Exhibit 10.16
EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“ Agreement ”) is effective as of
November 17, 2005 (the “ Effective Date ”)
by and between Richard H. Revier (“ Executive ”)
and 1 st Pacific Bank of California, a California
state-chartered bank (the “ Bank ”), with regard
to the following:
A. Executive has served as the Executive Vice
President and Chief Credit Officer of the Bank under an Employment
Agreement between Executive and the Bank dated November 17, 2003
(the “ Former Employment Agreement
”).
B. Executive and the Bank have agreed that
Executive shall continue to serve as the Executive Vice President
and Chief Credit Officer and a full-time employee of the Bank under
the terms of this Agreement, and as such is expected to make a
major contribution to the profitability, growth and financial
strength of the Bank.
C. The Bank considers the availability of
Executive’s services, managerial skills and business
experience to be in the best interests of the Bank and the
shareholders of the Bank and desires to assure the continued
services of Executive on behalf of the Bank.
D. Executive is willing to be employed by the Bank
upon the understanding that the Bank will provide him with income
security and benefits if his employment with the Bank is
terminated, upon certain terms and conditions.
NOW, THEREFORE, for valuable
consideration the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1.
Definitions
.
“ Bank ” means
1st Pacific Bank of California, a California state-chartered bank,
its successors and permitted assigns.
“ Bank Board ”
means the Board of Directors of the Bank.
“ Beneficiary ”
means the person or entity to receive rights or benefits under this
Agreement, as set forth in this Agreement, in the event of the
death of Executive. Unless otherwise specified in a written
notice to the Bank, the Beneficiary shall be the spouse of
Executive, if any, and if there is none, the estate of Executive
(including any trust created by the terms of Executive’s
will) or, if Executive provides the Bank with written notice
thereof prior to his death, any trust as to which Executive was a
settlor with a power of revocation.
“ Benefits ”
means the types and amounts of benefits provided under
Paragraph 3.6, provided that if at the date of reference the
terms of any Bank insurance plan prohibit the continuance or
recommencement of insurance benefits that Executive formerly held,
the Bank shall be obligated to pay to Executive in cash on a
monthly basis an amount equal to the Bank’s former premium
payments (pro rated on a monthly basis) for the benefit of
Executive under such plan, except that if Executive is entitled to
COBRA health insurance benefits the amount shall be increased to
the amount payable by Executive for such benefits if higher than
the Bank’s former premium payments.
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“ Change of Control
” means the occurrence of any of the following
events:
(i)
any “person” (as used in
Section 13(d) of the Securities Exchange Act of 1934 and
the rules promulgated thereunder) becomes the “beneficial
owner” (as defined in Rule 13d-3) of securities
representing a majority of the voting power of the then outstanding
securities of the Bank; or
(ii)
a sale of assets involving all or
substantially all of the assets of the Bank, or a merger or
consolidation of the Bank in which the holders of securities of the
Bank immediately prior to such event hold in the aggregate less
than a majority of the securities of the Bank or any other
surviving or resulting entity immediately after such
event.
Notwithstanding the foregoing, a
Change in Control shall not be deemed to have occurred in the event
the Bank forms a holding company as a result of which the holders
of the Bank’s outstanding voting securities immediately prior
to the transaction hold, in approximately the same relative
proportions as they held prior to the transaction, substantially
all of the outstanding voting securities of a holding company
owning all of the Bank’s outstanding voting securities after
the completion of the transaction.
“ Change of Control
Severance Benefits ” means (i) an amount equal to
the sum of (y) one (1) times Executive’s base annual
salary at the rate then in effect in accordance with
Paragraph 3.1, plus (z) the amount actually paid by the
Bank to Executive under the Plan for the immediately preceding
year, if any; and (ii) continuation of benefits provided under
Paragraph 3.6 or substitute equivalent benefits in the event
that the particular benefits (for instance, insurance coverage) are
not carried by the Bank under its programs following the Change of
Control Termination, for a period of twelve (12) months.
“ Change of Control
Termination ” means the termination of employment of
Executive within twelve (12) months after a Change of Control
(i) by the Bank under Paragraph 4.1.5; or (ii) by
Executive under Paragraph 4.2 for Good Cause.
“ Code ” means
the Internal Revenue Code of 1986, as amended.
“ Disability ”
shall be deemed to occur on the date the Executive is, by reason of
any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the
Bank.
“ Executive ”
means Richard H. Revier.
“ Expiration Date
” means November 16, 2007.
“ Good Cause ”
means: (i) a reduction in Executive’s base salary
below the rate then in effect in accordance with
Paragraph 3.1; (ii) the Bank requiring that Executive be
based at a location more than fifty (50) miles from the
Bank’s headquarters as of the Effective Date (excluding
travel for Bank business and other temporary relocations of no more
than thirty (30) days individually); (iii) a reduction in his
title; or (iv) the continuation after a Change of
Control,
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or imposition within six
(6) months after a Change of Control, of a material reduction
in the duties or authority of Executive so that he is no longer
performing substantially all of the duties of a chief credit
officer of a community bank.
“ Plan ” means
the 1st Pacific Bank of California Incentive Compensation Plan for
Senior Management, in substantially the form attached hereto as
Exhibit A , as the same may be amended from time to
time.
“ Separation Agreement
” means the Separation and General Release of Claims,
substantially in the form attached hereto as Exhibit B
.
“ Trade Secrets and Other
Proprietary and Confidential Information ” means and
consist of, for example, and not intending to be inclusive,
information concerning any matters relating to the business of the
Bank, any of its customers, governmental relations, customer
contacts, underwriting methodology, loan program configuration and
qualification strategies, marketing strategies and proposals, or
any other information concerning the business of the Bank, its
subsidiaries and affiliates, and the Bank’s good will;
provided that “Trade Secrets and Other Proprietary and
Confidential Information” shall not be deemed to include
information that is or becomes, through no fault of Executive, in
the public domain.
2.
Rights and Duties of
Executive .
2.1
Employment
. The Bank hereby employs
Executive as its Executive Vice President and Chief Credit Officer,
and Executive accepts the duties described herein, and agrees to
discharge the same faithfully and to the best of his ability.
Executive shall perform such other duties as shall be from time to
time prescribed by the Chief Executive Officer of the Bank and
shall report to and be subject to the direction of the Chief
Executive Officer of the Bank. Executive shall devote his
full business time and attention to the business and affairs of the
Bank.
2.2
Termination of Former Employment
Agreement . As of
the Effective Date, the Former Employment Agreement shall terminate
without further liability of the Bank or Executive thereunder of
any kind.
2.3
At-Will Employment
. Executive’s employment
with the Bank is not for a fixed period of time and can be
terminated at the will of either Executive or the Bank at any time,
with or without notice, and with or without cause. There are
no agreements between Executive and the Bank contrary to
Executive’s at-will status. Neither a Bank Board member
nor a manager, supervisor, employee or agent of the Bank is
authorized to alter Executive’s at-will status, except for
the Chairperson of the Bank Board, and then only in a writing
signed both by the Chairperson of the Bank Board and Executive
following adoption of a resolution by the Bank Board authorizing
the specific change reflected in such writing and authorizing the
Chairperson of the Bank Board to sign such writing. Executive
should neither assume nor imply any promise of employment for any
specified period of time except through such a signed
writing. This Agreement shall terminate immediately without
further liability or obligation to Executive if (i) the Bank
is closed by any supervisory authority, or (ii) any
supervisory authority demands, by proposed consent agreement or by
a Prompt Corrective Action Directive, or pursuant to
cease
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and desist powers, the removal of
Executive from his position as the Executive Vice President or
Chief Credit Officer of the Bank. Should Executive remain
employed under this Agreement through the Expiration Date,
Executive’s employment with the Bank shall automatically
terminate on that date and this Agreement shall be of no force or
effect on or after that date, subject to Paragraphs 5.4 and
8.6.
2.4
Outside Activities
. Executive shall not have
other employment, consulting, charitable or independent contractor
work that materially interferes with the fulfillment of
Executive’s duties to the Bank. Executive shall not
undertake expanded commitments to business or charitable activities
or engage in new such activities before consulting with the
President and Chief Executive Officer of the Bank. Executive
will not provide services to, hold or make any investment in or
loan to, or participate in the management or business of, any bank,
savings and loan, credit union, thrift and loan, industrial loan or
other entity engaged in the business of making loans or accepting
deposits or both; provided that Executive may own less than 5% of
the voting stock of any company that files reports under the
Securities Exchange Act of 1934.
3.
Compensation and
Benefits . In
consideration for the services to be rendered by Executive to the
Bank, the Bank agrees to provide Executive with the following
compensation and benefits:
3.1
Salary . The Bank shall pay Executive a minimum
annual salary at the rate of One Hundred Fifty Thousand Dollars
($150,000) for the period of November 17, 2005 through November 16,
2006, increasing to One Hundred Sixty Thousand Dollars ($160,000)
for the period of November 17, 2006 through November 16, 2007, due
and payable biweekly, or otherwise in accordance with the
Bank’s policy for the scheduling of salary payments to
employees as in effect from time to time. Other salary
increases, if any, shall only be as approved by the Bank Board in
its sole discretion.
3.2
Withholding and
Deductions . The
Bank shall withhold and/or deduct from any and all salary or other
payments to Executive, all taxes which may be required to be
deducted or withheld under any provision of law (including, but not
limited to, social security payments and income tax withholding)
now in effect or which may become effective any time during
Executive’s employment with the Bank.
3.3
Executive Incentive
Compensation . In
general, the Bank believes that superior performance of Executive
should be rewarded and encouraged by incentive compensation.
The Bank Board shall adopt the Plan pursuant to which Executive may
be entitled to incentive compensation provided that the performance
goals of the Bank as set forth in the Plan are achieved and the
terms and conditions of the Plan are satisfied. In addition,
Executive shall be entitled to other incentive compensation and
bonuses as the Bank Board may determine in its sole
discretion. Notwithstanding the foregoing, Executive shall
not participate in the Bank’s Team Share Plan.
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3.4
Automobile Allowance
. The Bank shall pay the
Executive an automobile allowance of Six Hundred and Fifty Dollars
($650.00) per month, subject to withholding. This is an
allowance for all automobile costs and expenses, including, but not
limited to, fuel, license, maintenance, insurance, repairs and
purchase or lease payments.
3.5
Expense Reimbursement
. The Bank agrees to reimburse
Executive for all ordinary and necessary expenses incurred by
Executive on behalf of the Bank in accordance with the Bank’s
policies and procedures as in effect from time to time, including
entertainment, meal and travel expenses.
3.6
Insurance . The Bank shall provide life insurance
with a life insurance benefit equal to at least one and one-half
times the annual salary of Executive at the rate then in effect
under Paragraph 3.1, which shall be provided through any group
life insurance plan of the Bank at the Bank’s option.
The Bank shall provide to Executive the long term disability
insurance provided by the Bank to employees at the Effective Date
under the Bank’s group plan or shall replace it with similar
coverage so long as Executive is employed by the Bank.
Executive shall be entitled to participate in such other insurance
benefits as are generally provided to the employees of the Bank
from time to time.
3.7
Vacation . Executive shall be entitled to five (5)
weeks of vacation time and pay per annum, which shall be scheduled
in Executive’s discretion, subject to and taking into account
applicable banking laws and regulations. Unused vacation may
be accrued up to a maximum of six (6) weeks of unused vacation in
addition to the vacation to which Executive may be entitled in the
current year, and thereafter Executive shall cease to accrue unused
vacation until used. Vacation must be accrued before taken,
and if not yet accrued, must have the prior approval of the Chief
Executive Officer of the Bank to be taken. Vacation may be
used only at the time or times approved by the Chief Executive
Officer of the Bank.
4.
Termination
.
4.1
Employer Right to Terminate
Employment .
Nothing in this Agreement shall adversely affect the right of the
Bank Board to terminate Executive. The Bank Board has the
right to terminate the employment of Executive with the Bank at
will, with or without cause, upon delivery of written notice to
Executive (except in the case of death of Executive, in which event
termination shall automatically occur at the date of death), and
including, but not limited to, for any of the following
grounds:
4.1.1
Willful breach or habitual neglect
or inability (except where such inability is due to Disability or
death) to perform Executive’s duties hereunder, including
without limitation failure to cooperate with the Bank Board in the
structuring, documentation or negotiation of a transaction that
might result in a Change of Control;
4.1.2
Malfeasance or misfeasance in the
performance of Executive’s duties hereunder, imposition of a
regulatory order to remove Executive, failure to comply with a
direction by the Chief Executive Officer of the Bank, material
breach of Bank policy or procedure, or breach of this
Agreement;
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4.1.3
Immoral or illegal conduct,
conviction of a felony, conviction of a misdemeanor involving moral
turpitude;
4.1.4
Disability or death;
4.1.5
Determination in the complete
discretion of the Bank Board that the employment of Executive
should be terminated prior to the Expiration Date, without
reference to the grounds set forth in Paragraphs 4.1.1, 4.1.2,
4.1.3 or 4.1.4, and specification of the termination date in the
notice described in Paragraph 4.1.
4.2
Termination by
Executive .
Executive may terminate his employment with the Bank at will, for
any reason, and without advance notice. However, as a
courtesy, Executive is requested to deliver written notice to the
Bank three (3) months in advance of the date such termination
is to take effect, except with respect to a termination for Good
Cause. Executive may terminate his employment with the Bank
prior to the Expiration Date for Good Cause upon thirty (30) days
notice to the Bank and the Bank’s failure to cure within that
time. To be effective, such notice must be given by Executive
within fifteen (15) days of the occurrence of the event that
constitutes Good Cause, provided that if Good Cause results from a
material reduction in the duties or authority of Executive so that
he is no longer performing substantially all of the duties of a
chief credit officer of a community bank and such reduction occurs
before a Change of Control occurs and continues after the Change of
Control occurs, Executive shall be required to give the thirty (30)
day notice described above within fifteen (15) days of the Change
of Control.
4.3
Termination Upon
Expiration . Should
Executive remain employed under this Agreement through the date
five (5) months prior to the Expiration Date, Executive shall
have the right, while he is still employed, to provide written
notice to the Bank of his desire to remain employed after the
Expiration Date on or before the date four (4) months prior to
the Expiration Date. If Executive and the Bank have not
entered into an amendment of this Agreement extending its term or
another written agreement replacing this Agreement on or prior to
the date three (3) months prior to the Expiration Date, and
Executive’s employment is not otherwise terminated,
Executive’s employment shall automatically terminate on the
Expiration Date. If such an extension or replacement is not
entered into on or prior to three (3) months prior to the
Expiration Date, Executive shall be deemed to have been given
advance notice by the Bank that his employment with the Bank will
terminate as of the Expiration Date. Nothing in this
Paragraph shall prejudice the at-will status of Executive or
require the Bank to negotiate with Executive.
4.4
Post-Notice Activities of
Executive . In the
event termination is not effective immediately upon the delivery of
notice of termination by the Bank or Executive, the Bank shall have
the right to require that during the period between the giving of
notice and the effective date of termination, Executive’s
activities and responsibilities be curtailed as deemed appropriate
by the Bank. Such curtailment shall include, without
limitation, removing Executive from corporate offices, requiring
Executive to be physically absent from the Bank’s facilities,
and eliminating Executive’s access to computer systems,
e-mail and telephone systems.
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4.5
Automatic Resignations
. Upon notice of termination
of employment Executive shall, automatically and without further
action by any party, be deemed to have resigned from all
directorships with the Bank and any of its subsidiaries and
affiliates. Upon termination of employment, Executive shall,
automatically and without further action by any party, be deemed to
have resigned from all offices and other capacities with the Bank
and any of its subsidiaries and affiliates.
5.
Post-Termination Payments and
Benefits . The
following are the post-termination payments and benefits to which
Executive is entitled upon termination of employment with the
Bank.
5.1
Termination Resulting from
Breach . In the
event the employment of Executive is terminated under
Paragraphs 4.1.1, 4.1.2 or 4.1.3, the Bank shall provide
Executive only a payout of all accrued but unused vacation as of
the date of termination, the base salary and Benefits, if any,
then-provided, on the terms then-provided, due him through the date
of termination and shall not be obligated to provide any other
compensation or Benefits.
5.2
Other Terminations
.
5.2.1
Payments –
Disability . In the
event the employment of Executive is terminated under
Paragraphs 4.1.4 for disability, the Bank shall provide
Executive only the following:
(a)
the salary due Executive as of the
date of termination;
(b)
payment of certain incentive
compensation due Executive, if any, in compliance with the
Plan;
(c)
a payout of all accrued but unused
vacation as of the date of termination; and
(d)
continuation of the group medical
and other insurance benefits, if any, then-provided under
Paragraph 3.6, for a period of three (3) months from the
date of termination, subject to the limitations of and to the
extent permitted by the policy or policies under which such
benefits are provided.
5.2.2
Payments – Death
. In the event the employment
of Executive is terminated under Paragraphs 4.1.4 for death,
the Bank shall provide the Beneficiary only the
following:
(a)
the salary due Executive as of the
date of death plus a lump sum payment equal to three (3) months of
the base salary at the rate then in effect in accordance with
Paragraph 3.1;
(b)
payment of certain incentive
compensation due Executive, if any, in compliance with the
Plan;
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(c)
a payout of all accrued but unused
vacation as of the date of termination; and
(d)
continuation of the group medical
and other insurance benefits, if any, then-provided under
Paragraph 3.6, for a period of three (3) months from the
date of termination, subject to the limitations of and to the
extent permitted by the policy or policies under which such
benefits are provided.
5.2.3
Payments – Termination
Under Paragraph 4.1.5 . In the event the employment of Executive
is terminated under Paragraph 4.1.5 or under Paragraph 4.2 for
Good Cause, subject to Executive first entering into the Separation
Agreement and such agreement being fully effective, the Bank shall
provide Executive only the following:
(a)
continued salary at the rate then in
effect under Paragraph 3.1 and the automobile allowance then
provided under Paragraph 3.4 for a period of nine (9) months from
the date notice of termination is delivered to the Executive, or at
the option of the Bank a lump sum payment of such amount, all
subject to withholding;
(b)
payment of certain incentive
compensation due Executive, if any, in compliance with the Plan,
with Executive’s termination under this Paragraph 5.2.3 being
considered for the limited purpose of interpreting the Plan in the
context of this Agreement as being a termination “without
cause”;
(c)
a payout of all accrued but unused
vacation as of the date of termination; and
(d)
continuation of the group medical
and other insurance benefits, if any, then-provided under
Paragraph 3.6, for a period of nine (9) months from the
date of termination, subject to the limitations of and to the
extent permitted by the policy or policies under which such
benefits are provided.
5.2.4
Executive’s Right to Waive
Payments .
Executive shall have the right to waive his rights to receive such
payments and Benefits otherwise due under this Paragraph 5.2
by giving advance written notice of such waiver to the Bank.
After receipt of such notice, the Bank shall have no further
obligation to provide any payments or Benefits under this
Paragraph 5.2.
5.3
Change of Control
.
5.3.1
Payment Following Certain
Terminations Related to Change of Control . Subject to Executive first entering into
the Separation Agreement and such agreement being fully effective,
in respect of any Change of Control Termination the Bank shall pay
to Executive the Change of Control Severance Benefits in a lump sum
(except for the benefits under Paragraph 3.6, which shall be
continued) within five (5) days following the date the
Separation Agreement is fully effective.
5.3.2
Executive’s Right to Waive
Payments .
Executive shall have the right to waive his rights to receive
payments and Benefits otherwise due under this
Paragraph 5.3
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by giving advance written notice of
such waiver to the Bank. After receipt of such notice, the
Bank shall have no further obligation to provide any payments or
Benefits under this Paragraph 5.3.
5.3.3
Adjustments in
Payments . The
terms of this Paragraph 5.3.3 override and control any and all
other terms of this Agreement to the extent inconsistent with this
Paragraph 5.3.3. This Paragraph 5.3.3 shall apply
to the extent that the aggregate present value of any or all
payments and benefits in the nature of compensation to (or for the
benefit of) Executive provided under this Agreement or otherwise
provided to Executive by or on behalf of the Bank or any affiliate,
parent or controlling entity of the Bank, constitute a
“parachute payment” under the provisions of
Section 280G of the Code, and the regulations thereunder (the
“ Total Payments ”). In the event that the
Total Payments would exceed an amount equal to 299% of
Executive’s “base amount” as that term is defined
in Section 280G of the Code, as determined by the independent
public accountants for the Bank, Executive and the Bank agree that
the payments or benefits provided to Executive under this Agreement
shall be reduced (or the parties shall agree to a reduction in
other payments or benefits included in the Total Payments to the
extent legally and contractually permissible) so that the present
value of the total amount received by Executive that would
constitute a “parachute payment” will be one dollar
($1.00) less than three (3) times Executive’s base amount (as
defined in Section 280G of the Code) and so that no portion of the
payment or benefits received by Executive would be subject to the
excise tax imposed by Section 4999 of the Code.
5.4
Termination at Expiration
Date . If
Executive’s employment is terminated as a result of
expiration of this Agreement at the Expiration Date, subject to
Executive first entering into the Separation Agreement and such
agreement being fully effective, the Bank shall provide Executive
only the following:
5.4.1
continued salary at the rate then in
effect under Paragraph 3.1 for a period of six (6) months from the
date of termination, or at the option of the Bank a lump sum
payment of such amount, all subject to withholding;
5.4.2
continuation of the group medical
and other insurance benefits, if any, then-provided under Paragraph
3.6, for a period of six (6) months from the date of termination,
subject to the limitations of and to the extent permitted by the
policy or policies under which such benefits are
provided;
5.4.3
a payout of all accrued but unused
vacation as of the date of termination; and
5.4.4
payment of certain incentive
compensation due Executive, if any, in compliance with the Plan,
with Executive’s termination as a result of expiration being
considered for the limited purpose of interpreting the Plan in the
context of this Agreement as being a termination “without
cause.”
5.5
Consideration for Payments and
Remedies . Without
limiting any other remedies available to the Bank, the payments to
be made under Paragraphs 5.2, 5.3 or 5.4 (subject to the
exceptions stated therein) after the date of termination of
Executive’s employment
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shall be subject to
Executive’s execution of the Separation Agreement, and
Executive’s continued compliance with the Separation
Agreement and the terms of this Agreement that are effective after
termination of Executive’s employment, through the making of
the last such payment.
5.6
Death Following
Termination . In
the event that Executive dies while receiving any payments under
this Paragraph 5, such payments shall be continued for the
benefit of the Beneficiary, as would otherwise be required under
this Paragraph 5.
5.7
Nonassignability
. Neither Executive nor any
other person or entity shall have any power or right to transfer,
assign, anticipate, hypothecate, mortgage, commute, modify, or
otherwise encumber in advance any of the rights or benefits of
Executive under this Paragraph 5, nor shall any of said rights
or benefits be subject to seizure for the payment of any debts,
judgments, alimony or separate maintenance, owed by Executive or
any other person or entity, or be transferable by operation of law
in the event of bankruptcy, insolvency or otherwise. The
terms of this Paragraph 5.7 shall not affect the
interpretation of any provision of this Agreement.
5.8
Claims Procedure
. The Bank Board shall make
all determinations as to rights to benefits under this
Paragraph 5.
5.9
Regulatory
Restrictions . The
parties understand and agree that at the time any payment would
otherwise be made or benefit provided under this Paragraph 5,
depending on the facts and circumstances existing at such time, the
satisfaction of such obligations by the Bank may be deemed by a
regulatory authority to be illegal, an unsafe and unsound practice,
or for some other reason not properly due or payable by the
Bank. Among other things, the regulations at 12 C.F.R. Part
30, Appendix A promulgated pursuant to Section 39(a) of
the Federal Deposit Insurance Act, and at 12 C.F.R. Part 359, or
similar regulations or regulatory action following similar
principles may apply at such time. The Bank agrees
that
