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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into as of the 1st day of June, 2007, by and between Pacific Coast
National Bank (the "Bank"), Pacific Coast National Bancorp (the
"Company") and Stanley M. Cruse (the "Executive"), a resident of
San Diego County, California (the signatories to this Agreement
will be referred to jointly as the "Parties").
WITNESSETH:
WHEREAS,
the Bank is a wholly-owned subsidiary of the Company;
WHEREAS,
Bank has agreed to employ Executive, and Executive has agreed to be
employed by Bank, subject to and on the terms and conditions set
forth herein; and
WHEREAS,
Bank, Company and Executive have read and understood the terms and
provisions set forth in this Agreement and have been afforded a
reasonable opportunity to review this Agreement with their
respective legal counsel.
NOW,
THEREFORE, in consideration of the mutual promises and covenants
set forth in this Agreement, and for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, Executive, Company and Bank agree as follows:
1.
Term of Employment. This Agreement shall become effective on
the later of June 1, 2007 or the date on which the Bank receives a
satisfactory "no-objection" letter from the Office of the
Comptroller of the Currency ("Effective Date") and shall continue
in effect through May 31, 2010 (the "Initial Term"), unless
terminated pursuant to Section 4. At the end of the Initial Term of
this Agreement, the Agreement shall automatically renew for
successive one-year terms, unless Bank provides written notice to
Executive within ninety (90) days prior to the expiration of the
then current term. Such Initial Term and all subsequent terms shall
be referred to herein as the "Term of Employment."
2.
Duties and Authority.
(a) During
the Term of Employment, Executive shall serve as Executive Vice
President and Chief Credit Officer of the Bank and the Company.
Executive shall perform in a professional manner the authorized and
customary duties for the positions and such other reasonable duties
and responsibilities as the Board of Directors of Bank and/or
Company (the term "Board of Directors" as used in this Agreement
shall mean the Board of Directors of Bank, unless specifically
stated otherwise) may assign to Executive from time to time, in
writing, which duties shall include, but not be limited to the
following:
(i) Executive
shall oversee all lending functions of the Company and Bank and all
subsidiary lending activities related to and controlled by Bank and
Company;
(ii) Executive
shall carry out and implement all proper directions and
instructions of the Board of Directors that conform with reasonable
and sound banking practices;
(iii) Executive
shall use his best efforts to operate Bank so as to meet the growth
and financial projections and budgets established and approved by
the Board of Directors, assuming such projections and budgets shall
be reasonable and realistically attainable under the conditions
which then exist both in bank and local and national financial
markets; and
(iv) Executive
shall use his best efforts to avoid any action that might
materially damage, harm or discredit the reputation of Bank, its
shareholders, or it's Board of Directors.
(b) Notwithstanding
the provisions of Section 2(a), the duties and responsibilities of
Executive may be changed and modified from time to time by Bank at
its discretion. Upon changes and modifications to Executive's
duties and responsibilities, Executive's employment with Bank shall
continue to be governed by the terms of this Agreement.
(c) During
the Term of Employment, Executive shall devote Executive's best
efforts and entire productive time, ability and attention to the
lending operations of Bank and Company, and shall not, without the
written consent of Bank or Company, directly or indirectly, alone
or as a partner, officer, director, stockholder, employee, or
consultant of any other person, entity, association, agency,
organization, or institution, engage in any other business or
profession which would necessitate Executive's giving any portion
of his time and effort to such activity. Executive shall at all
times faithfully, with diligence and to the best of Executive's
ability, experience, and talent, perform all the duties that may be
required of and from Executive pursuant to the express and implicit
terms hereof to the reasonable satisfaction of B.
(d) Executive
shall become informed to the best of his ability of current
developments in the banking industry applicable to Bank and shall
attend such banking seminars and schools as he or the Board of
Directors deem appropriate to keep apprised of laws, regulations,
policies and procedures that affect Bank, Company and their
operations. Executive shall serve on such committees of Bank and/or
Board of Directors as the Board of Directors may determine from
time to time. Executive shall at all times be subject to the
direction and control of the Board of Directors, and all acts of
Executive in the performance of his duties hereunder shall be
carried out in conformity with the policies, directions and
limitations as from time to time established by the Board of
Directors. Executive shall not be required to change his domicile
from San Diego County, California in connection with the
performance of his duties hereunder. Executive shall not be
required to engage in any activities or exercise any powers or
authority that has the effect of violating any federal, state or
local laws or regulations.
3.
Compensation and Benefits. All payments of compensation to
Executive shall be payable in accordance with Bank's ordinary
payroll and other policies and procedures.
(a)
Base Salary. During the Term of Employment, Bank shall pay
Executive, at a minimum, a base salary of $140,000.00 per full
calendar year ("Base Salary"), appropriately prorated for partial
months at the commencement and end of the term of this Agreement.
Bank shall review the amount of such Base Salary no less often than
annually. Any salary adjustment shall be based on: (i) Executive's
performance since Executive's last review; (ii) the performance and
profitability of the Bank; and (iii) the Bank's salary policy
effective at the time
of any such salary review and adjustment. Bank shall have the
right to deduct from payment of all compensation to Executive
hereunder any federal, state or local taxes required by law to be
withheld with respect to such payments and any other amounts
specifically authorized to be withheld or deducted by
Executive.
(b)
Annual Cash Incentive Compensation. After the Bank's has
achieved at least two consecutive quarters of profitability,
Executive, if employed on the last day of the calendar year for
which any bonus as determined by the Board of Directors is being
awarded, shall be eligible for performance-based annual cash and/or
stock awards as determined by the Board of Directors in accordance
with mutually agreed upon goals and objectives established by the
Board of Directors in January of each calendar year this Agreement
is in force and effect.
(c)
Participation in Employee Benefit Programs. Executive shall
be entitled to participate in any benefit programs applicable to
all employees of Bank or to executive employees of Bank in
accordance with Bank policy and the provisions of said benefit
plans. This Agreement, which provides certain additional benefits,
does not preclude Executive's participation in such other plans of
B.
(d)
Executive "Personal Time Off" Allocation. Executive shall be
allocated a minimum of five (5) weeks of Personal Time Off ("PTO")
in accordance with Bank policy. Personal time off may be taken at
any time during the year subject to the working needs of the
office. If PTO time is unused, 50% of unused PTO time may
accumulate and be used at a future date as deemed appropriate by
Chief Executive Officer or President. If the Executive has
accumulated PTO at time of termination, accumulated PTO time will
be paid to Executive in accordance with Bank policy and applicable
law.
(e)
Stock Options. The Company shall grant to Executive 12,500
options to purchase shares of common stock of the Company. All
stock options granted under this Section shall expire ten (10)
years following the date of grant, have an exercise price equal to
the fair market value of the common stock of the Company at the
time of issuance, and be evidenced by a stock option agreement
which may contain additional terms and restrictions not
inconsistent with this Agreement or any stock option plan of the
Company then in existence and under which options pursuant to this
Section are issued. The options granted under this Section shall
vest in approximately equal percentages as of the anniversary date
of the initial grant date over the three-year period following
issuance.
(f)
Vehicle Allowance. Bank shall pay Executive $500.00 per
month for travel to and from the offices of Bank and for use in
engaging in activities in the name of or for the benefit of B.
Additionally, Bank shall pay or reimburse Executive for reasonable
gas and insurance costs associated with Executive's vehicle use for
Bank business.
(g)
Reimbursement of Expenses. During the Term of Employment,
Bank shall promptly pay all reasonable expenses incurred by
Executive for all reasonable travel and other business related
expenses incurred by him in performing his obligations under this
Agreement in accordance with Bank's travel and business expense
policy, such expenses to be reviewed by the Board of Directors on a
periodic basis.
(h)
Compensation After Termination.
(i) If
the Term of Employment is terminated (i) by Bank for cause or due
to the death or disability of Executive, (ii) by Executive or (iii)
through expiration of the Term of Employment, Bank shall have no
further obligations hereunder or otherwise with respect to
Executive's employment from and after the termination or expiration
date (except payment of Executive's Base Salary accrued through the
date of termination or expiration) and Bank shall continue to have
all other rights available hereunder.
(ii) If
the Term of Employment is terminated by the Bank without cause,
Executive shall be entitled to receive as severance pay (in
addition to the payment of the Base Salary through the date of
termination) an amount equal to Executive's Base Salary, payable
within thirty (30) days of the end of the Term of Employment;
provided, however, if the severance payment to Executive would
cause Bank to contravene any law, regulation or policy applicable
to Bank, Bank and Executive agree that such severance payment shall
be made to the extent permitted by law, regulation and policy, and
the remainder of such severance payment shall be made from time to
time at the earliest time permitted by law, regulation and policy.
After the 30th day following the end of the Term of Employment, the
outstanding severance payment shall, until paid, bear interest per
annum at the prime lending rate as published in the Southwest
Edition of The Wall Street Journal on the 31st day following the
end of the Term of Employment. Except as otherwise specifically
provided herein, Bank shall have no other obligations hereunder or
otherwise with respect to Executive's employment from and after the
termination or expiration date, and Bank shall continue to have all
other rights available hereunder.
(iii) No
termination under Section 4 shall terminate or adversely affect any
rights of Executive then vested under any disability or other
benefit program of Bank.
(i)
Fair and Adequate Compensation. Bank and Executive
acknowledge that such compensation and the other covenants and
agreements of Bank contained herein are fair and adequate
compensation for Executive's services and for the covenants
described below.
4.
Termination.
(a)
Death. If Executive dies during the Term of Employment and
while in the employ of Bank, this Agreement shall automatically
terminate and Bank or Company shall have no further obligation to
Executive or his estate under this Agreement (other than death
benefits payable under the benefit plans referenced in Section
3(c), except that Bank shall pay Executive's estate that portion of
Executive's base salary under Section 3(a) accrued through the date
on which Executive's death occurred. Such payment of base salary to
Executive's estate shall be made in the same manner as other
payroll obligations of the Bank.
(b)
Disability.
(i) Bank
may terminate this Agreement if, during the Term of Employment,
Executive shall be prevented from performing his duties hereunder
by reason of becoming disabled. For purposes of this Agreement, the
term "disabled" shall have the meaning set forth in Bank's long
term disability plan or, if Bank has no long term disability plan
in effect
at the time of the Executive ' s disability, shall
mean that Executive has become physically or mentally incapable
(excluding infrequent and temporary absences due to ordinary
illness) of performing the essential functions of his duties under
this Agreement for a continuous period of three (3) months, as
determined by Bank upon the advice of a qualified physician. In the
event a dispute arises between Executive and the Bank concerning
Executive's physical or mental ability to continue or return to the
performance of his duties, Executive shall submit to examination by
a competent physician mutually agreeable to both parties. The
physician's opinion as to the Executive's capability to perform his
duties will be final and binding. During any period prior to
termination during which the Executive fails to perform his duties
as a result of incapacity due to physical or mental illness,
Executive shall continue to receive his full salary at the rate
then in effect for such period until his employment terminates
pursuant to this Section 4(b), provided that payments so made to
Executive during such period shall be reduced by the sum of the
amounts, if any, payable to Executive under any disability benefit
plans of Bank that were not previously applied to reduce such
payment.
(ii) In
the event of a termination pursuant to this Section 4(b), Bank
shall be relieved of all its obligations under this Agreement,
except that Bank shall pay to Executive, or his estate in the event
of his subsequent death, Executive's base salary under Section 3(a)
through the date on which such termination shall have occurred,
reduced during such period by the amount of any benefits received
by Executive under any disability policy maintained by Bank and any
death benefits payable under the benefit plans referenced in
Section 3(c). All such payments to Executive or his estate shall be
made in the same manner as other payroll obligations of Bank.
(c)
Discharge for Cause. At any time during the Term of
Employment, Bank may discharge Executive for cause and terminate
this Agreement by delivering to Executive a written notice of
discharge. The notice of discharge shall set forth the reasons for
Executive's termination for cause. For purposes of this Agreement,
cause shall be defined as the occurrence of any of the following
events:
(i) The
determination by the Board of Directors in the exercise of its
reasonable judgment, after consultation with its legal counsel,
that Executive has committed an act or acts constituting (i) a
felony or other crime, whether a felony or a misdemeanor, involving
moral turpitude, dishonesty or theft, (ii) dishonesty or disloyalty
with respect to Bank or Company, or (iii) fraud;
(ii) The
determination by the Board of Directors in the exercise of its
reasonable judgment, that (i) the Executive has failed to follow
the policies adopted by the Board of Directors; (ii) that Executive
has failed to meet the performance goals established in writing by
the Board of Directors in January of each calendar year this
Agreement is in effect; or (iii) that Executive has engaged in such
actions or omissions that would constitute unsafe or unsound
banking practices;
(iii) The
determination by the Board of Directors in the exercise of its
reasonable judgment, after consultation with its legal counsel,
that Executive has committed a breach or violation of this
Agreement, and fails to cure such breach or violation within
ten (10) days after written notice to Executive by Bank
specifying in reasonable detail the alleged breach or
violation;
(iv) The
determination by the Board of Directors, after consultation with
its legal counsel, that Executive has engaged in gross misconduct
in the course and scope of his employment with Bank including
indecency, immorality, gross insubordination, dishonesty, unlawful
harassment or discrimination, use of illegal drugs, or fighting;
or
(v) In
the event Executive is prohibited from engaging in the business of
banking by any governmental regulatory agency having jurisdiction
over Bank or Company.
For
purposes of this Agreement, Executive shall not be deemed to be in
breach of this Agreement for his failure to substantially perform
his duties under this Agreement where such failure results because
Executive has becomes disabled within the meaning of Section 4(b).
In such cases, termination of Executive shall be governed by the
provisions of Section 4(b).
(d)
Discharge without Cause. At any time during the Term of
Employment, Bank shall be entitled to terminate Executive's
employment and this Agreement "without cause," by providing him
with a written notice of termination. Any termination of this
Agreement which is not for cause, as defined above in Section 4(c),
or which does not result from the death or disability of Executive,
as set forth in Sections 4(a) or 4(b) respectively, shall be deemed
to be a termination without cause.
(e)
Resignation. Executive shall be entitled to terminate this
Agreement by providing Bank with a written notice of resignation at
least ninety (90) days prior to the intended resignation date. Upon
Executive's resignation, he shall be entitled to receive any base
salary which has been earned by him through the effective date of
such resignation. In lieu of having Executive work for Bank through
the effective date of the resignation, Bank may terminate this
Agreement immediately; however, Bank shall still pay Executive
amounts to which he would otherwise be entitled through the
effective date of such resignation. Upon the effective date of
Executive's resignation, Executive shall not be entitled to receive
any other compensation or benefits as provided in the individual
benefit plans or agreements.
5.
Non-Disclosure and Confidentiality.
(a) Executiv
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