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EMPLOYMENT AGREEMENT
This Employment Agreement
(" Agreement ") is effective as of the 1 st day
of May, 2007 (" Effective Date "), is entered into as
of June 30, 2007 and amends and restates that certain
Employment Agreement made as of October 1, 2003, as amended
(" Old Agreement ") between Temecula Valley Bank, a
state chartered banking corporation (" Bank "), and
Stephen H. Wacknitz (" Executive ").
W I T N E S S E T H
WHEREAS, upon the
recommendation of the Executive Compensation Committee and at
the direction of Bank's Board of Directors (" Board of
Directors "), with Executive abstaining from
participation in such actions, the Old Agreement is hereby
revised and restated as provided herein.
WHEREAS, Bank desires that
Executive continue to be employed as Bank's President,
Chairman of the Board and Chief Executive Officer on the
terms set forth herein.
WHEREAS, Executive is
willing to accept such employment under the terms and
conditions herein stated.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements
hereinafter contained, and other good and valuable
consideration, it is hereby agreed as follows:
A)
Term . Bank hereby agrees to employ Executive and Executive
hereby accepts employment with Bank until such date and upon such
terms as provided in this Agreement (the " Term
").
A)
Duties . Executive shall perform the duties of
President, Chairman of the Board and Chief Executive Officer of
Bank, subject to the powers by law vested in the Board of Directors
of Bank and in Bank's shareholder, and shall serve as a Director of
Bank. During the Term, Executive shall perform the services herein
contemplated to be performed by Executive with due care faithfully,
diligently, to the best of Executive's ability and in compliance
with all applicable laws and Bank's Articles of Incorporation and
Bylaws.
B)
Exclusivity . Executive shall devote substantially
all of Executive's entire productive time, ability and attention to
the business of Bank during the Term. Executive shall not directly
or indirectly render any services of a business, commercial or
professional nature to any other person, firm or corporation for
compensation without prior consent evidenced by a resolution duly
adopted by the Board of Directors, or Executive Committee thereof.
Notwithstanding the foregoing, Executive may (i) make investments
of a passive nature in any business or venture; or (ii) serve in
any capacity in civic, charitable or social
organizations.
C)
Physical Examination . Executive may, in his
discretion, take an annual physical examination during each year
during the Term of this Agreement with said physical examination(s)
conducted at the expense of Bank.
A)
Salary . For Executive's services hereunder, Bank
shall pay, or cause to be paid, as annual gross base salary, to
Executive of not less than $500,000 during each of the years of the
Term, beginning with the Effective Date. Executive's salary shall
be payable in equal installments in conformity with Bank's normal
payroll periods as in effect from time to time. The Board of
Directors shall also, from time to time, and at least once each
year grant such additional "merit" increases, if any, in, the base
salary as are determined after review to be appropriate in the
discretion of the Board of Directors. Bank and Executive both
contemplate that his base salary shall be increased as Bank grows
and profits. Executive shall also, so long as he serves on the
Board of Directors, be entitled to directors and committee fees,
and any other compensation or benefits provided to outside
directors of Bank (including, but not limited to, committee fees,
any director retirement benefits, any stock options granted to
directors in such capacity, etc.) in addition to the compensation
and benefits provided to him as an employee pursuant to this
Agreement.
A)
Vacation . Executive shall be entitled to vacation
leave accruing at the rate of two and one-half vacation days for
each month in which he works (and a pro rata portion thereof for
partial weeks, except that banking holidays shall be treated as
days worked) during each year of the Term. Executive shall be
entitled to vacation pay in lieu of vacation. Time spent by
Executive at (or traveling to and from) seminars, conventions or
conferences related to Bank business shall not be counted against
his vacation leave.
B)
Automobile . Bank shall provide for the use of
Executive a suitable automobile (equivalent to, or better than, a
Lexus LS 430), commensurate with his position, and shall pay all
the expenses (including, but not limited to, maintenance, fuel,
insurance, registration) related thereto during the
Term.
C)
Medical and Life Insurance Benefits . Bank shall
provide for Executive, in accordance with Bank's policy now in
effect or as shall be amended from time to time, participation in a
comprehensive major medical (" Medical Benefits ") and
dental, with life insurance benefits, equivalent to the maximum
available from time to time under the California Bankers
Association Group Insurance Program for an employee of Executive's
salary level. Any such insurance for which Executive votes in favor
as a director, or endorses as an officer, shall be deemed to meet
the requirements of this Section. At any time, Medical Benefits are
not provided by Bank to Executive during his lifetime, Bank shall
pay insurance premiums for substantially similar medical benefits,
at a cost to Bank not to exceed $1,500 per month (with Executive to
pay any excess premium); provided, however, that at any time Bank
is unable to provide such a benefit due to the actions of a third
party (i.e. no insurance company will provide such coverage), then
Executive may obtain his own insurance and, in connection with such
insurance, Bank will contribute the lesser of: (i) $1,500 per month
(with Executive to pay any excess premium); or (ii) the amount of
the monthly premium charged to Executive (collectively, the "
Other Medical Benefit "). Term life insurance benefits shall
be provided to Executive, at Bank's expense during the Term, in an
amount not less than $250,000 until age ___, with Executive to be
entitled to make an irrevocable designation of the beneficiary and
owner of the policy thereunder. Executive's Salary Continuation
Agreement with Bank currently in effect shall be maintained by Bank
in accordance with its terms.
D)
Bonus . For each year end within the Term, Executive
shall be entitled to an Incentive Bonus determined in accordance
with this Section if the Threshold Test is met. The Threshold Test
shall be deemed to have been met if one or more of the following
exists: (i) Bank's regular outside independent loan reviewer gives
a favorable review of the loan quality of Bank at, or within four
months of, the end of the year; (ii) net loan losses for the year
do not exceed one percent of gross outstanding loans at the
beginning of the year; or (iii) the latest report of supervisory
activity of Bank by the Bank's principal state or federal regulator
rates Bank no less than satisfactory. The Incentive Bonus shall
equal 4 % of Bank's "Profits." For purposes of this Section 4.D,
"Profits" shall mean the net income of Temecula Valley Bancorp Inc.
(“Company”) before income taxes and before the effect
of this bonus or any other bonuses based on the profits of Bank and
Company. This bonus shall be payable in January of the year
following completion of the year on which it is based, or as soon
thereafter as is practical after Bank's certified public
accountants have delivered their report on Bank's condition and
results of operations for the year. The Incentive Bonus shall be
paid on or before March 15 of the calendar year following the year
in which it was earned.
E)
Sick Leave . Executive shall be entitled to sick
leave in accordance with Bank's Personnel Policy, accruing at a
rate of not less than one day per month or partial month of
service. Accrued sick leave may be carried over from prior periods,
but Executive shall not be entitled to be paid in lieu
thereof.
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5.
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BUSINESS EXPENSES AND REIMBURSEMENT .
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Executive shall be
entitled to reimbursement by Bank for any ordinary and
necessary business expenses incurred by Executive in the
performance of Executive's duties and in acting for Bank
during the Term, provided that such expenses are approved in
accordance with Bank policy.
A)
Termination With Cause .
(i) Except
as otherwise provided herein, Executive’s employment
with Bank may be terminated by Bank, at Bank's option with the
affirmative vote of 80% or more of the members of the Board of
Directors after an independent evaluation by an arbitrator
selected jointly by Executive and the Board of Directors
finds:
(a) Executive
has been convicted of a felony or of a gross misdemeanor
involving moral turpitude in connection with Executive's
employment with the Bank; or
(b) Executive
has committed a willful violation of any law or significant
Bank policy in connection with Executive's employment with the
Bank; and
(c) Either
(a) or (b) resulted in a material adverse effect on the
Bank.
(ii) Executive's
employment with Bank may be terminated by Bank, at Bank's
option, with notice to Executive or his heirs, upon the
occurrence of either of the following events:
(a) Executive
1) is unable to engage in any substantial, gainful activity by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months, or 2) is, by reason of any medically determinable
physical or mental impairment which 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. Medical
determination of disability may be made by either the Social
Security Administration or by the provider of an accident or
health plan covering employees of the Bank, provided that the
definition of disability under such a plan complies with the
requirements set forth herein. Upon the request of the Board
of Directors, Executive shall submit proof to the Board of
Directors of Social Security Administration's or the
provider's determination.
(b) Executive
is subject to a final removal or prohibition order issued by
a
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