EXHIBIT 10.27 AMENDED AND RESTATED TEMECULA VALLEY BANK, N.A. SALARY CONTINUATION AGREEMENT

 

                                  EXHIBIT 10.27

 

                              AMENDED AND RESTATED

                           TEMECULA VALLEY BANK, N.A.

                          SALARY CONTINUATION AGREEMENT

 

 

     THIS AGREEMENT is adopted this 30th day of September, 2004, by and between

the TEMECULA VALLEY BANK, N.A., a national banking association located in

Temecula, California (the "Company") and THOMAS M. SHEPHERD (the "Executive"),

amending, restating and replacing the Temecula Valley Bank, N.A., Salary

Continuation Agreement dated January 1, 2000, between the Company and the

Executive.

 

 

                                  INTRODUCTION

 

WITNESSETH:

 

     WHEREAS,  the  Executive  is in the employ of the  Company,  serving as its

Senior Vice President and Chief Credit Officer; and

 

     WHEREAS, the experience, knowledge of the affairs of the Company, and

reputation and contacts in the industry of the Executive are so valuable that

assurance of the Executive's continued service is essential for the future

growth and profits of the Company, and it is in the best interest of the Company

to arrange terms of continued employment for the Executive so as to reasonably

assure the Executive's remaining in the Company's employment during the

Executive's lifetime or until the age of retirement; and

 

     WHEREAS, it is the desire of the Company that the Executive's services be

retained as herein provided; and

 

     WHEREAS, the Executive is willing to continue in the employ of the Company

provided the Company agrees to pay to the Executive or the Executive's

beneficiaries certain benefits in accordance with the terms and conditions

hereinafter set forth.

 

     NOW, THEREFORE, in consideration of the services to be performed in the

future, as well as the mutual promises and covenants herein contained, it is

agreed as follows:

 

                                    Article 1

                                   Definitions

 

     Whenever used in this Agreement, the following words and phrases shall have

the meanings specified:

 

     1.1 "Change of Control" means that the Executive has been terminated within

12 months of: (1) a tender offer made and  consummated  for the ownership of 25%

or more of the outstanding  voting  securities of the Company;  (ii) a merger or

consolidation of the Company with another bank or corporation and as a result of

such merger or consolidation  less than 75% of the outstanding voting securities

of the surviving or resulting bank or  shareholders  of the Company,  other than

affiliates  (within the meaning of the  Securities  Exchange Act of 1934) of any

party  to  such  merger  or  consolidation,  as  the  same  shall  have  existed

immediately prior to such merger or consolidation, (iii) a sale of substantially

all of the Company's assets to another bank or corporation which is not a wholly

owned subsidiary;  or (iv) an acquisition of the Company by a person, within the

meaning of Section  3(a)(9)  or of  Section  13(d)(3)  (as in effect on the date

hereof)  of  the  Securities  Exchange  Act of  1934,  of  25%  or  more  of the

outstanding  voting  securities of the Company  (whether  directly,  indirectly,

beneficially or of record). For purposes hereof,  ownership of voting securities

shall take into account and shall  include  ownership as  determined by applying

the provisions of Rule 13d-3(d)(1)(I) (as in effect on the date hereof) pursuant

to the Securities Exchange Act of 1934.

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       1.2    "Code" means the Internal Revenue Code of 1986, as amended.

 

       1.3 "Disability" means the Executive suffering a sickness, accident or

injury which has been determined by the carrier of any individual or group

disability insurance policy covering the Executive, or by the Social Security

Administration, to be a disability rendering the Executive totally and

permanently disabled. The Executive must submit proof to the Company of the

carrier's or Social Security Administration's determination upon the request of

the Company.

 

       1.4 "Early Termination" means the Termination of Employment before Normal

Retirement Age for reasons other than death, Disability, Termination for Cause

or following a Change of Control.

 

       1.5 "Early Termination Date" means the month, day and year in which Early

Termination occurs.

 

       1.6    "Effective Date" means January 1, 2004.

 

       1.7    "Normal Retirement Age" means the Executive's 65th birthday.

 

       1.8 "Normal Retirement Date" means the later of the Normal Retirement Age

or Termination of Employment.

 

       1.9 "Plan Year" means a twelve-month period commencing on January 1 and

ending on December 31 of each year. The initial Plan Year shall commence on the

effective date of this Agreement.

 

       1.10   "Termination for Cause" See Section 5.1.

 

       1.11 "Termination of Employment" means that the Executive ceases to be

employed by the Company for any reason whatsoever other than by reason of a

leave of absence, which is approved by the Company. For purposes of this

Agreement, if there is a dispute over the employment status of the Executive or

the date of the Executive's Termination of Employment, the Company shall have

the sole and absolute right to determine the termination date.

 

 

                                       1

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                                    Article 2

                                Lifetime Benefits

 

       2.1 Normal Retirement Benefit. Upon Termination of Employment on or after

the Normal Retirement Age for reasons other than death, the Company shall pay to

the Executive the benefit described in this Section 2.1 in lieu of any other

benefit under this Agreement.

 

     2.1.1  Amount of  Benefit.  The annual  benefit  under this  Section 2.1 is

$60,000  (Sixty  Thousand  Dollars).  The Board of Directors may in its sole and

absolute discretion  unilaterally  increase the annual benefit amount at the end

of each Plan  Year from the date of this  Agreement  to the  Executive's  Normal

Retirement  Date. If the Board of Directors  increase this annual benefit,  then

the  Schedule A attached  hereto  shall also be  recalculated  to  increase  the

benefits under Article 2 of this Agreement.

 

     2.1.2 Payment of Benefit.  The Company shall pay the annual  benefit to the

Executive  in 12 equal  monthly  installments  payable  on the first day of each

month  commencing  with the month following the  Executive's  Normal  Retirement

Date. The Company shall pay this annual benefit to the Executive for 15 years.

 

     2.1.3 Benefit  Increases.  Commencing on the first anniversary of the first

benefit payment,  and continuing on each subsequent  anniversary,  the Company's

Board of Directors, in its sole discretion, may increase the benefit.

 

     2.2 Early Termination  Benefit.  Upon Early Termination,  the Company shall

pay to the  Executive  the benefit  described in this Section 2.2 in lieu of any

other benefit under this Agreement.

 

     2.2.1  Amount of Benefit.  The benefit  under this Section 2.2 is the Early

Termination  amount set forth in Schedule A for the Plan Year ending immediately

prior to the Early Termination Date,  determined by vesting the Executive in the

Accrual Balance.  However, the Executive shall not be entitled to any benefit if

he  voluntarily  terminates  his  employment  prior to the end of the fifth Plan

Year.  Any increase in the annual  benefit  under  Section 2.1 shall require the

recalculation of this benefit as set forth in Schedule A.

 

     2.2.2 Payment of Benefit.  The Company shall pay the annual  benefit amount

to the  Executive in 12 equal monthly  installments  payable on the first day of

each month  commencing with the month following the Normal  Retirement Date. The

Company shall pay this annual benefit to the Executive for 15 years.

 

     2.3  Disability  Benefit.  If the Executive  terminates  employment  due to

Disability  prior  to  Normal  Retirement  Age,  the  Company  shall  pay to the

Executive the benefit described in this Section 2.3 in lieu of any other benefit

under this Agreement.

 

     2.3.1  Amount  of  Benefit.  The  benefit  under  this  Section  2.3 is the

Disability  amount set forth in Schedule A for the Plan Year ending  immediately

prior to the date in which the Termination of Employment  occurs,  determined by

vesting the Executive in the Accrual Balance. Any increase in the annual benefit

under Section 2.1 shall require the  recalculation of this benefit amount as set

forth in Schedule A.

 

                                       2

<PAGE>

 

     2.3.2 Payment of Benefit.  The Company shall pay the annual  benefit amount

to the  Executive in 12 equal monthly  installments  payable on the first day of

each month  commencing with the month following  Termination of Employment.  The

Company shall pay this annual benefit to the Executive for 15 years.

 

       2.4 Change of Control Benefit. Upon a Change of Control, the Company

shall pay to the Executive the benefit described in this Section 2.4 in lieu of

any other benefit under this Agreement.

 

     2.4.1 Amount of Benefit.  The benefit  under this Section 2.4 is the Change

of Control Lump Sum set forth in Schedule A for the Plan Year ending immediately

prior to the date in which  Termination  of  Employment  occurs,  determined  by

vesting the Executive in the Accrual Balance. Any increase in the annual benefit

under Section 2.1 shall require the  recalculation  of this benefit as set forth

in Schedule A.