SEVERANCE
COMPENSATION AGREEMENT
This agreement is entered
into the 31st day of December, 2008, by and between Citizens
Business Bank (the “Bank”), and James Dowd, Executive
Vice President of the Bank (the
“Executive”).
Whereas, the Bank’s
Board of Directors has determined that it is appropriate to
reinforce and encourage the continued attention and dedication of
members of the Bank’s Senior Management Committee, including
the Executive, to their assigned duties without distraction in
potentially disturbing circumstances arising from the possibility
of a Change in Control (as defined herein) of CVB Financial Corp.
(the “Company”) or the Bank, a wholly owned subsidiary
of the Company; and
Whereas, this Agreement
sets forth the compensation which the Bank agrees it will pay to
the Executive upon a Change in Control and subsequent termination
or resignation of the Executive’s employment,
Now, therefore, in
consideration of these promises and the mutual covenants and
agreements contained herein and to induce the Executive to remain
employed by the Bank and to continue to exert his best efforts on
behalf of the Bank, the parties agree as follows:
1. Compensation Upon a
Change in Control.
A. In the event that a
Change in Control occurs during the Bank’s employment of the
Executive and
(i) the
Executive’s employment is terminated by the Company or the
Bank or any successor to the Company or the Bank other than for
Cause (as defined below) within one (1) year of the completion
of such Change in Control; or
(ii) the Executive
resigns his employment for any reason within one (1) year of
the completion of such Change in Control;
including, but not limited
to, circumstances in which the Executive is offered a position with
any successor to the Company or the Bank at or around the time of
such Change in Control but decides that he does not wish to accept
such a position and, as a result, the Executive suffers a job loss
(either by termination or resignation) within one (1) year of
the completion of such Change in Control;
the Executive shall
receive an amount equal to two (2) times the Executive’s
annual base compensation for the last calendar year ended
immediately preceding the Change in Control, plus two
(2) times the average annual bonus received for the last two
calendar years ended immediately preceding the Change in Control.
The Bank shall pay such amounts, less applicable withholdings,
employment and payroll taxes (which taxes shall be paid upon
termination or
resignation of
Executive’s employment or at the time payments are made
hereunder, as required by law), in 24 equal monthly installments
(without interest or other adjustment) on the first day of each
month commencing with the first such date that is at least six
(6) months after the date of the Executive’s
“separation from service” (as such term is defined for
purposes of Section 409A of the Internal Revenue Code pursuant
to Treasury Regulations and other guidance promulgated thereunder)
and continuing for 23 successive months thereafter. This payment
schedule is intended to comply with the requirements of
Section 409A of the Internal Revenue Code and shall be
interpreted consistently therewith.
B. The Executive may
designate in writing (only on a form provided by the Bank and
delivered by the Executive to the Bank before Executive’s
death) primary and contingent beneficiaries to receive the balance
of any payment under section 1.A that are not made prior to the
Executive’s death and the proportions in which such
beneficiaries are to receive such payment. The total amount of the
balance of such payment shall be paid to such beneficiaries in a
single unreduced lump sum payment made within ninety (90) days
following the Executive’s death. The Executive may change
beneficiary designations from time to time by completing and
delivering additional such forms to the Bank. The last written
beneficiary designation on such form delivered by the Executive to
the Bank prior to the Executive’s death will control. If the
Executive fails to designate a beneficiary in such manner, or if no
designated beneficiary survives the Executive, then
Executive’s payment balance shall be paid to the
Executive’s estate in an unreduced lump sum payment within
ninety (90) days following the Executive’s
death.
A. Change in Control. For
purposes of this Agreement, a “Change in Control” shall
deemed to have occurred if:
(i) any one person,
or more than one person acting as a group, acquires (or has
acquired during the 12 month period ending on the date of the
most recent acquisition by such person or persons) ownership of
stock of the Company or the Bank possessing more than 50% of the
total voting power of the Company’s or the Bank’s
stock; provided, however, it is expressly acknowledged by the
Executive that this provision shall not be applicable to any person
who is, as of the date of this Agreement, a Director of the Company
or the Bank;
(ii) a majority of
the members of the Company’s Board of Directors is replaced
during any 12 month period by directors whose appointment for
election is not endorsed by a majority of the members of the
Company’s board prior to the date of the appointment or
election;
(iii) a merger or
consolidation where the holders of the Bank’s or the
Company’s voting stock immediately prior to the effective
date of such merger or consolidation own less than 50% of the
voting stock of the entity surviving such merger or
consolidation;
2
(iv) any one person,
or more than one person acting as a group, acquired (or has
acquired during the twelve month period ending on the date of the
most recent acquisition by such person or persons) assets from the
Bank that have a total gross fair market value greater than 50% of
the total gross fair market value of all of the Bank’s assets
immediately before the acquisition or acquisitions; provided,
however, transfer of assets which otherwise would satisfy the
requirements of this subsection (iv) will not be treated as a
Change in Control if the assets are transferred to:
(a) a shareholder of
the Bank (immediately before the asset transfer) in exchange for or
with respect to its stock;
(b) an entity, 50% or
more of the total value or voting power of which is owned, directly
or indirectly, by the Bank;
(c) a person, or more
than one person acting as a group, that owns, directly or
indirectly, 50% or more of the total value or voting power of all
the outstanding stock of the Bank; or
(d) an entity, at
least 50% of the total value or voting power is owned, directly or
indirectly by a person, or more than one person acting as a group,
that owns, directly or indirectly, 50% or more of the total value
or voting power of all the outstanding stock of the
Bank.
Each event comprising a
Change in Control is intended to constitute a “change in
ownership or effective control”, or a “change in the
ownership of a substantial portion of the assets,” of the
Company or the Bank as such terms are defined for purposes of
Section 409A of the Internal Revenue Code and “Change in
Control
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