THIS DOCUMENT IS A COPY OF THE EMPLOYMENT AGREEMENT FILED ON MAY
15, 1996 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made on this 20th day of July, 1995, between
LIBERTY NATIONAL BANK ("Bank"), having a principal place of
business at One Pacific Plaza, 7777 Center Avenue, Huntington
Beach, California 92647, and PHILIP S. INGLEE ("Executive"), whose
residence is 3692 Aquarius Drive, Huntington Beach, California
92749.
W I T N E S S E T H
WHEREAS, Bank is a national banking association duly organized,
validly existing, and in good standing under the laws of the
United States of America, with power to own property and carry on
its business as it is now being conducted;
WHEREAS, Bank desires to continue to avail itself of the skill,
knowledge and experience of Executive in order to insure the
successful management of its business; and
WHEREAS, the parties hereto desire to specify the terms of
Executive's continued employment by Bank;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, it is agreed that from and after July 15,
1995 (the "Effective Date"), the following terms and conditions
shall apply to Executive's said employment:
A G R E E M E N T
A. TERM OF EMPLOYMENT
1. Term. Bank hereby employs Executive and Executive
hereby accepts employment with Bank for the period commencing on
the Effective Date and running through and including December 31,
1997 (the "Term"), subject, however, to prior termination of this
Agreement as hereinafter provided. Where used herein, "Term"
shall refer to the entire period of employment of Executive by
Bank hereunder, whether for the period provided above, or whether
terminated earlier as hereinafter provided.
B. DUTIES OF EXECUTIVE
1. Duties. Subject to the powers by law vested in the
Board of Directors of Bank and in Bank's shareholders, Executive
shall perform the duties of President and Chief Executive Officer
of Bank, which includes, but are not limited to those duties
specified on Bank's Job Description for the position of President
and Chief Executive Officer, and includes the following:
(a) Executive shall assume overall responsibility for
planning, directing, coordinating and evaluating all Bank
activities;
(b) Executive shall assume overall responsibility for
formulating and administering Bank-wide policies and procedures
subject only to approval of the Board of Directors, intended to
meet the goals and objectives of Bank;
(c) Executive shall manage Bank's stockholder
relationships;
(d) In light of the Bank's CRA Policy, Executive shall
represent Bank and provide leadership in key community
activities to maintain a responsible citizen stature for Bank;
(e) Executive shall provide guidance of personnel
activities that effect the key management team to ensure the
acquisition and retention of quality Bank officers who will work
together toward the attainment of Bank goals;
(f) To the best of his ability, Executive shall ensure
Bank's adherence to all governmental rules and regulations; and
(g) Executive shall promote a favorable image of Bank as
being business-oriented, aggressive, community oriented,
responsible and service minded.
However, in the event of a "Corporate Reorganization," as
hereinafter defined, the duties of Executive may be changed by the
mutual consent of Executive and the Board of Directors of Bank
from Chief Executive Officer to Chief Operating Officer without
resulting in a rescission of this Agreement. Notwithstanding any
such change from the duties originally assigned and specified
above, or hereafter assigned, the employment of Executive shall be
construed as continuing under this Agreement as modified. During
the Term, Executive shall perform exclusively the services herein
contemplated to be performed by Executive faithfully, diligently
and to the best of Executive's ability, consistent with the
highest standards of the banking industry and in compliance with
all applicable laws and Bank's Articles of Association and Bylaws.
2. Conflicts of Interests. Except as permitted by the
prior written consent of the Board of Directors of Bank, Executive
shall devote Executive's entire productive time, ability and
attention to the business of Bank during the Term and Executive
shall not directly or indirectly render any services of a
business, commercial or professional nature, to any other person,
firm or corporation whether for compensation or otherwise, which
are in conflict with Bank's interests.
C. COMPENSATION
1. Base Salary. For Executive's services hereunder, Bank
shall pay or cause to be paid as base salary to Executive the
amount of Fourteen Thousand Five Hundred Eighty-Three Dollars and
Thirty-Three Cents ($14,583.33) per month during the Term,
beginning with the Effective Date. Said salary shall be payable
in equal installments in conformity with Bank's normal payroll
period. Executive's base salary shall be reviewed by the Board of
Directors during the first calendar quarter of each year and
Executive shall receive such base salary increases, if any, as the
Board of Directors, in its sole discretion, shall determine.
2. Bonus Program. Executive shall be entitled to
participate in the Bank's Pay for Performance bonus program or
such other programs which may be approved by the Board of
Directors from time to time to replace the Bank's Pay for
Performance bonus program.
3. Additional Bonuses. In addition, Executive may
receive such additional bonuses, if any, as the Board of
Directors, in its sole discretion, shall determine.
4. Incentive Compensation.
(a) As an incentive to Executive to maximize shareholder
value and to continue his employment with Bank in the event of a
"Corporate Reorganization," as hereinafter defined, Executive
shall be entitled to incentive compensation equal to 2.4% times
the amount by which the "Value Attributed to Bank" in the
Corporate Reorganization exceeds Eleven Million Five Hundred
Thousand Dollars ($11,500,000), payable within thirty (30) days
after the Corporate Reorganization.
(b) For purposes of this Agreement, a "Corporate
Reorganization" shall be deemed to have occurred: (i) in the
event of a merger or consolidation where Bank is not the
surviving corporation, except where Bank's shareholders exchange
their interests in Bank for more than fifty percent (50%)
control of the surviving corporation; (ii) in the event of a
transfer of all or substantially all of the assets of Bank; or
(iii) in the event of any other corporate reorganization where
there is a change in ownership of more than fifty percent (50%),
except as may result from a transfer of shares to another
corporation in exchange for more than fifty percent (50%)
control of that corporation. Thus, for example, a Corporate
Reorganization will not be deemed to have occurred if one
hundred percent (100%) ownership of Bank is transferred to a
holding company, so long as those individuals who were
shareholders of Bank prior to the transfer own more than fifty
percent (50%) of the holding company after the transfer.
(c) For purposes of this Paragraph C.4, "the Value
Attributed to Bank" shall be determined by reference to the
value assigned pursuant to the Corporate Reorganization;
provided, however, in the event Bank's Common Stock is converted
into another security pursuant to the Corporate Reorganization,
Executive shall be entitled to receive the value so determined,
in cash.
(d) Executive shall be entitled to incentive compensation
pursuant to this Paragraph C.4 even in the event the Corporate
Reorganization occurs after the Term hereof, provided a letter
of intent for the Corporate Reorganization has been executed by
all parties to the Corporate Reorganization during the Term; and
provided further, in the event Executive dies after the signing
of the letter of intent, Executive's spouse, or if his spouse
does not survive him, Executive's estate, shall receive fifty
percent (50%) of the incentive compensation Executive would
have been entitled to receive.
D. EXECUTIVE BENEFITS
1. Vacation and Sick Pay. Executive shall be entitled to
five (5) weeks vacation each calendar year during the Term,
provided, however, that at least two (2) weeks of said vacation
(the "Mandatory Vacation") shall be taken consecutively.
Executive shall not be entitled to vacation pay in lieu of
vacation, and any vacation time not used in excess of the
Mandatory Vacation shall be deemed waived, unless otherwise
approved in advance by the Board of Directors or accumulated in
accordance with Bank's Personnel Policy. Executive shall also be
entitled to sick pay in accordance with Bank's Personnel Policy.
2. Automobile. During the Term hereunder Bank shall
provide Executive with use of a Bank-furnished automobile
consistent with Bank's Personnel Policy. Bank shall pay all
operating expenses of any nature whatsoever with regard to the
automobile, provided that Executive furnishes to the Bank adequate
records and other documentary evidence required by federal and
state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of such expenditures as
deductible expenses of Bank and not as deductible compensation to
Executive. Bank shall procure and maintain in force an automobile
liability insurance policy on such automobile, with coverage
including Executive, for comprehensive with extended coverage,
collision for actual cash value of the vehicle with no more than
Two Hundred Fifty Dollars ($250) deductible, and for bodily
injury, death or property damage, in limits no less than Five
Hundred Thousand Dollars ($500,000) for any one person, Five
Hundred Thousand Dollars ($500,000) for any one accident, and Five
Hundred Thousand Dollars ($500,000) for property damage.
3. Group Medical and Life Insurance Benefits. Bank shall
provide for Executive, at Bank's expense, participation in
medical, accident, disability, and health and life insurance
benefits equivalent to the normal and customary benefits currently
available under the California Banker's Association Group
Insurance Program for an employee of Executive's salary level;
provided, however, Executive's life insurance benefits shall equal
at least Four Hundred Twenty Thousand Dollars ($420,000), of which
Bank shall be named as beneficiary for Fifty Thousand Dollars
($50,000) of the policy proceeds. Upon termination of this
Agreement, at its expiration, or upon a voluntary termination of
Executive in accordance with the terms hereof, Executive shall
retain the conversion rights of the life insurance policy. Should
Executive elect to convert the policy, Bank shall retain no rights
in said policy. Executive's disability insurance coverage shall
provide for annual disability benefits of not less than sixty-six
and two-thirds percent (66 2/3%) of the amount of Executive's
annualized base salary, payable monthly and commencing with the
first month of disability. Said insurance coverages shall be in
existence or shall take effect as of the Effective Date hereof and
shall continue throughout the Term. Bank's liability to Executive
for any breach of this Paragraph D.3 shall be limited to the
amount of premiums payable by Bank to obtain the coverages
contemplated herein.
4. Annual Physical. Bank shall arrange for and pay all
fees, charges and expenses in connection with a mandatory, annual
executive physical of Executive, to be scheduled within thirty
(30) days of Executive's birthday.
5. Country Club Membership. During the Term, Bank shall
pay all monthly costs associated with Executive's membership at
such county club(s) as deemed appropriate by the Board of
Directors of Bank.
6. Financial Planning. During the Term, Bank shall pay
to or for the benefit of Executive up to the sum of One Thousand
Dollars ($1,000.00) per year for the purposes of personal
financial planning services, tax planning and preparation,
investment planning and/or estate planning of Executive.
E. BUSINESS EXPENSE REIMBURSEMENT
1. Business Expenses. 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, which types of
expenditures shall be determined by the Board of Directors,
provided that:
(a) Each such expenditure is of a nature qualifying it as
a proper deduction on the federal and state income tax returns
of Bank as a business expense and not as deductible compensation
to Executive; and
(b) Executive furnishes to Bank adequate records and other
documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the
substantiation of such expenditures as deductible business
expenses of Bank and not as deductible compensation to
Executive.
F. TERMINATION
1. Termination. Bank may terminate this Agreement at any
time without further obligation or liability to Executive, by
action of the Board of Directors:
(a) If Executive fails to perform or habitually neglects
Executive's duties;
(b) If Executive engages in illegal activity which
materially adversely affects Bank's reputation in the community
or which evidences the lack of Executive's fitness or ability to
perform Executive's duties as determined by the Board of
Directors in good faith;
(c) If Executive has committed any act which would cause
termination of coverage under Bank's Bankers Blanket Bond as to
Employee, as distinguished from termination of coverage as to
Bank as a whole;
(d) If Executive is deceased; or
(e) If Executive is found to be physically or mentally
incapable of performing Executive's duties for a period of
ninety (90) days or greater by the Board of Directors, in good
faith. Such termination shall not prejudice any remedy which
Bank may have at law, in equity, or under this Agreement.
Termination pursuant to this Paragraph F.1 shall become
effective two (2) days after notice of termination.
2. Action by Supervisory Authority. This Agreement shall
terminate immediately without further liability or obligation to
Executive or Bank:
(a) If Bank is closed or taken over by the Comptroller of
the Currency or other supervisory authority, including the
Federal Deposit Insurance Corporation; or
(b) If such supervisory authority should exercise its
cease and desist powers to remove Executive from office.
3. Merger or Transfer of Assets. This Agreement shall
not be terminated due to: (a) a merger where Bank is not the
surviving corporation; (b) a consolidation; or (c) a transfer of
all or substantially all of the assets of Bank. Bank shall take
all actions necessary to insure that the surviving or resulting
corporation, if other than Bank, or transferee of Bank's assets is
bound by and shall have the benefit of the provisions of this
Agreement. In the case of dissolution, this Agreement shall be
terminated.
4. Termination Without Cause. Notwithstanding
anything to the contrary herein, this Agreement may be terminated
at any time without cause by Bank upon five (5) days' written
notice of termination to Executive and by Executive upon ninety
(90) days' written notice of termination to Bank. In the event
Bank elects to terminate this Agreement pursuant to this Paragraph
F.4, Executive shall be entitled to compensation equal to twelve
(12) months' base salary, all due and payable within thirty (30)
days after termination; provided, however, in the event Bank
elects to terminate this Agreement pursuant to the provisions
hereof and there has been a "Corporate Reorganization," as defined
herein, Executive shall be entitled to compensation equal to
twenty-four (24) months' base salary, all due and payable within
thirty (30) days after termination. In addition, Bank shall pay
premiums for Executive's major medical, dental, disability and
life insurance coverages for a period of twelve (12) months;
Executive shall be entitled to continue to use the Bank-furnished
vehicle for a period of twelve (12) months; and Bank shall pay to
Executive, within thirty (30) days after termination, an amount
equal to the total automobile expenses paid by Bank for the
previous twelve (12) month period on behalf of Executive. In the
event Executive elects to terminate this Agreement pursuant to the
provisions hereof, Bank and Executive shall not be entitled to any
compensation.
5. Effect of Termination. In the event of the
termination of this Agreement prior to the completion of the Term
for any of the reasons specified in Paragraphs F.1, F.2, or F.4,
Executive shall also be entitled to the salary earned by Executive
prior to the date of termination as provided for in this
Agreement, computed pro rata up to and including that date, and
accrued but unused vacation time (to the extent accumulated in
accordance with Paragraph D.1); but Executive shall be entitled to
no further compensation for services rendered after the date of
termination.
G. GENERAL PROVISIONS
1. Trade Secrets. During the Term, Executive will have
access to and become acquainted with what Executive and Bank
acknowledge are trade secrets, to wit, knowledge or data
concerning Bank, including its operations and business, and the
identity of customers of Bank, including knowledge of their
financial condition, their financial needs, as well as their
methods of doing business. Executive shall not disclose any of
the aforesaid trade secrets, directly or indirectly, or use them
in any way, either during the Term or for a period of one (1) year
after the termination of this Agreement, except as required in the
course of Executive's employment with Bank.
2. Covenant Not to Interfere. Executive hereby covenants
and agrees that he will not now, or for a period of one (1) year
after termination and for any period during which Executive
receives any compensation from Bank, whether pursuant to Paragraph
F.4 or otherwise, Executive shall not disrupt, damage, impair or
interfere with the business of the Bank, whether by way of
interfering with or raiding its employees, disrupting its
relationships with customers and their agents, representatives or
vendors, or otherwise. After termination of employment, Executive
is not, however, restricted from being employed by or engaged in a
competing business.
3. Return of Documents. Executive expressly agrees that
all manuals, documents, files, reports, studies, instruments or
other materials used and/or developed by Executive during his
employment with Bank are solely the property of Bank, and that
Executive has no right, title or interest therein. Upon
termination of Executive's employment, Executive or Executive's
representative shall promptly deliver possession of all of said
property to Bank in good condition.
4. Notices. Any notice, request, demand or other
communication required or permitted hereunder shall be deemed to
be properly given when personally served in writing, when
deposited in the United States mail, postage prepaid, or when
communicated to a public telegraph company for transmittal,
addressed to the party at the address appearing at the beginning
of this Agreement. Either party may change its address by written
notice in accordance with this paragraph.
5. Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their
respective executors, administrators, successors and assigns.
6. Applicable Law. Except to the extent governed by the
Laws of the United States, this Agreement is to be governed by and
construed under the laws of the State of California.
7. Captions and Paragraph Headings. Captions and
paragraph headings used herein are for convenience only and are
not a part of this Agreement and shall not be used in construing
it.
8. Invalid Provisions. Should any provisions of this
Agreement for any reason be declared invalid, void, or
unenforceable by a court of competent jurisdiction, the validity
and binding effect of any remaining portion shall not be affected,
and the remaining portions of this Agreement shall remain in full
force and effect as if this Agreement had been executed with said
provision eliminated.
9. Entire Agreement. This Agreement contains the entire
agreement of the parties. It supersedes any and all other
agreements, either oral or in writing, between the parties hereto
with respect to the employment of Executive by Bank except any
Stock Option Agreements between Executive and Bank. Each party to
this Agreement acknowledges that no representations, inducements,
promises, or agreements, oral or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement, or
promise not contained in this Agreement shall be valid or binding.
This Agreement may not be modified or amended by oral agreement,
but only by an agreement in writing signed by Executive and by
Bank, through a duly authorized officer.
10. Arbitration. In the event that any dispute shall
arise between the parties concerning the provisions of this
Agreement or the performance of any part of the obligations
hereunder, or in the event of an alleged breach of this Agreement
by any of the parties hereto, and the parties are unable to
mutually adjust and settle same, such dispute or disputes shall be
submitted to binding arbitration pursuant to the applicable rules
of the American Arbitration Association, and the decision and
determination of the arbitrators shall be final and conclusive.
The prevailing party shall be entitled to attorneys' fees and
costs.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
LIBERTY NATIONAL BANK
By /s/ Richard M. Wilbur
----------------------
By
/s/ Philip S. Inglee
----------------------
Philip S. Inglee