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 ("Agreement") is made effective March 1, 1995,
between LIBERTY NATIONAL BANK ("Bank"), having a principal place of
business at One Pacific Plaza, 7777 Center Avenue, Huntington Beach,
California 92647, and RICHARD I. GANULIN ("Executive"), whose
residence is 9532 Zetland Drive, Huntington Beach, California 92646.
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 March 1,
1995, (the "Effective Date"), the following terms and conditions
shall apply to Executive's 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 the last day of
February 1997 (the "Term"), subject, however, to prior termination
of this Agreement as permitted by law or 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.
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 Senior Executive Vice President and Credit
Administrator of Bank. In that capacity, Executive is primarily
responsible for the successful acquisition and management of the
Bank's loan portfolio. Executive is also responsible for the
supervision and training of personnel in the following departments:
Real Estate Finance, Business Banking Group, SBA Loan Group, Credit
Adjustment and Centralized Loan Servicing and Credit Analysis.
Executive's duties include, but are not limited to, those duties
specified on Bank's Job Description for the position of Credit
Administrator/Senior Executive Vice President, a copy of which is
attached as Exhibit "A" hereto.
The duties and position of Executive may be changed from time to
time by the Board of Directors of Bank 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, Bank's
Articles of Association and Bylaws and Bank's policies, as modified
from time to time.
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
interest.
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 Eight Thousand Three Hundred Thirty-Three Dollars and Thirty-Three
Cents ($8,333.33) per month during the Term, beginning with the
Effective Date. Said salary shall be paid in equal pro rata, bi-monthly
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. Incentive Program. Executive shall be eligible to
participate in any Bank Incentive programs which may be approved by
the Board of Directors from time to time.
3. Year End Bonuses. In addition, Executive may receive
such additional bonuses, if any, as the Board of Directors, in its
sole discretion, shall determine.
D. EXECUTIVE BENEFITS
1. Vacation and Sick Pay. Executive shall accrue five (5)
weeks vacation during each calendar year of employment. Executive
is encouraged to use all accrued vacation pay each calendar year.
In each calendar year, Executive shall take at least two (2) weeks
of said vacation (the "Mandatory Vacation") consecutively. Unused
vacation, if any, may be carried forward from one year to the next.
The maximum vacation that Executive may have at any time shall be
seven (7) weeks vacation pay, at Executive's current annual vacation
accrual rate. If Executive's earned, but unused vacation pay reached
the maximum, Executive shall not accrue any additional vacation
benefits. If Executive later uses enough vacation pay to fall below
the maximum, Executive will resume earning vacation pay from that day
forward. Executive shall also be entitled to sick pay in accordance
with Bank's Personnel Policy.
2. Automobile. Except as hereafter provided, during the
Term hereunder Bank shall provide Executive with use of a Bank-furnished
automobile (the "Automobile"). 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 the 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.
(a) Bank reserves, in its sole discretion, the right to
determine, at any time, and after thirty (30) days notice, the
Automobile shall no longer be made available to Executive. Upon
notice to Executive that Bank has elected to exercise such
discretion, Executive shall have the option of purchasing the
Automobile at fair market value, but not less than the value as to
which the Automobile is carried on the Bank's books. Alternatively,
Executive shall promptly surrender the Automobile to Bank.
(b) If Bank elects to exercise its discretion to no
longer make the Automobile available to Executive, Executive shall
thereafter receive a monthly automobile allowance in an amount to
be determined by the Board of Directors at such time.
3. Group Medical and Life Insurance Benefits. Bank shall
provide, 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 Bankers' Association Group Insurance Program for an
employee of Executive's salary level; provided, however, Executive's
life insurance benefits shall equal at least Two Hundred Fifty
Thousand Dollars ($250,000), of which Bank shall be named as
beneficiary for Twenty-Five Thousand Dollars ($25,000) 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 ninety-first day of disability. Said insurance
coverage 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 an amount equal to one (1) year of premiums payable by
Bank to obtain the applicable coverage(s) contemplated herein.
4. Financial Planning. During the term of this Agreement,
Bank shall pay to or for the benefit of Executive, an amount not to
exceed One Thousand Dollars ($1,000) annually for the purpose of
personal financial planning services, tax planning and preparation,
investment planning and/or estate planning of Executive.
E. BUSINESS EXPENSE REIMBURSEMENT
1. Business Expense. 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 by the Board of Directors. Executive is an
officer of Bank, appointed by the Board of Directors. Under the
National Bank Act and this Agreement, Executive serves at the
pleasure of the Board of Directors and is subject to dismissal by the
Board at any time, without further obligation or liability to
Executive. In the event Bank elects to dismiss Executive and
terminate this Agreement, upon Executive's execution and delivery to
Bank of an original Separation Agreement and General Release in a
form and with content acceptable to the Board of Directors, Executive
shall be entitled to compensation equal to six (6) months' base
salary, to be paid in six (6) equal monthly installments, beginning
on the first day of the month after termination and continuing
thereafter on the first day of the five (5) subsequent months.
However, if there has been a "Corporate Reorganization" and the Bank
elects to terminate this Agreement pursuant to the provisions hereof,
Executive, if terminated within twelve (12) months of said
"Corporate Reorganization," shall be entitled to compensation equal
to twelve (12) months' base salary, to be paid in six (6) equal
monthly installments, beginning on the first day of the month after
termination and continuing thereafter on the first day of the five
(5) subsequent months. For purposes of this paragraph F.1., a
Corporate Reorganization shall be deemed to have occurred upon the
occurrence of any of the following: (i) the sale of substantially all
of the assets of the Bank; (ii) the sale, exchange or other
disposition, in one transaction, of more than 50% of the Bank's
outstanding common stock; (iii) the termination of the Bank's
business and distribution of its assets in liquidation; (iv) the
merger or consolidation of the Bank in a transaction in which the
Bank's shareholders receive less than 50% of the outstanding shares
of the new or continuing entity.
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) the sale or transfer of substantially all
of the assets of the Bank; (b) the sale, exchange or other
disposition, in one transaction, of more than 50% of the Bank's
outstanding common stock; (c) the merger or consolidation of the Bank
in a transaction in which the Bank's shareholders receive less than
50% of the outstanding shares of the new or continuing entity. In
the case of dissolution and distribution of the Bank's assets, this
Agreement shall be terminated.
4. Termination by Executive. Executive may terminate his
employment with Bank, and this Agreement, upon sixty (60) days'
written notice of termination to Bank.
5. Effect of Termination. In the event of the termination of
Executive or this Agreement prior to the completion of the Term for
any of the reasons specified in this Paragraph F, Bank reserves the
right to relieve Executive of duties at any time after receiving
notice of termination. Executive shall be entitled to the salary
earned by Executive prior to the Effective Date of Termination, as
determined by the Board of Directors, 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 Effective 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 its customers'
financial condition, their financial needs and methods of doing
business. Executive shall not disclose any of the aforesaid trade
secrets,directly or indirectly, or use them in any way, 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, disrupt, damage, impair or interfere with the
business of Bank, whether by way of interfering with or raiding its
employees, disrupting its relationships with customers and their
identities, 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/his 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 provision 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 Chairman of the Board and
Executive.
10. Arbitration.
(a) If any dispute, controversy or claim arises out of
or relates to this contract, the parties agree first to try to settle
the dispute by mediation under the Rules of Judicial Arbitration &
Mediation Services (JAMS) before resorting to arbitration.
Thereafter, any dispute, controversy or claim not resolved by
mediation shall be settled by binding arbitration in accordance with
the Rules of JAMS, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof.
(b) The arbitrator shall determine which is the
prevailing party and shall include in the award that party's actual
attorneys' fees and costs.
(c) As soon as practicable after selection of the
arbitrator, the arbitrator or his or her designated representative
shall determine a reasonable estimate of anticipated fees and costs
of the arbitrator, and render a statement to each party setting forth
that party's pro rata share of said fees and costs. Thereafter, each
party shall, within ten (10) days of receipt of said statement,
deposit said sum with the arbitrator. Failure of any party to make
such a deposit shall result in a forfeiture by the non-depositing
party of the right to prosecute or defend the claim which is the
subject of the arbitration, but shall not otherwise serve to abate,
stay or suspend the arbitration proceedings.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
LIBERTY NATIONAL BANK Date
By /s/ Richard M Wilbur 7-13-95
Chairman of the Board of Directors
RICHARD I. GANULIN Date
By /s/ Richard I. Ganulin 7-12-95