Exhibit 10.39
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and effective
as of February 10, 2006 between TEMECULA VALLEY BANK, a California
state-chartered banking corporation ("Bank") and FRANK BASIRICO, JR.
("Executive").
R E C I T A L
Bank desires that Executive be employed as Executive Vice
President and Chief Administrative Officer of Bank and Executive desires to be
so employed subject to the terms and conditions herein stated.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
parties agree as follows:
1. TERM OF EMPLOYMENT.
1.1. Term. Bank hereby agrees to employ Executive, and Executive hereby
accepts employment with Bank, for the period ("Term") commencing February 23,
2006 ("Commencement Date"), and terminating on such date and upon such terms as
provided for in Section 4 hereof.
2. DUTIES OF EXECUTIVE.
2.1. Duties. Executive shall perform the duties of Executive Vice
President and Chief Administrative Officer, as assigned by Bank's Chief
Executive Officer, subject to the powers by law vested in the Board of Directors
of Bank and in Bank's Shareholder. 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.
2.2. Exclusivity. Executive shall devote substantially all of
Executive's 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 of Bank, or the Executive Committee
thereof. Notwithstanding the foregoing, Executive may (i) make investments of a
passive nature in any business or venture; and (ii) serve in any capacity in
civic, charitable or social organizations, provided, however, that such
investments or services shall not be in competition, directly or indirectly, in
any manner with Bank.
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3. COMPENSATION AND BENEFITS.
3.1. Salary. For Executive's services hereunder, Bank shall pay, or
cause to be paid, as annual gross base salary, to Executive $250,000 during the
Term ("Base Salary"), beginning with the Commencement Date, payable in equal
installments in accordance with Bank's normal payroll periods as in effect from
time to time. The Board of Directors shall also, from time to time, 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.
3.2. Bonus. For each year 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:
(i) Bank's regular outside independent loan reviewer gives a favorable review of
the overall loan quality of Bank; and (ii) the latest report of supervisory
activity relative to Bank issued by Bank's principal bank regulator rates Bank
operations no less than satisfactory. The Incentive Bonus shall equal 1% of
Bank's Pre-Tax Profit. Pre-Tax Profit shall equal the consolidated net income of
Temecula Valley Bancorp Inc. ("Company") after the payment of all bonus amounts
paid by Bank but before the payment of taxes. The Incentive Bonus shall be
payable in January of the year following completion of the fiscal year on which
it is based, or as soon thereafter as is practicable after Bank's or its
parent's outside accountants have delivered their report on Bank's and its
parent's condition and results of operations. Notwithstanding the foregoing,
Executive shall be entitled to an Incentive Bonus for the portion of the Term in
2006, payable in January 2007 or as soon thereafter as is practicable after
Bank's or its parent's outside accountants have delivered their report on Bank's
and its parent's condition and results of operations, prorated as follows:
Pre-Tax Profit for fiscal year 2006 x 1%, divided by 12, multiplied by the
number of full calendar months in 2006 within the Term.
3.3. Vacation. Executive shall be entitled to 20 days of vacation leave
each year of the Term accruing in accordance with Bank policy. Vacation time
shall not accumulate but at the end of each year of the Term, Executive shall be
entitled to vacation pay in lieu of vacation.
3.4. Equipment. Bank shall provide for Executive's use a luxury
automobile, the selection of which shall be within the discretion of the Chief
Executive Officer. Bank shall pay all the expenses (including, but not limited
to, maintenance, fuel, insurance, registration) related to such automobile
during the Term. Executive shall be responsible for taxes in connection with any
non-cash compensation relative to personal use of the automobile. Bank shall
also provide Executive with a cellular phone for Executive's reasonable use in
the performance of his duties hereunder. Bank shall pay all reasonable expenses
in connection with the business use of such cellular phone.
3.5. Group Medical and Other Benefits. Bank shall provide for Executive
participation in the medical, dental, vision, life insurance program, long-term
disability coverage, voluntary life insurance programs and other benefit plans
offered to other similarly titled employees of Bank, commencing on the first day
of the month following Executive's start date, except that Executive will not
become eligible to participate in Bank's 401(k) Plan until the first day of the
month following the 90th day after the Commencement Date.
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3.6. Sick Leave. Executive shall be entitled to sick leave in
accordance with Bank's personnel policy. Accrued sick leave may not be carried
over from prior periods and Executive shall not be entitled to be paid in lieu
thereof.
3.7. Stock Options. As soon as practicable and when legally permissible
after the Commencement Date, Executive shall receive an incentive stock option
under a plan ("Plan") maintained by the Company which will entitle Executive,
upon vesting, to purchase up to an aggregate of 20,000 shares of Company's
common stock. The vesting schedule shall provide for vesting of one-third of the
options at the end of each of the next three successive 12 month periods of the
Term, subject to all applicable provisions of the Plan and the stock option
agreement to be entered into by Executive and Company.
3.8. Salary Deferment Program. Bank will use its best efforts to afford
Executive, as soon as practicable after the Commencement Date, a salary
deferment plan that is acceptable to Bank and Executive.
3.9. Salary Continuation Plan. Subject to Executive's successful
passing of any required physical examination and insurability, as determined by
Bank and Bank's insurance provider, Executive shall receive a salary
continuation plan that provides for an annual $100,000 benefit when Executive
reaches the age of 65 for up to 15 years, and a fully vesting death benefit for
the benefit of Executive's family, subject to specific terms and conditions to
be agreed upon by Executive and Bank.
3.10. Additional Compensation. Executive shall be entitled to receive
the lesser of: (i) $100,000 or (ii) the difference between (a) the exercise
prices of CVB Financial Corporation ("CVBF") options to purchase common stock
issued to Executive and scheduled to become exercisable in March and June 2006
("Vesting Options") and (b) the closing price of CVBF common stock on the
Commencement Date, as quoted on NASDAQ.com, multiplied by the number of Vesting
Options, only in the instance where the exercise price of the Vesting Options is
less than the applicable closing price (the "Additional Compensation"). Each
1/12th of the Additional Compensation shall be payable on the first day of each
month, beginning March 1, 2006 and continuing for 11 successive months
thereafter.
3.11. Designation of Beneficiaries. Executive may designate in writing
(only on a form requested by Executive and provided by Bank and delivered by
Executive to Bank before Executive's death or permanent disability, as
determined by the Board of Directors) primary and contingent beneficiaries to
receive the balance of any payments under Section 3.10, 4.3(b) or 4.3(c) that
are not made prior to Executive's death or permanent disability, as determined
by the Board of Directors, and the proportions in which such beneficiaries are
to receive such payments. 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 Executive's death or permanent disability, as
determined by the Board of Directors. Executive may change beneficiary
designations from time to time by completing and delivering additional such
forms to Bank. The last written beneficiary designation delivered by Executive
to Bank prior to Executive's death will control. If Executive fails to designate
a beneficiary in such manner, or if no designated beneficiary survives
Executive, then Executive's payment balance shall be paid to Executive's estate
in an unreduced lump sum payment within ninety (90) days following Executive's
death.
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4. TERMINATION.
4.1. Termination With Cause. Except as otherwise provided herein, this
Agreement may be terminated by Bank, at Bank's option with notice to Executive,
upon the occurrence of any of the following events:
(a) A material breach by Executive of any of the express terms
or provisions of this Agreement;
(b) Executive is charged with criminal activity or pleads
guilty to or nolo contendere to, criminal activity;
(c) Executive has committed any illegal or dishonest act which
would cause termination of coverage under Bank's Bankers Blanket Bond as to
Executive or termination of coverage as to Bank as a whole;
(d) Executive fails to perform or neglects Executive's duties
or commits an act of malfeasance or misfeasance in connection therewith;
(e) Executive becomes permanently disabled, as determined in
good faith by the Board of Directors;
(f) Any regulatory agency having jurisdiction over Bank or
Company requests Executive's dismissal or removal, issues a notice of suspension
or removal, finally removes, or suspends Executive from office;
(g) Any supervisory or regulatory authority takes possession
of the property and business of Bank; or
(h) The death of Executive.
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4.2. Termination Without Cause. During the Term, subject to provisions
specifically intended to survive termination, this Agreement may be terminated
by either party without cause upon written notice to the other.
4.3. Compensation Upon Termination.
(a) If Executive's employment is terminated by Bank pursuant
to Section 4.1 above, or by Executive pursuant to Section 4.2, Executive shall
then only be entitled to receive his Base Salary through the effective date of
such termination except as otherwise specifically provided in Section 3.11.
(b) If Executive's employment is terminated: (i) by Bank or
any successor to Bank within six months before the completion of a Change of
Control or within one year after completion of a Change of Control, as defined
in Section 4.4, and Section 4.1 is not applicable to such termination; or (ii)
by Executive for a Good Reason (as defined in this Section 4.3) within six
months before the completion of a Change of Control or within one year after
completion of a Change of Control, subject to any limitations on payments under
applicable federal or state law, Executive shall be entitled to the lesser of
$1,000,000 or: (x) the same amount as if the termination had been pursuant to
Section 4.1; and (y) an amount equal to Executive's annual Base Salary (as in
effect immediately prior to termination) multiplied by two; and (z) the average
of the Incentive Bonus received by Executive for the last two fiscal years ended
immediately prior to the Change of Control multiplied by two (and if less than
two full fiscal years have lapsed since the Commencement Date, then the amount
shall be the amount of Incentive Bonus actually paid for the most recent full
fiscal year prior to termination multiplied by two) ((x) plus (y) plus (z) is
the ("CoC Severance Payment"). The CoC Severance Payment shall be payable
(without interest or other adjustment) over 120 months, in equal installments,
on the first day of each month commencing with the first such day of the first
full month after the effective date of the termination of Executive's employment
and continuing for 119 successive months thereafter.
(c) If Executive's employment is terminated by Bank or any
successor to Bank pursuant to Section 4.2, and Section 4.3(b)(i) is not
applicable to such termination, subject to limitations on payments under
applicable federal or state law, Executive shall be entitled to: (i) the same
amount as if the termination had been pursuant to Section 4.1; and (ii) an
amount equal to Executive's annual Base Salary (as in effect immediately prior
to termination) ((i) plus (ii) is the "Other Severance Payment") . The Other
Severance Payment shall be payable (without interest or other adjustment) over
12 months, in equal installments, on the first day of each month.
For purposes of this Agreement, "Good Reason" means, except in the case
of death or retirement (i) Executive's then current level of annual Base Salary
is reduced; or (ii) there is any reduction in the employee benefit coverage
provided to Executive (excluding the Incentive Bonus) from the coverage levels
in effect immediately prior to the Change of Control, unless Company or Bank, or
any successor thereto, provide substantially equivalent employee benefits to
Executive, provided, however, that termination by Executive for Good Reason must
be made by Executive in good faith.
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4.4. Vesting of Options Upon Change of Control. Executive's option
agreements covering Company stock options to be issued to him, from time to
time, shall provide that in the event of a Change of Control (as defined below),
all options shall vest immediately prior to any Change of Control. "Change of
Control" means: (a) more than 50% of Company's voting stock is transferred to a
person or entity that is not, prior to the transaction, a Bank "Affiliate," as
that term is defined in 12 U.S.C. Section 371c or (b) a merger, consolidation or
other transaction or series of transactions pursuant to which Company's
shareholders prior to such transaction or series of transactions own less than
50% of the voting control of the resulting entity after such transaction.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
as a result of any transaction whose primary purpose is to change the
jurisdiction of incorporation of Company or Bank.
4.5. Other Employment. In the event of termination of Executive under
Section 4.2 and payment by Bank of the Severance Payment under Section 4.3,
Executive agrees not to seek or accept employment in the banking industry for
performance of services within a 25 mile radius of every location Bank maintains
an office for a period of one year from the effective date of termination. If
Executive chooses to accept such employment, he shall not be entitled to the
Severance Payment and to the extent paid, the amount shall be repaid by
Executive immediately to Bank.
5. GENERAL PROVISIONS.
5.1. Ownership of Books and Records; Confidentiality.
(a) All records or copies thereof of the accounts of
customers, and any other records and books relating in any manner whatsoever to
Bank customers, and all other files, books and records and other materials owned
by Bank or Company or used by them in connection with the conduct of Bank or
Company business, whether prepared by Executive or otherwise coming into his
possession, shall be the exclusive property of Bank and/or Company regardless of
who actually prepared the original material, book or record. All such books and
records and other materials, together with all copies thereof, shall be
immediately returned to Bank by Executive on any termination of his employment;
and
(b) 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 and Company, including its operations and
business, and the identity of Bank customers, 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
thereafter, except as required in the course of Executive's employment with
Bank.
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5.2. Assignment and Modification. This Agreement, and the rights and
duties hereunder, may not be assigned by Executive.
5.3. Notices. All notices required or permitted hereunder shall be in
writing and shall be delivered in person, sent by courier, by facsimile or
certified or registered mail, return receipt requested, postage prepaid as
follows:
to Bank: Temecula Valley Bank
27710 Jefferson Drive, Suite A100
Temecula, CA 92590
Attn: Stephen H. Wacknitz, President/
Chief Executive Officer
Facsimile: (951) 694-9194
with a copy to: Stephanie E. Allen, Esq.
McAndrews, Allen & Matson
1100 South Coast Highway, Suite 308
Laguna Beach, CA 92651
Facsimile: (949) 497-0291
to Executive: Frank Basirico, Jr.
_____________________________________
_____________________________________
or to such other party or address as either of the parties may designate in a
written notice served upon the other party in the manner provided herein. All
notices required or permitted hereunder shall be deemed duly given and received
on the date received if delivered in person, by courier or by facsimile, or on
the third day next succeeding the date of mailing if sent by certified or
registered mail, postage prepaid.
5.4. Successors. This Agreement shall be binding upon, and shall inure
to the benefit of, the successors and assigns of the parties.
5.5. Entire Agreement. Except as provided herein, this Agreement
constitutes the entire agreement between the parties, and all prior
negotiations, representations, or agreements between the parties, whether oral
or written, are merged into this Agreement. This Agreement may only be modified
by an agreement in writing executed by both of the parties hereto.
5.6. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of California.
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5.7. Executed Counterparts. This Agreement may be executed in one or
more counterparts, all of which together shall constitute a single agreement and
each of which shall be an original for all purposes.
5.8. Section Headings. The various section headings are inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement or any section hereof.
5.9. Calendar Days/Close of Business. Unless the context so requires,
all periods terminating on a given day, period of days or date shall terminate
on the close of business on that day or date and references to "days" shall
refer to calendar days.
5.10. Severability. In the event that any of the provisions, or
portions thereof, of this Agreement are held to be unenforceable or invalid by
any court of competent jurisdiction, the validity and enforceability of the
remaining provisions or portions hereof, shall not be affected thereby.
5.11. Attorneys' Fees. In the event that any party shall bring an
action or arbitration in connection with the performance, breach or
interpretation hereof, then the prevailing party in such action as determined by
the court or other body having jurisdiction shall be entitled to recover from
the losing party in such action, as determined by the court or other body having
jurisdiction, all reasonable costs and expenses of litigation or arbitration,
including reasonable attorneys' fees, court costs, costs of investigation and
other costs reasonably related to such proceeding, in such amounts as may be
determined in the discretion of the court or other body having jurisdiction.
5.12. Limitation on Payments. This Agreement is made expressly subject
to the provisions of law codified at 12 U.S.C. 1828(k) and applicable
regulations which regulate and prohibit certain forms of benefits to Executive.
Executive acknowledges that he understands these sections of law and that Bank's
obligations to make payments hereunder are expressly relieved if such payments
violate these sections of law or regulation or any successors thereto.
5.13. Rules of Construction. The parties hereby agree that the normal
rule of construction, which requires the court to resolve any ambiguities
against the drafting party, shall not apply in interpreting this Agreement. This
Agreement has been reviewed by each party and counsel for each party and shall
be construed and interpreted according to the ordinary meaning of the words used
so as to fairly accomplish the purposes and intentions of all parties hereto.
Each provision of this Agreement shall be interpreted in a manner to be
effective and valid under applicable law, but if any provision shall be
prohibited or ruled invalid under applicable law, the validity, legality and
enforceability of the remaining provisions shall not, except as otherwise
required by law, be affected or impaired as a result of such prohibition or
ruling.
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IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.
Bank: TEMECULA VALLEY BANK
By: /s/ Stephen H. Wacknitz
---------------------------------------
Stephen H. Wacknitz
President and Chief Executive Officer
Executive: /s/ Frank Basirico, Jr.
---------------------------------------
Frank Basirico, Jr.
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