EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and shall be
effective as of December 4, 2006 between TEMECULA VALLEY BANK, a California
state-chartered bank ("Bank") and DONALD A. PITCHER ("Executive").
R E C I T A L
- - - - - - -
Bank desires that Executive continue to be employed as
Executive Vice President/Chief Financial Officer of Bank and Executive desires
to continue to be so employed pursuant to this Agreement, subject to its terms
and conditions.
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. Executive has been employed by Bank since 1996 without a written
employment agreement and he and Bank wish to continue the employment of
Executive with Bank, for the period ("Term") commencing on the date of this
Agreement ("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/Chief Financial Officer of Bank, 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.
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 $170,000 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 Executive Compensation Committee shall , from time to time,
and at least once each calendar year, consider and recommend to the Board of
Directors for its consideration the grant of such additional "merit" increases,
if any, in, the Base Salary as are determined in accordance with the policies of
the Bank..
3.2. Bonus. For each year within the Term, Executive shall be entitled to
an annual Incentive Bonus, as considered by the Executive Compensation Committee
1
and reviewed and approved by the Board of Directors in accordance with the
policies of the Bank and if the Threshold Test is met. The Threshold Test shall
be deemed to have been met if the latest report of supervisory activity relative
to Bank issued by the Bank's principal bank regulators rate Bank operations no
less than satisfactory.
3.3. Vacation. Executive shall be entitled to vacation leave each year of
the Term in accordance with Bank policy. Executive shall be entitled to vacation
pay in lieu of vacation, in accordance with Bank policy.
3.4. Equipment. Bank shall provide for Executive's use an 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. 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's
participation in the medical and other benefit plans offered to other similarly
titled employees of Bank.
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. Salary Continuation Agreement. Executive's salary continuation plan
that provides for payments of $80,000 per year for 15 years at age 65 (the
"Minimum Amount") shall continue to be maintained by the Bank for Executive's
benefit, or any other plan so long as: (a) such other plan or arrangement
provides for payments according to the salary continuation payment schedule of
Executive's currently in effect salary continuation plan document, as agreed
upon by Bank and Executive; and (b) so long as any such plan document or
arrangement meets or exceeds the Minimum Amount.
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 illegal activity or pleads guilty to or
nolo contendere to, illegal 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;
2
(f) Any bank regulatory agency having jurisdiction, 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 having jurisdiction takes
possession of the property and business of Bank; or
(h) The death of the Executive.
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. 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. If Executive's employment is terminated by
Bank pursuant to Section 4.2 or within six months before or after a Change of
Control, as defined in Section 4.4, subject to any limitations on payments under
applicable federal or state law, Executive shall be entitled to the same amount
as if the termination had been pursuant to Section 4.1 plus: (i) medical and
dental benefits for twelve months after termination; such benefits shall be
comparable to the benefits Executive enjoyed on the date of termination and (ii)
an amount equal to the amount of the annual bonus most recently received by
Executive ("Bonus Amount"); and (iii) a "Severance Amount" equal to twelve
months of Base Salary (as in effect immediately prior to termination). The Bonus
Amount and the Severance Amount shall be payable over twelve months, in equal
installments, in accordance with the Bank's normal payroll practices.
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 the 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.
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 used by it in connection with the conduct of its
business, whether prepared by Executive or otherwise coming into his
possession, shall be the exclusive property of Bank 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, 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
3
way, either during the Term or thereafter, except as required in the
course of Executive's employment with Bank. Executive shall not
solicit any Bank employee or Bank customer to become an employee or
customer of another institution until six months following his
termination of employment.
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 Avenue, Suite A100
Temecula, California 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: Donald A. Pitcher
1828 Queens Way
Vista, CA 92084
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.
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.
4
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. 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.
5.13. Compliance with Section 409A of the Internal Revenue Code ("Code").
(a) Short-Term Deferral Exemption. This Agreement is not intended to
provide for any deferral of compensation subject to Section 409A of
the Code and, accordingly, the benefits provided pursuant to this
Agreement are intended to be paid not later than the later of: (i) the
fifteenth day of the third month following Executive's first taxable
year in which such benefit is no longer subject to a substantial risk
of forfeiture, and (ii) the fifteenth day of the third month following
the first taxable year of the Bank in which such benefit is no longer
subject to a substantial risk of forfeiture, as determined in
accordance with Section 409A of the Code and any Treasury Regulations
and other guidance issued thereunder. The date determined under this
subsection is referred to as the "Short-Term Deferral Date."
(b) Compliance with Code Section 409A. Notwithstanding anything to the
contrary herein, in the event that any benefits provided pursuant to
this Agreement are not actually or constructively received by
Executive on or before the Short-Term Deferral Date, to the extent
such benefit constitutes a deferral of compensation subject to Code
Section 409A, then: (i) subject to clause (ii), such benefit shall be
paid upon Executive's separation from service, in accordance with
Section 4.3, with respect to the Bank and its affiliates within the
meaning of Section 409A of the Code, and (ii) if Executive is a
"specified employee," as defined in Section 409A(a)(2)(B)(i) of the
Code, with respect to the Bank and its affiliates, the first payment
of such benefit shall be paid upon the date which is six months after
the date of Executive's "separation from service" and continue
thereafter for 11 months in accordance with the provisions of Section
4.3. In the event that any benefit provided for in this Agreement is
subject to this subsection, such benefit shall be paid on the sixtieth
day and thereafter following the payment date determined under this
subsection.
5
(c) Reformation to Comply with Code Section 409A. To the extent that
this Agreement or any payment under this Agreement is subject to
Section 409A of the Code, the parties intend that the provisions of
this Agreement meet the applicable requirements of Sections
409A(a)(2), (3) and (4) of the Code and the transitional relief under
Section 409A of the Code (including, without limitation, the
requirements of the transitional relief under A-19(c) of Internal
Revenue Service Notice 2005-1 and the Proposed Regulations under
Section 409A of the Code) and agree that, to the extent such
applicable requirements are not met, this Agreement shall be reformed,
with the written consent of the parties, to comply with such
requirements.
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/ Donald A. Pitcher
----------------------------------------
Donald A. Pitcher
EVP/Chief Financial Officer
6