EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made this 1st day of July, 2012, by and between CHINO
COMMERCIAL BANK, N.A. (the "Bank"), having its main office at 14245 Pipeline
Avenue, Chino, California 91710, and DANN H. BOWMAN ("Executive"), whose
residence address is 5481 Arena Way, Fontana, California 92336.

 

WHEREAS, the Bank is a national banking association, with power to own property
and carry on its business as it is now being conducted;

 

WHEREAS, the Bank desires 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 and conditions of
Executive's employment by the Bank;

 

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
and intending to be legally bound, it is agreed that from and after July 1, 2012
(the "Effective Date"), the following terms and conditions shall apply to
Executive's said employment:

 

A. TERM OF EMPLOYMENT

 

1. Term. The Bank hereby employs Executive and Executive hereby accepts
employment with the Bank for the period of three (3) years (the "Term")
commencing with the Effective Date, 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 The Bank hereunder, whether
for the period provided above, or whether terminated earlier as hereinafter
provided.

 

B. DUTIES OF EXECUTIVE

 

1. Duties. Executive shall perform the duties of President and Chief Executive
Officer of the Bank, subject to the powers by law vested in the Board of
Directors of the Bank and in the Bank's shareholders. 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 and best standards of the banking industry and in
compliance with all applicable laws and the Bank's Articles of Association and
Bylaws.

 

2. Conflicts of Interest. Except as permitted by the prior written consent of
the Board of Directors of the Bank, Executive shall devote Executive's entire
productive time, ability and attention to the business of the Bank during the
Term and Executive shall not directly or indirectly render any services to any
other person, firm or corporation, whether for compensation or otherwise, which
are in conflict with the Bank's interests. Notwithstanding the foregoing,
Executive may make investments of a passive nature in any business or venture,
provided however, that such business or venture is neither in competition,
directly or indirectly, in any manner with the Bank nor a customer of the Bank.

 

 

 

 

C.   COMPENSATION

 

1. Salary. For Executive's services hereunder, the Bank shall pay or cause to be
paid as annual base salary to Executive: One-Hundred, Seventy-Six Thousand,
Dollars ($176,000) for the first year of the Term, commencing July 1, 2012 and
continuing through June 30, 2013; One-Hundred, Eighty-Five Thousand, Dollars
($185,000) for the second year of the Term, commencing July 1, 2013 and
continuing through June 30, 2014; and One-Hundred, Ninety-Four Thousand, Dollars
($194,000) for the year of the Term, commencing July 1, 2014 and continuing
through June 30, 2015. Said salary shall be payable in equal installments in
conformity with the Bank's normal payroll practice.

 

2. Bonuses.

 

(a) Incentive Bonus Compensation Executive shall receive annual incentive bonus
compensation equal to five percent (5.0%) of the net income (after Federal and
State income taxes) of the Bank for each fiscal year during the Term. For
purposes of this Paragraph C.2(a), net income shall be determined based upon the
Bank's audited annual financial statements and such bonus shall be payable to
Executive upon certification of such financial statements by the Bank's
independent accountants.

 

(b ) Discretionary Bonuses. In addition, Executive may receive such bonuses, if
any, as the Board of Directors in its sole discretion shall determine.

 

D. EXECUTIVE BENEFITS

 

1. Vacation. Executive shall be entitled to up to four (4) weeks of vacation for
each remaining year of the Term, which vacation shall be taken at such times as
are agreed upon by Executive and the Board of Directors; provided, however, that
during each year of the Term, Executive is required to, and shall take at least
five (5) days of said vacation (the "Mandatory Vacation"), which shall be taken
consecutively. Accrual for unused vacation time shall be determined in
accordance with the Bank's Personnel Policy as if in effect from time to time.

 

2. Automobile. Commencing on the Effective Date and during the entire Term
hereunder, the Bank shall pay to Executive an automobile allowance of Six
Hundred Dollars ($600) per month or furnish said Executive with a Bank-owned
automobile.

 

3. Group Medical and Life Insurance Benefits. The Bank, at its expense, shall
provide for Executive medical, dental, accident and health, and income
continuation insurance benefits (including disability) benefits in accordance
with the Bank's Personnel Policy as in effect from time to time, except that in
any event, Executive shall be provided with term life insurance benefits of at
least $500,000. Said coverage shall be in existence or shall take effect as of
the Effective Date hereof and shall continue throughout the Term. Executive
shall be the individual owner of such life insurance policy with all associated
benefits. The Bank's liability to Executive for any breach of this Paragraph D.3
shall be limited to the amount of premiums payable by the Bank to obtain the
coverage contemplated herein. Said coverage shall be in existence or shall take
effect as of the Effective Date and shall continue throughout the Term.

 

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4. .Stock Option. No additional stock options are included in this contract
renewal over and above any options which may have been previously awarded.

 

E. REIMBURSEMENT FOR BUSINESS EXPENSES

 

Executive shall be entitled to reimbursement by the Bank for ordinary and
necessary business expenses (the general nature of which shall be established by
the Board of Directors) incurred by Executive in the performance of Executive's
duties when acting for the Bank during the Term, provided that:

 

1. Each such expenditure is of a nature qualifying it as a proper deduction on
the Federal and State income tax returns of the Bank as a business expense and
not as compensation to Executive; and

 

2. 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 business expenses of the Bank and not as compensation to Executive.

 

F. TERMINATION

 

1. Termination for Cause. The Bank may terminate this agreement at any time
without further obligation or liability to Executive, by action of the Board of
Directors, if Executive: (a) fails to perform or habitually neglects the duties
which he is required to perform hereunder; (b) engages in illegal activity which
materially adversely affects the 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) engages in the
use or possession of any controlled substance or in chronic abuse of alcoholic
beverages; (d) exhibits personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform his stated duties, or willful violation of any law, rule, regulation
(other than traffic violations or similar offenses) or final cease-and-desist
order; or (e) commits any act which would cause termination of coverage under
the Bank's Bankers' Blanket Bond as to Executive (as distinguished from
termination of coverage as to the Bank as a whole). Such termination shall not
prejudice any remedy which the Bank may have at law, in equity, or under this
Agreement. The Bank may also terminate this Agreement without further obligation
or liability to Executive in the event that the Bank is not licensed to do
business, does not receive a Certificate of Authority to commence the business
of banking from the Office of the Comptroller of the Currency or fails to obtain
insurance of accounts from the Federal Deposit Insurance Corporation for any
reason. Termination pursuant to this Paragraph F.1 shall become effective
immediately upon notice to Executive of termination from the Bank.

 

2. Death Or Disability. In the event of Executive's death, or if Executive is
found to be physically or mentally disabled (as hereinafter defined) as
determined by the Board of Directors in good faith, this Agreement shall
terminate without any further liability or obligation to Executive.

 

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For purposes of this Agreement only, "physically or mentally disabled" shall be
defined as that term is defined in the Bank's disability policy as in effect
from time to time; if for any reason no such policy is in effect, then "
physically or mentally disabled" shall be defined as Executive being unable to
fully perform under this Agreement for a continuous period of One-hundred,
twenty (120) days or a cumulative period of One-hundred, Eighty (180) days in
any one calendar year. If there should be a dispute between the Bank and
Executive as to Executive's physical or mental disability for purposes of this
Agreement, the question shall be settled by the opinion of an impartial
reputable physician or psychiatrist agreed upon by the parties or their
representatives, or if the parties cannot agree within ten (10) days after a
request for designation of such Party, then by a physician or psychiatrist
designated by the San Bernardino County Medical Association. The certification
of such physician or psychiatrist as to the question in dispute shall be final
and binding upon the parties hereto.

 

3. Action by Supervisory Authority. If the Bank is closed or taken over by the
Comptroller of the Currency or other supervisory authority, including the
Federal Deposit Insurance Corporation, or if such supervisory authority should
exercise its enforcement powers to remove Executive from office or suggest such
removal, the Bank may immediately terminate this Agreement without further
liability or obligation to Executive.

 

4. Merger or Corporate Dissolution. In the event of a "Terminating Event" as
defined below, this Agreement shall not be terminated, in which case the
surviving or resulting corporation, the transferee of the Bank's assets, or the
Bank shall be bound by and shall have the benefit of the provisions of this
agreement. In the event Executive's employment is actually or constructively
terminated in connection with or following such a Terminating Event, Executive
shall be entitled to the same severance benefits as contemplated by Paragraph F
.5 below. For purposes of this Paragraph F .4, constructive termination shall
include: (i) any decrease in salary or benefits below those in effect for
Executive immediately prior to the Terminating Event, (ii) any demotion to a
position below that of an executive officer, or (iii) any relocation of
Executive more than 30 miles from his principal place of business immediately
prior to the Terminating Event. Notwithstanding any provision to the contrary in
this Paragraph F.4, no severance benefits shall be payable to Executive
hereunder if Executive's employment is terminated for any of the reasons
delineated in Paragraph F.1 hereof.

 

For purposes of this Paragraph F.4, a "Terminating Event" shall include: (i) a
reorganization, merger, or consolidation of the Bank with one or more
corporations as a result of which the Bank will not be the surviving
corporation, (ii) a sale of substantially all the assets and property of the
Bank to another person, corporation or entity, or (iii) a "change in control,"
i.e., any other single transaction involving the Bank (such as a tender offer)
where there is a change in ownership of at least twenty-five percent (25%) of
the Bank's outstanding shares, unless such change in ownership results from (i)
a transfer of shares to another corporation in exchange for at least eighty
percent (80%) control of that corporation, (ii) the issuance of additional
shares of stock by the Bank in a secondary stock offering, private placement or
similar transaction, or (iii) any acquisition in which the Bank will be the
surviving entity.

 

In addition, and notwithstanding any of the foregoing, if the Bank is not the
surviving entity in any transaction contemplated above and said transaction is
in any manner the result of the then poor financial condition of the Bank,
however caused, including, but not limited to, lack of profitability,
deterioration of asset condition or defalcation, or such action is the result of
any suggestion or order of the Comptroller or the FDIC, then, in such event,
this Agreement shall terminate immediately upon the consummation of such
transaction and Executive agrees that all rights, duties and obligations and
benefits herein conferred shall thereupon terminate and that Executive shall be
entitled to no further compensation or benefits from the Bank other than as
required by applicable law.

 

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5. Termination At Will. Pursuant to the provisions of 12 U.S.C. Section 24 and
notwithstanding any other provision to the contrary contained herein, it is
agreed by the parties hereto that the Bank may at any time elect to terminate
this Agreement and Executive's employment by the Bank for any reason by action
of its Board of Directors. Any termination under this Paragraph F.5 shall be
effective immediately upon the Bank's giving of notice to Executive, and all
benefits provided by the Bank hereunder to Executive shall thereupon cease,
other than the severance benefits contemplated herein, and the insurance
benefits provided to Executive hereunder which shall be continued by the Bank
for a period not to exceed Ninety (90) days after termination. Notwithstanding
the foregoing, it is agreed that in the event of such termination, Executive
shall be entitled to receive a lump sum payment equal to the lesser of eighteen
(18) months' severance pay or the balance due under the Agreement, but in no
event less than six (6) months salary. If Executive is entitled to receive
payments pursuant to this Paragraph F.5 and the event causing such payment
occurs within sixty (60) days of the Bank's fiscal year end, the Bank's Board of
Directors, or a duly authorized committee thereof, shall consider an additional
payment to Executive based on Executive's pro rata share of a mandatory bonus,
if any, for such fiscal year. Such action shall not be construed as a breach of
this Agreement, and the payment of the benefits stated above shall constitute
full and complete performance by the Bank of its obligations hereunder.

 

6. Effect of Termination. In the event of the termination of this Agreement
prior to the completion of the Term specified herein, Executive shall 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;
but Executive shall be entitled to no further compensation for services rendered
after the date of termination, except as provided in Paragraphs FA and F.5 above
in the event that if Executive's employment is terminated pursuant to either
Paragraph F.4 or F.5 hereof.

 

G.   GENERAL PROVISIONS

 

1. Trade Secrets. During the Term, Executive will have access to and become
acquainted with what Executive and the Bank acknowledge are trade secrets, to
wit, knowledge or data concerning the Bank, including its operations and
business, and the identity of customers of the 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 anyway, either during the Term or for a
period of one year thereafter, except as required in the course of Executive's
employment with the Bank.

 

2. Indemnification. To the maximum extent and when permitted by applicable law,
the Articles of Association, Bylaws and/or resolutions of the Bank in effect
from time to time (except as limited below), the Bank shall indemnify Executive
against liability or loss arising out of Executive's actual or asserted
misfeasance or non-feasance in the performance of Executive's duties or out of
any actual or asserted wrongful act against, or by, the Bank including but not
limited to judgments, fines, settlements and expenses incurred in the defense of
actions, proceedings and appeals there from. However, the Bank shall have no
duty to indemnify Executive with respect to any claim, issue or matter as to
which Executive has been adjudged to be liable to the Bank in the performance of
his duties, unless and only to the extent that the court in which such action
was brought shall determine upon application that, in view of all of the
circumstances of the case, Executive is fairly and reasonably entitled to
indemnification for the expenses which such court shall determine. The Bank
shall endeavor to maintain Directors and Officers Liability Insurance to
indemnify and insure the Bank and Executive from and against the aforesaid
liabilities, and unless otherwise required by law, the Bank shall have no duty
to indemnify Executive in any amount which exceeds the Bank's insurance
coverage. The provisions of this Paragraph G.2 shall apply to the estate,
executor, administrator, heirs, legatees or devisees of Executive.

 

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3. Arbitration. In the event of a breach or dispute pertaining to or arising
from this Agreement, the parties hereto agree that any such dispute between the
parties arising out of any section of this Agreement except Paragraphs G.1 and
G.2 will, on the written notice of one party served on the other, be submitted
to binding arbitration governed by the laws, rules, regulations and ordinances
applicable in San Bernardino County, State of California. In such event, each of
the parties will appoint one person as an arbitrator to hear and determine the
dispute and if they are unable to agree, then the two arbitrators so chosen will
select a third impartial arbitrator whose decision will be final and conclusive
upon the parties. A material or anticipatory breach of any section of this
Agreement shall not release either party from the obligations of this Paragraph
G.5.

 

4. Notices. Any notice, request, demand or other communication required or
permitted hereunder shall be in writing and shall be deemed to be duly given
upon personal delivery (professional courier acceptable); three (3) calendar
days following deposit in the United States mail by either certified or
registered mail, with return receipt requested, postage prepaid; or upon receipt
of written confirmation of transmission if delivered by facsimile, 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
G.6. (In the case of the Bank's address, no notice need be given of the change
to its permanent address of 14245 Pipeline Avenue, Chino, California 91710).

 

5 .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.

 

6. 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.

 

7. 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.

 

8. 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 the
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 the
Bank and Executive.

 

19. Receipt of Agreement. Executive hereby acknowledges that he has read this
Agreement in its entirety and does hereby acknowledge receipt of a fully
executed copy thereof. A fully executed copy shall be an original for all
purposes, and is a duplicate original.

 

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20. Review by Counsel. Executive represents and warrants to the Bank that he has
had this Agreement reviewed by independent legal counsel of his choice, or if he
has not, that he has had the opportunity to do so, and hereby waives any claim,
objection or defense on the grounds that this Agreement has not been reviewed by
legal counsel of his choice.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.

 

  CHINO COMMERCIAL BANK, N.A.         By /s/ Thomas A. Woodbury, D.O.     Thomas
A. Woodbury, D.O.,     Chairman of Compensation Committee         By /s/ Bernard
Wolfswinkel     Bernard Wolfswinkel.     Chairman         By: /s/ Dann H.
Bowman.     Dann H. Bowman     President and Chief Executive Officer
("Executive")

 

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