Exhibit 10.7


 


EMPLOYMENT AGREEMENT


 


THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and
effective as of December 22, 2004, by and between PREMIER COMMERCIAL BANK, N.A,
a national banking association (“Bank”) and PREMIER COMMERCIAL BANCORP, a
California corporation (“Bancorp”), (collectively “Company”) and ASHOKKUMAR
PATEL (“Employee”), with respect to the following facts:


 


A.                                   The
Company desires to be assured of the continued association and services of
Employee in order to take advantage of his experience, knowledge and abilities
in the Company’s business, and is willing to employ Employee.


 


B.                                     The
Employee desires to be so employed, on the terms and conditions set forth in
this Agreement.


 


ACCORDINGLY, on the basis of the representations,
warranties and covenants contained herein, the parties hereto agree as follows:


 


1.                                       EMPLOYMENT


 


1.1           Employment
and Effective Date.  The Company hereby employs Employee as the
President and Chief Operating Officer of Bancorp and Bank, and Employee hereby
accepts such employment, on the terms and conditions set forth below, to
perform during the term of the Agreement such services as are required
hereunder.


 


The effective date of this Agreement shall be the date
of execution by both parties hereof; provide, however, that the term shall
commence October 1, 2004. (See paragraph 3.1, below.)


 


1.2           Duties.  Employee
shall render such management services to Company, and shall perform such duties
and acts, in each case consistent with his position as President and Chief
Operating Officer, as reasonably may be required by the Company’s Board(s) of
Directors (collectively “Board”) in connection with any aspect of the Company’s
business. Employee will have such authority, power, responsibilities and duties
as are inherent in his positions (and the undertakings applicable to his
positions) and necessary to carry out his responsibilities and the duties
required of him hereunder.


 


1.3           Service
to Others.  During the period in which Employee is employed by
Company, Employee shall devote substantially all of his productive time,
ability and attention to, and shall diligently and conscientiously use his best
efforts to further, the Company’s business, and shall not, without the prior
written consent of the Board, perform such services for any person other than
the Company, which would materially interfere with the performance of his
duties hereunder. Notwithstanding the foregoing provisions of this paragraph
1.3, while Employee is employed by Company, he may devote reasonable time to
activities other than those required under this Agreement, including the
supervision of his personal investments, and activities involving professional,
charitable, educational, religious and similar types of organizations, speaking
engagements, membership on the boards of directors of other organizations, and
similar types of activities, to the extent that such other activities do not
inhibit or prohibit the performance of Employee’s duties under this Agreement,
or conflict in any material way with the business or interests of the Company;
provided, however, that Employee shall not serve on the board of any business,
or hold any other position with any business without the consent of the Board.


 


1.4           Place
of Performance.  In connection with his employment with Company, Employee
will be based at the principal executive offices of the Company, located in
Anaheim, California.


 


1.5           Elevation
of Duties in Event of Resignation of Chief Executive Officer.  In
the event that the current Chief Executive Officer of the Company is terminated
or resigns from that position for any reason, Employee shall be appointed Chief
Executive Officer, subject to any necessary regulatory approvals and the
approval of the Board.


 


2.                                       COMPENSATION


 


2.1           Compensation.  As
consideration for the services which Employee renders hereunder, Employee shall
be entitled to the following:


 

















 


(a)           Commencing
October 1, 2004, an annual base salary of $200,000, less income tax and other
applicable withholdings, payable in installments consistent with the payment practices
generally applicable to employees of the Company; provided, however, that
effective as of January 1, 2006, such base salary shall increase to $225,000,
and effective January 1, 2007, such base salary shall increase to $250,000
during the remaining term of this Agreement.


 


(b)           Commencing
on January 1, 2005, annual performance bonuses for each fiscal year of the
Company, payable upon receipt of audited financial statements for the end of
the fiscal year, as follows:


 


(i)            Return on Average Equity Bonus. Employee
shall be entitled to receive 7.5% of the return on average equity (“ROAE”) of
Bancorp on a consolidated basis over a minimum benchmark. The benchmarks shall
be 8% ROAE in 2005; 9% ROAE in 2006; and 10% ROAE in 2007. ROAE shall be
calculated by dividing Bancorp’s adjusted net income by the average shareholder
equity for Bancorp for the year in question (the average shareholder equity for
each quarter during the year divided by four). Adjusted net income shall be
after tax net income for Bancorp prior to any incentive compensation paid or
accrued to Employee or Kenneth Cosgrove during the subject year.


 


(ii)           Return on Average Asset Bonus. Employee
shall be entitled to receive 15% of the return on average assets (“ROAA”) of
Bancorp on a consolidated basis over a minimum benchmark. The benchmarks shall
be 0.80% ROAA in 2005; 0.90% ROAA in 2006; and 1.00% ROAA in 2007. ROAA shall
be calculated by dividing Bancorp’s adjusted net income by the average total
assets for Bancorp for the year in question (the average total assets for each
quarter during the year divided by four). Adjusted net income shall be after
tax net income for Bancorp prior to any incentive compensation paid or accrued
to Employee or Kenneth Cosgrove during the subject year.


 


In 2005 there shall be no limit to the amount of the
annual performance bonus. In 2006 and 2007, the annual performance bonus shall
be limited to 100% of Employee’s base salary for such year.


 


(c)           In
addition to any other benefits agreements specific to Employee, participation
in all benefit plans or programs sponsored by Company, including, without
limitation, participation in any group health, medical reimbursement, dental,
disability, accidental death or dismemberment or life insurance plan (the
costs, including premiums, of which shall by paid exclusively by Company),
vacation and sick leave; provided that the plan and programs shall be
maintained by Company on terms no less favorable to Employee than those plans
and programs in effect on the date hereof.


 


(d)           Reimbursement
of reasonable and documented expenses incurred by Employee from time to time in
the performance of his duties hereunder including but not limited to
entertainment, meals, travel, cellular phone, and expenses associated with
participation on Company’s Board of Directors.


 


(e)           Four
(4) weeks paid vacation per year, and all paid holidays observed by Company. In
scheduling vacations, Employee shall take into consideration the needs and
activities of the Company.


 


(f)            An
automobile allowance of $1,000 per month for a luxury automobile for business
and personal use, together with all reasonable expenses for insurance, fuel,
maintenance, repair and registration.


 


(g)           All
initiation fees and membership dues associated with the Employee’s membership
in a local country club.


 


(h)           The
Company will, to the maximum extent permitted by law, defend, indemnify and
hold harmless Employee and his heirs, estate, executors and administrators
against any costs, losses, claims, suites proceedings, damages or liabilities
to which Employee may become subject which arise out of, are based upon or
relate to Employee’s employment by Company (and any predecessor to Company), or
the Employee’s service as an officer or member of the Board of Directors of
Company (or any predecessor to Company), including without limitation the
advance of legal or other expenses reasonably incurred by Employee in
connection with investigation and defending against any such costs, losses,
claims, suits, proceedings, damages or liabilities. The Company shall maintain
directors and officers liability insurance in commercially reasonable amounts
(as reasonably determined by the Board), and Employee shall be covered under
such insurance to the same extent as other senior management


 


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employees of the
Company.


 


Not withstanding anything to the contrary contained
herein, Employee shall not be entitled to the payment of any severance benefit
to the extent that such payment shall be deemed a “golden parachute payment” as
defined in Section 359.1(f) of the Federal Deposit Insurance Corporation Rules
and Regulations.


 


2.2           Illness.  Subject
to the limitations contained in paragraph 3.3, if Employee shall be unable to
render the services required hereunder on account of personal injuries or
physical or mental illness, he shall continue to receive all payments provided
injuries in this Agreement; provided, however, that any such payments may, at
the sole option of the Company, be reduced by any amount that the Employee
receives for the period covered by such payments as disability compensation
under insurance policies, if any, maintained by the Company or under government
programs, subject to the terms and conditions set forth in that certain Salary
Continuation Agreement by and between Company and Employee dated April 1, 2004.


 


2.3           Key
Man and Disability Insurance.  The Company shall have the right
to obtain and hold a “keyman” life insurance policy on the life of Employee
and/or a disability insurance policy with the Company as the beneficiary of the
policy. Employee agrees to provide any information required for the issuance of
such policy and submit himself to any physical examination required for such
policy.


 


3.                                       TERM
OF EMPLOYMENT AND TERMINATION


 


3.1           Term.  Unless
sooner terminated pursuant to paragraph 3.2 of this Agreement, the term of
employment hereunder shall be for a period commencing January 1, 2005 and
ending on the third anniversary date thereof, January 1, 2008.


 


3.2           At
Will Employment.  Each party hereby acknowledges and agrees that,
except as expressly set forth in paragraph 3.3, (i) the Employee’s employment
under this Agreement is AT WILL and can be terminated at the option of either
the Company or Employee in their sole and absolute discretion, for any or no
reason whatsoever, with or without cause, and (ii) no representations,
warranties or assurances have been made concerning the length of such
employment by the Company.


 


3.3           Duties
Upon Termination.


 


(a)           In
the event that employment under this Agreement is terminated, neither Company
nor Employee shall have any remaining duties or obligations hereunder, except
that (i) Company shall pay to Employee, or his estate, such compensation as is
due pursuant to paragraph 2.1, prorated through the date of termination, (ii)
Employee shall continue to be bound by paragraph 4 of this Agreement, and (iii)
in the event that such employment is terminated (A) by Company for any reason
other than “for cause” (as defined below) or (B) by Employee with “just reason”
(as defined below), the Company shall pay or provide to Employee, or his
estate, (I) a lump sum payment, not later than 5 days after such termination of
employment, equal to six (6) months of Employee’s salary at the time of
termination; (II) a lump sum payment, not later than six (6) months following
termination, equal to six months of Employee’s salary at the time of
termination; (III) a lump sum payment, not later than one year following
termination, equal to six months of Employee’s salary at the time of
termination; and (IV) participation in all benefit plans and programs sponsored
by the Company for executive officers in general, all as set forth in paragraph
2.1(c), and all long-term incentive compensation (including, without
limitation, those equity allocations set forth in paragraph 2.1(h)) shall vest
at the date of such termination of employment.


 


(b)           The
Company shall be deemed to have terminated the employment of Employee “for
cause” if, but only if, such termination (i) shall result solely from Employee’s
continued and willful failure or refusal to substantially perform his duties in
accordance with the terms of this Agreement and shall have been approved by
66.66% of the Board (excluding Employee); provided, however, that the Employee
first shall have received written notice specifying the acts or omissions
alleged to constitute such failure or refusal and such failure or refusal
continues after the Employee shall have had reasonable opportunity (but in no
event less than thirty (30) days) to correct the same; (ii) Employee is subject
to removal proceedings brought by a bank regulatory authority; or (iii)
Employee is formally charged with a felony involving dishonesty or moral
turpitude; provided, however, that in the case of clause (ii) next above, if
the removal proceeding is unsuccessful, or in the case of clause (iii) next
above, if the Employee is not convicted of the felony, Employee shall not be
treated as having been terminated “for cause” and shall be entitled to prompt
payment of all amounts described in paragraph 3.3(a)(iii). For purposes of this
subparagraph (b), no act, or failure to act, on the Employee’s part shall be
deemed “willful” unless done, or omitted


 


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to be done, by the
Employee not in good faith and without reasonable belief that Employee’s action
or omission was in the best interest of the Company.


 


(c)           Employee
shall be deemed to have terminated his employment with “just reason” if such
termination shall result, in whole or in part, from any of the following
events:


 


(i)                                     the
breach by the Company of any material provision of this Agreement;


 


(ii)                                  receipt
by the Employee of a notice from the Company that the Company intends to
terminate employment under this Agreement;


 


(iii)                               the
failure of a successor or assign of the Company’s rights under this Agreement
to assume the Company’s duties hereunder;


 


(iv)                              the
Company directs Employee to perform any unlawful act;


 


(v)                                 the
Employee ceases to be a member of the Board;


 


(vi)                              the
Employee’s duties are materially reduced;


 


(vii)                           a
relocation of Employee’s principal place of employment by more than 25 miles
from 2400 East Katella Avenue, Anaheim, California;


 


(viii)                        liquidation
or dissolution of Bank; or


 


(ix)                                the
death or disability of the Employee.


 


(d)           The
Employee shall not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise. The Company
shall not be entitled to set off against the amounts payable to Employee under
this Agreement any amounts owed to the Company by Employee, any amounts earned
by Employee in other employment after termination of his employment with
Company, or any amounts which might have been earned by Employee in other
employment had he sought such other employment.


 


(e)           Without
limiting any other remedies available to the Company, the payments to be made
under this paragraph 3.3 after termination of Employee shall be subject to the
Employee’s execution of a release agreement satisfactory to the Company and the
Employee’s continued compliance with such agreement. Such release agreement
shall contain, but not be limited to, provisions that (i) Employee shall not
disparage Company; (ii) Employee shall not, for a period of one (1) year
following termination, solicit or attempt to solicit, directly or indirectly
any employee or customer of the Company; and (iii) Employee shall not, directly
or indirectly, be employed by, be connected with, or have an interest of any
kind in, any person or entity owning managing, controlling, operating, or
otherwise participating or assisting in any business that is similar to or in
competition with Company or any of its affiliates, within a 25 mile radius of
any location where the Company or any subsidiary or parent thereof has a place
of business, for period of one year.


 


3.4           Change
of Control.  In the event that within one (1) year of a merger,
consolidation or other reorganization, as a result of which, the current
shareholders of either Bank or Bancorp do not retain at least 50% of the
outstanding shares of the respective entity, Employee is terminated other than “for
cause” (as that term is defined in paragraph 3.3(b)), or is given a different
position, title or reduction in base salary, authority or duties with the Company,
then Company shall be required to pay Employee a sum equal to two times his
current base salary plus the bonus earned for the preceding fiscal year. Said
payment will be in lieu of the payment contemplated by paragraph 3.3(a) of this
Agreement and shall be made within 5 days of such termination. Notwithstanding
the foregoing, benefits shall not be payable under this paragraph to the extent
the benefit would be an excess parachute payment under Section 280G of the
Internal Revenue Code of 1986, as amended.


 


3.5           Resignation.  Employee
shall provide at least ninety days notice of resignation from employment.
Company shall have the authority to waive such notice.


 


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4.                                       TRADE
SECRETS


 


4.1           Trade
Secrets.  Employee shall not, without the prior written consent
of the Board in each instance, disclose or use in any way, during the term of
his employment by the Company and for one (1) year thereafter, except as
required in the course of such employment, any confidential business or
technical information or trade secret of the Company acquired in the course of
such employment, whether or not patentable, copyrightable or otherwise
protected by law, and whether or not conceived of or prepared by him
(collectively, the “Trade Secrets”) including, without limitation, any
information concerning customer lists, products, procedures, operations,
investments, financing, costs, employees, accounting, marketing, salaries,
pricing, profits and plans for future development, the identity, requirements,
preferences, practices and methods of doing business of specific parties with
whom the Company transacts business, and all other information which is related
to any product, service or business of the Company, other than information which
is generally known in the industry in which the Company transacts business or
is acquired from public sources; all of which Trade Secrets are the exclusive
and valuable property of the Company; provided, however, that, following
termination of employment, Employee shall be entitled to retain a copy of any
rolodex or other compilation maintained by him of the names of business
contacts with their addresses, telephone numbers and similar information.


 


4.2           Tangible
Items.  All files, accounts, records, documents, books, forms,
notes, reports, memoranda, studies, compilations of information, correspondence
and all copies, abstracts and summaries of the foregoing, and all other
physical items related to the Company, other than a merely personal item, whether
of a public nature or not, and whether prepared by the Employee or not, are and
shall remain the exclusive property of the Company and shall not be removed
from the premises of the Company, except as required in the course of
employment by the Company, without the prior written consent of the Board in
each instance, and the same shall be promptly returned to the Company by
Employee on the expiration or termination of this employment by the Company or
at any time prior thereto upon the request of the Company.


 


4.3           Injunctive
Relief.  Employee hereby acknowledges and agrees that it would be
difficult to fully compensate the Company for damages resulting from the breach
or threatened breach of this paragraph 4 and, accordingly, that the Company
shall be entitled to seek temporary and injunctive relief, including temporary
restraining orders, preliminary injunctions and permanent injunctions, to
enforce such provisions without the necessity of proving actual damages and
without the necessity of posting any bond or other undertaking in connection
therewith. This provision with respect to injunctive relief shall not, however,
diminish the Company’s right to claim and recover damages.


 


4.4           “Company”.  For
the purposes of this paragraph 4 of the Agreement only, the term “Company”
shall include Premier Commercial Bank, N.A., Premier Commercial Bancorp, their
successors, assigns and nominees, and all individuals, corporations and other
entities that directly, or indirectly through one or more intermediaries,
control or are controlled by or are under common control with any of the
foregoing.


 


5.                                       MISCELLANEOUS


 


5.1           Severable
Provisions.  The provisions of this Agreement are severable, and
if any one or more provision may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions, and any partially
unenforceable provisions to the extent enforceable, shall nevertheless be
binding and enforceable.


 


5.2           Successors
and Assigns.  All of the terms, provisions and obligations of
this Agreement shall inure to the benefit of and shall be binding upon the
parties hereto and their respective heirs, representatives, successors and
assigns. Notwithstanding the foregoing, neither the Agreement nor any rights
hereunder shall be assigned, pledged, hypothecated or otherwise transferred by
Employee without the prior written consent of the Board in each instance.


 


5.3           Governing
Law.  The validity, construction and interpretation of this
Agreement shall be governed in all respects by the laws of the State of
California applicable to contracts made and to be performed within that State.


 


5.4           Headings.  Paragraph
and subparagraph headings are not to be considered part of the Agreement and
are included solely for convenience and reference and in no way define, limit
or describe the scope of the Agreement or the intent of any provisions hereof.


 


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5.5           Entire
Agreement.  The Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, and
supersedes all prior agreements, understanding, negotiations and discussions,
whether oral or written, relating to the subject matter of the Agreement. No
supplement, modification, waiver or termination of the Agreement shall be valid
unless executed by the party to be bound thereby. No waiver of any of the
provisions of the Agreement shall be deemed to or shall constitute a waiver of
any other provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.


 


5.6           Notice.  Any
notice or other communication required or permitted hereunder shall be in
writing and shall be deemed to have been given (i) if personally delivered,
when so delivered, (ii) if mailed, one (1) week after having been placed in the
United States mail, registered or certified, postage prepaid, addressed to the
party to whom it is directed at the address set forth below or (iii) if given
by telecopier, when such notice or other communication is transmitted to the
telecopier number specified below and the appropriate answerback confirmation
is received. Either party may change the address to which such notices are to
be addressed by giving the other party notice in the manner herein set forth.


 


5.7           Attorneys’
Fees.  In the event either party takes legal action to enforce
any of the terms of the Agreement, the unsuccessful party to such action shall
pay the successful party to such action shall pay the successful party’s
expenses, including attorneys’ fees, incurred in such action.


 


5.8           Third
Parties.  Nothing in the Agreement, expressed or implied, is
intended to confer upon any person other than the Company or the Employee any
rights or remedies under or by reason of the Agreement.


 


5.9           Arbitration.  Any
controversy arising out of or relating to this Agreement or the transactions
contemplated hereby shall be referred to arbitration before the American
Arbitration Association strictly in accordance with the terms of this Agreement
and the substantive law of the State of California. The board of arbitrators
shall convene at a place mutually acceptable to the parties in the State of
California and, if the place of arbitration cannot be agreed upon, arbitration
shall be conducted in Anaheim. The parties hereto agree to accept the decision
of the board of arbitrators, and judgment upon any award rendered hereunder may
be entered in any court having jurisdiction thereof. Neither party shall
institute a proceeding hereunder until that party has furnished to the other
party, by registered mail, at least thirty (30) days’ prior written notice of
its intent to do so.


 


5.10         Construction.  If
any part of this Agreement is deemed to be unclear or ambiguous, it shall be
construed as if it were drafted jointly by the parties. Each party hereto
acknowledges that no party was in a superior bargaining position regarding the
substantive terms of this Agreement.


 


5.11         Consent
to Jurisdiction.  Subject to paragraph 5.9, each party hereto, to
the fullest extent it may effectively do so under applicable law, irrevocably
(i) submits to the exclusive jurisdiction of any court of the State of
California or the United States of America sitting the City of Anaheim over any
suit, action or proceeding arising out of or relating to this Agreement, (ii) waives
and agrees not to assert, by way of motion, as a defense or otherwise, any
claim that it is not subjection to the jurisdiction of any such court, any
objection that it may now or hereafter have to the establishment of the venue
of any such suit, action or proceeding brought in any such court and any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum, (iii) agrees that a judgment in any such
suit, action or proceeding brought in any such court shall be conclusive and
binding upon such party and may be enforced in the courts of the United States
of America or the State of California (or any other courts to the jurisdiction
of which such party is or may be subject) by a suit upon such judgment and (iv) consents
to process being served in any such suit, action or proceeding by mailing a
copy thereof by registered or certified air mail, postage prepaid, return
receipt requested, to the address of such party specified in or designated
pursuant to paragraph 5.6. Each party agrees that such service (i) shall
be deemed in every respect effective service of process upon such party in any
such suit, action or proceeding and (ii) shall, to the fullest extent
permitted by law, be taken and held to be valid personal service upon and
personal delivery to such party.


 


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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the date and year first set forth above.


 


 


	
   

  	
  PREMIER COMMERCIAL BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kenneth J. Cosgrove

  
	
   

  	
  Its

  	
   CEO/Chairman

  
	
   

  	
  2400 East Katella Avenue, Suite 125

  
	
   

  	
  Anaheim, California 92806

  
	
   

  	
  Facsimile Number:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Gene Hatz

  
	
   

  	
  Its

  	
   Vice Chairman

  
	
   

  	
  2400 East Katella Avenue, Suite 125

  
	
   

  	
  Anaheim, California 92806

  
	
   

  	
  Facsimile Number:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PREMIER COMMERCIAL BANCORP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kenneth J. Cosgrove

  
	
   

  	
  Its

  	
   CEO/Chairman

  
	
   

  	
  2400 East Katella Avenue, Suite 125

  
	
   

  	
  Anaheim, California 92806

  
	
   

  	
  Facsimile Number:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Gene
  Hatz

  
	
   

  	
  Its

  	
   Vice Chairman

  
	
   

  	
  2400 East Katella Avenue, Suite 125

  
	
   

  	
  Anaheim, California 92806

  
	
   

  	
  Facsimile Number:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ASHOKKUMAR PATEL

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ Ashokkumar Patel

  
	
   

  	
  Facsimile Number:

  
	
   

  	
   

  
	
   

  	
  14035 Sweetgrass Lane

  
	
   

  	
  Chino Hills, CA 91709

  
				



 


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