Exhibit
10.6


 


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 KENNETH J.
COSGROVE (“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 Chairman and
Chief Executive 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 Chairman and
Chief Executive 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.


 


2.             COMPENSATION


 


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


 

















 


(a)           Effective
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
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:


 


(1)           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 Ash Patel during the subject year.


 


(2)           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 Ash Patel 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 the Pacific 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 


 


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the Board), and Employee shall be covered under such insurance to the
same extent as other senior management 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



 


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subparagraph (b), no act, or failure to act, on the Employee’s part
shall be deemed “willful” unless done, or omitted 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.


 


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/ Gene Hatz

  	
   

  
	
   

  	
  Its

  	
  Vice Chairman

  	
   

  
	
   

  	
  2400 East Katella Avenue, Suite 125

  	
   

  
	
   

  	
  Anaheim, California 92806

  	
   

  
	
   

  	
  Facsimile Number:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PREMIER COMMERCIAL BANCORP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Gene Hatz

  	
   

  
	
   

  	
  Its

  	
  Vice Chairman

  	
   

  
	
   

  	
  2400 East Katella Avenue, Suite 125

  
	
   

  	
  Anaheim, California 92806

  	
   

  
	
   

  	
  Facsimile Number:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KENNETH J. COSGROVE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   /s/ Kenneth
  J. Cosgrove

  	
   

  
	
   

  	
  Facsimile Number:

  	
   

  
	
   

  	
   

  
	
   

  	
  For Notice:

  	
  7 Via Pal;ladio

  
	
   

  	
   

  	
  Newport Coast, CA 92657

  
						



 


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