Document:

Exhibit 10.16

 

RESOLUTIONS FOR THE NOVEMBER 25, 2004

MEETING OF THE ORGANIZING BOARD OF

1ST CENTURY BANK, NATIONAL
ASSOCIATION

 

I.                                         CUPP EMPLOYMENT AGREEMENT

 

WHEREAS, Richard S.
Cupp has been engaged by the Organizers and the Organizing Board as a consultant
during the application and organizational phases of the Bank, pursuant to which
(i) consulting fees of $7,000 per month have been paid since February 1,
2003 and will continue to be paid until the Bank opens for business; and (ii) from
February 1, 2003, until the Bank opens for business, the Bank will accrue,
for payment after the Bank opens for business, the additional amount of $8,833
per month in payment for these consulting services; and

 

WHEREAS, the
Organizing Board desires to ratify and affirm the terms of the consulting
agreement in effect with Richard S. Cupp; and

 

WHEREAS, it is in
the best interests of the Bank that it enter into an employment agreement with
Richard S. Cupp as the prospective President and Chief Executive Officer of the
Bank to commence when the Bank opens for business; and

 

WHEREAS, there has
been presented to the Organizing Board a proposed form of Employment Agreement
in the form attached hereto as Exhibit “A” (the “Cupp Agreement”) which
the Board desires to adopt, and which shall be subject to confirmation and
ratification by the Board of Directors of the Bank when elected by the
shareholders, and to required regulatory review and non-objection;

 

NOW, THEREFORE, BE IT HEREBY RESOLVED, that
the terms and conditions of the consulting agreement in effect with Richard S.
Cupp are hereby ratified and affirmed.

 

BE IT FURTHER RESOLVED, that
the Cupp Agreement in substantially the form attached hereto as Exhibit “A”
is approved and adopted, subject to confirmation and ratification by the Board
of Directors of the Bank when elected by the shareholders, and to required
regulatory review and non-objection; and

 

BE IT FURTHER RESOLVED, that
the prospective officers of the Bank are authorized and directed to execute the
Cupp Agreement for and on behalf of the Bank, and to do and perform any and all
other acts necessary or desirable to carry out the terms of the Cupp Agreement.

 

BE IT FURTHER RESOLVED, that
the Secretary or Assistant Secretary of the Bank is directed to insert a duly
executed copy of the Cupp agreement in the minute books of the Bank.Exhibit 10.17

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(the “Agreement”) is made and entered into as of this 25th
day of November, 2003, by and between 1st Century Bank, National Association
(In Organization) (the “Bank”), on one hand, and Richard S. Cupp (the “Executive”),
on the other hand.

 

WHEREAS, the parties hereto
wish to enter into an employment agreement to employ the Executive as the
President and Chief Executive Officer of the Bank and to set forth certain
additional agreements between the Executive and the Bank.

 

NOW, THEREFORE, in
consideration of the mutual covenants and representations contained herein, the
parties hereto agree as follows:

 

1.             Term.  The Bank will employ the Executive, and the
Executive will serve the Bank, under the terms of this Agreement for an initial
term of three (3) years (the “Initial Term”), commencing on the
date the Bank opens for business (the “Effective Date”).  However, if the Bank does not open for
business on or before December 31, 2004, this Agreement shall
automatically terminate and be of no effect. The Initial Term of this Agreement
shall automatically be extended for an additional one (1) year period  unless, not later than sixty (60) days prior to the
expiration of the Initial Term, either party hereto shall have given notice to
the other that the Initial Term shall not be so extended. Notwithstanding the
foregoing, the Executive’s employment hereunder may be earlier terminated, as
provided in Section 4 hereof. The term of this Agreement, as in effect
from time to time in accordance with the foregoing, shall be referred to herein
as the “Term”. The period of time between the Effective Date and the
termination of the Executive’s employment hereunder shall be referred to herein
as the “Employment Period.”

 

2.                                       Employment.

 

(a)           Positions and Reporting. The Bank
hereby employs the Executive for the Employment Period as its President and
Chief Executive Officer. During the Employment Period, the Executive shall
report directly to the Board of Directors of the Bank (the “Board”), or a
committee of the Board specifically authorized to direct the Executive,
composed of at least three (3) members of the Board.

 

(b)           Authority and Duties. The Executive
shall exercise such authority, perform such executive duties and functions and
discharge such responsibilities as are reasonably associated with the Executive’s
position as President and Chief Executive Officer, commensurate with the
authority vested in the Executive pursuant to this Agreement and consistent
with the bylaws of the Bank.  During the
Employment Period, the Executive shall devote his full business time, skill and
efforts to the business of the Bank. Notwithstanding the foregoing, the
Executive may (i) make and manage personal business investments of his choice
and serve in any capacity with any civic, educational or charitable
organization, or any trade association, without seeking or obtaining approval
by the Board, provided such activities and service do not materially 

 

 

interfere or conflict with the performance
of his duties hereunder and (ii) with the approval of the Board serve on
the boards of directors of other corporations 
By entering into this Agreement the Board specifically acknowledges that
the activities described in Exhibit A, attached and incorporated by this
reference, are permitted by the foregoing language.

 

The Bank shall make
Executive a director of the Bank, and any subsidiaries of the Bank
contemporaneously with the execution of this Agreement. As the Bank desires
that Executive continue to serve as a director, the Bank shall use its
reasonable best efforts to cause the Executive to be elected a director at any
meeting of the Board or of the shareholders held for the purpose of electing
directors during the Term, and shall use its reasonable best efforts to insure
that the Executive remains a director of each subsidiary, including such
subsidiaries as may from time to time come into existence after the date
hereof.  The Executive shall not be entitled
during the Employment Period to receive any additional compensation (excluding
the payment or reimbursement of any expenses incurred by the Executive) for his
services as a director of any of the above entities.

 

3.                                       Compensation
and Benefits.

 

(a)           Salary. During the
Employment Period, the Bank shall pay to the Executive, as compensation for the
performance of his duties and obligations under this Agreement, a base salary
at the rate of $190,000 per annum, payable in arrears not less frequently than
monthly in accordance with the normal payroll practices of the Bank (the “Base
Salary”). Such Base Salary shall be subject to review in the eleventh (11th)
month after the Effective Date, and at each anniversary of the Effective Date
thereafter, for possible increase by the Board based on factors including, but
not limited to, market conditions and performance of Executive and the Bank, in
its sole discretion, but shall in no event be decreased from the levels set
forth above during the Initial Term, or from its then-existing level during the
Employment Period.

 

(b)           Annual Bonus.  Effective on the earlier of eighteen (18)
months after the Effective Date, or the day after the end of the first quarter
in which the Bank has a quarterly net profit, the Executive shall be entitled
to receive annual bonus amounts in the form of cash awards based upon the
satisfaction of performance criteria (the “Performance Goals”) that will be
established by the Board in its discretion and upon negotiation with the
Executive at the beginning of each year, subject to the approval of the
Board.  Increased levels of achievement
of the agreed upon Performance Goals will correlate to increased levels of
annual bonus.  In the first year of the
Term the target bonus available shall be equal to 20% to 50% of the Executive’s
base annual salary then in effect, as determined in the sole discretion of the
Board.  After the completion of the first
year of the Term, the target bonus available shall be equal to 40% to 60% of
the Executive’s base annual salary then in effect, as determined in the sole
discretion of the Board.   Performance
Goals will include goals consistent with the Bank’s business plan for the year,
as established by the Bank’s management and subject to the review and approval
of the Board. The final determinations as to the actual corporate and
individual performance against the Performance Goals shall be made by the Board
in its sole good faith discretion. 
Executive’s bonus, if any, shall be paid in one lump sum to Executive at
such time as other executive bonuses are paid. 
The Board retains the discretion to determine whether a pro-rata bonus
is appropriate if 

 

 

the Executive is terminated or
leaves the employ of the Bank prior to the annual determination of bonuses.

 

(c)           Other Benefits. During the
Employment Period, the Executive shall receive such life insurance, disability
insurance and health insurance benefits, holiday, vacation and sick pay
benefits and other benefits which the Bank extends, as a matter of policy, to
all of its executive employees, except as otherwise provided herein, and shall
be entitled to participate in all deferred compensation and other incentive
plans of the Bank, on the same basis as other like employees of the Bank.
Without limiting the generality of the foregoing, the Executive shall be
entitled to four (4) weeks of vacation during the first year of the
Employment Period, and five (5) weeks of vacation during each subsequent
year of the Employment Period, which shall be scheduled in the Executive’s
discretion, subject to and taking into account applicable banking laws and
regulations and business needs. Unused vacation may be accrued up to a maximum
of six (6) weeks of unused vacation, at which time the Executive shall
cease to accrue unused vacation until used.

 

(d)           Business Expenses. During the Employment
Period, the Bank shall promptly reimburse the Executive for all documented reasonable business expenses
incurred by the Executive in the performance of his duties under this
Agreement, in accordance with the Bank’s employee manual or policies adopted by
the Board from time to time.

 

(e)           Car Allowance. The Bank shall provide the
Executive with a monthly automobile allowance of $750.00 per month during the
Employment Period.

 

(f)            Club Membership. The Executive and the Bank agree
that the Executive’s participation in the membership of a country club or
similar club will assist in promoting the Bank’s business.  For this reason, the Bank shall be
responsible for the monthly dues related to such membership, as well as those
entertainment costs that are business related (without regard, however, to
whether such costs are deductible for income tax purposes), provided that
appropriate documentation is provided regarding the entertainment costs.

 

(g)           Stock Options

 

(i)            On the date of the first meeting
of the Board following the date the Bank opens for business, pursuant to the
terms of the 2004 1st Century Bank Stock Option Plan (the “Plan”), which shall
be in the form of Exhibit B attached hereto (subject to such changes as
the parties shall agree to after good faith negotiations during the thirty-day
period immediately following the execution hereof or as may be required by
regulatory authorities), and subject to subsequent shareholder approval of the
Plan, the Bank shall grant to the Executive an incentive stock option (the “Stock
Option Agreement”) to purchase up to that number of shares of the Bank’s
common stock which is equal to 5% of the number of shares of common stock of
the Bank’s duly issued, fully paid and outstanding shares as of the date the
Bank opens for business. The exercise price shall be $10.00, equal to the
offering price for such shares in the Bank’s initial stock offering, which the
parties agree shall be deemed to be the fair market value of such shares at the
date of grant.  The Stock Option
Agreement shall have a term of 10 years. The options granted under the Stock
Option Agreement shall be exercisable as follows, subject to the Plan: (i) 25%
of the options shall vest and become exercisable on the first anniversary of
the Effective 

 

 

Date; and (ii) another
25% of the options shall vest and become exercisable on each of the second,
third and fourth anniversary of the Effective Date.

 

4.                                       Termination of Employment.

 

(a)           Termination for Cause. The Board may terminate
the Executive’s employment hereunder for “Cause” or without “Cause.” For
purposes of this Agreement termination for “Cause” shall mean termination
because of Executive’s personal dishonesty, incompetence, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) or final cease-and-desist
order or material breach of any provision of this Agreement.  For purposes of this Agreement, no act, or
the failure to act, on Executive’s part shall be considered “willful” unless
done, or omitted to be done, not in good faith and without reasonable belief
that the action or omission was in the best interests of the Bank.

 

Termination under this Paragraph shall not prejudice any
remedy that the Bank may have at law, in equity, or under this Agreement.

 

(b)           Termination for Good Reason. The
Executive shall have the right at any time to terminate his employment with the
Bank for any reason.  For purposes of
this Agreement, and subject to the Bank’s opportunity to cure as provided in Section 4(c) hereof,
the Executive shall have “Good Reason” to terminate his employment
hereunder if such termination shall be the result of:

 

(i)            a material diminution during the Employment Period
in the Executive’s title, duties or responsibilities as set forth in Section 2
hereof;

 

(ii)           a material breach by the
Bank of the compensation and benefits provisions set forth in Section 3
hereof;

 

(iii)          a material breach by the
Bank of any material terms of this Agreement; or

 

(iv)          the relocation
of the Executive’s principal place of employment to any location more than 50
miles from the Bank’s headquarters at the Effective Date.

 

(c)           Notice and Opportunity to Cure.
Notwithstanding the foregoing, it shall be a condition precedent to the Bank’s
right to terminate the Executive’s employment for “Cause” pursuant to Paragraph
4(a), and the Executive’s right to terminate his employment for “Good Reason”
that (1) the party seeking the termination shall first have given the
other party written notice stating with specificity the reason for the
termination (“breach”) and (2) if such breach is susceptible of
cure or remedy, a period of 30 days from and after the giving of such notice to
cure the breach.  If the breach cannot
reasonably be cured or remedied within 30 days, the period for remedy or cure
shall be extended for a reasonable time (not to exceed 30 days), provided the 

 

 

breaching
party has made and continues to make a diligent effort to effect such remedy or
cure.  With respect to terminations
because of a willful violation of any law, rule or regulation or final
cease-and-desist order, or because of the Executive’s personal dishonest or
breach of fiduciary duty involving personal profit, the Bank will not be
required to provide a cure period. 
Additionally,  Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to him a notice of termination which shall include a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the members of the Board at a meeting of the Board called and held for that
purpose (which may be telephonic) finding that, in the good faith opinion of
the Board, Executive was guilty of conduct justifying termination for Cause and
specifying the particulars thereof in detail.

 

(d)           Termination Upon Death or Permanent Disability.  The Employment Period shall
automatically be terminated by the death of the Executive. The Employment
Period may be terminated by the Bank if the Executive shall be subject to a “permanent
disability” as such term is defined in the disability insurance provided by the
Bank, or if such insurance is not provided by the Bank, the term shall mean
that the Executive has been unable to perform his duties under this Agreement
for a period of at least 90 consecutive days or 120 days in any 180 day period,
and it is not reasonable to believe that he would ever be able to resume his duties
on a full time basis.  If the Employment
Period is terminated by reason of the permanent disability of the Executive,
the Bank shall give 30-days’ advance written notice to that effect to the
Executive.

 

(e)           Termination Upon a Change of Control.  In the event this Agreement or Executive’s
employment is terminated without Cause by the Bank or for Good Reason by the
Executive within twelve (12) months after the occurrence of a Change of
Control, (as defined below), the Executive shall be entitled to the severance
pay as described in Paragraph 5(a) below.

 

(f)            Definition of Change in
Control.  A “Change in Control”
shall be deemed to have taken place if:

 

(i)            there shall be consummated
any consolidation or merger of the Bank in which the Bank is not the continuing
or surviving corporation or pursuant to which shares of the Bank’s capital
stock are converted into cash, securities or other property (other than a
consolidation or merger of the Bank in which the holders of the Bank’s voting
stock immediately prior to the consolidation or merger shall, upon consummation
of the consolidation or merger, own at least 50% of the voting stock) or any
sale, lease, exchange or other transfer (in one transaction or a series of
transactions contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of the Bank; or

 

(ii)           any person (as such term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)) shall, after the date
hereof, become the beneficial owner (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of securities of the Bank
representing 40% or more of the voting power of all of the then outstanding
securities of the Bank having the right under ordinary circumstances to vote in
an election of the Board (including, without limitation, any securities of the
Bank that any such person has the right to acquire pursuant to any agreement,
or upon 

 

 

exercise of conversion rights,
warrants or options, or otherwise, shall be deemed beneficially owned by such
person); or

 

(iii)          individuals who as of the
Effective Date constitute the entire Board and any new directors whose election
by the Bank’s shareholders, or whose nomination for election by the Board,
shall have been approved by a vote of at least a majority of the directors then
in office who either were directors at the date hereof or whose election or
nomination for election shall have been so approved shall cease for any reason
to constitute a majority of the members of the Board.

 

Notwithstanding the foregoing, a Change in Control shall not
be deemed to have occurred in the event the Bank forms a holding company as a
result of which the holders of the Bank’s outstanding voting securities immediately
prior to the transaction hold, in approximately the same relative proportions
as they held prior to the transaction, substantially all of the outstanding
voting securities of a holding company owning all of the Bank’s outstanding
voting securities after the completion of the transaction.

 

5.                                       Consequences of
Termination. The following are the severance pay and benefits
to which the Executive is entitled upon termination of employment in all
positions with the Bank, and such payments and benefits shall be the exclusive
payments and benefits to which the Executive is entitled upon such
termination.  Except in the case of
termination of employment by the Bank with Cause, or due to death, the
post-termination payments and benefits shall only be provided if the Executive
first enters into a form of release agreement reasonably satisfactory to the
Bank releasing both parties from any and all claims, known and unknown, related
to the Executive’s employment with the Bank.

 

(a)           Termination Without Cause or
for Good Reason. In the event of termination of the Executive’s
employment hereunder (i) by the Bank without “Cause” (other than upon
death or permanent disability), (ii) by the Executive for “Good Reason,”
or (iii) a termination by the Bank without Cause or the Executive for Good
Reason within 12 months following a Change in Control, the Executive shall be
entitled to the following severance pay and benefits:

 

(i)            Severance Pay –
a lump sum amount equal to one (1) year of the Executive’s annual Base
Salary.  However, in the event Executive’s
employment is terminated  by the Bank
without Cause or the Executive terminates his employment for Good Reason within
12 months following a Change in Control, the Executive shall be entitled to
receive two (2) times the highest annual cash compensation amount paid to
the Executive by the Bank within the three years preceding the Change in
Control;

 

(ii)           Benefits
Continuation – continuation for 24 months (the “Severance Period”) of
coverage under the group medical care, disability and life insurance benefit
plans or arrangements in which the Executive is participating at the time of
termination, with the Bank continuing to pay its share of premiums and
associated costs as if Executive continued in the employ of the Bank; provided,
however, that the Bank’s obligation to provide such coverages shall be
terminated if the Executive obtains comparable substitute coverage from another
employer at any time during the Severance Period.  Executive agrees to advise the Bank 

 

 

immediately if such comparable
substitute coverage is obtained from another employer.  The Executive shall be entitled, at the
expiration of the Severance Period, to elect continued coverage under the Bank’s
medical benefit plans pursuant to the terms of COBRA.

 

(b)           Termination
Upon Disability.  In the
event of termination of the Executive’s employment hereunder by the Bank on
account of permanent disability, the Executive shall be entitled to the
following severance pay and benefits.

 

(i)            Severance Pay –
severance payments in the form of continuation of the Executive’s Base Salary
as in effect immediately prior to such termination for a period of 6 months
following the first date of disability; and

 

(ii)           Benefits
Continuation – the same benefits as provided in Section 5(a)(ii) above,
to be provided during the Employment Period while the Executive is suffering
from a permanent disability and for a period of 6 months following the
effective date of termination of employment by reason of permanent disability.

 

(c)           Termination
Upon Death.  In the
event of termination of the Executive’s employment hereunder on account of the
Executive’s death, the Bank shall pay to the Executive’s beneficiary or
beneficiaries or his estate, as the case may be, the accrued Base Salary and
accrued and unused vacation earned through the date of death.  Such payment shall be made no later than
sixty (60) days after the date of death. In addition, Executive’s
beneficiary(ies) or his estate shall be entitled to the payment of benefits
pursuant to any life insurance policy of the Executive, as provided for in Section 3(c) above.
The Executive’s beneficiary or estate shall not be required to remit to the
Bank any payments received pursuant to any life insurance policy purchased
pursuant to Section 3(c) above.

 

(d)           Accrued Rights.  Notwithstanding the foregoing provisions of
this Section 5, in the event of termination of the Executive’s employment
hereunder for any reason, the Executive shall be entitled to payment of any
unpaid portion of his Base Salary through the effective date of termination,
payment of any unreimbursed business expenses incurred pursuant to Section 3(d) above,
and payment of any accrued but unpaid benefits solely in accordance with the
terms of any incentive bonus or employee benefit plan or program of the Bank.

 

(e)           Termination for Cause or Due to End of the Term.  In the event the employment of the
Executive is terminated by the Bank for Cause, the Bank shall provide the
Executive only salary and vacation earned through the date of termination.  No severance payment or benefit shall be
provided in such instance. In the event the employment of the Executive is
terminated as a result of the expiration of the Term, the Executive shall be entitled
to no severance payment or benefit of any kind notwithstanding any provision to
the contrary in the Bank’s employee manual or policies then in effect, except
as to matters such as COBRA coverage required by law without reference to such
manual or policies.

 

(f)            Nonassignability.  Neither the Executive nor any other person or
entity shall have any power or right to transfer, assign, anticipate,
hypothecate, mortgage, commute, modify, or otherwise encumber in advance any of
the rights or benefits of the Executive under this Section 5, nor shall
any of said rights or benefits be subject to seizure for the payment of any 

 

 

debts,
judgments, alimony or separate maintenance, owed by the Executive or any other
person or entity, or be transferable by operation of law in the event of
bankruptcy, insolvency or otherwise.  The
terms of this Section 5(f) shall not affect the interpretation of any
provision of this Agreement.

 

(g)           Regulatory Restrictions.  The parties understand and agree that at the
time any payment would otherwise be made or benefit provided under Sections 5
or 18, depending on the facts and circumstances existing at such time, the
satisfaction of such obligations by the Bank may be deemed by a regulatory
authority to be illegal, an unsafe and unsound practice, or for some other reason
not properly due or payable by the Bank. 
Among other things, the regulations at 12 C.F.R. Part 30, Appendix
A and at 12 C.F.R. Part 359 promulgated pursuant to Sections 18(k) and
39(a) of the Federal Deposit Insurance Act, respectively, or similar regulations
or regulatory action following similar principles may apply at such time. The
parties understand, acknowledge and agree that, notwithstanding any other
provision of this Agreement, the Bank shall not be obligated to make any
payment or provide any benefit under Sections 5 or 18 where an appropriate
regulatory authority disapproves or does not acquiesce as required, if
required, and the regulatory authority’s disapproval or non-acquiescence is
documented in a writing from the regulatory authority, a copy of which is
actually provided by the regulatory authority or the Bank to the Executive.

 

(h)           Conditions to Severance Benefits. The Bank
shall have the right to seek repayment of the severance payments and benefits
or to terminate payments or benefits provided by this Section 5 in the
event that the Executive fails to honor, in accordance with their terms, the
provisions of Sections 6 or 9 hereof. 
For purposes only of this Section, Executive shall be treated as having
failed to honor the provisions of Section 6 or Section 9 hereof only
upon the vote of two-thirds of the Board following notice by the Bank to the
Executive of the alleged failure, an opportunity for the Executive to cure the
alleged failure for a period of 30 days from the date of such notice and the
Executive’s opportunity to be heard on the issue by the Board.

 

(i)            Suspension and Removal Orders.  If Executive is suspended and/or temporarily
prohibited from participating in the conduct of the Bank’s affairs by notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. Section 1818(e)(3) and (g)(1)), the Bank’s
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. 
If the charges in the notice are dismissed, the Bank may in its
discretion:  (i) pay Executive all
or part of the compensation withheld while its obligations under this Agreement
were suspended; and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.  If
Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank’s affairs by an order issued under Section 8(e)(3) or
8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. Section 1818(e)(3) or
(g)(1)), all obligations of the Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of the parties shall not be
affected.

 

(j)            Termination by Default.  If the Bank is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act (12 U.S.C. Section 1813(x)(1)), all
obligations under this Agreement shall terminate as of the date of default, but
vested rights of the parties shall not be affected.

 

 

(k)           Supervisory Assistance or Merger.  All obligations under this Agreement shall be
terminated, except to the extent that it is determined that continuation of the
Agreement is necessary for the continued operation of the Bank:  (i) by the Comptroller of the Currency
(the “Comptroller”) or his or her designee, at the time that the Federal
Deposit Insurance Corporation enters into an agreement to provide assistant to
or on behalf of the Bank under the authority contained in Section 11 of
the Federal Deposit Insurance Act (12 U.S.C. Section 1821); or (ii) by
the Comptroller or his or her designee, at the time that the Comptroller or his
or her designee approves a supervisory merger to resolve problems related to
the operation of the Bank or when the Bank is in an unsafe or unsound
condition.  All rights of the parties
that have already vested, however, shall not be affected by such action.

 

6.             Confidentiality. The Executive agrees that he
will not at any time during the Employment Period or at any time thereafter for
any reason, in any fashion, form or manner, either directly or indirectly,
divulge, disclose or communicate to any person, firm, corporation or other
business entity, in any manner whatsoever, any confidential information or
trade secrets concerning the business of the Bank, including, without limiting
the generality of the foregoing, the techniques, methods or systems of its
operation or management, any information regarding its financial matters, or
any other material information
concerning the business of the Bank (including customer lists), any of its
customers, governmental relations, customer contacts, underwriting methodology,
loan program configuration and qualification strategies, marketing strategies
and proposals, its manner of operation, its plans or other material data, or
any other information concerning the business of the Bank, its subsidiaries or
affiliates, and the Bank’s good will (the “Business”).  The provisions of this Section 6 shall
not apply to (i) information disclosed in the performance of the Executive’s
duties to the Bank based on his good faith belief that such a disclosure is in
the best interests of Bank; (ii) information that is, at the time of the
disclosure, public knowledge; (iii) information disseminated by the Bank
to third parties in the ordinary course of business; (iv) information
lawfully received by the Executive from a third party who, based upon inquiry
by the Executive, is not bound by a confidential relationship to the Bank or
otherwise improperly received the information; or (v) information
disclosed under a requirement of law or as directed by applicable legal
authority having jurisdiction over the Executive.

 

Executive agrees that all manuals, documents, files,
reports, studies or other materials used and/or developed by Executive for the
Bank during the Term of this Agreement are solely the property of the Bank, and
that Executive has no right, title or interest therein.  Upon termination of Executive’s employment,
Executive or Executive’s representative shall promptly deliver possession of
all such materials (including any copies thereof) to the Bank.

 

7.             Keyman Life Insurance. The Bank shall have the
right to obtain and hold a “keyman” life insurance policy on the life of the
Executive with the Bank as beneficiary of the policy. The Executive agrees to
provide any information required for the issuance of such policy and submit
himself to any physical examination required for such policy.

 

8.             Unsecured General Creditor.  Neither the Executive nor any other person or
entity shall have any legal right or equitable rights interests or claims in or
to any property or assets of the Bank under the provisions of this
Agreement.  No assets of the Bank shall
be held under any trust for the benefit of the Executive or any other person or
entity or held in any way as security 

 

 

for the fulfilling of the
obligations of the Bank under this Agreement. All of the Bank’s assets shall be
and remain the general, unpledged, unrestricted assets of the Bank. The Bank’s
obligations under this Agreement are unfunded and unsecured promises, and to
the extent such promises involve the payment of money, they are promises to pay
money in the future.  The Executive and
any person or entity claiming through him shall be unsecured general creditors
with respect to any rights or benefits hereunder.

 

9.             Business
Protection Covenants.

 

(a)           Covenant Not to Compete.  The Executive agrees that he will not, during
the Employment Period, voluntarily or involuntarily, directly or indirectly, (i) engage
in any banking or financial products or service business, loan origination or
deposit-taking business or any other business competitive with that of the
Bank, its subsidiaries or affiliates (“Competitive Business”) within Los
Angeles County (the “Market Area”), (ii) directly or indirectly own
any interest in (other than less than three percent (3%) of any publicly traded
company or mutual fund), manage, operate, control, be employed by, or provide
management or consulting services in any capacity to any firm, corporation, or
other entity (other than the Bank or its subsidiaries or affiliates) engaged in
any Competitive Business in the Market Area, or (iii) directly or
indirectly solicit or otherwise intentionally cause any employee, officer, or
member of the Board or any of its subsidiaries or affiliates to engage in any
action prohibited under (i) or (ii) of this Section 9(a).

 

(b)           Inducing Employees To Leave The Bank; Employment of Employees.  Any attempt on the part of the
Executive to induce others to leave the Bank’s employ, or the employ of any of
its subsidiaries or affiliates, or any effort by the Executive to interfere
with the Bank’s relationship with its other employees would be harmful and
damaging to the Bank.  The Executive
agrees that during the Employment Period and for a period of twelve (12) months
thereafter, the Executive will not in any way, directly or indirectly:  (i) induce or attempt to induce any
employee of the Bank or any of its subsidiaries of affiliates to quit
employment with the Bank or the relevant subsidiary or affiliate; (ii) otherwise
interfere with or disrupt the relationships between the Bank and its
subsidiaries and affiliates and their respective employees; (iii) solicit,
entice, or hire away any employee of the Bank or any of its subsidiaries or
affiliates; or (iv) hire or engage any employee of the Bank or any
subsidiary or affiliate or any former employee of the Bank or any subsidiary or
affiliate whose employment with the Bank or the relevant subsidiary or affiliate
ceased less than one (1) year before the date of such hiring or
engagement.

 

(c)           Nonsolicitation of Business.  For a period of twelve (12) months from the
date of termination of employment, the Executive will not divert or attempt to
divert from the Bank or any of its subsidiaries or affiliates, any business the
Bank or a subsidiary or affiliate had enjoyed or solicited from its customers,
borrowers, depositors or investors during the twelve (12) months prior to
termination of his employment.

 

(d)           Bank’s Ownership of Inventions.  To the extent that Executive has intellectual
property rights of any kind in any pre-existing works which are subsequently
incorporated in any work or work product produced in rendering services to the
Bank, Executive hereby grants Bank a royalty-free, irrevocable, world-wide,
perpetual non-exclusive license 

 

 

(with the
right to sublicense), to make, have made, copy, modify, use, sell, license,
disclose, publish or otherwise disseminate or transfer such subject
matter.  Similarly, Executive agrees that
all inventions, discoveries, improvements, trade secrets, original works of
authorship, developments, formulae, techniques, processes, and know-how,
whether or not patentable, and whether or not reduced to practice, that are conceived,
developed or reduced to practice during Executive’s employment with the Bank,
either alone or jointly with others, if on the Bank’s time, using the Bank’s
facilities, or relating to the Bank shall be owned exclusively by the Bank, and
Executive hereby assigns to the Bank all of Executive’s right, title and
interest throughout the world in all such intellectual property.  Executive agrees that the Bank shall be the
sole owner of all domestic and foreign patents or other rights pertaining
thereto, and further agrees to execute all documents that the Bank reasonably
determines to be necessary or convenient for use in applying for, prosecuting,
perfecting, or enforcing patents or other intellectual property rights,
including the execution of any assignments, patent applications, or other
documents that the Bank may reasonably request. 
This provision is intended to apply to the extent permitted by
applicable law and is expressly limited by Section 2870 of the California
Labor Code, which is set forth in its entirety in Exhibit A to this
Agreement.  By signing this Agreement,
Executive acknowledges that this Paragraphs shall constitute written notice of
the provisions of Section 2870.

 

(e)           Bank’s Ownership of Copyrights.  Executive agrees that all original works of
authorship not otherwise within the scope of Paragraph (d) above that are
conceived or developed during Executive’s employment with the Bank, either
alone or jointly with others, if on the Bank’s time, using Bank facilities, or
relating to the Bank, are “works for hire” to the greatest extent permitted by
law and shall be owned exclusively by the Bank, and Executive hereby assigns to
the Bank all of Executive’s right, title, and interest in all such original
works of authorship.  Executive agrees that
the Bank shall be the sole owner of all rights pertaining thereto, and further
agrees to execute all documents that the Bank reasonably determines to be
necessary or convenient for establishing in the Bank’s name the copyright to
any such original works of authorship.

 

10.           Resignations. The Executive
agrees that upon termination of employment, for any reason, he will submit his
resignations from all offices and directorships with the Bank and all of its
subsidiaries.

 

11.           Other Agreements. The parties further
agree that to the extent of any inconsistency between this Agreement and any
employee manual or policy of the Bank, that the terms of this Agreement shall
supersede the terms of such employee manual or policy.

 

12.           Notice. 
For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
personally delivered or (unless otherwise specified) mailed by United States
certified or registered mail, return receipt requested, postage prepaid, or
sent by facsimile, provided that the facsimile cover sheet contains a notation
of the date and time of transmission, and shall be deemed received: (i) if
personally delivered, upon the date of delivery to the address of the person to
receive such notice, (ii) if mailed in accordance with the provisions of
this Section 13, two (2) business days after the date placed in the
United States mail, (iii) if mailed other than in accordance with the
provisions of this Section 13 or mailed from outside the United States,
upon the date of delivery 

 

 

to the
address of the person to receive such notice, or (iv) if given by
facsimile, when sent.  Notices shall be
addressed as follows:

 

	
  If to the Bank:

  
	
   

  	
  1st
  Century Bank, National Association

  
	
   

  	
  1875 Century
  Park East

  
	
   

  	
  Suite 1400

  
	
   

  	
  Los
  Angeles, CA 90067

  
	
   

  	
   

  
	
   

  	
  Attn:
  Chairman of the Board

  
	
   

  	
   

  
	
  With a
  copy to:

  
	
   

  	
  Manatt,
  Phelps & Phillips, LLP

  
	
   

  	
  11355
  West Olympic Avenue

  
	
   

  	
  Los
  Angeles, CA 90064

  
	
   

  	
   

  
	
   

  	
  Attn:
  T.J. Grasmick, Esq.

  
	
   

  	
   

  
	
  If to
  the Executive, to:

  
	
   

  	
   

  
	
   

  	
  Richard S. Cupp

  
	
   

  	
  4253 Mesa Vista Drive

  
	
   

  	
  La Canada, CA 91011

  

 

or to such
other respective addresses as the parties hereto shall designate to the other
by like notice, provided that notice of a change of address shall be effective
only upon receipt thereof.

 

13.           Arbitration. 
Any dispute or controversy arising under or in connection with this
Agreement, the inception or termination of the Executive’s employment, or any
alleged discrimination or tort claim related to such employment, including
issues raised regarding the Agreement’s formation, interpretation or breach,
shall be settled exclusively by binding arbitration in accordance with the
National Rules for the Resolution of Employment Disputes of the American
Arbitration Association (“AAA”). Without limiting the foregoing, the following
potential claims by the Executive would be subject to arbitration under the
Arbitration Agreement:  claims for
wages or other compensation due; claims for breach of any contract or covenant
(express or implied) under which the Executive believes he would be entitled to
compensation or benefits; tort claims related to such employment; claims for
discrimination and harassment (including, but not limited to, race, sex,
religion, national origin, age, marital status or medical condition,
disability, sexual orientation, or any other characteristic protected by
federal, state or local law); claims for benefits (except where an employee
benefit or pension plan specifies that its claims procedure shall culminate in
an arbitration or other procedure different from this one); and claims for
violation of any public policy, federal, state or other governmental law,
statute, regulation or ordinance.  The
arbitration will be conducted in Los Angeles County.   The arbitration shall provide for written
discovery and depositions adequate to give the parties access to documents and
witnesses that are essential to the dispute. 
The arbitrator shall have no authority to add to or to modify this
Agreement, shall apply all applicable law, and shall have no lesser and no
greater remedial authority than would a court of law 

 

 

resolving the same claim or
controversy.  The arbitrator shall issue
a written decision that includes the essential findings and conclusions upon
which the decision is based, which shall be signed and dated. Executive and the
Bank shall each bear his or its own costs and attorneys’ fees incurred in
conducting the arbitration and, except in such disputes where Executive asserts
a claim otherwise under a state or federal statute prohibiting discrimination
in employment (“a Statutory Claim”), or unless required otherwise by applicable
law, shall split equally the fees and administrative costs charged by the
arbitrator and AAA.  In disputes where
Executive asserts a Statutory Claim against the Bank, Executive shall be
required to pay only the AAA filing fee to the extent such filing fee does not
exceed the fee to file a complaint in state or federal court.  Executive shall pay the balance of the
arbitrator’s fees and administrative costs. 
Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.

 

14.           Waiver of Breach. 
Any waiver of any breach of this Agreement shall not be construed to be
a continuing waiver or consent to any subsequent breach on the part either of
the Executive or of the Bank.  No delay
or omission in the exercise of any power, remedy, or right herein provided or
otherwise available to any party shall impair or affect the right of such party
thereafter to exercise the same.  Any
extension of time or other indulgence granted to a party hereunder shall not
otherwise alter or affect any power, remedy or right of any other party, or the
obligations of the party to whom such extension or indulgence is granted except
as specifically waived.

 

15.           Non-Assignment; Successors. Neither
party hereto may assign his or its rights or delegate his or its duties under
this Agreement without the prior written consent of the other party; provided,
however, that: (i) this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Bank upon any sale of all or
substantially all of the Bank’s assets, or upon any merger, consolidation or
reorganization of the Bank with or into any other corporation, all as though
such successors and assigns of the Bank and their respective successors and
assigns were the Bank; and (ii) this Agreement shall inure to the benefit
of and be binding upon the heirs, assigns or designees of the Executive to the
extent of any payments due to them hereunder. 
As used in this Agreement, the term “Bank” shall be deemed to refer to
any such successor or assign of the Bank referred to in the preceding sentence.

 

16.           Withholding of Taxes. All payments required to
be made by the Bank to the Executive under this Agreement shall be subject to
the withholding and deduction of such amounts, if any, relating to tax, and
other payroll deductions as the Bank may reasonably determine it should
withhold and/or deduct pursuant to any applicable law or regulation (including,
but not limited to, the Executive’s portion of social security payments and
income tax withholding) now in effect or which may become effective any time
during the term of this Agreement.

 

17.           Excise Tax Provision.  Notwithstanding anything elsewhere in this
Agreement to the contrary, if any of the payments or benefits provided for in
this Agreement, together with any other payments or benefits which the
Executive has the right to receive from the Bank (or its affiliated companies),
would constitute a “parachute payment” as defined in Section 280G(b)(2) of
the Internal Revenue Code of 1986, as amended (the “Code”), the parties
agree that the payments or benefits provided to the Executive pursuant to this
Agreement shall be reduced (in each case, in such manner as the Executive in
his sole discretion shall determine) so 

 

 

that the
present value of the total amount received by the Executive that would
constitute a “parachute payment” will be one dollar ($1.00) less than three (3) times
the Executive’s base amount (as defined in Section 280G of the Code) and
so that no portion of the payment or benefits received by the Executive would
be subject to the excise tax imposed by Section 4999 of the Code.

 

18.           Indemnification. 
To the fullest extent permitted by law, regulation, and the Bank’s
Articles of Incorporation and Bylaws, the Bank shall pay as and when incurred
all expenses, including legal and attorney costs, incurred by, or shall satisfy
as and when entered or levied a judgment or fine rendered or levied against,
Executive in an action brought by a third party against Executive (whether or
not the Bank is joined as a party defendant) to impose a liability or penalty
on Executive for an act alleged to have been committed by Executive while an
officer of the Bank; provided, however, that Executive was acting in good
faith, within what Executive reasonably believed to be the scope of Executive’s
employment or authority and for a purpose which the Executive reasonably
believed to be in the best interests of the Bank or the Bank’s shareholders,
and in the case of a criminal proceeding, that the Executive had no reasonable
cause to believe that Executive’s conduct was unlawful.  Payments authorized hereunder include amounts
paid and expenses incurred in settling any such action or threatened
action.  All rights hereunder are limited
by any applicable state or Federal laws.

 

19.           Severability. 
To the extent any provision of this Agreement or portion thereof shall
be invalid or unenforceable, it shall be considered deleted therefrom (but only
for so long as such provision or portion thereof shall be invalid or
unenforceable) and the remainder of such provision and of this Agreement shall
be unaffected and shall continue in full force and effect to the fullest extent
permitted by law if enforcement would not frustrate the overall intent of the
parties (as such intent is manifested by all provisions of the Agreement
including such invalid, void, or otherwise unenforceable portion).

 

20.           Payment.  All amounts payable by the Bank to the
Executive under this Agreement shall be paid promptly on the dates required for
such payment in this Agreement without notice or demand.  Any salary, benefits or other amounts paid or
to be paid to Executive or provided to or in respect of the Executive pursuant
to this Agreement shall not be reduced by amounts owing from Executive to the
Bank.

 

21.           Expenses.  The Bank shall pay or reimburse the Executive
for all legal fees and expenses incurred by him in the drafting, review and
negotiation of this Agreement.

 

22.           Authority. 
Each of the parties hereto hereby represents that each has taken all
actions necessary in order to execute and deliver this Agreement.

 

23.           Counterparts. 
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

 

24.           Governing Law. 
This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of California, without giving effect to
the choice of law principles thereof.

 

 

25.           Entire Agreement. 
This Agreement and written agreements, if any, entered into concurrently
herewith constitute the entire agreement by the Bank and the Executive with
respect to the subject matter hereof and merges and supersedes any and all
prior discussions, negotiations, agreements or understandings between the
Executive and the Bank with respect to the subject matter hereof, whether
written or oral, including without limitation, the oral discussions referred to
and the provisions set forth in electronic e-mail exchanges dated February 21,
2003 and February 23, 2003, provided, however, that Executive shall be
entitled to any unpaid pre-opening consulting fees and expense reimbursements
provided therein. This Agreement may be amended or modified only by a written
instrument executed by the Executive and the Bank. With regard to such
amendments, alterations, or modifications, facsimile signatures shall be
effective as original signatures.  Any
amendment, alteration, or modification requiring the signature of more than one
party may be signed in counterparts.

 

26.           Further Actions. 
Each party agrees to perform any further acts and execute and deliver
any further documents reasonably necessary to carry out the provisions of this
Agreement.

 

27.           Time of Essence. 
Time is of the essence of each and every term, condition, obligation and
provision hereof.

 

28.           No Third Party Beneficiaries.  This Agreement and each and every provision
hereof is for the exclusive benefit of the parties and not for the benefit of
any third party.

 

29.           Headings. 
The headings in this Agreement are inserted only as a matter of
convenience, and in no way define, limit, or extend or interpret the scope of
this Agreement or of any particular provision hereof.

 

 

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written
above.

 

 

	
   

  	
  1st
  CENTURY BANK, National Association (In 

  Organization)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alan
  I. Rothenberg

  
	
   

  	
   

  	
   Alan I. Rothenberg

  
	
   

  	
   

  	
   Chairman of the
  Organizing Board

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Richard S. Cupp

  
	
   

  	
  Richard S. Cupp

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