Document:

EX-4.1 EMPLOYMENT AGREEMENT

 

EXHIBIT 4.1

Employment Agreement

The parties to this agreement are LJ International Inc., a British Virgin
Islands Company (the “Company”) and YIH Yu Chuan (the “Executive”). The
Company and the Executive hereby agree as follows :

	1.	 	Employment and Duties
	 
	 	 	The Company shall employ the Executive and the Executive shall serve the
Company as President and Chief Executive Officer of the Company. The
Executive shall use his best efforts to promote the interests of the
Company, and shall perform his duties in relation to the Company and/or
its subsidiaries (collectively “the Group”) faithfully and diligently,
consistent with sound business practices.
	 
	2.	 	Term of Employment
	 
	 	 	The Executive shall be employed by the Company under this Agreement for a
period of three (3) years commencing as of the date of this agreement.
	 
	3.	 	Remuneration and Reimbursement

	 	(A)	 	Subject to Clause 5, the Executive shall receive during the
continuance of the Appointment :

	 	(1)	 	A salary at the rate of HK$1,800,000 per annum
such salary to accrue on a day to day basis (including any sum
receivable by the Executive as director’s fee from any company
in the Group) and to be payable monthly in twelve equal
installments in arrears on the last day of each calendar month
provided that if the Appointment is terminated prior to the
end of a calendar month, the Executive shall only be entitled
to a proportionate part of such salary in respect of the
period of service during the relevant month up to the date of
termination. Such salary shall be adjusted on annual basis at
a rate to be determined by the Board as its absolute
discretion having regard to the operating results of the Group
and the performance of the Executive.
	 
	 	(2)	 	An annual management bonus of a sum to be
determined by the Board at its absolute discretion having
regard to the operating results of the Group and the
performance of the Executive during the relevant financial
year or any proportionate part thereof in which service of the
Executive pursuant to this Agreement is rendered. The
management bonus shall be payable in arrears in respect of
each relevant financial year within one month after the issue
of the consolidated audited accounts of the Group for such
financial year. The amount payable to the Executive shall be
decided by majority decision of the members of

 

 

	 	 	 	the Board present in the meeting called for that purpose
provided that the Executive shall abstain from voting and not
be counted in the quorum in respect of the resolution regarding
the amount so payable to himself.

	 	(B)	 	The Executive shall continue to receive his salary during any
period of absence on medical grounds up to a maximum of 12 weeks in
any period of 12 months provided that the Executive shall if
required supply the Company with medical certificates covering the
period of absence.
	 
	 	(C)	 	The Executive shall be reimbursed all reasonable
out-of-pocket expenses (including expenses of entertainment
subsistence and travelling) incurred by him on the Group’s business
which expenses shall be evidenced in such manner as the Board may
require.
	 
	 	(D)	 	The Executive will be entitled to the benefits of any medical
or provident fund scheme as maybe maintained by the Group from to
time.
	 
	 	(E)	 	The Executive shall be entitled to 12 working days paid
vacation each year.

	4.	 	Other Benefits
	 
	 	 	The Executive shall be entitled, during the continuance of the
Executive’s engagement hereunder, to the use of a motor car and the
Company shall pay all vehicle registration fees, taxes and insurance
premiums in respect of the car and shall pay or reimburse against
receipts all maintenance, repair and other running costs in respect of
the car and the cost of petrol.
	 
	5.	 	Termination of the Appointment

	 	(A)	 	Without prejudice to the accrued rights (if any) or remedies
of either party under or pursuant to this Agreement :
	 
	 	(1)	 	the Executive shall be entitled to terminate the Appointment
by two months’ notice in writing to the Company if any money payable
by the Company to the Executive under or pursuant to this Agreement
is not paid in full by the Company to the Executive within a period
of 30 days from any written demand by the Executive for the payment
thereof;
	 
	 	(2)	 	the Company shall be entitled to terminate the Appointment
without any compensation to the Executive :

	 	(a)	 	by not less than three months’ notice in writing
given at any time while the Executive shall have been
incapacitated or prevented by reason of ill health, injury or
accident from performing his duties hereunder for a period of
or periods aggregating 90 days in the proceeding 12 months
provided that if at any time during the currency of a notice
given pursuant to this sub-paragraph the Executive shall
provide a medical certificate satisfactory to the Board to the
effect that he has fully recovered his physical and/or mental
health and that no recurrence of illness or incapacity can
reasonably be anticipated the Company shall withdraw such
notice; or

 

 

	 	(b)	 	by summary notice in writing if the Executive
shall at any time:

	 	i.	 	commit any serious or persistent breach
of any of the provisions herein contained
(and to the extent that such breach is capable of remedy
shall fail to remedy such breach within 60 days after
within warning given by the Board);
	 
	 	ii.	 	be guilty of any given misconduct or
willful neglect in the discharge of his duties (and to the
extent that such breach is capable of remedy shall fail to
remedy such breach within 60 days after written warning
given by the Board);
	 
	 	iii.	 	become bankrupt or have a receiving order
made against him;
	 
	 	iv.	 	become a lunatic or of unsound mind;
	 
	 	v.	 	absent himself from the meetings of the
Board during a continuous period of three months, without
special leave of absence from the Board, and his alternate
director (if any) shall not during such period have
attended in his stead;
	 
	 	vi.	 	become prohibited by law from acting as a
director;
	 
	 	vii.	 	be guilty of conduct tending to bring
himself or any company in the Group into disrepute;
	 
	 	viii.	 	be prohibited by law from fulfilling his
duties hereunder; or
	 
	 	ix.	 	be convicted of any criminal offence
(other than an offence which in the reasonable opinion of
the Board does not effect his position as a director of
the Company).

	 	(B)	 	If the Company becomes entitled to terminate the Appointment
pursuant to sub-clause (A)(2)(b) it shall be entitled (but without
prejudice to its right subsequently to terminate the Appointment on
the same or any other ground) to suspend the Executive without
payment of salary in full or in part for so long as it may think
fit.
	 
	 	(C)	 	If the Executive shall have refused or failed to agree to
accept without reasonable grounds an appointment offered to him on
terms no less favourable to him than the terms in effects under this
Agreement, either by a company which has acquired or agreed to
acquire the whole or substantially the whole of the undertaking and
assets of the Company or which shall own or has agreed to acquire
the whole or not less than 90% of the issued share capital of the
Company, the Executive shall have no claim against the Company by
reason of the subsequent voluntary winding up of any company in the
Group or of the disclaimer or termination of this Agreement by the
Company within three months after such refusal or failure to agree.
	 
	 	(D)	 	On the termination of the Appointment howsoever arising the Executive
shall :

	 	(1)	 	at any time and from time to time thereafter at
the request of the Company

 

 

	 	 	 	resign from office as a director of
the Company and all offices held by him in any company in the
Group and shall transfer without payment to the Company or as
the Company may direct any qualifying shares provided by it or
any shares held by the Executive as nominee for the Company or
any company in the Group provided by it and the Executive
hereby irrevocable appoints the Company to be his attorney and
in his name and on his behalf to sign and do any documents or
things necessary or
requisite to give effect thereto and a certificate in writing
signed by any director or by the secretary of the Company that
any instrument or act falls within the authority hereby
conferred shall be conclusive evidence that such is the case
and any third party shall be entitled to rely on such
certificate without further enquiry provided however that such
resignation or resignations shall be given and accepted on the
footing that it is or they are without prejudice to any claims
which the Executive may have against any such company or which
any such company may have against the Executive arising out of
this Agreement or of the termination of the appointment; and
	 
	 	(2)	 	forthwith deliver to the Company all books,
documents, papers, materials, credit cards (if any) and other
property of or relating to the business of the Group which may
then be in his possession or under his power or control.

	 	(E)	 	Save as expressly provided herein, neither party may terminate this
Agreement.

	6.	 	Confidentiality
	 
	 	 	The Company shall not, at any time during or after his employment under
this agreement, disclose to any third party, except in the performance of
his duties under this agreement, any confidential information regarding
the Company’s customers, suppliers, trade secrets or business. The
Executive shall return all tangible evidence of such confidential
information to the Company prior to or at the termination of his
employment.
	 
	7.	 	Waiver

	 	(A)	 	Time is of the essence of this Agreement but no failure or
delay on the part of either party to exercise any power, right or
remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise by either party of any power, right or
remedy preclude any other or further exercise thereof or the
exercise of any other power, right or remedy by that party.
	 
	 	(B)	 	The remedies provided herein are cumulative and are not
exclusive of any remedies provided by law.

	8.	 	Former Service Agreements
	 
	 	 	This agreement contains a complete statement of all the arrangements
between the parties with respect to its subject matter, supersedes all
existing and former agreements between them with respect to that subject
matter, may not be changed or terminated orally and any amendment or
modification must be in writing and signed by the party to be charged.

 

 

	9.	 	Notices
	 
	 	 	All notices, requests, demands, consents or other communications to or
upon the parties under or pursuant to this Agreement shall be in writing
addressed to the relevant party at such party’s address set out below (or
at such other address as such party may hereafter specify to the other
party) and shall be deemed to have been duly given or made :-

	 	(A)	 	in the case of a communication by letter 48 hours after
despatch or, if such letter is
delivered by hand, on the day of delivery;
	 
	 	(B)	 	in the case of communication by telex or facsimile, when
sent.

The
Company’s address:

Unit 12, 12/F., Block A, Focal Industrial Centre

21 Man Lok Street, Hunghom

Kowloon, HONG KONG

The
Executive’s address:

House No. K80, Stage IV, Marina Cove, Sai Kung

HONG KONG

	10.	 	Assignability
	 
	 	 	This Agreement shall be binding upon and ensure to the benefit of each
party hereto and its successors and assigns and personal representatives
(as the case may be), provided always that the Executive may not assign
his obligations and liabilities under this Agreement without the prior
written consent of the Company.
	 
	11.	 	Relationship
	 
	 	 	None of the provisions of this Agreement shall be deemed to constitute a
partnership or joint venture between the parties for any purpose.

 

 

	12.	 	Amendment
	 
	 	 	This Agreement may not be amended, supplemented or modified except by a
written agreement or instrument signed by or on behalf of the parties
hereto.
	 
	13.	 	Severability
	 
	 	 	Any provision of this Agreement prohibited by or unlawful or
unenforceable under any applicable law actually applied by any court of
competent jurisdiction shall, to the extent required by such law, be
severed from this Agreement and rendered ineffective so far as is
possible without modifying the remaining provisions of this Agreement.
Where, however, the provisions of any such applicable law may be waived,
they are hereby waived by the parties to the full extent permitted by
such law to the end that this Agreement shall be a valid and binding
agreement enforceable in accordance with its terms.
	 
	14.	 	Law and Jurisdiction
	 
	 	 	This Agreement shall be governed and construed in all respects in
accordance with the laws of Hong Kong and the parties hereby submit to
the non-exclusive jurisdiction of the courts of Hong Kong.

IN WITNESS whereof this Agreement has been duly executed the 1st day of
October, 2003.

Signed by

	 	 	 
	

	 	

	LJ International Inc.

	 	YIH Yu ChuanEXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

      This Employment Agreement ("Agreement") is effective as of the 1st day of
January, 2003 ("Effective Date"), is entered into as of October 1, 2003 and
amends and restates that certain Employment Agreement made as of September 1,
2001 ("Old Agreement") between Temecula Valley Bank, N.A., a national banking
association ("Bank"), and Stephen H. Wacknitz ("Executive").

                               W I T N E S S E T H

      WHEREAS, at the direction of Bank's Board of Directors ("Board of
Directors"), the Old Agreement is hereby revised and restated as provided
herein.

      WHEREAS, Bank desires that Executive continue to be employed as Bank's
President, Chairman of the Board and Chief Executive Officer on the terms set
forth herein.

      WHEREAS, Executive is willing to accept such employment under the terms
and conditions herein stated.

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, and other good and valuable consideration, it is hereby
agreed as follows:

      A. TERM OF EMPLOYMENT

            1. Term. Bank hereby agrees to employ Executive and Executive hereby
accepts employment with Bank, for the period (the "Term") commencing January 1,
2003 and terminating on such date and upon such terms as provided in Section F
hereof.

      B. DUTIES OF EXECUTIVE

            1. Duties. Executive shall perform the duties of President, Chairman
of the Board and Chief Executive Officer of Bank, subject to the powers by law
vested in the Board of Directors of Bank and in Bank's shareholders, and shall
serve as a Director of Bank. During the Term, Executive shall perform the
services herein contemplated to be performed by Executive with due care
faithfully, diligently, to the best of Executive's ability and in compliance
with all applicable laws and Bank's Articles of Association and Bylaws.

            2. Exclusivity. Executive shall devote substantially all of
Executive's entire productive time, ability and attention to the business of
Bank during the Term. Executive shall not directly or indirectly render any
services of a business, commercial or professional nature to any other person,
firm or corporation for compensation without prior consent evidenced by a
resolution duly adopted by the Board of Directors, or Executive Committee
thereof. Notwithstanding the foregoing, Executive may (i) make investments of a
passive nature in any business or venture; or (ii) serve in any capacity in
civic, charitable or social organizations.

                                  Page 1 of 10
<PAGE>

            3. Physical Examination. Executive may, in his discretion, take an
annual physical examination during each year during the Term of this Agreement
with said physical examination(s) conducted at the expense of Bank.

      C. COMPENSATION

            1. Salary. For Executive's services hereunder, Bank shall pay, or
cause to be paid, as annual gross base salary, to Executive the amount of not
less than $210,000 during each of the years of the Term, beginning with the
Effective Date. Executive's salary shall be payable in equal installments in
conformity with Bank's normal payroll periods as in effect from time to time.
The Board of Directors shall also, from time to time, and at least once each
year grant such additional "merit" increases, if any, in, the base salary as are
determined after review to be appropriate in the discretion of the Board of
Directors. Bank and Executive both contemplate that his base salary shall be
increased as Bank grows and profits. Executive shall also, so long as he serves
on the Board of Directors, be entitled to directors and committee fees, and any
other compensation or benefits provided to outside directors of Bank (including,
but not limited to, committee fees, any director retirement benefits, any stock
options granted to directors in such capacity, etc.) in addition to the
compensation and benefits provided to him as an employee pursuant to this
Agreement.

      D. EXECUTIVE BENEFITS

            1. Vacation. Executive shall be entitled to a vacation leave
accruing at the rate of two and one-half vacation days for each month in which
he works (and a pro rata portion thereof for partial weeks, except that banking
holidays shall be treated as days worked) during each year of the Term, of which
two weeks must be taken consecutively in each year. Executive shall be entitled
to vacation pay in lieu of vacation. Time spent by Executive at (or traveling to
and from) seminars, conventions or conferences related to Bank business shall
not be counted against his vacation leave.

            2. Automobile. Bank shall provide for the use of Executive a
suitable automobile (equivalent to, or better than, a Lexus LS 430),
commensurate with his position, and shall pay all the expenses (including, but
not limited to, maintenance, fuel, insurance, registration) related thereto
during the Term.

            3. Group Medical and Life Insurance Benefits. Bank shall provide for
Executive, at Bank's expense during the Term, and after the Term until death in
accordance with Bank's policy now in effect or as shall be amended as soon as
practicable to provide for ongoing coverage upon the events described in such
policy, participation in a comprehensive major medical and dental, with life
insurance benefits, equivalent to the maximum available from time to time under
the California Bankers Association Group Insurance Program for an employee of
Executive's salary level. Any such insurance for which Executive votes in favor
as a director, or endorses as an officer, shall be deemed to meet the
requirements of this Section. Term life insurance benefits shall be provided to
Executive, at Bank's expense during the Term, in an amount not less than
$250,000, with Executive to be entitled to make an irrevocable designation

                                  Page 2 of 10
<PAGE>

of the beneficiary and owner of the policy thereunder. Executive's Salary
Continuation Agreement with Bank currently in effect shall be maintained by Bank
during the Term.

            4. Bonus. For each year end within the Term, Executive shall be
entitled to an Incentive Bonus determined in accordance with this Section if the
Threshold Test is met. The Threshold Test shall be deemed to have been met if
one or more of the following exists: (i) Bank's regular outside independent loan
reviewer gives a favorable review of the loan quality of Bank at, or within four
months of, the end of the year; (ii) net loan losses for the year do not exceed
one percent of gross outstanding loans at the beginning of the year; or (iii)
the latest report of supervisory activity of Bank by the Office of the
Comptroller of the Currency (or other bank regulatory agency) rates Bank no less
than satisfactory. The Incentive Bonus shall equal 7.5% of Bank's "Profits." For
purposes of this Section 4, "Profits" shall mean Bank's net income before income
taxes and before the effect of this bonus or any other bonuses based on the
profits of Bank.

            This bonus shall be payable in January of the year following
completion of the year on which it is based, or as soon thereafter as is
practical after Bank's certified public accountants have delivered their report
on Bank's condition and results of operations for the year.

            5. Sick Leave. Executive shall be entitled to sick leave in
accordance with Bank's Personnel Policy, accruing at a rate of not less than one
day per month or partial month of service. Accrued sick leave may be carried
over from prior periods, but Executive shall not be entitled to be paid in lieu
thereof.

            6. Disability Coverage.

                  (a) Bank shall continue to maintain for the benefit of
Executive a long term disability insurance policy. Said policy shall provide
benefits of not less than $120,000 per year and shall remain in effect to age
65. To the extent no disability payments are made by the insurer after
disability but before payments are made under such policy, Bank shall provide
monthly payments to Executive equal to $10,000 per month. Bank shall not be
responsible for the premiums on such policy after termination of Executive's
employment by Bank.

                  (b) After age 65, in the event of Executive's disability as
determined under applicable policies of Bank covering Executive, Bank shall pay
to Executive the difference between the amount received by Executive under the
then in effect Bank disability policies and $15,000 per month until September
16, 2006.

      E. BUSINESS EXPENSES AND REIMBURSEMENT

            1. Business Expenses. Executive shall be entitled to reimbursement
by Bank for any ordinary and necessary business expenses incurred by Executive
in the performance of Executive's duties and in acting for Bank during the Term,
provided that an independent officer of Bank approves such expenses in
accordance with the standards set forth herein. Executive shall furnish to Bank
adequate records and other documentary evidence

                                  Page 3 of 10
<PAGE>

required by federal and state statutes and regulations issued by the appropriate
taxing authorities for the substantiation of such payments as deductible
business expenses of Bank and not as deductible compensation to Executive;
provided, however, that reimbursement of such expenses shall not be dependent on
proving deductibility of such expenses for tax purposes if such expenses are
otherwise determined by the Board of Directors, in its sole discretion, to be
appropriate.

      F. TERMINATION

            1. Termination With Cause. Except as otherwise provided herein, this
Agreement may be terminated by Bank, at Bank's option with notice to Executive,
upon the occurrence of any of the following events:

                  (a) Executive is convicted of illegal activity by a court of
competent jurisdiction or pleads guilty or nolo contendere to, illegal activity,
which activity materially adversely affects Bank's reputation in the community
or which evidences the lack of Executive's fitness or ability to perform
Executive's duties, as determined by the Board of Directors in good faith;

                  (b) Executive has committed any illegal or dishonest act which
would cause termination of coverage under Bank's Bankers Blanket Bond as to
Employee, as distinguished from termination of coverage as to Bank as a whole;

                  (c) Executive after written notice from the Board of Directors
specifying the event and how it can be corrected again materially fails to
perform or habitually neglects Executive's duties;

                  (d) Executive becomes permanently disabled as such is defined
in his or Bank's disability insurance policies (or if no such definition, as
defined by federal law or regulation pursuant to the Social Security Act or a
related statute), such disability makes Executive eligible for benefits
thereunder, and any relevant waiting periods have passed. Any controversy
concerning Executive's disability shall be settled by arbitration in accordance
with the rules of the American Arbitration Association. Any termination pursuant
to this subsection (d) shall not affect the continued operation of that portion
of Section D.6. hereof which is intended to survive Executive's disability;

                  (e) The Comptroller of the Currency, or any other regulatory
agency having jurisdiction, finally removes, or suspends Executive from office;

                  (f) The Comptroller of the Currency or other supervisory or
regulatory authority having jurisdiction takes possession of the property and
business of Bank; or

                  (g) Any regulatory authority having supervisory authority over
Bank exercises its cease and desist authority to remove Executive from office or
advises Bank that Executive should be removed from office.

                                  Page 4 of 10
<PAGE>

      Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated pursuant to Section F.1. unless and until there has been delivered to
him a copy of a resolution duly adopted by the affirmative vote of not less than
two-thirds of the entire authorized membership of the Board of Directors at a
meeting of the Board of Directors called and held for the purpose (after
reasonable notice and an opportunity for Executive, together with counsel, to be
heard before the Board of Directors), finding that in the good faith opinion of
the Board of Directors he engaged in conduct set forth above in clauses (a)
through (g) of this Section F.1. and specifying the particulars thereof in
detail.

            2. Termination Without Cause or Resignation for Good Reason.

                  (a) During the Term, this Agreement may be terminated by Bank
without cause upon written notice to Executive or by Executive for Good Reason,
as defined below.

                  (b) During the Term, this Agreement may be terminated by
Executive without cause upon written notice to Bank.

            3. Compensation Upon Termination.

                  (a) If Executive's employment with Bank is terminated by Bank
pursuant to Section F.1., or by Executive pursuant to Section F.2.(b), Executive
shall then only be entitled to receive the amount of his annual gross salary, as
in effect immediately prior to termination, payable through the effective date
of such termination plus proration of the Incentive Bonus described in Section
D.4. above (calculated as provided in Section F.3(b)) and the amounts specified
in Section D.6. as well as any incurred but not yet reimbursed business expenses
(subject to the provisions of Section E.1. hereof). Other than the amounts
payable over time under Section D.6, the amounts payable under this Section
F.3(a) shall be paid in a lump sum upon termination.

                  (b) If Executive's employment is terminated by Bank or any
successor pursuant to Section F.2.(a), by Executive pursuant to Section F.2.(a)
or by Bank or any successor within one year before or after any Change of
Control, as defined below, and such termination is not based upon Section F.1.,
he shall be entitled to the same amount as if the termination had been pursuant
to Section F.1., plus an immediate payment in an amount equal to the greater of:
(i) one times the annual gross base salary of Executive (as in effect
immediately prior to termination) plus the amount equal to the Incentive Bonus
provided in Section D.4. above as though a full year had lapsed (calculated as
follows: the dollar amount of the Incentive Bonus for the number of months
lapsed in the year of termination, divided by the number of months lapsed in
that year and the resulting number multiplied by 12, less the amount of the
Incentive Bonus, if any, paid in the year of termination pursuant to Section G
below; or (ii) two times Executive's annual gross base salary, as in effect
immediately prior to termination, to be paid in a lump sum, less any applicable
withholding deductions.

                                  Page 5 of 10
<PAGE>

                  (c) Notwithstanding the foregoing, to the extent that 12
U.S.C. ss.1828 and regulations promulgated pursuant thereto prohibit, or limit,
the payment of compensation pursuant to this Section F.3., Executive's right to
compensation hereunder shall be similarly prohibited or limited.

                  (d) Good Reason shall mean that without Executive's express
written consent, the assignment to Executive of any duties inconsistent with his
positions, duties, responsibilities and status with Bank; or a change in his
reporting responsibilities, titles or offices; or any removal of Executive from
or any failure to re-elect Executive to any of such positions, except in
connection with the termination of his employment pursuant to Section F.1. or
retirement or as a result of his death or by Executive other than for Good
Reason; or a reduction by Bank in Executive's annual gross base salary as in
effect on the date hereof or as the same may be increased from time to time.

                  (e) Notwithstanding anything to the contrary set forth herein,
if Executive's employment with Bank is terminated by the Bank pursuant to
Section F.2(a), by Executive pursuant to Section F.2(a), by Executive after he
reaches the age of 65 under Section F.2(b), or by Bank or any successor within
one year before or after any Change of Control and such termination following a
Change of Control is not based on Section F.1, Executive shall continue to
receive the comprehensive major medical and dental, and life insurance benefits
until death as set forth in Section D.3.

      G. Change of Control Benefit.

            Upon a Change of Control, as defined below, Executive shall be
entitled to receive his Section D.4 Incentive Bonus as of the effective date of
the Change of Control for the year in which the Change of Control occurs. Such
Incentive Bonus shall be calculated as follows: the Incentive Bonus for the
number of months lapsed in the year in which the Change of Control occurs
divided by the number of months lapsed in the year in which the Change of
Control occurs and the resulting number multiplied by 12. Such Incentive Bonus
shall be paid effective at the Change of Control.

            1. Change of Control. The term "Change of Control" pursuant to this
Section G shall have the following meaning:

                  (a) A reorganization, merger, consolidation or other form of
corporate transaction or series of transactions, in each case, with respect to
which persons who were the shareholders of Bank or its parent immediately prior
to such reorganization, merger or consolidation or other transaction do not,
immediately thereafter, directly or indirectly, own more than 75% of the
combined voting power entitled to vote generally in the election of director of
the reorganized, merged or consolidated entity's then outstanding voting
securities;

                  (b) A liquidation or dissolution of the Bank effected by the
Bank;

                                  Page 6 of 10
<PAGE>

                  (c) The sale of more than 50% of the assets of Bank to any
person or entity not controlled by or under common control with Bank (unless
such reorganization, merger, consolidation or other corporate transaction,
liquidation, dissolution or sale is subsequently abandoned); or

                  (d) The acquisition by any person, entity or "group", within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act,
(excluding any employee benefit plan of Bank, its subsidiaries or its parent
which acquires beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act)) of: (i) more than 25% of the
outstanding shares of any class of voting stock of the Bank or its parent; or
(ii) more than 9.9% and up to and including 25% of the outstanding shares of any
class of voting stock of the Bank or its parent, if after the acquisition, no
other person, entity or "group" would beneficially own a greater percentage of
such class of voting shares than the acquiror(s).

      H. GENERAL PROVISIONS

            1. Ownership of Books and Records; Confidentiality.

                  (a) All records or copies thereof of the accounts of
customers, and any other records and books relating in any manner whatsoever to
the customers of Bank, and all other files, books and records and other
materials owned by Bank or used by it in connection with the conduct of its
business, whether prepared by Executive or otherwise coming into his possession,
shall be the exclusive property of Bank regardless of who actually prepared the
original material, book or record. All such books and records and other
materials, together with all copies thereof, shall be immediately returned to
Bank by Executive on any termination of his employment. Executive shall be
entitled to copies of any policies, procedures or forms prepared with his
assistance.

                  (b) During the Term, Executive will have access to and become
acquainted with what Executive and Bank acknowledge are trade secrets, to wit,
knowledge or data concerning Bank, including its operations and business, and
the identity of customers of Bank, including knowledge of their financial
condition, their financial needs, as well as their methods of doing business.
Executive shall not disclose any of the aforesaid trade secrets, directly or
indirectly, or use them in any way, either during the Term or thereafter, except
as required in the course of Executive's employment with Bank. Executive shall
not solicit any employee or customer of Bank to become an employee or customer
of another institution until six months following the termination; provided,
however, that Executive shall not be prohibited from soliciting customers with
which he had a banking relationship established at another employer prior to the
commencement of the term hereof.

            2. Assignment and Modification. This Agreement, and the rights and
duties hereunder, may not be assigned by either party hereto without the prior
written consent of the other, and the parties expressly agree that any attempt
to assign the rights of any party hereunder without such consent will be null
and void; provided, however, that Bank's rights and obligations hereunder shall
be assignable without consent by operation of law in the event of a merger or
similar transaction involving Bank.

                                  Page 7 of 10
<PAGE>

            3. Further Assurance. From time to time each party will execute and
deliver such further instruments and will take such other action as the other
party reasonably may request in order to discharge and perform the obligations
and agreements hereunder.

            4. Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement, or a breach thereof (other than matters pertaining
to injunctive relief, including, but not limited to, temporary restraining
orders, preliminary injunctions and permanent injunctions,) shall be finally
settled by arbitration in accordance with the rules then prevailing of the
American Arbitration Association. Judgment upon the award rendered in such
arbitration may be entered and enforced in any court of competent jurisdiction.
The prevailing party shall be entitled to all costs of arbitration or litigation
as determined by the arbitrators or the court, including, but not limited to,
reasonable attorneys' fees. Any excluded matter shall be determined by the San
Diego County Superior Court, subject to any rights of appeal which may exist.
The arbitration, including the rendering of the award, shall take place in the
County of San Diego, State of California, unless otherwise agreed to in writing
by the parties. In reaching a decision, the arbitrator(s) shall be bound by the
terms of this Agreement. The award and judgment thereon shall include interest,
at the legal rate, from the date that the sum awarded to the prevailing party
was originally due and payable. The parties hereto agree that the arbitrator(s)
shall have jurisdiction to award punitive damages. Arbitration shall be the
exclusive means of resolution of disputes, controversies or claims arising out
of this Agreement and which are subject to arbitration. The parties agree that
they shall be entitled to conduct discovery in accordance with Sections 1283.05
and 1283.1 of the California Code of Civil Procedure, or any successor provision
thereof, in the same manner as though the dispute were within the jurisdiction
of the Superior Court of the State of California.

            5. Notices. All notices required or permitted hereunder shall be in
writing and shall be delivered in person or sent by certified or registered
mail, return receipt requested, postage prepaid as follows:

            To Bank:               Temecula Valley Bank, N.A.
                                   27710 Jefferson Drive, Suite A-100
                                   Temecula, CA  92590

            To Executive:          Stephen H. Wacknitz
                                   2148 Rockhoff Road
                                   Escondido, CA  92026

or to such other party or address as either of the parties may designate in a
written notice served upon the other party in the manner provided herein. All
notices required or permitted hereunder shall be deemed duly given and received
on the date of delivery if delivered in person or on the third day next
succeeding the date of mailing if sent by certified or registered mail, postage
prepaid.

            6. Successors. This Agreement shall be binding upon, and shall inure
to the benefit of, the successors and assigns of the parties.

                                  Page 8 of 10
<PAGE>

            7. Entire Agreement. Except as provided herein and in any separate
agreement for the provision of benefits to Executive, this Agreement constitutes
the entire agreement between the parties, and all prior negotiations,
representations or agreements between the parties, whether oral or written, are
merged into this Agreement. This Agreement may only be modified by an agreement
in writing executed by both of the parties hereto.

            8. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of California.

            9. Executed Counterparts. This Agreement may be executed in one or
more counterparts, all of which together shall constitute a single agreement and
each of which shall be an original for all purposes.

            10. Section Headings. The various section headings are inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement or any section hereof.

            11. Close of Business/Calendar Periods. Unless the context so
requires, all periods terminating on a given day, period of days or date shall
terminate on the close of business on that day or date, references to "days"
shall refer to calendar days, references to "months" shall refer to calendar
months and references to "years" shall refer to calendar years. Any singular
term includes the plural and vice versa.

            12. Severability. In the event that any of the provisions, or
portions thereof, of this Agreement are held to be unenforceable or invalid by
any court of competent jurisdiction, the validity and enforceability of the
remaining provisions or portions thereof, shall not be affected thereby.

            13. Attorneys' Fees. In the event that any party shall bring an
action or arbitration in connection with the performance, breach or
interpretation hereof, then the prevailing party in such action as determined by
the court or other body having jurisdiction shall be entitled to recover from
the losing party in such action, as determined by the court or other body having
jurisdiction, all reasonable costs and expenses of litigation or arbitration,
including reasonable attorneys' fees, court costs, costs of investigation and
other costs reasonably related to such proceeding, in such amounts as may be
determined in the discretion of the court or other body having jurisdiction.

            14. Indemnification. Bank shall indemnify and hold Executive
harmless from, claims (defined in the broadest sense, including claims for
monetary or non-monetary relief, and any claims brought before an administrative
agency or body) arising out of, or related to, his service as an officer,
director or agent of Bank, to the fullest extent permitted by applicable law,
including his costs of defense and attorneys fees and shall advance his costs of
defense (including legal fees) related to the defense thereof to the extent
permitted by applicable law. The provisions of this Section 14 shall survive
termination of this Agreement and Executive's employment with the Bank.

                                  Page 9 of 10
<PAGE>

            15. Rules of Construction. The parties hereby agree that the normal
rule of construction, which requires the court to resolve any ambiguities
against the drafting party, shall not apply in interpreting this Agreement. This
Agreement has been reviewed by each party and counsel for each party and shall
be construed and interpreted according to the ordinary meaning of the words used
so as to fairly accomplish the purposes and intentions of all parties hereto.
Each provision of this Agreement shall be interpreted in a manner to be
effective and valid under applicable law, but if any provision shall be
prohibited or ruled invalid under applicable law, the validity, legality and
enforceability of the remaining provisions shall not, except as otherwise
required by law, be affected or impaired as a result of such prohibition or
ruling.

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

                        Bank:             TEMECULA VALLEY BANK, N.A.

                                          By:  /s/ Donald A. Pitcher
                                               ---------------------
                                               Donald A. Pitcher
                                               Executive Vice President / Chief
                                               Financial Officer

                        Executive:        /s/ Stephen H. Wacknitz
                                          -----------------------
                                          Stephen H. Wacknitz

                                 Page 10 of 10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}]]