Document:

Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”), dated as of the date finally executed below, is entered into by and between Luther Burbank Corporation, a California corporation (the “Company”), and John Biggs (“Executive”).  The Agreement amends and restates the employment agreement entered into previously between the Company and the Executive, which was initially effective January 1, 2016 (the “Prior Agreement”).  As of the first day of the Term (as defined below), the Agreement supersedes the Prior Agreement in all respects and such Prior Agreement is hereby rendered null and void.

 

INTRODUCTION

 

The Company and its operating subsidiaries (“Affiliates”) are engaged in the business of banking.  The Company desires to continue to employ Executive, and Executive desires to continue such employment, under the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

 

EMPLOYMENT; TERM; DUTIES

 

1.1                               Employment.  Upon the terms and conditions hereinafter set forth, the Company hereby employs Executive, and Executive hereby accepts employment, as the Company’s Chief Executive Officer and President. Executive shall also serve as a member of the Company’s Board of Directors (the “Board”).  During the Term, Executive shall also serve without additional compensation as the President and Chief Executive Officer of Luther Burbank Savings (“LBS”), Burbank Financial Inc. (“BFI”), and Burbank Investor Service (“BIS”) and as a member of each of the subsidiaries’ board of directors. Executive shall report directly to the Company’s Board and the Chairman of the Board.

 

1.2                               Term.  Subject to Article IV below, Executive’s employment hereunder shall be for an initial term of three (3) years commencing on the date of the Company’s initial public offering, with one (1) year automatic extensions thereafter unless terminated in writing by either party sixty (60) days in advance of the end of the initial three (3) year period or any one (1) year extension period (the “Term”).

 

1.3                               Duties.  During the Term, Executive shall perform such executive duties for the Company and/or its Affiliates, consistent with Executive’s position hereunder, as may be reasonably assigned to Executive from time to time.  Executive shall reasonably devote Executive’s productive business time, attention and energies to the performance of Executive’s duties hereunder.  Executive shall use Executive’s best efforts to advance the interests and business of the Company and its Affiliates.  Executive shall abide by all rules, regulations and

 

 

policies of the Company, as may be in effect from time to time.  Notwithstanding the foregoing, Executive may act for Executive’s own account in passive-type investments where the time allocated for those activities does not interfere with or create a conflict of interest with the discharge of Executive’s duties for the Company.

 

1.4                               Exclusive Agreement.  Executive represents and warrants to the Company that there are no agreements or arrangements, whether written or oral, in effect which would prevent Executive from rendering Executive’s exclusive services to the Company during the Term.  Executive commits to providing exclusive employment services to the Company and shall accept no other employment.

 

ARTICLE II

 

COMPENSATION

 

2.1                               Compensation.  For all services rendered by Executive hereunder and all covenants and conditions undertaken by Executive pursuant to this Agreement, the Company shall pay, and Executive shall accept, as full compensation, the amounts set forth in this Article II.

 

2.2                               Base Salary.  The base salary shall be paid at an annual rate of six-hundred thousand dollars ($600,000) during the portion of the 2017 calendar year that predates the Term and at an annual rate of six-hundred and eighty-five thousand dollars ($685,000) for the portion of the 2017 calendar year on and after the commencement of the Term and seven-hundred and eighty-five-thousand dollars ($785,000) during the 2018 calendar year (the “Base Salary”), payable by the Company in accordance with the Company’s normal payroll practices.  Executive’s Base Salary shall be adjusted thereafter solely at the discretion of the Compensation Committee of the Board (the “Compensation Committee”).

 

2.3                               Annual Target Bonus.  Executive shall be eligible for an annual performance bonus with a target payout of seventy-five percent (75%) of Executive’s Base Salary (the “Target Bonus”) based on specific performance criteria set by the Compensation Committee.  The Target Bonus shall be payable no later than March 15th of the year following the year to which it relates and Executive shall not have earned or have any rights to such Target Bonus unless he remains employed by the Company on the last day of the year to which the Target Bonus relates and the Compensation Committee has certified that all required performance standards have been met.

 

2.4                               Equity Grants.  Executive shall be eligible for annual grants of equity and equity based awards under the Luther Burbank Corporation Omnibus Equity and Incentive Compensation Plan (the “Equity Plan”) as expressly set forth under separate award agreements.  Any non-vested phantom stock awards under the Luther Burbank Corporation and Subsidiaries Phantom Stock Plan previously issued to Executive shall be converted to restricted stock units under the Equity Plan, as expressly set forth in a separate award agreement.

 

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2.5                               Deductions.  The Company shall deduct from the compensation described in this Agreement any federal, state or local withholding taxes, social security contributions and any other amounts which may be required to be deducted or withheld by the Company pursuant to any federal, state or local laws, rules or regulations.

 

2.6                               Clawback Provisions. Notwithstanding any other provisions in this Agreement to the contrary, any bonus, award under the Equity Plan or any other compensation, paid to Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation, stock exchange listing requirement or policy adopted by the Board (or a committee thereof), will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation, stock exchange listing requirement or policy. The Board (or a committee thereof) will make any determination for clawback or recovery in its sole discretion and in accordance with any applicable law, regulation, stock exchange listing requirements or Company policy.

 

2.7                               Executive’s Temporary Suspension. If Executive is suspended or temporarily prohibited from participating in the conduct of the Company’s affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)), the Company’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 Company 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.

 

ARTICLE III

 

BENEFITS; EXPENSES

 

3.1                               Benefits.  During the Term, Executive shall be entitled to participate in such group life, health, accident, disability or hospitalization insurance plans, pension plans and retirement plans as the Company may make available to its other similarly situated executive employees as a group, subject to the terms and conditions of any such plans.  Executive’s participation in all such plans shall be at a level, and on terms and conditions, that are commensurate with Executive’s positions and responsibilities at the Company.  The Company shall communicate the material terms of all benefit plans and programs in compliance with applicable law.

 

3.2                               Expenses.  The Company agrees that Executive is authorized to incur reasonable and appropriate expenses in the performance of Executive’s duties hereunder, including reasonable cellular telephone expenses, and in promoting the business of the Company.  The Company shall make reasonable efforts to reimburse Executive within thirty (30) days of receipt of properly remitted expenses but a delay in reimbursement shall not be considered a breach of this Agreement.

 

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3.3                               Vacation.  Each year, Executive shall annually accrue thirty (30) days of vacation plus predetermined holidays pursuant to Company policy.

 

3.4                               Company Policies.  The Company shall timely provide Executive all Company policies applicable to Executive.

 

ARTICLE IV

 

TERMINATION

 

4.1                               Termination.  Upon any termination of Executive’s employment for any reason, Executive shall, at the Company’s request, immediately resign from all his Board memberships and other positions with the Company or any of its subsidiaries held at such time.  Executive’s employment may be terminated under this Agreement in the following events:

 

(a)                                 Death.  Executive’s employment hereunder will terminate upon his death.

 

(b)                                 Total Disability.  Executive’s employment hereunder will terminate upon his becoming “Totally Disabled.”  For purposes of this Agreement, Executive shall be considered “Totally Disabled” if he has been physically or mentally incapacitated so as to render him incapable of performing the essential functions of any substantial gainful activity that is expected to result in death or to last for continuous period of at least 12 months.  Executive’s receipt of disability benefits under the Company’s long-term disability plan or receipt of Social Security disability benefits shall be deemed conclusive evidence of Total Disability for purpose of this Agreement.

 

(c)                                  Termination for Cause by the Company.  The Company may terminate Executive’s employment hereunder for “Cause” at any time after providing a notice of termination for Cause to Executive.  For purposes of this Agreement, Cause means (i) engaging in conduct which is demonstrably and materially injurious to the Company and any Affiliates, or that materially harms the reputation, good will, or business of the Company and any Affiliates; (ii) being convicted of, or entering a plea of guilty or nolo contendere (or similar plea), to a criminal offense involving dishonesty, breach of trust, fraud, or moral turpitude; (iii) the suspension, removal or prohibition from participating in the conduct of the Company’s affairs by an order issued under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818) or any comparable provision of federal or state law; (iv) having been found liable in any Securities and Exchange Commission or other civil or criminal securities law action or any cease and desist order applicable to Participant is entered (regardless of whether or not Participant admits or denies liability); (v) gross negligence, insubordination, or material violation of any duty of loyalty or other fiduciary duty to the Company or any other material misconduct on the Executive’s part; (vi) the willful refusal or negligent failure to perform assigned duties; (vii) having used or disclosed, without authorization, confidential or proprietary information of the Company and Affiliates; (viii) having breached any written agreement

 

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with the Company not to disclose any information pertaining to the Company or its Affiliates or their customers, suppliers and businesses; (ix) having breached any agreement relating to non-solicitation, non-competition, or the ownership or protection of the intellectual property of the Company or its Affiliates; or (x) having materially breached any applicable federal, state or local laws or regulation governing Executive’s duties with the Company or any of the Company’s policies applicable to Executive, whether currently in effect or later adopted.

 

4.2                               Termination by the Company without Cause.  The Company may terminate Executive’s employment hereunder without Cause at any time upon written notice to him.

 

4.3                               Voluntary Termination by Executive.  Executive may terminate his employment hereunder with or without Good Reason at any time upon written notice to the Company.  For purposes of this Agreement, Executive shall be treated as having resigned for Good Reason if and only if he resigns as a result of the occurrence of one or more of the following events:

 

(a)                                 a significant material detrimental change in Executive’s position or responsibilities, including a material change in duties that represents a substantial reduction in the position or responsibilities in effect immediately prior thereto; the assignment to Executive of any significant duties or responsibilities that are materially inconsistent with such position or responsibilities; except in connection with the termination of Executive’s employment for Cause, as a result of his Total Disability or death, or by Executive other than for Good Reason;

 

(b)                                 a material reduction in Executive’s Base Salary other than in connection with a general reduction in wages for all senior executive employees of the Company;

 

(c)                                  The Company requiring Executive (without Executive’s consent) to be based at any place outside a sixty (60) mile radius of Santa Rosa, except for reasonably required travel on the Company’s business; or

 

(d)                                 any material breach by the Company of its obligations to Executive under this Agreement.

 

Notwithstanding the foregoing, Executive shall not be treated as having resigned for Good Reason unless Executive notifies the Company in writing of the event constituting Good Reason not more than thirty (30) days after Executive knows, or with the exercise or reasonable diligence would have known, of the occurrence of such event, the Company fails within thirty (30) days after receipt of such notice to cure such event and return Executive to the position he would have been in had the event not occurred, and Executive resigns after the end of such thirty (30) days period, but in no event more than two (2) years after the occurrence of the event; provided, however, that in no event shall Executive’s failure to notify the Company of the occurrence of any event constituting Good Reason, or to resign as a result of such event, in either case within the applicable time period, be construed as a consent to the occurrence of future events, whether or not similar to the initial occurrence.

 

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ARTICLE V

 

Compensation Following Termination of Employment

 

In the event that Executive’s employment hereunder is terminated in a manner as set forth in Article IV above, Executive shall be entitled to the compensation and benefits provided under this Article V, in each case, subject to potential reduction as may be required under the terms of this Agreement.

 

5.1                               Termination by Reason of Death.  In the event that Executive’s employment is terminated by reason of his death, the Company shall pay the following amounts to Executive’s beneficiary or estate:

 

(a)                                 Any accrued but unpaid Base Salary for services rendered to the date of death, any accrued but unpaid expenses required to be reimbursed under this Agreement, any vacation accrued to the date of termination, any earned but unpaid bonuses for any prior calendar year (“Accrued Compensation”);

 

(b)                                 Any benefits accrued through the date of termination to which Executive may be entitled pursuant to the Company’s plans, policies and arrangements, as determined and paid in accordance with the terms of such plans, policies and arrangements (“Plan Benefits”); and

 

(c)                                  Continued Base Salary through the end of the 2018 calendar year, if the death occurs before December 31, 2018.

 

5.2                               Termination by Reason of Total Disability.  In the event that Executive’s employment is terminated by reason of his Total Disability, the Company shall pay the following amounts to Executive:

 

(a)                                 Accrued Compensation; and

 

(b)                                 Plan Benefits.

 

(c)                                  Continued Base Salary through the end of the 2018 calendar year, if the Disability termination occurs before December 31, 2018.

 

5.3                               Termination for Cause.  In the event that Executive’s employment is terminated by the Company for Cause, the Company shall pay the following amounts to Executive:

 

(a)                                 Accrued Compensation; and

 

(b)                                 Plan Benefits.

 

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5.4                               Voluntary Termination by Executive.  In the event that Executive voluntarily terminates employment other than for Good Reason, the Company shall pay the following amounts to Executive:

 

(a)                                 Accrued Compensation; and

 

(b)                                 Plan Benefits.

 

5.5                               Termination by the Company Without Cause; Termination by Executive for Good Reason.  In the event that Executive’s employment is terminated by the Company for reasons other than death, Total Disability or Cause, or Executive terminates employment for Good Reason, the Company shall pay the following amounts to Executive:

 

(a)                                 Accrued Compensation;

 

(b)                                 Plan Benefits;

 

(c)                                  Subject to Executive’s execution and non-revocation of the Release (as defined below), an amount equal to Executive’s Base Salary (as then in effect) for twenty-four (24) months, with payments beginning on the first administratively feasible payroll date following the date the Release becomes effective, with the first payment totaling the amount of individual payments that would have been made from the termination date through the date of the payment, and subsequent payments continuing at the same time and in the same manner as Base Salary would have been paid if Executive had remained in active employment until the end of such period.  Notwithstanding the foregoing, in the event that the period for consideration of the Release and the revocation period crosses two (2) calendar years, the first administratively feasible payroll date shall be deemed to be the first payroll date in the second calendar year that occurs on or after the expiration of the revocation period, regardless of the date the Release is signed.  Further notwithstanding the foregoing, the Company may in its discretion change the timing of the payment of any amounts to the extent such amounts are not subject to Section 409A of the Internal Revenue Code (the “Code”).

 

(d)                                 Subject to Executive’s execution of the Release (as defined below) and his timely election of COBRA, the Company shall pay Executive in monthly installments over the severance period an amount equal to the monthly cost of COBRA continuation coverage for the medical plan at the date of termination at the level of coverage then in effect for Executive, less the active rate for such coverage.

 

(e)                                  Subject to Executive’s execution and non-revocation of the Release (as defined below), each outstanding award under the Equity Plan that the Company granted to Executive will become fully vested.

 

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(f)                                   Subject to Executive’s execution and non-revocation of the Release (as defined below) a pro rata annual bonus for the calendar year in which the termination occurs based on the number of days Executive was employed in such calendar year; provided, however, that such pro rata bonus shall be paid at the time it would have been paid had Executive not terminated employment and will be paid only if the applicable performance conditions are met at the conclusion of the calendar year and the amount shall be determined based on the actual satisfaction of the applicable performance criteria.

 

(g)                                  Each of the payments of severance (including installments) and continued medical benefits above are designated as separate payments for purposes of Code Section 409A.  As a result, to the extent applicable, (A) payments that are made on or before the 15th day of the third month of the calendar year following the applicable year of termination, and (B) any additional payments that are made on or before the last day of the second calendar year following the year of Executive’s termination and do not exceed the lesser of two times Base Salary or two times the limit under Code Section 401(a)(17) then in effect, are exempt from the requirements of Code Section 409A.]1  Notwithstanding any provision of this Agreement to the contrary, if Executive is designated as a “specified employee” within the meaning of Code Section 409A, to the extent the payments to be made during the six month period following Executive’s “separation from service” from the Company (within the meaning of Code Section 409A) constitute “nonqualified deferred compensation (within the meaning of Code Section 409A, a “Separation from Service”), the payments shall be withheld and the amount of the payments withheld will be paid in a lump sum, without interest, during the seventh month after the date of Executive’s Separation from Service (or such earlier date upon which such amounts can be paid under Code Section 409A without resulting in a prohibited distribution, including as a result of Executive’s death).

 

As a result of Executive entering into this Agreement, during the term of the Agreement Executive is not entitled to participate in the Company’s involuntary separation pay plan or any successor thereto.

 

5.6                               Cancellation and Refund of Termination Benefits for Subsequently Discovered Cause.  Notwithstanding any provision of this Agreement to the contrary, if after and within one (1) year of Executive termination of employment, the Company becomes aware of facts that would have allowed the Company to terminate Executive’s employment for Cause, then without regard to any notice or cure periods, to the extent permitted by law, the Company may elect to cancel any and all payments under Section 5(c)-(f) due Executive, but not yet paid, under this Agreement.

 

5.7                               Release.  For purposes of this Agreement, “Release” means that specific document which the Company shall present to Executive for consideration and execution after

 

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any termination of employment pursuant to Section 5.5 and Article VI, wherein if Executive agrees to such, he will irrevocably and unconditionally release and forever discharge the Company, its subsidiaries, affiliates and related parties from any and all causes of action which Executive at that time had or may have had against the Company (excluding any claim for indemnity, claims under this Agreement, any claim under state workers’ compensation or unemployment laws, any claim under COBRA, or any claims that cannot be released as a matter of law).  The Release will be provided to Executive as soon as practical after Executive’s termination date, but in any event in sufficient time so that Executive will have adequate time to review the Release as provided by applicable law.

 

ARTICLE VI

 

Certain Terminations During a Change-in-Control Period

 

6.1                               Additional Severance.                         Subject to reduction as may be required under the Agreement, in the event a Change-in-Control occurs and Executive terminates his employment for Good Reason during a Change-in-Control Period, or the Company terminates Executive’s employment without Cause (and for reason other than death or Total Disability) during a Change-in-Control Period, the Company shall, subject to Executive’s execution of the Release (as defined in Section 5.7), pay the payments and benefits provided for in Section 5.5 in the same form as provided for therein and subject to the same terms and conditions thereunder; provided, however, that the Company shall pay Executive one-hundred percent (100%) of the Executive’s Target Bonus for the year of termination instead of a pro-rata portion of the annual bonus as provided for in Section 5.5(f) and such payment shall not be conditioned on the satisfaction of the applicable performance criteria.  For purposes of this Agreement, “Change-in-Control” means a “change-in-control” as determined under the Equity Plan.  For purposes of this Agreement, “Change-in-Control Period” means the period commencing on the date on which a Change-in-Control occurs and ending on the first anniversary of the date on which a Change-in-Control occurs.

 

6.2                               Golden Parachute.  Notwithstanding the foregoing, if the total payments to be paid to Executive under this Agreement, along with any other payments to Executive by the Company, would result in Executive being subject to the excise tax imposed by Section 4999 of the Code (commonly referred to as the “Golden Parachute Tax”), the Company shall reduce the aggregate payments to the largest amount which can be paid to Executive without triggering the excise tax, but only if and to the extent that such reduction would result in Executive retaining larger aggregate after-tax payments. The determination of the excise tax and the aggregate after-tax payments to be received by Executive will be made by the Compensation Committee.  If payments are to be reduced, the payments made latest in time will be reduced first and if payments are to be made at the same time, non-cash payments will be reduced before cash payments.

 

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ARTICLE VII

 

NON-DISCLOSURE;
 RESTRICTIVE COVENANTS

 

7.1                               Non-Disclosure of Confidential Information.  As used herein, “Confidential Information” means any and all private, proprietary information affecting or relating to the business of the Company and its Affiliates, including without limitation, financial data, customer lists and data, licensing arrangements, borrower or prospective borrower information, regardless of the form in which it is handled or maintained (including, without limitation, bank and credit card account numbers, income and credit information, and social security numbers), loan files, business strategies, pricing information, product development, intellectual, or other materials of any kind or nature (whether or not entitled to protection under applicable copyright laws, or reduced to or embodied in any medium or tangible form), including without limitation, all copyrights, patents, trademarks, service marks, trade secrets, contract rights, ideas, concepts, technologies, logos, hardware, software, and as may be embodied in any and all computer programs, tapes, diskettes, disks, mailing lists, lists of actual or prospective customers and/or suppliers, notebooks, documents, memoranda, reports, files, correspondence, charts, lists and all other written, printed or otherwise recorded material of any kind whatsoever and any other information, whether or not reduced to writing, including “know-how”, ideas, concepts, research, processes, and plans.  “Confidential Information” does not include information that is in the public domain, information that is generally known in the trade, or information that Executive can prove Executive acquired wholly independently of Executive’s employment with the Company.  Executive shall not, at any time during the Term or thereafter, directly or indirectly, disclose or furnish to any other person, firm or corporation any Confidential Information, except in the course of the proper performance of Executive’s duties hereunder or as required by law (in which event Executive shall give prior written notice to Company and shall cooperate with Company and Company’s counsel in complying with such legal requirements).  Promptly upon the expiration or termination of Executive’s employment hereunder for any reason or whenever the Company so requests, Executive shall surrender to the Company all documents, hardware, software, loan files, work papers, lists, memoranda, records and other data (including all copies) constituting or pertaining in any way to any of the Confidential Information.

 

7.2                               Non-Competition.  Executive shall not, during the Term directly:  (a) compete with the Company; or (b) have an interest in, be employed by, be engaged in or participate in the ownership, management, operation or control of, or act in any advisory or other capacity for, any Competing Entity which conducts its business within the Territory (as such terms are hereinafter defined); provided, however, that notwithstanding the foregoing, Executive may make solely passive investments in any Competing Entity the common stock of which is “publicly held,” and of which Executive shall not own or control, directly or indirectly, in the aggregate securities which constitute more than one (1%) percent of the voting rights or equity ownership of such Competing Entity; or (c) solicit or divert any business or any customer from the Company or assist any person, firm or corporation in doing so or attempting to do so; or (d)

 

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cause or seek to cause any person, firm or corporation to refrain from dealing or doing business with the Company or assist any person, firm or corporation in doing so or attempting to do so.

 

For purposes of this Section 7.2, (i) the term “Competing Entity” shall mean any entity which presently or during the period referred to above engages in any business activity in which the Company or any of its Affiliates is then engaged; and (ii) the term “Territory” shall mean any geographic area in which the Company or any of its Affiliates conducts business during such period.

 

7.3                               Non-Solicitation.

 

7.3.1                     Executive shall not, for a period of two (2) year from the date of any termination or expiration of Executive’s employment hereunder, directly or indirectly:  (a) acquire any financial interest in or perform any services for himself or any other entity in connection with a business in which Executive’s interest, duties or activities would inherently require Executive to reveal any Confidential Information; or (b) solicit or cause to be solicited the disclosure of or disclose any Confidential Information for any purpose whatsoever or for any other party.

 

7.3.2                     Executive shall not, for a period of two (2) years from the date of any termination or expiration of Executive’s employment hereunder, solicit, directly or indirectly, or cause others to solicit, directly or indirectly, any person employed by the Company (a “Current Employee”) to leave employment with the Company. The term “solicit” includes, but is not limited to the following (regardless of whether done directly or indirectly):  (i) requesting that a Current Employee change employment, (ii) assisting a Current Employee in finding employment elsewhere, (iii) inquiring if a Current Employee might have an interest in employment elsewhere or (iv) informing others of the name or status of, or other information about, a Current Employee for purposes of inducing the Current Employee to leave the Company and advising a third-party to induce the Current Employee to leave.

 

7.4                               Breach of Provisions.  In the event that Executive shall breach any of the provisions of this Article VII, in addition to and without limiting or waiving any other remedies available to the Company at law or in equity, the Company shall be entitled to immediate injunctive relief in any court, domestic or foreign, having the capacity to grant such relief, without the necessity of posting a bond, to restrain any such breach or threatened breach and to enforce the provisions of this Article VII. Executive acknowledges and agrees that there is no adequate remedy at law for any such breach or threatened breach and, in the event that any action or proceeding is brought seeking injunctive relief, Executive shall not use as a defense thereto that there is an adequate remedy at law.

 

7.5                               Reasonable Restrictions.  The parties acknowledge that the foregoing restrictions, the duration and the territorial scope thereof as set forth in this Article VII, are under all of the circumstances reasonable and necessary for the protection of the Company and its business.

 

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7.6                               Definition.  For purposes of this Article VII, the term “Company” shall be deemed to include (i) any successor of the Company, (ii) any subsidiary of the Company (including, without limitation, any entity in which the Company owns 50% or more of the issued and outstanding equity), and (iii) any entity that is under the control or common control of the Company (including, by way of illustration and not as a limitation, any joint venture to which the Company or one of its subsidiaries is a party).

 

ARTICLE VIII

 

Dispute Resolution

 

8.1                               Negotiation. The parties will attempt in good faith to resolve through negotiation any dispute, claim, or controversy arising out of or relating to this Agreement. Either party may initiate negotiations by providing written notice to the other pursuant to the above. Such notice shall set forth the subject of the dispute and the relief requested. The recipients of such notice will respond in writing within ten (10) days with a statement of their respective positions on and recommended solution to the dispute. If the dispute is not resolved by this exchange of correspondence, the parties, and/or their representatives, will meet at a mutually agreeable time and place within twenty (20) days of the date of the initial notice in order to exchange relevant information and perspectives, and to attempt to resolve the dispute.

 

8.2                               Mediation. Either party may commence mediation of a good faith dispute by providing to the Judicial Arbitration and Mediation Services (“JAMS”) and the other party a written request for mediation. Such request shall set forth the subject of the dispute and the relief requested. The parties will cooperate with JAMS and with one another in selecting a mediator from the JAMS panel of neutrals, and in scheduling the mediation proceedings which shall be conducted in Santa Rosa, California. The parties covenant that they will participate in the mediation in good faith. All offers, promises, conduct, and statements, whether oral or written, made in the course of the mediation by any of the parties and/or their respective agents, employees, experts, and attorneys, and by the mediator or any JAMS employees, are confidential, privileged, and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation.

 

8.3                               Consent to Judicial Reference. Subject to the provisions of Sections 8.1 and 8.2 hereinabove, the parties hereby consent and agree that (a) any and all disputes arising out of or related to this Agreement or any other matter in any way relating to or arising out of Executive’s employment with the Company (collectively “Dispute”) shall be heard by a referee in accordance with the general reference provisions of California Code of Civil Procedure Section 638, sitting without a jury in the City of Santa Rosa, County of Sonoma, California, (b) such referee shall hear and determine all of the issues in any Dispute (whether of fact or of law), including issues pertaining to a “provisional remedy” as defined in California Code of Civil Procedure section 1281.8, including without limitation, entering restraining orders, entering

 

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temporary restraining orders, issuing temporary and permanent injunctions and appointing receivers, and shall report a statement of decision; provided that, if, during the course of any Dispute, any party desires to seek such a provisional remedy at a time when a referee has not yet been appointed or is otherwise unavailable to hear the request for such provisional remedy, then such party may apply to the Sonoma County Superior Court for such provisional relief, and (c) pursuant to California Code of Civil Procedure section 644(a), judgment may be entered upon the decision of such referee in the same manner as if the Dispute had been tried directly by a court. The parties shall use their respective commercially reasonable and good faith efforts to agree upon and select such referee, provided that such referee must be a retired California state or federal judge, and further provided that if the parties cannot agree upon a referee, the referee shall be appointed by the Presiding Judge of the Sonoma County Superior Court. The parties acknowledge that this consent and agreement is a material inducement to enter into this Agreement and that each party will continue to be bound by and to rely on this consent and agreement in their related future dealings. The parties shall share the cost of the referee and reference proceedings equally, except that the costs of the referee and reference proceedings to be paid by Executive shall not exceed the amount Executive would have had to pay in court costs to initiate or respond to a civil action had the matter been pursued in court. Executive shall be responsible for all other costs payable; provided that, the referee may award attorneys’ fees and reimbursement of the referee and reference proceeding fees and costs to the prevailing party, whereupon all referee and reference proceeding fees and charges will be payable by the non-prevailing party (as so determined by the referee). The parties further warrant and represent that each has reviewed this consent and agreement with legal counsel of its own choosing, or has had an opportunity to do so, and that it knowingly and voluntarily gives this consent and enters into this agreement having had the opportunity to consult with legal counsel. This consent and agreement is irrevocable, meaning that it may not be modified either orally or in writing, and this consent and agreement shall apply to any subsequent amendments, renewals, supplements or modifications to this Agreement or any other agreement or document entered into between the parties in connection with this Agreement. In the event of litigation, this Agreement may be filed as evidence of the parties’ consent and agreement to have Disputes heard and determined by a referee under California Code of Civil Procedure section 638.

 

8.4                               ERISA.  Article VIII shall not apply to any claims or disputes arising out of or relating to any Company plan subject to the Employee Retirement Income and Security Act (“ERISA”), which claims or disputes shall be subject to ERISA.

 

ARTICLE IX

 

MISCELLANEOUS

 

9.1                               Company’s Default.                                 If Company is in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act), all obligations under this Agreement shall terminate as of the date of default, except to the extent it is determined that continuation of the Agreement is necessary for the continued operation of the Company by:

 

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(a)                                 the FDIC, the DBO, or the FRBSF at such time as said regulatory agency enters into an agreement to provide assistance to or on behalf of the Company under the authority contained in 13(c) of the Federal Deposit Insurance Act or comparable federal or state law; or

 

(b)                                 the FDIC, the DBO, or the FRBSF at such time as said regulatory agency approves a supervisory merger to resolve problems related to operation of the Company or when the Company is determined by the FDIC, the DBO, or the FRBSF to be in an unsafe or unsound condition.

 

(c)                                  Any rights of the Company or Executive that have already vested, however, shall not be affected by such action pursuant to section 163.39 of Title 12 of the Code of Federal Regulations.

 

9.2                               Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, heirs, distributees, successors and assigns.

 

9.3                               Assignment.  The Company may assign this Agreement to any successor in interest to its business, or to any subsidiary of the Company, and Executive hereby agrees to be employed by such assignee as though such assignee were originally the employer named herein.  Executive hereby acknowledges that the services to be rendered by Executive are unique and personal, and, accordingly, Executive may not assign any of Executive’s rights or delegate any of Executive’s duties or obligations under this Agreement.

 

9.4                               Notices.  Any notice provided for herein shall be in writing and shall be deemed to have been given or made when personally delivered or three (3) days following deposit for mailing by first class registered or certified mail, return receipt requested, or if delivered by electronic mail, upon confirmation of receipt of the transmission, to the address of the other party set forth below or to such other address as may be specified by notice given in accordance with this Section 9.4:

 

	
If to the Company:
    	
 
    
	
 
    	
 
    
	
General Counsel &   Corporate Secretary
    	
 
    
	
Luther Burbank Savings
    	
 
    
	
1500 Rosecrans Avenue,   Suite 300
    	
 
    
	
Manhattan Beach, CA 90266
    	
 
    
	
 
    	
 
    
	
legal@lbsavings.com
    	
 
    
	
 
    	
 
    
	
If to Executive:
    	
 
    
	
 
    	
 
    
	
The   Executive’s last known address of record.
    

 

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9.5                               Severability.  If any provision of this Agreement, or portion thereof, shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall attach only to such provision or portion thereof, and shall not in any manner affect or render invalid or unenforceable any other provision of this Agreement or portion thereof, and this Agreement shall be carried out as if any such invalid or unenforceable provision or portion thereof were not contained herein.  In addition, any such invalid or unenforceable provision or portion thereof shall be deemed, without further action on the part of the parties hereto, modified, amended or limited to the extent necessary to render the same valid and enforceable.

 

9.6                               Confidentiality.  The parties hereto agree that they will not, except to their attorney, during the Term or thereafter, disclose to any other person or entity the terms or conditions of this Agreement (excluding the financial terms hereof) without the prior written consent of the other party, except as required by law, regulatory authority or as necessary for either party to obtain personal loans or financing.  Approval of the Company and of Executive shall be required with respect to any press releases regarding this Agreement and the activities of Executive contemplated hereunder.

 

9.7                               Indemnity.  The Company shall, to the fullest extent permitted by law, indemnify Executive with respect to, and hold Executive harmless from and against, all expenses (including reasonable attorneys’ fees), liabilities, judgments, penalties, fines and amounts paid in settlement reasonably incurred by Executive or on behalf of Executive in connection with such legal proceeding or any claim, issue or matter therein, for any breach of any representation, warranty or obligation hereunder by the Company or the Company’s gross negligence or intentionally tortious misconduct.

 

9.8                               Waiver.  No waiver by a party hereto of a breach or default hereunder by the other party shall be considered valid unless in writing signed by such first party, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or any other nature.

 

9.9                               Entire Agreement.  This Agreement sets forth the entire agreement between the parties with respect to the subject matter hereof, and supersedes any and all prior agreements or understanding between the Company and Executive (including the Prior Agreement), whether written or oral, fully or partially performed relating to any or all matters covered by and contained or otherwise dealt with in this Agreement.

 

9.10                        Amendment.  No modification, change or amendment of this Agreement or any of its provisions shall be valid unless in writing and signed by the party against whom such claimed modification, change or amendment is sought to be enforced.

 

9.11                        Authority.  The parties each represent and warrant that they have the power, authority and right to enter into this Agreement and to carry out and perform the terms, covenants and conditions hereof.

 

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9.12                        Applicable Law, Jurisdiction and Venue.  This Agreement shall be governed by and construed under the laws of the State of California, without regard to its conflicts of laws principles. The parties agree that any action taken to enforce the terms of this Agreement, including judicial action not inconsistent with the arbitration provisions hereunder, shall come under the jurisdiction of, and be properly heard and adjudicated in the Courts of the State of California and that venue shall be proper in the County of Sonoma.

 

9.13                        Survival.  The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

 

9.14                        Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

 

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

 

	
 
    	
“COMPANY”
    
	
 
    	
 
    
	
 
    	
Luther Burbank Corporation
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
“EXECUTIVE”
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
John Biggs
    

 

16Exhibit 10.3

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (“Agreement”) is entered into Santa Rosa, California as of August 1, 2016 (“Effective Date”) by and between Luther Burbank Savings (“Bank”), and Laura Tarantino (“Tarantino”).  Bank and Tarantino are collectively referred to herein as “Parties.”

 

RECITALS

 

A.            Bank currently employs Tarantino and Bank and Tarantino desire to continue Bank’s employment of Tarantino on the terms and conditions set forth herein.

 

B.            Tarantino possesses the requisite knowledge, skill, and experience to serve as the chief financial officer of Bank.

 

In consideration of the mutual covenants, promises, and conditions set forth herein, Bank and Tarantino agree as follows:

 

Article 1. Term and Title

 

1.1          Chief Financial Officer of Bank.  During the Term of Employment defined below, Tarantino shall serve as the Chief Financial Officer of Bank.  The Parties contemplate that Tarantino will report directly to the Chief Executive Officer (“CEO”).  In such position, Tarantino shall have such duties, authority, and responsibility as shall be determined from time to time by the CEO, which duties, authority, and responsibility are consistent with Tarantino’s position.

 

1.2          Other Positions.  During the Term of Employment defined below, Tarantino shall serve as the Executive Vice President, Chief Financial Officer, and Assistant Secretary to the Luther Burbank Corporation and the Luther Burbank Mortgage Corporation.  In such positions, Tarantino shall have such duties, authority, and responsibility as shall be determined from time to time by the CEO, which duties, authority, and responsibility are consistent with Tarantino’s positions.

 

1.3          Term of Employment.  Subject to any earlier termination as provided in Article 8 herein below, Tarantino’s employment under this Agreement shall commence on the Effective Date and shall continue for a three (3) year period (“Term”), also subject to any extension as set forth herein.  Upon expiration of the Term, and each subsequent term or extension thereof, this Agreement shall automatically be extended for an additional term of one (1) year, unless Tarantino or Bank shall have notified the other party hereto of her or its election to terminate this Agreement not later than sixty (60) days prior to the end of such subsequent term or extension thereof (the Term, together with any extensions, until termination in accordance herewith, shall be referenced herein as the “Term of Employment”).  Nothing stated in this Agreement or represented orally or in writing to either Party shall create any obligation to renew this Agreement and the decision of Bank not to extend the Term or any subsequent term, shall not be deemed a termination of employment entitling Tarantino to any severance compensation or separation benefits under either this Agreement or any Bank severance plan or practice then in effect.

 

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Article 2. Duties of Tarantino

 

2.1          Compliance with Law.  Tarantino hereby agrees to use her best efforts as Chief Financial Officer of Bank and agrees to perform such related duties as are customary for the chief financial officer of a financial institution or as may reasonably be required by Bank from time to time.  Tarantino agrees during the term of this Agreement to remain knowledgeable of, and to comply with, all applicable rules and regulations relating to banking and to keep informed of, and to comply with, all applicable federal, state and local laws, regulations, and/or ordinances governing the conduct of Bank’s business.

 

2.2          Bank Management Obligations.  Pursuant to, and in accordance with, the policies and procedures of Bank, as may be amended from time to time in Bank’s discretion, Tarantino shall be responsible for oversight of all financial matters of Bank and such other matters as are assigned to her from time to time consistent with the intent of this Agreement and sound business practices.

 

2.3          Full Time Employment.  Tarantino shall devote her full energies, abilities, and productive time to the performance of the services contemplated under this Agreement, unless an alternative arrangement is agreed to by the CEO.  Tarantino shall not engage in any business activities that would interfere or conflict with the performance of Tarantino’s duties under this Agreement, without the prior written consent of the CEO of Bank.  Notwithstanding the above, Tarantino will be permitted, to the extent such activities do not interfere with the performance by Tarantino of her duties and responsibilities under this Agreement, to (a) manage Tarantino’s personal, financial and legal affairs, and (b) serve on nonprofit or professional association boards or committees.

 

2.4          Location.  The principal place of Tarantino’s employment shall be 520 Third Street, Santa Rosa, CA 95401; provided that, Tarantino will be required to travel on Bank business during the Term of Employment.

 

Article 3. Tarantino’s Compensation

 

3.1          Base Salary.  If, in the sound judgment of the CEO, Tarantino performs her obligations under Article 2 hereof in the manner expected and is and remains an employee in good standing at Bank, Bank shall pay Tarantino an annual rate of base salary of $290,000.00 in periodic installments in accordance with the Bank’s customary payroll practices, but no less frequently than monthly.  Tarantino’s base salary shall be reviewed at least annually by the CEO and the Board’s Governance, Nominating, and Compensation Committee (the “GNCC”) who may, but shall not be required to, increase the base salary during the Term of Employment.

 

3.2          Corporate Annual Bonus.  Tarantino will be eligible to earn an annual discretionary incentive bonus based on a percentage of her base salary (the “Incentive Bonus”), subject to the terms and conditions of the Luther Burbank Corporation and Subsidiaries Performance and Profitability Based Annual Incentive Plan (the “Bonus Plan”) and the achievement by the Bank’s performance goals.  The actual amount of the Incentive Bonus shall be determined by the GNCC, in its sole discretion.  The grant of the Incentive Bonus hereunder shall be subject to typical and reasonable performance measures in the sound judgment of the

 

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GNCC.  The target Incentive Bonus will be between 50% and 100% of Tarantino’s base salary during the applicable year.  No portion of the Incentive Bonus will be payable if Tarantino resigns or otherwise terminates employment before the end of the applicable calendar or fiscal year except as provided in Section 8.7.

 

Article 4. Phantom Stock Award and Vesting

 

4.1          Phantom Stock.  Luther Burbank Corp. (“LBC”) adopted the Luther Burbank Corporation and Subsidiaries Phantom Stock Plan as of January 1, 2011, including any amendments thereto (the “Plan”).  During the Term of Employment, Tarantino shall be entitled to participate in the Plan in the same manner as any comparable employee in good standing of Bank.  LBC reserves the right to amend or cancel the Plan at any time in its sole discretion, subject to the terms of such Plan and applicable law.

 

Article 5. Tarantino’s Benefits

 

5.1          Participation in Bank Benefit Plans.  Tarantino shall be eligible to participate in those group employee benefit plans, including, without limitation, medical, dental, and life insurance, which Bank makes available to similarly situated employees from time to time, subject to all terms and conditions of those plans and amendments thereto, including, without limitation, any and all provisions concerning eligibility for participation.

 

5.2          Expenses.  Upon presentation of appropriate vouchers and receipts, Bank shall reimburse Tarantino, in a manner similar to other senior Bank executives, for all reasonable business expenses incurred by Tarantino.

 

5.3          Stock Appreciation Rights Plan.  Tarantino shall retain all rights to Awards of Stock Appreciation Rights (“SAR Awards”) made pursuant to the Luther Burbank Savings Stock Appreciation Rights Plan adopted on January 1, 2006, attached hereto as Exhibit B, including amendments thereto.

 

5.4          Salary Continuation Agreement.  Tarantino shall be entitled to the benefits set forth in the Luther Burbank Savings Amended and Restated Salary Continuation Agreement dated April 25, 2006 as amended on December 5, 2008, both of which are attached hereto as Exhibit C.

 

5.5          Vacation.  During the Term of Employment, Tarantino shall be entitled to twenty (20) days of vacation leave at full salary taken at the discretion of Tarantino as time allows, so long as it is reasonable and does not conflict with the fulfillment of her responsibilities.

 

5.6          Clawback Provisions. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to Tarantino pursuant to this Agreement or any other agreement or arrangement with the Bank which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, or government regulation (or any policy adopted by the Bank pursuant to any such law, government regulation or stock exchange listing requirement). The Bank will make any

 

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determination for clawback or recovery in its sole discretion and in accordance with any applicable law or regulation.

 

Article 6. Safeguarding Customer Information

 

6.1          Customer Information.  Tarantino will learn of, and come into possession of non-public personal information (“Customer Information”) regarding borrowers or prospective borrowers during the term of this Agreement.  Tarantino agrees to take all reasonable measures to ensure the security and confidentiality of Customer Information, to protect against any anticipated threats or hazards to the security of such information and to protect against the unauthorized access to or use of Customer Information which could result in substantial harm or inconvenience to any borrower or prospective borrower.  Tarantino agrees that she will use such Customer Information only for the limited purpose(s) for which it is disclosed, and for no other purpose.  Tarantino further agrees to comply with all federal and state laws governing the disclosure of Customer Information.  “Customer Information,” as used herein, means any record containing non-public personal information pertaining to a borrower or prospective borrower, regardless of the form in which it is handled or maintained, and includes, without limitation, bank and credit card account numbers, income and credit information, and social security numbers.

 

6.2          Non-solicitation of Customers.  Tarantino understands and acknowledges that because of her experience with and relationship to the Bank she will obtain information Customer Information that includes names, phone numbers, addresses, e-mail addresses, pricing information, and other information identifying facts and circumstances specific to customers.  Tarantino understands and acknowledges that loss of such customer relationships and/or goodwill will cause significant and irreparable harm to Bank.  Tarantino agrees that if her employment with Bank is terminated, with or without cause, during the Term, that for the remainder of the Term and for a period of six (6) months thereafter, she shall not attempt to contact or meet with the Bank’s current, former or prospective customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Bank.  This restriction shall only apply to customers about whom Tarantino has trade secret or confidential information.

 

Article 7. Unfair Competition and Confidential Information

 

7.1          Confidential Information.  Tarantino acknowledges that Bank owns proprietary Confidential Information which constitutes a valuable, special, and unique asset.  This Confidential Information has been compiled and developed by Bank over time at considerable expense and effort, has not been divulged to third parties, and is not known to Bank’s competitors, who could have obtained economic value from such information had it been known. As used herein, the term “Confidential Information” includes all information and materials belonging to, used by, or in the possession of Bank relating to its products, processes, services, technologies, inventions, patents, ideas, contracts, forms, records, data, processes, financial information, business strategies, pricing, marketing plans, customer lists, and trade secrets of every kind and character, but shall not include (a) information that was already within the public domain at the time the information was acquired by Tarantino, or (b) information that subsequently becomes public through no act or omission of Tarantino.  Tarantino agrees that all

 

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Confidential Information is and shall continue to be the exclusive property of Bank, whether or not prepared in whole or in part by Tarantino and whether or not disclosed to or entrusted to Tarantino’s custody.  Tarantino’s obligation to preserve the secrecy of Confidential Information shall survive the termination of this Agreement and her employment with Bank.  Upon termination of Tarantino’s employment, Tarantino agrees to return to Bank all files, papers, and materials of any kind containing or relating to Confidential Information.  Tarantino further understands and acknowledges that the Bank’s ability to reserve these for the exclusive knowledge and use of the Bank is of great competitive importance and commercial value to the Bank, and that improper use or disclosure by Tarantino is likely to result in unfair or unlawful competitive activity.

 

7.2          Non-Solicitation.  Tarantino agrees that if her employment with Bank is terminated, with or without cause, during the Term, that for the remainder of the Term and for a period of six (6) months thereafter, she shall not induce or attempt to induce any employee of Bank to discontinue employment or association with Bank to obtain employment with a competitor of Bank or providing services to Tarantino or any company affiliated with Tarantino.

 

Article 8. Termination

 

8.1          Death or Disability.

 

a)            Tarantino’s death or total disability during the Term of Employment shall result in the termination of Tarantino’s employment for cause.  No compensation or benefits shall be paid except as set forth in Section 8.7(a) below and as provided in Exhibit A, the Luther Burbank Corporation and Subsidiaries Phantom Stock Plan.

 

b)            Bank and Tarantino respectively shall each have the right to terminate the Term of Employment in the event of Tarantino’s Disability.  “Disability” as used in this Agreement shall have the meaning set forth in Section 22(e)(3) of the Internal Revenue Code, which, as of the date of this Agreement, is as follows:

 

An individual is permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

 

A termination of Tarantino’s employment by either party for Disability shall be communicated to the other party by written notice, and shall be effective on the tenth (10th) day after receipt of such notice by the other party (the “Disability Effective Date”), unless Tarantino returns to full-time performance of her duties before the Disability Effective Date.

 

8.2          Termination by Bank.  Bank shall have the right to terminate Tarantino’s employment for Cause.  “Cause” as used in this Agreement shall mean:

 

a)            Tarantino’s charge of or conviction by, or entry of a plea of guilty or nolo contendere in a court of competent jurisdiction, for any crime involving moral turpitude or a felony in the jurisdiction involved;

 

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b)            Tarantino’s willful refusal or negligent failure to perform Tarantino’s duties as required by this Agreement;

 

c)             Tarantino’s gross negligence, insubordination, or material violation of any duty of loyalty or fiduciary duty to Bank or any other material misconduct on the part of Tarantino;

 

d)            Tarantino’s revocation of any approvals required by any federal or state banking regulator for Tarantino to perform her assigned duties and responsibilities with Bank, including without limitation, Tarantino’s suspension, removal or prohibition from participating in the conduct of Bank’s affairs by an order issued under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. §1818(e)(3) and (g)(1)) or any comparable provision of federal or state law;

 

e)             Tarantino’s material failure to comply with all applicable federal, state, and local laws, regulations, and/or ordinances governing her duties with Bank; or

 

f)             Tarantino’s material breach of any other provision of this Agreement.

 

Bank shall also have the right to terminate Tarantino’s employment “Without Cause” at any time, with or without notice, subject solely to its remittance of the consideration set forth in Section 8.7(b) herein below.

 

8.3          Termination by Tarantino.

 

a)            Tarantino shall have the right to terminate the Employment Term for Good Reason (as defined below), upon thirty (30) days written notice to Bank delivered within thirty (30) days following the occurrence of an event constituting Good Reason; provided that Bank shall have thirty (30) days after the date such notice has been received by Bank in which to cure the conduct specified in such notice.  Tarantino’s continued employment during such thirty (30) day period shall not constitute Tarantino’s consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.  For purposes of this Agreement “Good Reason” shall mean:

 

i)              a significant material change in Tarantino’s position or responsibilities, including a material change in duties that represents a substantial reduction in the position or responsibilities in effect immediately prior thereto; the assignment to Tarantino of any significant duties or responsibilities that are materially inconsistent with such position or responsibilities; except in connection with the termination of Tarantino’s employment for Cause, as a result of her Disability or death, or by Tarantino other than for Good Reason;

 

ii)             a reduction in Tarantino’s base salary or eligibility for target bonus other than in connection with a general reduction in wages for all senior executive employees except that Tarantino’s actual bonus payment may be reduced in accordance with the Bonus Plan based on the company’s or her performance;

 

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iii)            Bank requiring Tarantino (without Tarantino’s consent) to be based at any place outside of Sonoma County, except for reasonably required travel on Bank’s business;

 

iv)           Bank’s failure to provide Tarantino with the compensation, including salary, bonuses, and benefits as outlined in this Agreement;

 

v)            the failure of any successor to Bank to assume this Agreement pursuant to Section 11.2; or

 

vi)           any material breach by Bank of its obligations to Tarantino under this Agreement.

 

b)            Tarantino shall have the right to terminate her employment hereunder without Good Reason by providing Bank with a written notice of termination, and such termination shall not in and of itself be a breach of this Agreement.

 

8.4          Bank’s Default.  If Bank is in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act), all obligations under this Agreement shall terminate as of the date of default, except to the extent it is determined that continuation of the Agreement is necessary for the continued operation of Bank by:

 

(a)           the Office of the Comptroller of the Currency (the “OCC”), the California Department of Business Oversight (the “DBO”), the Federal Deposit Insurance Corporation (the “FDIC”), or the Federal Reserve Bank of San Francisco (the “FRBSF”) at such time as said regulatory agency enters into an agreement to provide assistance to or on behalf of Bank under the authority contained in 13(c) of the Federal Deposit Insurance Act or comparable federal or state law; or

 

(b)           the OCC, the FDIC, the DBO, or the FRBSF at such time as said regulatory agency approves a supervisory merger to resolve problems related to operation of Bank or when Bank is determined by the OCC, the FDIC, the DBO, or the FRBSF to be in an unsafe or unsound condition.

 

Any rights of Bank or Tarantino that have already vested, however, shall not be affected by such action pursuant to section 163.39 of Title 12 of the Code of Federal Regulations.

 

8.5          Loan Files.  Upon termination of Tarantino’s employment for any reason, all loan files, whether pending or closed, shall remain with, or promptly be returned to Bank, at Bank’s election, along with any Confidential Information in Tarantino’s possession.  Tarantino acknowledges and agrees that all such files and Confidential Information are the sole and exclusive property of Bank and no copies shall be retained by Tarantino.

 

8.6          Computers/Equipment.  Immediately upon the termination of Tarantino’s employment for any reason, any and all computer hardware and other equipment provided to Tarantino by Bank shall be returned to Bank.

 

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8.7          Effect of Termination upon Tarantino’s Compensation.

 

a)            Termination for Cause.  In the event Tarantino’s employment terminates for Cause, in accordance with Sections 8.1(a), 8.1(b), or 8.2, respectively, hereinabove, Tarantino shall be entitled solely to her base salary, as defined in Section 3.1 hereinabove, through the effective date of such termination and a payment equal to the value of her then accrued, untaken vacation, and, if applicable, disability and other insurance benefits in accordance with the then effective plans and programs of Bank.  In the event Tarantino’s employment terminates under Section 8.1, Tarantino or her estate shall also receive a one-time separation bonus, to be paid within 100 days after termination, equal to 90 days of her base salary, less the amount of any disability benefit received from a Bank-sponsored disability plan during the 90 days following termination.

 

b)            Termination by Bank without Cause or by Tarantino with Good Reason.  In the event Tarantino’s employment is terminated by Bank without Cause or in the event Tarantino terminates her employment for Good Reason in accordance with Section 8.3(a) above, at any time during the Term of Employment, Tarantino shall be entitled to (1) a prorated Corporate Annual Bonus (as described in Section 3.2 above,) for the time worked in the current calendar year, (2) continuation until the end of the Term of all group employee benefits, including, without limitation, medical, dental, and life insurance, which Bank makes available to executives, (3) payment for her accrued, untaken vacation through the effective date of her termination, (4) payment of her base salary as described in Section 3.1, above, for the remainder of the Term, or, in the alternative, a one-time severance payment equal to twice the sum of the base salary and Incentive Bonus earned by Tarantino during the prior calendar year paid in a lump sum within sixty (60) days following the Termination, whichever is greater, (5) Tarantino shall become one hundred percent (100%) vested in the Phantom Stock Account and such account shall be distributed in a lump sum within sixty (60) days following the Termination notwithstanding anything to the contrary under the Phantom Stock Plan, and (6) all of the additional benefits to which Tarantino would be entitled upon a Change in Control, including vesting of Awards and SAR Awards.

 

c)             Golden Parachute Payments.            Bank shall have no obligation to make any Severance Payment or other payment that is prohibited by section 359 of Title 12 of the Code of Federal Regulations (12 C.F.R. § 359 (2011)).

 

d)            Release.  The Bank’s obligation to pay the severance benefits in this section, as applicable, is conditioned on Tarantino’s execution and delivery to Bank, and non-revocation of a general release of claims in favor of Bank.

 

8.8          Resignation from Related Positions.  Upon termination of Tarantino’s employment hereunder for any reason, Tarantino shall be deemed to have resigned from all positions that Tarantino holds as an officer of the Bank or any of its affiliates, including the positions identified in Section 1.2, above.

 

8.9          Other Exit Obligations.  Upon (a) voluntary or involuntary termination of Tarantino’s employment or (b) the Bank’s request at any time during Tarantino’s employment, Tarantino shall (i) provide or return to Bank any and all Bank property and all Bank documents

 

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and materials belonging to the Bank and stored in any fashion, including but not limited to those that constitute or contain any Confidential Information or work product, that are in the possession or control of Tarantino, whether they were provided to Tarantino by Bank or any of its business associates or created by Tarantino in connection with her employment by Bank; and (ii) delete or destroy all copies of any such documents and materials not returned to Bank that remain in Tarantino’s possession or control, including those stored on any non-Bank devices, networks, storage locations and media in Tarantino’s possession or control.

 

8.10        Cooperation. The parties agree that certain matters in which Tarantino will be involved during the Employment Term may necessitate Tarantino’s cooperation in the future. Accordingly, following the termination of Tarantino’s employment for any reason, to the extent reasonably requested by the CEO or the Board, Tarantino shall cooperate with the Bank in connection with matters arising out of Tarantino’s service to the Bank; provided that, the Bank shall make reasonable efforts to minimize disruption of Tarantino’s other activities. The Bank shall reimburse Tarantino for reasonable expenses incurred in connection with such cooperation and, to the extent that Tarantino is required to spend substantial time on such matters, the Bank shall compensate Tarantino at an hourly rate based on Tarantino’s base salary on the Termination Date.

 

8.11        Acknowledgement. Tarantino acknowledges and agrees that the services to be rendered by her to the Bank are of a special and unique character; that Bank will obtain knowledge and skill relevant to the Bank’s industry, methods of doing business and marketing strategies by virtue of Tarantino’s employment; and that the restrictive covenants and other terms and conditions of this Agreement are reasonable and reasonably necessary to protect the legitimate business interest of the Bank.

 

Tarantino further acknowledges that the amount of her compensation reflects, in part, her obligations and the Bank’s rights under Articles 6, 7, and 8 of this Agreement; that she has no expectation of any additional compensation, royalties or other payment of any kind not otherwise referenced herein in connection herewith; that she will not be subject to undue hardship by reason of her full compliance with the terms and conditions of Articles 6, 7, and 8 of this Agreement or the Bank’s enforcement thereof.

 

8.12        Remedies. In the event of a breach or threatened breach by either Party hereto of Articles 6, 7, or 8 of this Agreement, the Parties hereby consent and agree that the aggrieved Party shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages or other available forms of relief.

 

Article 9. Notices

 

9.1          Notices.  Any notice given hereunder by either Party to the other may be effected either by personal delivery in writing or by mail, registered or certified, postage prepaid, with

 

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return receipt requested.  Mailed notices shall be addressed to the Parties at the following addresses:

 

	
Bank:
    	
 
    	
Laura Tarantino:
    
	
 
    	
 
    	
 
    
	
Luther Burbank Corporation
    	
 
    	
 
    
	
1500 Rosecrans Avenue, Suite 300
    	
 
    	
 
    
	
Manhattan Beach, CA 90266
    	
 
    	
Email:
    	
 
    
	
ATTN: Chief Executive Officer
    	
 
    	
 
    
	
Email: legal@lbsavings.com
    	
 
    	
 
    

 

Each Party may change her or its address by written notice in accordance with this section of the Agreement.  Notices delivered personally shall be deemed communicated as of the actual date of receipt.  Mailed notices shall be deemed communicated no later than three (3) business days after deposit in the United States mail.

 

Article 10. Dispute Resolution

 

10.1        Negotiation.  The Parties will attempt in good faith to resolve through negotiation any dispute, claim, or controversy arising out of or relating to this Agreement.  Either Party may initiate negotiations by providing written notice to the other pursuant to the above.  Such notice shall set forth the subject of the dispute and the relief requested.  The recipients of such notice will respond in writing within ten (10) days with a statement of their respective positions on and recommended solution to the dispute.  If the dispute is not resolved by this exchange of correspondence, the Parties, and/or their representatives, will meet at a mutually agreeable time and place within twenty (20) days of the date of the initial notice in order to exchange relevant information and perspectives, and to attempt to resolve the dispute.

 

10.2        Mediation.  Either Party may commence mediation of a good faith dispute by providing to the Judicial Arbitration and Mediation Services (“JAMS”) and the other Party a written request for mediation.  Such request shall set forth the subject of the dispute and the relief requested.  The Parties will cooperate with JAMS and with one another in selecting a mediator from the JAMS panel of neutrals, and in scheduling the mediation proceedings which shall be conducted in Santa Rosa, California.  The Parties covenant that they will participate in the mediation in good faith.  All offers, promises, conduct, and statements, whether oral or written, made in the course of the mediation by any of the Parties and/or their respective agents, employees, experts, and attorneys, and by the mediator or any JAMS employees, are confidential, privileged, and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the Parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation.

 

10.3        Consent to Judicial Reference.  Subject to the provisions of Sections 10.1 and 10.2 hereinabove, the Parties hereby consent and agree that (a) any and all disputes arising out of or related to this Agreement or any other matter in any way relating to or arising out of Tarantino’s employment with Bank (collectively “Dispute”) shall be heard by a referee in accordance with the general reference provisions of California Code of Civil Procedure Section

 

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638, sitting without a jury in the City of Sonoma, County of Sonoma, California, (b) such referee shall hear and determine all of the issues in any Dispute (whether of fact or of law), including issues pertaining to a “provisional remedy” as defined in California Code of Civil Procedure section 1281.8, including without limitation, entering restraining orders, entering temporary restraining orders, issuing temporary and permanent injunctions and appointing receivers, and shall report a statement of decision; provided that, if, during the course of any Dispute, any Party desires to seek such a provisional remedy at a time when a referee has not yet been appointed or is otherwise unavailable to hear the request for such provisional remedy, then such Party may apply to the Sonoma County Superior Court for such provisional relief, and (c) pursuant to California Code of Civil Procedure section 644(a), judgment may be entered upon the decision of such referee in the same manner as if the Dispute had been tried directly by a court.  The Parties shall use their respective commercially reasonable and good faith efforts to agree upon and select such referee, provided that such referee must be a retired California state or federal judge, and further provided that if the Parties cannot agree upon a referee, the referee shall be appointed by the Presiding Judge of the Sonoma County Superior Court.  The Parties acknowledge that this consent and agreement is a material inducement to enter into this Agreement and that each Party will continue to be bound by and to rely on this consent and agreement in their related future dealings.  The Parties shall share the cost of the referee and reference proceedings equally, except that the costs of the referee and reference proceedings to be paid by Tarantino shall not exceed the amount Tarantino would have had to pay in court costs to initiate or respond to a civil action had the matter been pursued in court.  Bank shall be responsible for all other costs payable; provided that, the referee may award attorneys’ fees and reimbursement of the referee and reference proceeding fees and costs to the prevailing party, whereupon all referee and reference proceeding fees and charges will be payable by the non-prevailing party (as so determined by the referee).  The Parties further warrant and represent that each has reviewed this consent and agreement with legal counsel of its own choosing, or has had an opportunity to do so, and that it knowingly and voluntarily gives this consent and enters into this agreement having had the opportunity to consult with legal counsel.  This consent and agreement is irrevocable, meaning that it may not be modified either orally or in writing, and this consent and agreement shall apply to any subsequent amendments, renewals, supplements or modifications to this Agreement or any other agreement or document entered into between the parties in connection with this Agreement.  In the event of litigation, this Agreement may be filed as evidence of the Parties’ consent and agreement to have Disputes heard and determined by a referee under California Code of Civil Procedure section 638.

 

Section 10.3 shall not apply to any claims or disputes arising out of or relating to any Bank plan subject to the Employee Retirement Income and Security Act (“ERISA”), which claims or disputes shall be subject to ERISA.

 

Article 11. Miscellaneous Provisions

 

11.1        Integration.  This Agreement supersedes any and all other agreements, either oral or in writing, between Bank and Tarantino with respect to Tarantino’s performance of services as an agent or employee of Bank, and contains all the covenants and agreements between the Parties with respect to such services in any manner whatsoever with the exception of the Indemnification Agreement executed between Bank and Tarantino which remains in full force and effect.  Each Party to this Agreement acknowledges that no representations, inducements,

 

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promises, or agreements, oral or otherwise, have been made by the other Party which are not embodied herein, and that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding.

 

11.2        Assignment.  This Agreement may not be assigned by Tarantino, but shall inure to the benefit of, and shall be binding upon, the successors and assigns of Bank.  Bank shall require any successor to all or substantially all of the business and/or assets of the Bank (whether direct or indirect, by purchase, merger, reorganization, sale, transfer of stock, consolidation or otherwise) to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Bank would be required to perform it if no succession had taken place.

 

11.3        Receipt of Agreement.  Each of the Parties acknowledges that she or it has read this Agreement in its entirety and hereby acknowledges receipt of a fully-executed copy thereof.

 

11.4        Governing Law/Jurisdiction/Venue.  This Agreement shall be governed by and construed under the laws of the State of California, without regard to its conflicts of laws principles.  The Parties agree that any action taken to enforce the terms of this Agreement, including judicial action not inconsistent with the arbitration provisions hereunder, shall come under the jurisdiction of, and be properly heard and adjudicated in the Courts of the State of California and that venue shall be proper in the County of Sonoma.

 

11.5        Captions and Section Headings.  Captions and section headings used herein are for convenience only and are not part of this Agreement and shall not be used in construing it.

 

11.6        Amendments and Waiver.  This Agreement may be amended from time to time only by a writing signed by both Parties.  A waiver of any of the terms and conditions hereof shall not be construed as a waiver of any other provision, nor shall any waiver constitute a continuing waiver or commit a Party to providing a waiver in the future.

 

11.7        Survival.  The covenants, agreements, representations, and warranties made herein shall survive the termination of this Agreement, unless the context clearly provides otherwise.  Specific survival provisions shall not lessen the survival nature of provisions without such specificity.

 

11.8        Severability.  If a court or arbitrator of competent jurisdiction finds any provision in this Agreement to be invalid, illegal, or otherwise unenforceable, that determination will not affect any other provision of this Agreement.  The invalid provision will be severed from this Agreement and all remaining provisions will continue to be enforceable by their terms and of full force and effect.

 

11.9        Interpretation.  Any ambiguity in the language, words, phrases, gender identifiers, sentences, or provisions contained herein is not to be interpreted against a Party merely by reason of that Party having drafted, suggested, transcribed, or dictated such provision.  In interpreting this Agreement the intentions of the Parties, as expressed in this Agreement, shall be paramount and this Agreement shall be read as a whole document in order to ascertain the intentions of the Parties with respect to any particular word, phrase, sentence, or provision.  This Agreement shall not be deemed to have been prepared or drafted by one Party or another, and shall be construed accordingly.

 

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11.10      Third-Party Beneficiary.  This Agreement has been made by, and is made solely for the benefit of Bank, Bank’s successors, and assigns.  Nothing in this Agreement is intended to confer any rights or remedies under or because of this Agreement on any persons or entities other than the Parties to it and Bank’s successors and assigns.  Nothing in this Agreement is intended to relieve or discharge the obligation or liability of any third persons or entities to any Party to this Agreement.

 

11.11      Counterparts.  This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which together shall constitute one and the same instrument.  The Parties agree that a signed copy of this Agreement transmitted by one Party to the other by facsimile transmission shall be binding upon the sending Party to the same extent as a signed original of this Agreement.

 

11.12      Section 409A.

 

a)            General Compliance. This Agreement is intended to comply with Section 409A or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. Notwithstanding the foregoing, the Bank makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Bank be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Tarantino on account of non-compliance with Section 409A.

 

b)            Specified Employees. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to Tarantino in connection with her termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and Tarantino is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six (6) month anniversary of the Termination Date or, if earlier, on Tarantino’s death (the “Specified Employee Payment Date”) . The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to Tarantino in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

 

TARANTINO ACKNOWLEDGES AND AGREES THAT SHE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. TARANTINO ACKNOWLEDGES AND AGREES THAT SHE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HER CHOICE BEFORE SIGNING THIS AGREEMENT.

 

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This Agreement is entered into by and between the Parties as of the above written Effective Date.

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
LAURA TARANTINO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    	
LUTHER BURBANK   SAVINGS
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Its:
    	
 
    

 

Attachments:

 

Exhibit A:                                      Luther Burbank Corporation and Subsidiaries Phantom Stock Plan, adopted January 1, 2011.

 

Exhibit B:                                      Luther Burbank Savings Stock Appreciation Rights Plan, adopted January 1, 2006.

 

Exhibit C:                                      Luther Burbank Savings Amended and Restated Salary Continuation Agreement adopted April 25, 2006, amended December 5, 2008.

 

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