Chief Operating Officer Employment Agreement

Exhibit 10..6


EMPLOYMENT AGREEMENT


THIS AGREEMENT is made as of the 14th day of December 2001 between Business Bancorp (" Holding Co." ), having a principal place of business at 1248 Fifth Avenue, San Rafael, California, Business Bank of California (" Bank" ), having a principal place of business at 321 East Sixth Street, Corona, California and Charles O. Hall (" Executive" ), whose residence address is 1059 Rancho Lindo Drive, Petaluma, California.


RECITALS


A. Holding Co. is a bank holding company duly organized, validly existing, and in good standing under the laws of the State of California, with power to carry on its business as it is now being conducted.


B. Bank is a state-chartered commercial bank duly organized, validly existing, and in good standing under the laws of the State of California, with power to carry on its business as it is now being conducted.


C. Holding Co. and Bank desire to employ Executive in order to avail themselves of the skill, knowledge and experience of Executive and Executive desires to provide such skill, knowledge and experience to Holding Co. and Bank.


D. The parties hereto desire to specify the terms and conditions of Executive' s employment.


NOW, THEREFORE , in consideration of the mutual covenants hereinafter set forth, it is agreed that the following terms and conditions shall apply to Executive' s employment:


1. Term of Employment . Holding Co. and Bank hereby employ Executive and Executive hereby accepts employment with Holding Co. and Bank commencing from and after January 1, 2002 (the " Effective Date" ), subject, however, to the termination of the Agreement as


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hereinafter provided.


2. Duties . From and after the Effective Date, Executive shall be employed as and shall serve as the President and Chief Operating Officer of Holding Co. and Chief Executive Officer of Bank. Subject to the direction of the Boards of Directors of Holding Company and Bank, Executive shall perform such duties and assume such responsibilities as are normally attributed to the president and chief operating officer of a bank holding company and to the chief executive officer of a community bank. During the term of this Agreement, Executive shall perform exclusively the services herein contemplated to be performed by Executive faithfully, diligently and to the best of Executive' s ability, consistent with the highest and best standards of the banking industry and in compliance with all applicable laws and Holding Co.' s and Bank' s Articles of Incorporation, Bylaws and internal written policies. If at any time Executive does not hold the titles of President and Chief Operating Officer of Holding Co. and Chief Executive Officer of Bank, Executive shall be entitled to deem this Agreement terminated pursuant to Section 5.1 hereof.


3. Conflicts of Interest . Except as permitted by the prior written consent of the Board of Directors of Holding Co. and Bank, Executive shall devote Executive' s entire productive time, ability and attention to the business of Holding Co. and Bank during the term of this Agreement and Executive shall not directly or indirectly render any services of a business, commercial or professional nature, to any other person, firm or corporation, whether for compensation or otherwise, which are in conflict with Holding Co.' s or Bank' s interests. Notwithstanding the foregoing, Executive may make investments of a passive nature in any business or venture, provided however, that neither such business nor venture is in competition, directly or indirectly, in any manner with Holding Co. or Bank.


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4. Compensation and Benefits .


4.1 Salary . During the first year of this Agreement, Executive shall receive a base annual salary (the " base salary" ) in the amount of Two Hundred Sixty Thousand Dollars ($260,000) payable monthly in arrears or by such manner as may be established by Holding Co. or Bank from time to time but not less often than monthly. This base salary shall be increased annually by a percentage not less than the percentage increase in the " Consumer Price Indexes, Pacific Cities and U.S. Average All Items Indexes, 1982-1984 = 100, San Francisco - Oakland - San Jose" most recently reported by the U.S. Department of Labor' s Bureau of Labor Statistics, and additional increases may be awarded in the discretion of Bank' s Board of Directors.


4.2 Automobile . Holding Co. or Bank shall provide Executive, for Executive' s sole use, a suitable full-sized automobile, comparable to the automobile provided to Executive prior to the Effective Date, the specific make and model of such automobile to be determined by Executive, which automobile shall be initially new and at no time be older than three (3) years. The Holding Co. or Bank shall pay all operating expenses of any nature whatsoever with regard to such automobile, provided Executive furnishes to the Holding Co. or Bank adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for substantiation of such payments as deductible business expenses of the Holding Co. or Bank and not as deductible compensation to Executive. The Holding Co. or Bank shall also procure and maintain in force an automobile liability insurance policy on such automobile, containing all reasonable and necessary coverage. Executive will maintain a record of personal use mileage, which will be reflected on Executive' s W-2 in accordance with IRS guidelines.


4.3 Medical, Dental and Life Insurance . Holding Co. and Bank will provide Executive and his dependents, at the Holding Co.' s or Bank' s expense, with Bank' s standard


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insurance coverage provided to all Bank employees, as such coverage may change from time to time. Executive shall cooperate with Holding Co. and Bank in obtaining any key man or other insurance coverage Holding Co. and Bank may reasonably desire.


4.4 Business Expenses . In accordance with Holding Co. and Bank policy as it may exist from time to time, and subject to the approval of all such expenses by the Board of Directors of Holding Co. or Bank, Executive shall be entitled to reimbursement by Holding Co. or Bank for any ordinary, reasonable business expenses incurred by Executive in the performance of Executive' s duties and in acting for Holding Co. or Bank during the term of this Agreement, provided that Executive furnishes to Holding Co. or Bank substantially adequate records and other documentary evidence as required by Holding Co.' s or Bank' s policies or by federal and state statutes and regulations with respect to the substantiation of such expenditures as deductible business expenses of Holding Co. or Bank.


4.5 Vacation . Executive shall be entitled to four weeks of vacation per year and shall use his best efforts to take two consecutive weeks of vacation each year. Executive shall not be entitled to vacation pay in lieu of vacation and accrual of any unused vacation time shall be limited to a maximum of five (5) weeks at any time.


4.6 Stock Options . The Holding Co. shall grant Executive a stock option to purchase up to Thirty Thousand (30,000) shares of the Holding Co.' s authorized but unissued Common Stock (in addition to any currently outstanding options held by Executive), at an exercise price equal to the market value on the date of grant, subject to compliance with any applicable requirements of the Holding Co.' s Stock Option Plan. The Holding Co. and Executive agree that such option shall be for a term of ten (10) years, and will vest over a period of five (5) years from the date of grant as follows: twenty percent (20%) will be exercisable on or after each of the first five anniversaries of the date of grant of the stock option. The Holding Co. and Executive also


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agree that, to the maximum extent permitted by law, the option will qualify as an " incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended. Such stock option will be granted to Executive pursuant to Holding Co.' s current Stock Option Plan, and an agreement between Holding Co. and Executive containing such terms as (i) are consistent with the terms of the Stock Option Plan and (ii) may be agreed upon by such parties.


4.7 401 (k) Plan . Executive shall be entitled to participate in the Bank' s or Holding Company' s 401 (k) Plan subject to the eligibility and vesting requirements set forth in said Plan.


4.8 Executive' s Bonus . In addition to the base salary provided for in Section 4.1, Executive shall be paid, within thirty-one days following the end of the Holding Co.' s fiscal year, an amount equal to one percent (1%) of Holding Co.' s consolidated pre-tax income for such fiscal year; provided, however, that such payment shall only be made if Holding Co.' s r ...