EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made this 7th day of July, 1998, between
CHANNEL ISLANDS BANK, a California banking corporation with its principal
office at 000 Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000 (hereinafter
"Bank"), and Xxxxxx X. Xxxxxxx (hereinafter "Executive") whose present
residence address is 00 Xxx Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000.
W I T N E S S E T H
WHEREAS, the Bank is a corporation organized for the purpose of carrying
on the business of banking and has been granted authority to conduct the
business of a bank by the California Commissioner of Financial Institutions
(the "Commissioner"); and
WHEREAS, Bank desires to avail itself of the skill, knowledge and
experience of Executive in order to insure the successful management of its
business; and
WHEREAS, the parties hereto desire to specify the terms of Executive's
employment by Bank as its Senior Vice President and Senior Lending Officer in
this written agreement which supersedes all prior agreements, whether written
or oral; and
WHEREAS, the employment, the duration thereof, the compensation to be
paid to Executive, termination and other terms and conditions of employment
provided in this Agreement were duly fixed, stated, approved and authorized
for and on behalf of the Bank by action of its Board of Directors at a
meeting held on June 18, 1998, at which meeting a quorum was present and
voted.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the sufficiency of which is acknowledged, the parties hereto
covenant and agree as follows:
A. TERM OF EMPLOYMENT
1. TERM. Subject to all necessary regulatory approvals, Bank hereby
employs Executive, and Executive hereby accepts employment with Bank, for the
period (the "Term") commencing June 18, 1998 (the "Effective Date"), through
December 31, 1999, subject however to prior termination as hereinafter
provided. Where used herein, "Term" shall refer to the entire period of the
employment of Executive by Bank hereunder, whether for the period provided
above, or whether terminated earlier as hereinafter provided.
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B. DUTIES OF EXECUTIVE
1. DUTIES. Executive's duties under this Employment Agreement include
all ordinary and reasonable duties customarily performed by the full-time
Senior Lending Officer of a commercial banking institution in California,
subject to the powers by law vested in the Board of Directors of the Bank, in
the Bank's shareholders and the Bank's President and Chief Executive Officer.
Executive shall render his services to the Bank and shall exercise such
corporate responsibilities as Executive may be directed by the Board of
Directors and the Bank's President and Chief Executive Officer, and Executive
shall perform his duties faithfully, diligently and to the best of his
ability, consistent with the highest and best standards of the banking
industry and in compliance with applicable laws and the Bank's Articles of
Incorporation and Bylaws. Executive shall be a member of certain committees
of the Board as determined by the Board and Executive.
2. CONFLICTS OF INTEREST. Executive expressly agrees as a condition to
the performance by Bank of its obligations herein that during the term of
this Agreement and of any renewals hereof, he will not, directly or
indirectly, render any services of an advisory nature or otherwise to or
become employed by or participate or engage in any business competitive with
any businesses of the Bank, without the prior written consent of the Bank,
however, that nothing herein shall prohibit Executive from owning stock or
other securities of a competitor which are relatively insubstantial to the
total outstanding stock of such competitor, and so long as he in fact does
not have the power to control or direct the management or policies of such
competitor and does not serve as a director or officer of, and is not
otherwise associated with, any competitor except as consented to by the Bank.
Nothing contained herein shall preclude substantially passive investments by
Executive during the Term which may require nominal amounts of his time,
energies and interest.
3. PERFORMANCE. Except as provided in paragraph G.2. herein, Executive
after the Effective Date shall devote substantially his full energies,
interests, abilities and productive time to the business of the Bank.
Executive shall at all times loyally and conscientiously perform all of these
duties and obligations hereunder and shall at all times strictly adhere to
and obey, and instruct and require all those who work under and with him
strictly to adhere and obey, all applicable federal and state laws, statutes,
rules and regulations to the end that the Bank shall at all times be in full
compliance with such laws, statutes, rules and regulations.
C. COMPENSATION
1. SALARY. In consideration of the performance by Executive of all of
his obligations under this Agreement, the Bank agrees to pay Executive during
the Term
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hereof a base salary of $95,258.89 per year from the date of commencement of
this Agreement for each year of the Term. Subsequent annual compensation
amounts will be negotiated in good faith by the parties hereto, with such
subsequent annual compensation to be not less than $95,258.89 per year. Such
salary shall be paid semi-monthly and the Bank shall withhold such taxes and
other amounts as required by law or policy.
2. BONUSES. During the term of this Agreement, Executive may receive
such bonuses, if any, as the Board of Directors in its sole discretion shall
determine.
D. EXECUTIVE BENEFITS
1. VACATION. Executive shall be entitled to a vacation each year
during the Term, which vacation shall be four (4) weeks per year, provided
however, that each year of the Term, Executive is required to and shall take
at least two (2) weeks of said vacation (the "Mandatory Vacation"), which
shall be taken consecutively. Executive further agrees that he will not take
more than two (2) weeks of vacation consecutively, and that he will not take
any vacation at times which would be detrimental to the interests of the Bank.
2. AUTOMOBILE. Until the Board of Directors of the Bank changes its
policies, the Bank shall provide Executive use of a full-size automobile and
the Bank shall pay (a) all insurance, gas and maintenance expenses of such
automobile, and (b) any expenses such automobile which are paid by the Bank
and which are for the personal use of the automobile by Executive shall be
taxable as income to Executive. Executive agrees to conform to any policy
changes made by the Board of Directors of the Bank regarding use of
automobiles.
3. GROUP MEDICAL AND LIFE INSURANCE BENEFITS. The Bank shall provide
for Executive and Executive's spouse, at the Bank's expense, participation in
medical, dental and vision programs in existence at the Bank, and provide
Executive accident and health, long term disability and life insurance
benefit programs in existence at the Bank. Said coverage shall be in
existence or shall take effect as of the Effective Date hereof and shall
continue throughout the Term. The Bank's liability to Executive for any
breach of this paragraph shall be limited to the amount of premiums payable
by the Bank to obtain the coverage contemplated herein.
4. STOCK OPTIONS. The Bank agrees to grant an incentive stock option
under its current stock option plan to Executive in the amount of 5,000
shares with vesting 20% immediately and the remainder equally over the next
four years at an exercise price of $20.00 per share.
E. REIMBURSEMENT FOR BUSINESS EXPENSES
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Executive shall be entitled to reimbursement by the Bank for any
ordinary and necessary business expenses incurred by Executive in the
performance of Executive's duties and in acting for the Bank during the Term,
which type of expenditures shall be determined by the Board of Directors,
provided that:
(a) Each such expenditure is of a nature qualifying it as a proper
deduction on the federal and state income tax returns of the Bank as a
business expense and not as deductible compensation to Executive; and
(b) Executive furnishes to the Bank adequate records and other
documentary evidence required by federal and state statutes and regulations
issued by the appropriate taxing authorities for the substantiation of such
expenditures as deductible business expenses of the Bank and not as
deductible-compensation to Executive.
F. TERMINATION
Executive acknowledges the at-will nature of his employment with the
Bank and such employment may be terminated for any reason or for any cause,
as more full described herein. Notwithstanding any and all other provisions
of this Agreement to the contrary, Executive's employment hereunder may be
terminated;
1. WITHOUT CAUSE. If Executive is terminated by the Board of Directors
in its sole and absolute discretion without cause, or if such termination
occurs during the Term and during the Term the Bank sells stock representing
more than 25% of the voting power of the Bank then outstanding, to another
corporation or person, or the Bank enters into a plan of dissolution or
liquidation of the Bank, or consummates a plan of reorganization, merger or
consolidation of the Bank with one or more corporations, as a result of which
the Bank is not the servicing corporation, or upon the sale of all or
substantially all the assets of the Bank to another corporation, and upon
such event, such other corporation or person requires Executive to be
replaced, Executive shall receive severance payment in the amount of six (6)
months of the Executive's then current annual salary in full and complete
satisfaction of any and all rights which Executive may enjoy hereunder other
than the right, if any, to exercise any of the Options vested prior to such
termination.
2. DISABILITY OR DEATH. Upon Executive's physical or mental disability
to continue his duties hereunder as the Senior Vice President and Senior
Lending Officer of the Bank, or upon Executive's death. For purposes of this
Agreement, physical or mental disability shall be defined as Executive being
unable to fully perform under this Agreement for a continuous period of 60
days.
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3. FOR CAUSE. The Bank may terminate this Agreement without any
further obligation or liability whatsoever to Executive, if:
(i) Executive engages in misconduct or is negligent in the
performance of his material duties hereunder; or
(ii) Executive is convicted of or pleads guilty or nolo contendere
to any felony, or is convicted of or pleads guilty or nolo contendere to any
misdemeanor involving moral turpitude; or
(iii) Bank is required to remove or replace Executive by formal
order or formal or informal instruction, including a requested consent order
or agreement, from the Commissioner or Federal Deposit Insurance Corporation
or any other regulatory authority having jurisdiction; or
(iv) Executive has failed to perform or habitually neglected
Executive's duties; or
(v) Executive has failed to follow any written policy of the Board
of Directors or any resolutions of the Board adopted after commencement of
the Term adopted at a duly called meeting; or
(vi) Executive has engaged in any activity which materially
adversely affects Bank's reputation in the Community; or
Any termination under this paragraph 3 shall not prejudice any remedy
which Bank may otherwise have at law, in equity, or under this Agreement.
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G. GENERAL PROVISIONS
1. TRADE SECRETS. During the Term, Executive will have access to and
become acquainted with what Executive and the Bank acknowledge are trade
secrets, to wit, knowledge or data concerning the Bank, including its
operations and business, and the identity of customers of the Bank, including
knowledge of their financial conditions therein financial needs, as well as
their methods of doing business. Executive shall not disclose any of the
aforesaid trade secrets, directly or indirectly, or use them in any way,
either during the Term or for a period of one (1) year after the termination
of this Agreement, except as required in the course of Executive's employment
with the Bank.
2. COVENANT NOT TO COMPETE. Executive hereby covenants and agrees
that for any period during which Executive receives any salary from the Bank
and for a one (1) year period following any termination of Executive from the
Bank, Executive shall not solicit any customers or employees of the Bank to
move their banking or employment relationship from the Bank.
In the event of a merger, where Bank is not the surviving corporation,
or in the event of a consolidation, in the event of a transfer of all or
substantially all of the assets of Bank, or in the event that the majority of
the Bank's Board of Directors, as it exists as of the date of this Agreement,
does not have control, the Executive shall be unconditionally released from
all of his duties and obligations under this paragraph.
3. INDEMNIFICATION. To the extent permitted by law, applicable
statutes, the Bylaws or resolutions of the Bank in effect from time to time,
the Bank shall indemnify Executive against liability or loss arising out of
Executive's actual or asserted misfeasance or nonfeasance in the performance
of Executive's duties or out of any actual or asserted wrongful act against,
or by, the Bank including but not limited to judgments, fines, settlements
and advancement of expenses incurred in the defense of actions, proceedings
and appeals therefrom. The Bank shall endeavor to obtain Directors and
Officers Liability Insurance to indemnify and insure the Bank and Executive
from and against the aforesaid liabilities. The provisions of this paragraph
shall apply to the estate, executor, administrator, heirs, legatees or
devisees of Executive.
4. RETURN OF DOCUMENTS. Executive expressly agrees that all manuals,
documents, files, reports, studies, instruments or other materials used
and/or developed by Executive during the Term are solely the property of the
Bank, and that Executive has no right, title or interest therein. Upon
termination of this Agreement, Executive or Executive's representative shall
promptly deliver possession of all of said property to the Bank in good
condition.
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NOTICES. Any notice, request, demand or other communication required or
permitted hereunder shall be deemed to be properly given when personally
served in writing, when deposited in the United States mail, postage prepaid,
or when communicated to a public telegraph address appearing at the beginning
of this Agreement. Either party may change its address by written notice in
accordance with this paragraph.
6. CALIFORNIA LAW. This Agreement is to be governed by and construed
under the laws of the State of California.
7. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings
used herein are for convenience only and are not a part of this Agreement and
shall not be used in construing it.
8. INVALID PROVISIONS. Should any provision of this Agreement for any
reason be declared invalid, the validity and binding effect of any remaining
portion shall not be affected, and the remaining portion of this Agreement
shall remain in full force and effect as if this Agreement had been executed
with said provision eliminated.
9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties. It supersedes any and all other agreements, either oral or in
writing, between the parties hereto with respect to the employment of
Executive by the Bank. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, oral or otherwise,
have been made by any party, or anyone acting on behalf of any party, which
are not embodied herein, and that no other agreement, statement, or promise
not contained in this Agreement shall be valid or binding. This Agreement may
not be modified or amended by oral agreement, but only by an agreement in
writing signed by the Bank and Executive.
10. RECEIPT OF AGREEMENT. Each of the parties hereto acknowledges that
he has read this Agreement in its entirety and does hereby acknowledge
receipt of a fully executed copy thereof. A fully executed copy shall be an
original for all purposes, and is a duplicate original.
11. ARBITRATION. Any controversy or claim arising out of, or relating
to this Employment Agreement or the breach thereof, shall be settled by
arbitration in the County of Ventura, State of California, in accordance with
the rules of the American Arbitration Association, and a judgment upon the
award rendered may be entered is any court having jurisdiction thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
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CHANNEL ISLANDS BANK
By /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Chairman of the Board
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
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