Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the 4th
day of May, 1999 (the "Agreement Effective Date"), by and among THE BANK OF
ORANGE COUNTY, a California state-chartered banking corporation (the "Bank"),
CALIFORNIA FINANCIAL BANCORP, a California corporation ("Bancorp") (Bank and
Bancorp are jointly and severally referred to herein as "Employers") and XXXXXX
XXXXXXXX (the "Employee") (collectively, the "parties"):
WHEREAS, Employee has been employed by Bank as the President and Chief
Executive Officer pursuant to that certain Employment Agreement dated December
31, 1998 (the "Bank Employment Agreement");
WHEREAS, Bank and Employee desire, as of the Agreement Effective Date,
to cancel and to terminate the Bank Employment Agreement;
WHEREAS, the parties hereto desire to enter into a new agreement, as of
the Agreement Effective Date, for the purpose of continuing the services of
Employee for Bank as its President and Chief Executive Officer, and further
retaining the services of Employee for Bancorp as its Interim Vice-Chairman and
Chief Executive Officer, and in the near future after he is no longer its
Interim Vice-Chairman, as its President and Chief Executive Officer;
NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. EMPLOYMENT AND DUTIES. Employers and Employee hereby enter into this
Agreement upon the terms and conditions hereinafter set forth. Employee
is hereby employed, at the
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pleasure of the Board of Directors of the Bank (the "Bank Board"), as
the President and Chief Executive Officer of Bank. Employee shall
perform the customary duties of a President and Chief Executive Officer
of a California state-chartered banking corporation and such attendant
duties as may, from time to time, be reasonably requested of Employee
by the Bank Board. Employee is hereby further employed, at the pleasure
of the Board of Directors of the Bancorp (the "Bancorp Board"), as the
Interim Vice-Chairman and Chief Executive Officer of Bancorp and in the
near future after he is no longer Interim Vice-Chairman of Bancorp, as
the President and Chief Executive Officer of Bancorp. Employee shall
perform the customary duties of a Vice-Chairman and Chief Executive
Officer, and when so appointed, of a President of a bank holding
company and such attendant duties as may, from time to time, be
reasonably requested of Employee by the Bancorp Board. In connection
with Employee's employment as President of Bank and Bancorp, Employee's
duties shall include, if so elected, serving without compensation on
the Boards of Directors of Employers (the "Boards").
2. EXTENT OF SERVICES.
a) Employee shall devote Employee's full time, ability and
attention to the business of Employers during the term of this
Agreement, and shall neither directly nor indirectly render
any services of a business, commercial or professional nature
to any other person, firm, corporation or organization for
compensation without the prior written consent of the Boards
or Chairmen of the Boards.
b) Nothing contained herein shall be construed to prevent
Employee from investing Employee's assets in any form or
manner which does not in any manner or for any
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amount of time interfere with Employee's performance of
services on behalf of Employers.
3. TERM OF EMPLOYMENT. Subject to prior termination of this Agreement as
hereinafter provided, Employers hereby employ Employee, and Employee
hereby accepts employment with Employers, for a period beginning on the
Agreement Effective Date and ending May 4, 2002 (the "Employment
Term").
4. COMPENSATION AND BENEFITS. In consideration of Employee's services to
Employers during the Employment Term, Employers agree to compensate
Employee, subject to such limitations as may exist under any applicable
state or federal banking law or regulation, as follows:
a) BASE COMPENSATION. Employers shall pay or cause to be paid to
Employee a base compensation of $ 165,000 per year, payable in
conformity with Employers' normal payroll procedures (the
"Base Salary"), and prorated for any partial calendar year in
which this Agreement is in effect.
b) BONUS. Employee shall be eligible to receive an annual bonus
for each fiscal year of Employers, and shall be prorated for
any partial fiscal year of employment. The bonus will be
awarded by the Boards, in their sole discretion, based on
reasonable performance goals and administrative procedures
established by the Boards.
c) GENERAL EXPENSES. Employers shall, upon submission and
approval of written statements and bills in accordance with
the then regular procedures of Employers,
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pay or reimburse Employee for any and all necessary, customary
and usual expenses incurred by him while traveling for or on
behalf of Employers, and any and all other necessary,
customary or usual expenses (including entertainment) incurred
by Employee for or on behalf of Employers in the normal course
of business, as determined to be appropriate by Employers.
d) INSURANCE.
i) Employee shall be entitled to participate in such
group life insurance, health and long-term disability
plans as are provided by Employers to their employees
and/or senior executives, with such terms, conditions
and contributions as Employers generally provide
their other employees and/or senior executives;
provided, however, there shall be no duplication of
such benefits due to Employee being eligible for the
same benefit at both Bank and Bancorp. Employee shall
have the right, in Employee's discretion, to
designate the beneficiary or beneficiaries of any
such insurance.
ii) Employers shall continue to pay Employee's cancer
insurance premiums during the Employment Term.
e) AUTOMOBILE ALLOWANCE. During the Employment Term , Employee
shall be entitled to an automobile allowance of $600 per month
(less any customary withholding and employment taxes). Except
for this automobile allowance, Employers shall not be
obligated to pay any other expenditure with respect to the
ownership, registration, operation, insurance or maintenance
of Employee's automobile.
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f) VACATION. Employee shall accrue four (4) weeks' paid vacation
leave per year, pro rated on a daily basis for any partial
calendar year in which this Agreement is in effect. Such
vacation leave shall be taken at such time or times as are
mutually agreed upon by Employee and the Boards and in
accordance with Employers' vacation leave policy, provided,
that at least two (2) weeks of such vacation shall be taken
consecutively each year. Employee acknowledges that the
requirement of two (2) consecutive weeks of vacation each year
is required by sound banking practice. For each calendar year,
the Boards shall decide, in their discretion, either (i) to
pay Employee for any unused vacation time for such calendar
year or (ii) to carry over any unused vacation time for such
calendar year to the next calendar year, provided, however,
that Employee shall accrue no additional vacation time at any
time that the Employee has accrued and unused vacation time of
six (6) weeks.
g) OTHER BENEFITS. Employee shall be entitled to participate
during the Employment Term in such other benefits of
Employers, including bonus programs, if any, as Employers now
or hereafter shall provide for their employees and/or senior
executives generally, in accordance with the applicable terms
and conditions thereof.
5. TERMINATION OF AGREEMENT. This Agreement may be terminated with or
without cause during the Employment Term in accordance with this
Section 5. In the event of such termination, Employee shall be released
from all obligations under this Agreement, except that Employee shall
remain subject to Sections 7, 8, 9(b), 9(c), 13, 15 and 18, and
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Employers shall be released from all obligations under this Agreement,
except as otherwise provided in this Section 5 and Sections 9(b), 13,
15 and 18.
a) EARLY TERMINATION BY EMPLOYERS WITHOUT CAUSE OR BY EMPLOYEE
UPON CHANGE IN TITLE. This Agreement and Employee's employment
may be terminated (i) by Employers without cause, for any
reason whatsoever, in the sole, absolute and unreviewable
discretion of Employers, upon written notice by the Boards to
Employee; or (ii) by Employee in the event that Employers
change Employee's titles or duties from those contemplated
under Section 1 of this Agreement. In the event of termination
pursuant to this Section 5(a), Employee shall receive a single
sum severance payment equal to twelve (12) months of his then
current Base Salary, less customary withholdings, payable
within two (2) days of such termination. Employers shall also
pay, for a period not to exceed twelve (12) months of coverage
following such termination of employment, Employee's premiums
for continuation of his group medical insurance coverage
(referred to as "COBRA") or, if COBRA is not available, for
individual coverage purchased by Employee. Such severance pay
and payment of medical coverage premiums shall constitute
liquidated damages in lieu of any and all claims by Employee
against Employers, and shall be in full and complete
satisfaction of any and all rights which Employee may enjoy
hereunder, and are expressly conditioned upon receipt by
Employers of a full and unconditional release (in the form of
Exhibit A) from Employee of any and all liability of Employers
or any of their affiliates, directors, officers, employees and
agents, arising out of this Agreement or out of
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the employment relationship or termination of the employment
relationship between Employee and Employers.
b) EARLY TERMINATION BY EMPLOYERS FOR CAUSE. This Agreement and
Employee's employment may be terminated for cause by Employers
upon written notice to Employee, and Employee shall not be
entitled to receive compensation or other benefits for any
period after termination for cause. "For cause" pursuant to
this Agreement shall include, but not be limited to: (i) any
act of dishonesty; (ii) any breach of this Agreement or any
breach of a fiduciary duty (involving personal profit); (iii)
any neglect of, or negligence in carrying out, those duties
contemplated under Section 1 of this Agreement; (iv) any
willful violation of any law, rule or regulation, which, by
virtue of bank regulatory restrictions imposed as a result
thereof, would have a material adverse effect on the business
or financial prospects of Employers; (v) any commission of any
crime (other than a traffic violation or similar offense);
(vi) any failure by Employee to qualify at any time during the
Employment Term for a fidelity bond as described in Section 6
of this Agreement; or (vii) the requirement to comply with any
final cease-and-desist order or written agreement with any
applicable state or federal bank regulatory authority which
requests or orders Employee's dismissal or limits Employee's
employment duties. Termination for cause by Employers shall
not constitute a waiver of any remedies which may otherwise be
available to Employers under law, equity, or this Agreement.
c) EARLY TERMINATION BY EMPLOYEE. Employee may terminate this
Agreement upon ninety (90) days' written notice to Employers.
Except as otherwise provided
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below by Section 5(f), Employee shall not be entitled to
receive compensation or other benefits under this Agreement
for any period after such early termination by Employee.
d) DEATH DURING EMPLOYMENT. This Agreement and all benefits
hereunder shall terminate immediately upon the death of
Employee, provided that such termination of benefits shall not
operate to prejudice or forfeit the rights of any beneficiary
or beneficiaries of any life insurance policy on the life of
Employee obtained pursuant to Section 4(d) hereof.
e) AUTOMATIC TERMINATION UPON CLOSURE OR TAKE-OVER. This
Agreement shall terminate automatically if Bank is closed or
taken over by the California Department of Financial
Institutions or by any other supervisory authority.
f) MERGER OR CORPORATE DISSOLUTION.
i) In the event of a (a) merger in which neither Bank
nor Bancorp is the surviving corporation a majority
of the capital stock of which is not owned by the
sole shareholder of either Bank or Bancorp or an
affiliate thereof; (b) a transfer of all or
substantially all of the assets of Employers; (c) any
other corporate reorganization in which there is a
change in ownership of the outstanding shares of
Employers wherein more than fifty percent (50%) of
the outstanding shares of Employers are transferred
to any other partnership, corporation, trust or
business entity (a "Change in Control"); or (d) the
dissolution of Employers, this Agreement shall not be
terminated, but instead, the surviving or resulting
corporation, the
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transferee of Employers' assets, or Employers shall
be bound by and shall have the benefit of the
provisions of this Agreement. Notwithstanding the
foregoing, in the event of a Change in Control and in
the event that, during the twelve month period
following such Change in Control, Employee terminates
employment with Employers (pursuant to Section 5(c)
above) following a reduction in the Employee's duties
or title, or a reduction in the Base Salary, Employee
shall receive a single sum severance payment equal to
twelve (12) months of his then current Base Salary,
less customary withholdings and taxes. Such severance
pay shall constitute liquidated damages in lieu of
any and all claims by Employee against Employers, and
shall be in full and complete satisfaction of any and
all rights which Employee may enjoy hereunder, and
are expressly conditioned upon receipt by Employers
of a full and unconditional release (in the form of
Exhibit A) from Employee of any and all liability of
Employers or any of their affiliates, directors,
officers, employees and agents, arising out of this
Agreement or out of the employment relationship or
termination of the employment relationship between
Employee and Employers.
ii) Notwithstanding anything to the contrary provided
herein, if neither of the Employers is the surviving
entity in any transaction referred to in this Section
5(f) hereof and said transaction is in any manner the
result of any action taken at the direction of any
supervisory authority whatsoever, then in such event
this Agreement shall terminate immediately upon the
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consummation of such transaction and Employee agrees
that all rights, duties, obligations, and benefits
herein contained shall thereupon terminate and that
Employee shall be entitled to no further compensation
or benefits from Employers save and except those
rights, duties, obligations, benefits and/or
compensation accrued and/or earned prior to the date
of such termination.
6. FIDELITY BOND. Employee agrees that he will furnish all information and
take any other steps necessary to enable Employers to obtain or
maintain a fidelity bond conditional on the rendering of a true account
by Employee of all moneys, goods, or other property which may come into
the custody, charge or possession of Employee during the term of
Employee's employment. The surety company issuing the bond and the
amount of the bond must be acceptable to Employers and satisfy all
banking laws and regulations. All premiums on the bond are to be paid
by Employers. If Employee cannot qualify for a fidelity bond at any
time during the term of this Agreement, Employers shall have the option
to terminate this Agreement immediately, which shall constitute a
termination for cause as defined in Section 5(b) hereof.
7. PRINTED MATERIAL. All written or printed materials which shall include,
but not be limited to, computer software, programs and files, used by
Employee in performing duties for Employers are, and shall remain, the
property of Employers, provided that any materials which belonged
personally to Employee prior to his employment with Employers are, and
shall remain, the property of Employee. Upon termination of Employee's
employment with Employers, Employee shall return such applicable
written or printed materials to Employers.
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8. DISCLOSURE OF INFORMATION. Employee recognizes and acknowledges that
Employers possess trade secrets and other confidential and/or
proprietary information concerning their business affairs and methods
of operation which constitute valuable, confidential, and unique assets
of their businesses and that of their affiliates ("Proprietary
Information"), which Employers have developed through a substantial
expenditure of time and money and which are and will continue to be
utilized in Employers' businesses and which are not generally known in
the trade. At any time before or after termination of this Agreement,
Employee agrees not to disclose to anyone any Proprietary Information
and not to make use of any Proprietary Information for his own purposes
or for the benefit of anyone other than Employers under any
circumstances. For purposes of this Section 8, Proprietary Information
includes, without limitation, all information regarding products,
services, processes, know-how, customers, suppliers, product and/or
service development, business and capital plans, research, finances,
marketing, pricing, costs and any other confidential matters relating
to Employers or any affiliate of Employers. Employee recognizes and
acknowledges that all financial information concerning any of
Employers' customers, products or financial results is strictly
confidential, and Employee shall not, at any time before or after
termination of this Agreement, disclose to anyone any such information
or any part thereof, for any reason or purpose whatsoever except to the
extent that such information is already otherwise publicly available or
to the extent such disclosure is required by Employee in order to
comply with judicial process or applicable regulations of any state or
federal bank regulatory agency.
Employee hereby acknowledges the particular value to Employers of this
Section 8, the loss of which cannot be reasonably or adequately
compensated in an action at law or in
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arbitration. Therefore, Employee expressly agrees that Employers, in
addition to any other rights or remedies that Employers shall possess,
shall be entitled to injunctive and other equitable relief to prevent
or remedy a breach of this Section 8 by Employee, without the necessity
of posting any bond.
Employee's obligation under this Section 8 shall survive the
termination of this Agreement and/or the termination of employment.
9. NON-COMPETITION BY EMPLOYEE: CONSULTING AGREEMENT.
a) Employee shall not, during the Employment Term, directly or
indirectly, either as an employee, employer, consultant,
agent, principal, partner, shareholder, corporate officer,
director, or in any other individual or representative
capacity, engage or participate in any competing bank or
financial institution or financial services business without
the prior written consent of the Boards; provided, however,
Employee shall not be restricted by this Section from owning
securities of corporations listed on a national securities
exchange or regularly traded by national securities dealers so
long as such investment does not exceed one percent of the
market value of the outstanding securities of such
corporation.
b) In the event that this Agreement is terminated pursuant to
Section 5(a) or Section 5(c) hereof within twelve (12) months
after the Agreement Effective Date (the "Early Termination
Date"), Employee agrees to provide consulting services and not
to compete with Employers under the terms and conditions set
forth in the Consulting and Non-Competition Agreement attached
hereto as Exhibit B ("Consulting Agreement").
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c) Notwithstanding anything to the contrary set forth elsewhere
in this Agreement, Employee agrees that (i) the Consulting
Agreement shall take effect only in the event of and upon the
termination of Employee's employment with Employers pursuant
to Section 5(a) or 5(c) of this Agreement; and (ii) the
obligation of the Employers to pay fees under the Consulting
Agreement is wholly independent of and shall in no way effect
the provisions set forth in Section 5(a) and/or 5(c)
including, without limitation, the severance pay and medical
coverage payment provisions set forth in Section 5(a) or the
provision in Section 5(c) which provides that, except as
provided in Section 5(f), Employee shall not be entitled to
receive compensation or other benefits under this Agreement
for any period after early termination by Employee pursuant to
Section 5(c).
10. NOTICES. Any notices to be given hereunder by either party to the other
may be effected in writing either by personal delivery or by mail,
registered or certified, postage prepaid with return receipt requested.
Notices to Employers shall be given to Bancorp at its then current
principal office, c/o Chairman of the Bancorp Board of Directors.
Notices to Employee shall be sent to Employee's then current personal
residence. Notices delivered personally shall be deemed communicated as
of actual receipt; mailed notices shall be deemed communicated as of
five (5) calendar days after mailing.
11. ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the employment of Employee by Employers (including without
limitation the Bank Employment Agreement, which is hereby cancelled and
terminated) and contains all of the covenants, rights, obligations and
agreements between the parties with respect to such employment. Each
party to this
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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 and binding. Any modification of this
Agreement will be effective only if it is in writing signed by all
parties to the Agreement.
12. SEVERABILITY. In the event that any term or condition contained in this
Agreement shall, for any reason, be held by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any
other term or condition of this Agreement, but this Agreement shall be
construed as if such invalid or illegal or unenforceable term or
condition had never been contained herein.
13. CHOICE OF LAW AND FORUM. This Agreement shall be governed by and
construed in accordance with the laws of the State of California,
except to the extent preempted by the laws of the United States. Any
action or proceeding brought upon, or arising out of, this Agreement or
its termination shall be brought in a forum located within the County
of Orange, State of California, and Employee hereby agrees to be
subject to service of process in California.
14. WAIVER. The parties hereto shall not be deemed to have waived any of
their respective rights under this Agreement unless the waiver is in
writing and signed by such waiving party. No delay in exercising any
rights shall be a waiver nor shall a waiver on one occasion operate as
a waiver of such right on a future occasion.
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15. INDEMNIFICATION. Employers shall indemnify Employee, to the maximum
extent permitted under the articles of incorporation and bylaws of
Employers and governing laws and regulations, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by Employee in connection
with any threatened or pending action, suit or proceeding to which
Employee is made a party by reason of his position as an officer or
agent of Employers or by reason of his service at the request of
Employers, if Employee acted in good faith in the course and scope of
his employment and in a manner believed to be in or not opposed to the
best interests of Employers. If available at rates determined by
Employers, in their sole discretion, to be reasonable, Employers shall
endeavor to apply for and obtain directors' and officers' liability
insurance to indemnify and insure Employers and Employee from such
liability or loss.
Notwithstanding the foregoing, in any administrative proceeding or
civil action initiated by any federal or state banking agency,
Employers may only reimburse, indemnify or hold harmless Employee if
Employers are in compliance with any applicable statute, rule,
regulation or policy of the Federal Deposit Insurance Corporation, the
California Department of Financial Institutions, or any other state or
federal bank regulatory agency which then has jurisdiction over
Employers regarding permissible indemnification payments.
16. ASSIGNMENT. Neither this Agreement nor any of the rights or benefits
hereunder shall be subject to execution, attachment or similar process,
nor may this Agreement or any rights or benefits hereunder be assigned,
transferred, pledged or hypothecated without the
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written consent of both parties hereto, except as provided in Sections
4(d) and 5(d) hereof.
17. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings used
herein are for convenience and ready reference only and are not a part
of this Agreement and shall not be used in the construction or
interpretation thereof.
18. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or breach of this Agreement, shall be settled by
arbitration in accordance with the Employment Arbitration Rules of the
American Arbitration Association, and judgment on the award rendered by
the arbitrators may be entered in any court having jurisdiction. There
shall be three arbitrators, one to be chosen directly by each party,
and the third arbitrator to be selected by the two arbitrators so
chosen. If any arbitration proceeding is brought for the enforcement of
this Agreement or because of an alleged dispute, breach or default in
connection with this Agreement, (i) the non-prevailing party shall pay
the fees of the arbitrators and all other costs of the arbitration,
including the cost of any record or transcripts of the arbitrations and
administrative fees; and (ii) the prevailing party shall be entitled to
recover reasonable attorney's fees and any other costs and expenses
incurred in that action or proceeding, in addition to any other relief
to which it or he may be entitled.
19. WITHHOLDING. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law
and any additional withholding to which you have agreed.
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EXECUTED as of the 5th day of May, 1999.
EMPLOYERS: EMPLOYEE:
THE BANK OF ORANGE COUNTY
/s/ Xxxxx Xxxxxxxx
--------------------------------------
By: Chairman of the Board of Directors
/s/ Xxxxxx Xxxxxxxx
-------------------------------
Xxxxxx Xxxxxxxx
CALIFORNIA FINANCIAL BANCORP
/s/ Xxxxxxx X. Xxxxxx, Xx.
--------------------------------------
By: Chairman of the Board of Directors
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EXHIBIT A
RELEASE AGREEMENT
This Release Agreement ("Release") was given to me, Xxxxxx Xxxxxxxx
("Employee"), this _____day of _________ , _______, by THE BANK OF ORANGE COUNTY
(the "Bank") and CALIFORNIA FINANCIAL BANCORP (the "Bancorp") (jointly and
severally referred to as the "Employers"). At such time as this Release becomes
effective and enforceable (i.e., the revocation period discussed below has
expired), and assuming such Employee is otherwise eligible for payments under
the terms of that certain Employment Agreement between Employee and Employers
dated May 4, 1999 (the "Agreement"), Employers agree to pay Employee pursuant
to the terms of the Agreement an amount equal to $ ________ (minus customary
payroll deductions and any outstanding obligations owed by the Employee to
Employers).
In consideration of the receipt of the promise to pay such amount,
Employee hereby agrees, for himself or his heirs, executors, administrators,
successors and assigns (hereinafter referred to as the "Releasors"), to fully
release and discharge Employers and their officers, directors, employees,
agents, insurers, underwriters, subsidiaries, parents, affiliates, successors
and assigns (hereinafter referred to as the "Releasees") from any and all
actions, causes of action, claims, obligations, costs, losses, liabilities,
damages and demands under any federal, state or local law or laws, or common
law, whether or not known, suspected or claimed, which the Releasors have, or
hereafter may have, against the Releasees arising out of or in any way related
to Employee's employment or termination of employment with Employers.
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It is understood and agreed that this Release extends to all such
claims and/or potential claims, and that Employee, on behalf of the Releasors,
hereby expressly waives all rights with respect to all such claims under
California Civil Code Section 1542, which provides as follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his or her favor at the
time of executing the release, which if known by him or her
must have materially affected his or her settlement with the
debtor.
It is further understood and AGREED that this Release includes claims
and rights Employee might have under the Age Discrimination in Employment Act
("ADEA"). The Employee's waiver of rights under the ADEA does not extend to
claims or rights that might arise after the date this Release is executed. The
monies to be paid to the Employee in this Release are in addition to any sums to
which he would be entitled without signing this Release. For a period of seven
(7) days following execution-of this Release, Employee may revoke the terms of
this Release by a written document received by the Bancorp on or before the end
of the seven (7) day period. The Release will not be final until said revocation
period has expired. No payments will be made under the Agreement if the Employee
revokes this Release.
Employee executes this Release without reliance on any representation
by any Releasee. Employee acknowledges that he has read and does understand the
provisions of the Release set forth in the preceding paragraph, that he has had
an opportunity to consult with an attorney prior to executing this Release, that
he was given twenty-one (21) days in which to consider entering into this
Release, that he affixes his signature hereto voluntarily and without coercion,
and that no promise or inducement has been made other than those set out in this
Release. This document
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does not constitute, and shall not be admissible as evidence of, an admission by
any Releasee as to any fact or matter.
In case any part of this Release is later deemed to be invalid, illegal
or otherwise unenforceable, Employee agrees that the legality and enforceability
of the remaining provisions of this Release will not be affected in any way.
Dated: _____ __ , __________ _________________________
Xxxxxx Xxxxxxxx
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EXHIBIT B
CONSULTING AND NON-COMPETITION AGREEMENT
THIS CONSULTING AND NON-COMPETITION AGREEMENT (the "Agreement") is made
and entered into as of this 4th day of May, 1999, by and among THE BANK OF
ORANGE COUNTY, a California state-chartered banking corporation (the "Bank"),
CALIFORNIA FINANCIAL BANCORP, a California corporation ("Bancorp") (Bank and
Bancorp are jointly and severally referred to herein as the "Companies") and
XXXXXX XXXXXXXX ("Consultant") (collectively, the "Parties").
RECITALS
A. Bank entered into an Agreement and Plan of Reorganization and Merger
as of July 28, 1998 ("Merger Agreement"), whereby Bank was merged with CFB
Merger Co., with Bank being the surviving entity, by a statutory merger (the
"Merger");
B. Consultant was the record and beneficial owner of 2129 shares of
common stock of Bank and the holder of vested options to purchase 10,000 shares
of common stock of Bank;
C. Bank continued its business and operations following the Merger and
pursuant to the Merger Agreement, Consultant received substantial consideration
from Bank for said common shares and vested options;
D. Bank entered into an Employment Agreement with Consultant effective
as of December 31, 1998 (the "Bank Employment Agreement") to act as President
and Chief Executive Officer of Bank following the Merger;
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E. The Bank Employment Agreement was cancelled and terminated effective
May 4, 1999;
F. The Parties entered into a new employment agreement with Consultant
effective as of May 4, 1999 (the "Employment Agreement") to act as President
and Chief Executive Officer of Bank and Interim Vice-Chairman and Chief
Executive Officer of Bancorp, and in the near future after he is no longer
Interim Vice-Chairman, as the President and Chief Executive Officer of
Bancorp.
G. The Companies desire to obtain the services of Consultant in the
event that Consultant's employment with the Companies is terminated under the
Employment Agreement within twelve (12) months after the effective date of the
Employment Agreement, either (1) by the Companies "without cause" or (2) by
Consultant voluntarily, and Consultant desires in such event to provide personal
services to the Companies;
H. Consultant's knowledge of the Companies and the banking industry is
so valuable that assurance of his continued availability to provide information
and advice to the Companies is desired following the Merger;
I. The Companies desire to retain Consultant to serve on an
independent contractor basis; and
J. Consultant will perform such consulting services and not compete
with the Companies' business in order to protect said business and goodwill
following the Merger, provided the Companies agree to pay Consultant fees in
accordance with the terms and conditions hereinafter set forth.
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In consideration of the services to be performed in the future as well
as the mutual promises and covenants herein contained, it is agreed as follows:
1. CONSULTANT SERVICES; BANK'S RESPONSIBILITIES.
(a) CONSULTANT'S SERVICES. In the event that the Employment
Agreement is terminated pursuant to Section 5(a) or Section 5(c) of the
Employment Agreement within twelve (12) months after the effective date of the
Employment Agreement (the "Early Termination Date"), Consultant agrees to
provide consulting services as requested by the Companies including, but not
limited to, in the areas of strategic planning and business development (the
"Consulting Services") for the Term (as defined in Section 2 below). In
performing the Consulting Services, the Companies shall not obligate the
Consultant to devote more than an average of two (2) hours per week in providing
the Consulting Services. At the request of the Companies, the Consulting
Services may be provided by telephone or at a site or sites other than at the
offices of the Companies.
(b) THE COMPANIES' RESPONSIBILITIES. The Companies shall
cooperate with the Consultant and provide all information and direction
necessary to accomplish the purposes of this Agreement. The Companies shall
provide all administrative facilities and support necessary for the
accomplishment of the Consulting Services.
2. TERM. Subject to the provisions for termination provided in
paragraph 6, the term of this Agreement shall begin as of the Early Termination
Date and shall end upon the expiration of eighteen (18) months after the Early
Termination Date (the "Term").
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3. FEES. The Companies agree to pay to Consultant, and Consultant
agrees to accept as full payment for the performance of services hereunder and
for Consultant complying with the non-competition provision in Section 8 below,
a monthly fee in an amount of $8,305 per month payable within five (5) business
days of the month immediately following each such month during which the
Consulting Services are rendered and the Consultant complies with Section 8. The
Companies shall pay such fees without withholding any Federal or state or local
taxes.
4. EXPENSES. Consultant shall not be reimbursed for the expenses
incurred or paid by him in the provision of Consulting Services under this
Agreement; provided, however, that the Companies shall, upon submission and
approval of written statements and bills in accordance with the then regular
procedures of the Companies, pay or reimburse Consultant for any and all
necessary, customary and usual expenses incurred by him while traveling for or
on behalf of the Companies, and any and all other necessary, customary or usual
expenses (including entertainment) incurred by Consultant for or on behalf of
the Companies in the normal course of business, as determined to be appropriate
by the Companies.
5. INDEPENDENT CONTRACTOR. The Companies and the Consultant acknowledge
that during the Term the Consultant will not be an employee of the Companies and
will be working as an independent contractor for the Companies. Accordingly,
Consultant shall be responsible for payment of all taxes including federal,
state and local taxes arising out of Consultant's activities in accordance with
this Agreement, including by way of illustration but not limitation, federal and
State income tax, Social Security tax, Unemployment Insurance taxes, and any
other taxes or business license fees as required. Consultant shall not earn any
additional medical, dental, life insurance, retirement benefits, paid vacations
or sick leave or any other employee benefits as a result of his providing
Consulting Service to the Companies.
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6. TERMINATION OF AGREEMENT. If this Agreement is terminated pursuant
to this paragraph 6, the Companies shall have no further liability to Consultant
other than for fees or expenses incurred as of the date of termination but not
yet paid.
(a) TERMINATION BY THE COMPANIES FOR CAUSE. This Agreement and
Consultant's services hereunder may be terminated for cause by the Companies
upon written notice to Consultant, and Consultant shall not be entitled to
receive compensation or other benefits for any period after termination for
cause. "For cause" pursuant to this Agreement shall include, but not be limited
to: (i) any act of dishonesty; (ii) any breach of this Agreement or any breach
of a fiduciary duty (involving personal profit); (iii) any neglect of duties or
negligence in carrying out duties; (iv) any willful violation of any law, rule
or regulation, which, by virtue of bank regulatory restrictions imposed as a
result thereof, would have a material adverse effect on the business or
financial prospects of the Companies; (v) any commission of any crime (other
than a traffic violation or similar offense); or (vi) the requirement to comply
with any final cease-and-desist order or written agreement with any applicable
state or federal bank regulatory authority which requests or orders Consultant's
dismissal or limits Consultant's duties. Termination for cause by the Companies
shall not constitute a waiver of any remedies which may otherwise be available
to the Companies under law, equity, or this Agreement.
(b) TERMINATION BY DEATH OR DISABILITY. The Companies may
terminate this Agreement by written notice to Consultant if, during the term of
this Agreement, Consultant shall become incapable of fulfilling obligations
hereunder because of death, injury or physical or mental illness. Termination
for reason of disability shall be effective immediately as of the date of said
notice.
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(c) TERMINATION BY CONSULTANT WITHOUT CAUSE. Consultant may
terminate this Agreement without cause by giving the Companies ninety (90) days
written notice of said termination.
7. INDEMNIFICATION. To the extent permitted by law and the Bank's
articles and by-laws, the Bank shall indemnify, defend and hold Consultant
harmless against any and all claims as may be asserted by any third party
against Consultant based on the performance of Consultant's services under the
terms of this Agreement.
8. NON-COMPETITION. Consultant shall not, during the Term, directly or
indirectly, either as an employee, employer, consultant, agent, principal,
partner, shareholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any competing bank or
financial institution or financial services business for any bank or financial
institution or financial services business that has an office within 30 miles of
the head office or any branch of the Companies. Consultant hereby acknowledges
the particular value to the Companies of this Section 8, the loss of which
cannot be reasonably or adequately compensated in an action at law or in
arbitration. Therefore, Consultant expressly agrees that the Companies, in
addition to any and all other rights or remedies that the Companies shall
possess, shall be entitled to injunctive and other equitable relief to prevent
or remedy a breach of this Section 8 by Consultant, without the necessity of
posting any bond. Consultant's obligation under this Section 8 shall survive the
termination of this Agreement; provided that in the event of a breach of this
Section 8, the Companies will not have any obligation to continue to pay the
monthly fee under Section 3.
9. MISCELLANEOUS.
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(a) ENTIRE AGREEMENT. Except with respect to the Employment
Agreement, this Agreement supersedes any and all other agreements between
Consultant and the Companies, either oral or in writing, among the parties
hereto with respect to the retention of Consultant by the Companies and contains
all of the promises and agreements among the Parties with respect to such
retention. Each party acknowledges that no representations, promises or
agreements, oral or otherwise, have been made by any party or anyone acting on
behalf of a party which are not embodied herein, and that no other agreement,
statement, representation or promise with respect to such retention not
contained in this Agreement shall be valid or binding. Any modification, waiver
or amendment of this Agreement will be effective only if it is in writing and
signed by the party to be charged.
Notwithstanding anything to the contrary set forth elsewhere in this
Agreement, Consultant agrees that (i) this Agreement shall take effect only in
the event of and upon the termination of Consultant's employment with the
Companies pursuant to the Section 5(a) or 5(c) of the Employment Agreement; and
(ii) the obligation of the Companies to pay Consulting Fees pursuant to this
Agreement is wholly independent of and shall in no way effect the provisions set
forth in the Employment Agreement.
(b) ARBITRATION. Except as provided in Sections 8 and 9(d),
any controversy or claim arising out of or relating to this Agreement, or breach
of this Agreement, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrators may be entered in any court
having jurisdiction. There shall be three arbitrators, one to be chosen directly
by each party, and the third arbitrator to be selected by the two arbitrators so
chosen. If any arbitration proceeding is brought for the enforcement of this
Agreement or because of an alleged dispute, breach or
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default in connection with this Agreement, (i) the non-prevailing party shall
pay the fees of the arbitrators and all other costs of the arbitration,
including the cost of any record or transcripts of the arbitrations and
administrative fees; and (ii) the prevailing party shall be entitled to recover
reasonable attorney's fees and any other costs and expenses incurred in that
action or proceeding, in addition to any other relief to which it or he may be
entitled.
(c) CHOICE OF LAW AND FORUM. This Agreement shall be governed
by and construed in accordance with the laws of the State of California, except
to the extent preempted by the laws of the United States. Any action or
proceeding brought upon, or arising out of, this Agreement or its termination
shall be brought in a forum located within the County of Orange, State of
California, and Consultant hereby agrees to be subject to service of process in
California.
(d) DISCLOSURE OF INFORMATION. Consultant recognizes and
acknowledges that the Companies possess trade secrets and other confidential
and/or proprietary information concerning the Companies' business affairs and
methods of operation which constitute valuable, confidential, and unique assets
of the Companies' business ("Proprietary Information"), which the Companies have
developed through a substantial expenditure of time and money and which are and
will continue to be utilized in the Companies' business operations and which are
not generally known in the trade. At any time before or after termination of
this Agreement, Consultant agrees not to disclose to anyone any Proprietary
Information for any reason or purpose whatsoever and not to make use of any
Proprietary Information for his own purposes or for the benefit of anyone other
than the Companies under any circumstances. For purposes of this paragraph 9(d),
Proprietary Information includes, without limitation, all information regarding
services, processes, know-how, service development, business plans, strategic
plans,
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labor relations, research, finances, marketing, assessments, costs, benefits,
and any other confidential matters relating to the Companies. Consultant hereby
acknowledges the particular value to Bank of this paragraph 9(d), the loss of
which cannot be reasonably or adequately compensated in an action at law or in
arbitration. Therefore, Consultant expressly agrees that the Companies, in
addition to any other rights or remedies that the Companies shall possess, shall
be entitled to injunctive and other equitable relief to prevent or to remedy a
breach of this paragraph 9(d) by him, without the necessity of posting any bond.
(e) SEVERABILITY. In the event that any term or condition
contained in this Agreement shall, for any reason, be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other term
or condition of this Agreement, but this Agreement shall be construed as if such
invalid or illegal or unenforceable term or condition had never been contained
herein. It is the intention of the Parties that the non-competition covenants in
Section 8 shall be enforced to the greatest extent (but to no greater extent) in
time, area, and degree of participation as is permitted by the law of that
jurisdiction whose law is found to be applicable to any act allegedly in breach
of the covenants. It being the purpose of this Agreement to govern competition
by Consultant, the covenants in Section 8 shall be governed by and construed
according to that law (from among those jurisdictions arguably applicable to
this Agreement and those in which a breach of said Section is alleged to have
occurred or to be threatened) which best gives them effect.
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
and Non-Competition Agreement as of this 4th day of May, 1999, in the City of
Newport Beach, California.
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CONSULTANT:
DATED: May 5, 1999 /s/ Xxxxxx Xxxxxxxx
-------------------------------
XXXXXX XXXXXXXX
THE BANK OF ORANGE COUNTY
DATED: May 5, 1999 By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Chairman of the Board of Directors
CALIFORNIA FINANCIAL BANCORP
DATED: May 4, 1999 By: /s/ Xxxxxxx X. Xxxxxx, Xx.
-------------------------------
Chairman of the Board of Directors
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