Exhibit 10.7
EMPLOYMENT AGREEMENT
PART I
PARTIES TO AGREEMENT
Section 1.01 - Parties: This Employment Agreement is entered into by and between
Farmers & Merchants Bank of Central California, (hereinafter referred to as
"Employer") and Xxxxxxx X. Xxxxx (hereinafter referred to as "Employee").
PART II
EMPLOYMENT
Section 2.01 - Employment: Employer hereby employs Employee and Employee hereby
accepts employment with Employer in accordance with the terms and conditions set
forth herein.
Section 2.02 - Term of Employment: This Employment Agreement shall be in full
force and effect for a period of 36 months, commencing on the effective date of
employment of this Employment Agreement. At the end of this said term, this
Agreement shall renew automatically for additional one year terms, unless either
party furnishes written notice of his or its intention not to renew by no later
than sixty (60) days prior to the anniversary of the effective date of
employment of this Employment Agreement.
Section 2.03 - Regulatory Approval: The parties acknowledge that Employee's
employment with the Bank is subject to review and approval of governmental
regulatory authorities. The parties shall agree to take all steps necessary to
cooperate fully with said regulators in order to expedite the approval process.
Employee's contract under this Agreement is subject to, and shall not commence
until said regulatory approvals have been obtained.
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PART III
DUTIES OF EMPLOYEE
Section 3.01 - General Duties: Subject to Bank's Board of Directors approval,
Employee is employed as Executive Vice President and Chief Financial Officer of
the Bank under the direction of the Bank's Board of Directors and Chief
Executive Officer ("CEO") and shall perform and discharge well and faithfully
the duties that may be assigned to him from time to time by the Bank's Board of
Directors or Chief Executive Officer ("CEO") in connection with the conduct of
the Bank's business. Nothing herein shall preclude the Board of Directors or CEO
from changing Employee's title or duties as long as the resulting title and
duties are reasonably commensurate with the education, employment background,
and qualifications of the Employee.
Section 3.02 - Outside Activities: Employee agrees that while employed by Bank
he will refrain from any outside activity or activities actually in direct
conflict with the essential enterprise-related interest of Bank that would cause
a material and substantial disruption of the Bank's operation.
PART IV
COMPENSATION
Section 4.01 - Salary: Employee shall be paid a minimum base salary of
$178,008.00 per year. This base salary shall be paid to Employee in such
intervals and at times as other salaried executives of Employer are presently
paid. Employee will be considered for salary increases at the times that other
salaried executive officers of Employer are adjusted.
Section 4.02 - Incentive Programs: Employee shall be entitled to participate in
any Discretionary Incentive Compensation Plan. Beginning with the year ending
December 31, 2003, employee shall be eligible for an annual discretionary
incentive bonus. The amount of the bonus shall be determined in accordance with
the established terms and conditions of the Bank's Discretionary Incentive
Compensation Plan adopted by the Bank from time to time which covers employees
in positions comparable to that of employee. Also, subject to Bank's Board of
Directors Approval, Employee shall participate in the Bank's Deferred Bonus Plan
at a bonus Factor (as defined in the Plan Document) of not less than .00158%.
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PART V
BENEFITS
Section 5.01 - Benefits: Employee shall be eligible to participate in whatever
vacation, medical, dental, pension, sick leave, 401(k), profit-sharing plan,
disability insurance or other plans of general application to Employer's senior
level employees, as may be in effect from time to time, in accordance with the
rules established from time to time for individual participation in any such
plans.
Section 5.02 - Company Car/Car Allowance: At the discretion of the Employer,
Employer shall provide Employee with either an automobile for business and
incidental personal use as per Bank policy or an automobile allowance of $700.00
per month.
Section 5.03 - Membership Fees: Employer shall reimburse Employee for all
appropriate and reasonable expenses incurred in performing his duties, including
providing membership in local service and civic clubs and/or organizations as
the Bank deems appropriate and necessary for enhancement of its presence within
the local business community. In order to be eligible for reimbursement of these
expenses, Employee will provide Employer with receipts and documented evidence
as is required by Federal and State laws and regulations.
PART VI
EXPENSES
Section 6.01 - Travel and Entertainment Expenses: During the term of Employee's
employment, Employer shall reimburse Employee for reasonable out of pocket
expenses incurred in connection with Employer's business, including travel
expenses, food and lodging while away from his home, subject to such policies as
Employer may from time to time establish for its employees. Employee shall keep
records of his travel and entertainment expenses in a form suitable to the
Internal Revenue Service and the Franchise Tax Board to qualify this
reimbursement as a federal and state income tax deduction for Employer.
Section 6.02 - Moving Expenses: Employee shall be paid $35,000.00 within 45 days
of Employees date of hire to compensate employee for expenses relating to the
relocation of Employee to the Lodi, California area. Upon prior approval,
Employer will also reimburse Employee for (1) reasonable transportation, food
and lodging costs for Employee and his wife incurred during up to 2 house
hunting trips to the Lodi area, (2) normal buyers closing costs including a
maximum of 1% of any new loan fees associated with purchase of employee's Lodi
area residence, and (3) all reasonable expenses (excluding any expenses for
temporary storage) for moving Employee's furniture, furnishings and personal
items from employee's current residence to the Lodi, California area.
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Section 6.03 - Temporary Housing: Employee shall be reimbursed for temporary
housing expense for up to 6 months (or until employee secures permanent housing
whichever comes first) at an amount not to exceed $1,600.00 per month.
PART VII
TERMINATION OF EMPLOYMENT
Section 7.01 - Termination at Option of Employer: Notwithstanding any other
section of this Agreement, Employer may terminate this Agreement at any time and
without cause by giving Employee sixty (60) days written notice of Employer's
intent to terminate this Agreement. In the event Employee's employment is
terminated pursuant to Section 7.01 of this Agreement, Employee shall be paid
all accrued salary, vacation, and reimbursable expenses for which expense
reports have been provided to Employer in accordance with Employer's policies
and this Agreement. In addition to the forgoing amounts, if Employee is
terminated pursuant to this section of the Agreement, he will be entitled to
receipt of additional severance payment as follows:
1. Employee shall be entitled to received up to twelve (12) monthly payments
each in the amount equal to one twelfth (1/12) of Employee's then current
annual base salary, less any withholding required by law. Any payments due
and owing to Employee under this Section will commence on the 15th day of
the first month following Employee's termination and shall continue until
all payments due and owing Employee are made or until Employee obtains
other comparable employment, whichever comes first.
2. In addition, the Employee will also be entitled to all vested awards of
benefit plans in which employee is vested (including the Deferred Bonus
Plan) in accordance with the terms of those plans.
3. For purposes of implementing subparagraph 1 of Section 7.01, Employee
agrees to furnish Employer with prompt written notice describing any
subsequent employment he secures (including his compensation for such
employment) following any termination under this section.
4. For purposes of subparagraph 1 of Section 7.01, the term "comparable
employment" shall mean any employment in which Employee's compensation
(measured by any cash or non-cash payments or benefits) is comparable to
his compensation under this Agreement. Any compensation comparison
undertaken for the purposes of this Agreement shall be done without regard
to any vested or unvested earnings from the Deferred Bonus Plan.
5. In addition to any severance payments due and owing under Section 7.01,
Employer may, in its sole discretion, provide Employee with a performance
bonus prorated for the number of months between the termination date and
the end of Employer's last fiscal year.
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Section 7.02 - Termination by Employer : If, at any time during Employee's
employment, Employer finds that Employee is found to be guilty of committing
acts of dishonesty, theft, embezzlement or other acts of moral turpitude against
the Bank, its subsidiaries or affiliates which adversely impact the interests of
the Bank or if Employee is deemed by employer to be negligent in the performance
of his assigned duties, Employer may at its option terminate this Agreement by
giving written notification of such termination to Employee. In the event
Employee is terminated pursuant to this Section, Employee shall be entitled only
to the compensation earned by him prior to the date of termination, computed up
to and including the date of termination, and shall be entitled to no further
compensation or severance payment of any nature.
Section 7.03 - Termination at Option of Employee: This Agreement may be
terminated by Employee in his sole discretion by giving sixty (60) days written
notice of termination to Employer. In the event Employee terminates his
employment pursuant to this Section, Employee shall be entitled to the base
compensation earned by him computed up to and including the effective date of
his termination and he shall be entitled to no further compensation, or
severance payment of any nature; provided, however, Employee continues
productive employment until such date; and further provided that Employer may,
at its option, at any time after Employee gives written notice of resignation as
herein provided, pay Employee pro rata compensation as described above up
through and including the effective date of termination set forth in Employee's
resignation notice, and thereupon immediately release and terminate Employee.
Section 7.04 - Continuation of Medical Benefits: In the event Employee's
employment is terminated, Employee shall be afforded the right to continue his
medical benefits as and to the extent provided in the Consolidated Omnibus
Budget Reconciliation Act ("COBRA").
Section 7.05 - Termination of Employee due to Change of Control: In the event of
a change of control of the Bank during the term of this Agreement, and in the
event Employee is not retained by the purchaser in the same or similar position
in which the title and duties are reasonably commensurate with the education,
employment background, and qualifications of the Employee, Employer will provide
Employee with a severance package equal to one year of the Employee's annual
salary as set at the time the change of control occurs, as well as a pro rata
annual performance bonus for the year in which the termination occurs. In
addition, the Employee will also be entitled to all vested awards of benefit
plans in which employee is vested (including the Deferred Bonus Plan) in
accordance with the terms of those plans. All payments due Employee under this
Section will be paid within ninety (90) days of termination.
1. "Change of Control" means a change of control of the Bank of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A (or in response to any similar item on any similar
schedule or form) promulgated under the Securities Exchange Act of 1934
(the "Act"), whether or not the Bank is then subject to such reporting
requirement; provided, however, that without limitation, such a Change of
Control shall be deemed to have occurred if:
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(a) any person or group (as such terms are used in connection with
Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 and 13d-5 under the Act), directly or
indirectly, of securities of the Bank representing 40% or more of the
combined voting power of the Bank's then outstanding securities; or
(b) the Bank is a party to a merger, consolidation, sale of assets or
other reorganization, or a proxy contest, as a consequence of which
members of the Board of Directors in office immediately prior to such
transaction or event constitute less than a majority of the Board of
Directors thereafter.
Notwithstanding the foregoing provisions of this paragraph 1., a "Change of
Control" will not be deemed to have occurred solely because of the acquisition
of securities of the Bank (or any reporting requirement under the Act relating
thereto) by an employee benefit plan maintained by the Bank for its employees.
Section 7.06 - Exclusive Agreement: The agreement of Employer and Employee
respecting the extent of the parties' duties, obligations and liabilities in the
event of termination of employment as set forth in Part VII herein is intended
to be exclusive and in lieu of any other interests, rights or remedies to which
Employer or Employee may otherwise be entitled either at law, in equity, or
under this Agreement. Employer and Employee expressly waive any and all such
other rights and remedies.
PART VIII
COVENANTS
Section 8.01 - Business and Trade Secrets: Employee specifically agrees that he
will not at any time, whether during the period of Employee's employment by
Employer or at any time thereafter, in any fashion, form or manner, unless
specifically consented to in writing by Employer, either directly or indirectly
use or divulge, disclose or communicate to any person, firm or corporation, in
any manner whatsoever, any confidential information and trade secrets of any
kind, nature or description concerning any matters affecting or relating to the
business of Employer, including without limiting the generality of the
foregoing, the names, contact persons, business habits or practices, and
standards of the Employer, or confidential business or financial information,
including the Employer's financial and planning data, compilations of business
and financial data, records, reports, customer lists, (including contacts),
customers' profitability, studies, manuals, memoranda, notebooks, files,
documents, correspondence, and other confidential business or financial
information of, about, or concerning the business of the Employer, its manner of
operation, or other confidential data of any kind, nature or description, the
parties hereto stipulating that as between them, the same are important,
material and confidential business and trade secrets and affect the successful
conduct of the Employer's business and its goodwill, and that any breach in
whole or in part of the term of Part VIII of this Agreement is a material breach
of this Agreement.
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Section 8.02 - Employer's Property: All files, records, compilations, reports,
studies, manuals, memoranda, notebooks, documents, correspondence, and other
confidential information or records and similar items relating to the business
of the Employer, whether prepared by Employee or otherwise coming into his
possession, are, and shall remain, the exclusive property of the Employer, and
shall be promptly delivered to the Employer in the event of Employee's
termination.
Section 8.03 - Separate Covenants: The covenants of Part VIII of this Agreement
shall be construed as separate covenants covering their particular subject
matter. In the event that any covenant shall be found to be judicially
unenforceable, said covenant shall not affect the enforceability or validity of
any other part of this Agreement.
Section 8.04 - Continuing Obligation: Employee's obligations set forth in Part
VIII of this Agreement shall expressly continue in effect beyond Employee's
employment period in accordance with their terms, and such obligations shall be
binding on Employee's assigns, executors, administrators and other legal
representatives.
PART IX
ARBITRATION AGREEMENT
Section 9.01 - Resolution of Disputes: To resolve disputes which might otherwise
become civil court cases, Employee and Employer agree to submit all disputes
arising out of Employee's employment which may lawfully be the subject of
pre-dispute arbitration agreements to final and binding arbitration after the
conclusions of any relevant administrative proceedings. Arbitration shall be the
exclusive means of resolving any such disputes and no other action will be
brought in any court.
Section 9.02 - Notification: Employee begins the arbitration process by
delivering a written request for arbitration to Employer within the time limits
which would apply to the filing of a civil complaint in court. A late request
will be void.
Section 9.03 - Selection of Arbitrator: If Employee and Employer are unable to
agree upon a neutral arbitrator, Employer will obtain a list of arbitrators from
the American Arbitration Association. The arbitrator shall be bound by the
arbitration procedures set forth in the Model Employment Arbitration Procedures
of the American Arbitration Association, including the requirement for a written
decision. Each party shall bear its own costs of arbitration except that the
Employer shall bear the cost of the arbitrator and any other costs unique to
arbitration as opposed to litigation. The arbitrator shall have the authority to
order any legal and equitable remedy that would be available in a civil or
administrative action on the claim.
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Section 9.04 - Effect On Other Proceedings: PLEASE NOTE: Nothing in this
agreement affects National Labor Relations Board proceedings, petitions for
judicial review of a decision issued by the Fair Employment and Housing
Commission after an administrative hearing, California Labor Commissioner
claims, workers' compensation benefit claims, or the ability of either party to
seek appropriate interim injunctive relief pursuant to the California Code of
Civil Procedure before or while arbitration proceedings are pending. The parties
retain all rights to enter into agreements regarding arbitration after any
dispute has arisen.
Section 9.05 - Severability: If any court of competent jurisdiction declares
that any part of this Arbitration Agreement is illegal, invalid or
unenforceable, such a declaration will not affect the legality, validity or
enforceability of the remaining parts of the Agreement, and the illegal, invalid
or unenforceable part will no longer be part of this Agreement.
Section 9.06 - Continuation: The agreements in this part IX shall survive the
termination of this agreement and employee's employment with employer and remain
in full force and effect thereafter.
THIS ARBITRATION AGREEMENT IS A WAIVER OF SOME RIGHTS TO A CIVIL JURY TRIAL FOR
CLAIMS ARISING OUT OF EMPOYEE'S EMPLOYMENT WITH THE EMPLOYER.
PART X
GENERAL PROVISIONS
Section 10.01 - Notices: Any notice to be given to Employer under the terms of
this business, and any notice to be given to Employee shall be addressed to him
at his mailing address as either party may hereafter designate in writing to the
other. Any such notice shall be deemed to have been duly given when enclosed in
a properly sealed and addressed envelope, registered or certified, and deposited
(postage or registry or certification fee prepaid), in a post office or branch
post office regularly maintained by the United States government.
Section 10.02 - Entire Agreement: This Agreement supersedes any and all other
agreements or understandings, whether oral, implied, or in writing, between the
parties hereto with respect to the subject matter hereof and contains all of the
covenants and agreements between the parties with respect to such matters in
their entirety. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, orally 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. Any modification(s) to this
Agreement will be effective only if it is in writing and signed by the parties
hereto.
Section 10.03 - Partial Invalidity: If any provision in this Agreement is held
by a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way.
Section 10.04 - Continuing Obligations: Whether or not Employee's employment
relationship with Employer is terminated, neither Employer or Employee shall be
relieved of the continuing obligations of the covenants contained in this
Agreement.
Section 10.05 - Employee's Representatives: Employee represents and warrants
that he is free to enter into this Agreement and to perform each of the terms
and covenants in it. Employee represents and warrants that he is not restricted
or prohibited, contractually or otherwise, from entering into and performing
this Agreement, and that his execution and performance of this Agreement is not
a violation or breach of any other agreement between Employee and any other
person or entity.
The effective date of employment under this Agreement is on or about April 1,
2003.
FARMERS & MERCHANTS BANK
OF CENTRAL CALIFORNIA
By: /s/ Xxxxxx X. Xxxxxx March 25, 2003
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Xxxxxx X. Xxxxxx Date
Senior Vice President
Director of Human Resources
Employee:
/s/ Xxxxxxx X. Xxxxx March 25, 2003
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Xxxxxxx X. Xxxxx Date
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