SEVERANCE AGREEMENT
This
Severance Agreement is entered into as of the 29th day of March 2006 by and
between Capital Corp of the West (CCOW) and Xxxxxxxxx Xxxxxxxx.
I.
Term Of Agreement
The
initial term of this Agreement shall be for a period of two years, commencing
June 20th, 2005. On the first anniversary this Agreement, and on each
anniversary thereafter, the Agreement shall be extended automatically for one
additional year unless CCOW’s Board of Directors gives notice to the Executive
in writing at least ninety (90) days before the anniversary that the term of
this Agreement will not be extended. If the Board of Directors determines not
to
extend the term, it shall promptly notify the Executive. Unless terminated
earlier, this Agreement shall terminate when the Executive reaches age
sixty-five (65) or such age as shall be mutually agreed upon by the Executive
and Board. If the Board of Directors decides not to extend the term of this
Agreement, this Agreement shall nevertheless remain in force until its term
expires.
II.
Change In Control Combined With Employment Termination
Termination
of Executive Within One Year After a Change in Control.
If
a
Change in Control occurs during the term of this Agreement and if either of
the
following also occurs, the Executive shall be entitled to severance
benefits.
.
| 1) |
Involuntary
Termination Without Cause:
the Executive’s employment with CCOW and Subsidiaries is involuntarily
terminated within one year after a Change in Control, except for
termination under Section 4 of this Agreement. For purposes of this
Agreement, “Subsidiary” means any entity in which CCOW directly or
indirectly beneficially owns 50% or more of the outstanding voting
securities, or
|
| 2) |
Voluntary
Termination for Good Reason:
the Executive terminates his employment with CCOW and Subsidiaries
for
Good Reason (as defined in Section 3) within one year after a Change
in
Control.
|
If
the
Executive is removed from office or if his employment terminates after
discussions with a third party regarding a Change in Control commence, and
if
those discussions ultimately conclude with a Change in Control, then for
purposes of this Agreement the removal of the Executive or termination of his
employment shall be deemed to have occurred after the Change in Control.
Definition
of Change in Control.
For
purposes of this Agreement, “Change in Control” means any of the following
events occur -
1)
Merger:
CCOW
merges into or consolidates with another corporation, or merges another
corporation into CCOW, and as a result less than a majority of the combined
voting power of the resulting corporation immediately after the merger or
consolidation is held by persons who were stockholders of CCOW immediately
before the merger or consolidation. For purposes of this Agreement, the term
“person” means an individual, corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, or other entity,
| 3) |
Acquisition
of Significant Share Ownership:
a
report on Schedule 13D, Schedule TO, or another form or schedule
(other
than Schedule 13G), is filed or is required to be filed under Sections
13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule
discloses that the filing person or persons acting in concert has
or have
become the beneficial owner of 25% or more of the combined voting
power of
CCOW’s voting securities (but this clause shall not apply to beneficial
ownership of voting shares held by a subsidiary in a fiduciary capacity
or
beneficial ownership of voting shares held by an employee benefit
plan of
CCOW),
|
| 4) |
Change
in Board Composition:
during any period of two consecutive years, individuals who constitute
CCOW’s board of directors at the beginning of the two-year period cease
for any reason to constitute at least a majority thereof; provided,
however,
that for purposes of this clause each director who is first elected
by the
board (or first nominated by the board for election by stockholders)
by a
vote of at least two-thirds of the directors who were directors at
the
beginning of the period shall be deemed to have been a director at
the
beginning of the two-year period,
or
|
| 5) |
Sale
of Assets:
CCOW sells to a third party substantially all of CCOW’s assets. For
purposes of this Agreement, sale of substantially all of CCOW’s assets
includes sale of the shares or assets of the Bank
alone.
|
SEVERANCE
BENEFITS.
Severance.
The
benefits to which the Executive is entitled under Section 1 are -
| 1) |
Lump
Sum Payment:
CCOW shall make a lump sum payment to the Executive in an amount
in cash
equal to the Executive’s annual compensation. For purposes of this
Agreement, annual compensation means (a) the Executive’s annual base
salary on the date of the Change in Control or the Executive’s termination
of employment (at whichever date the Executive’s current annual base
salary is greater), plus (b) the average of the bonuses and incentive
compensation earned for the three calendar years immediately preceding
the
year in which the Change in Control occurs, regardless of when the
bonus
or incentive compensation is paid. CCOW recognizes that the bonus
and
incentive compensation earned by the Executive for a particular year’s
service might be paid in the year after the calendar year in which
the
bonus or incentive compensation is earned. The amount payable to
the
Executive hereunder shall not be reduced to account for the time
value of
money or discounted to present value. The payment required under
this
Section is payable no later than 15 business days after the date
the
Executive’s employment terminates. If the Executive terminates employment
for Good Reason, the date of termination shall be the date specified
by
the Executive in his notice of
termination.
|
2)
Benefit
Plans:
CCOW
shall cause the Executive to become fully vested in any qualified and
non-qualified plans, programs or arrangements in which the Executive
participated if the plan, program, or arrangement does not address the effect
of
a change in control. CCOW also shall contribute or cause a subsidiary to
contribute to the Executive’s CCOW Bank 401(k) Profit Sharing Plan account the
matching and voluntary contributions, if any, that would have been made had
the
Executive’s employment not terminated before the end of the plan
year.
3)
Insurance
Coverage:
CCOW
shall cause to be continued life, health and disability insurance coverage
substantially identical to the coverage
maintained
for the Executive before his termination. The insurance coverage may cease
when
the Executive becomes employed by another employer or 12 months after the
Executive’s termination, whichever occurs first. At the end of the 12-month
period, the Executive shall have the option to continue health insurance
coverage at his own expense for a period not less than the number of months
by
which the Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation
period exceeds 12 months.
(b)
No
Mitigation Required.
CCOW
hereby acknowledges that it will be difficult and could be impossible (1) for
the Executive to find reasonably comparable employment after his employment
terminates, and (2) to measure the amount of damages the Executive suffers
as a
result of termination. Additionally, CCOW acknowledges that its general
severance pay plans do not provide for mitigation, offset or reduction of any
severance payment received thereunder. Accordingly, CCOW further acknowledges
that the payment of severance benefits by CCOW under this Agreement is
reasonable and will be considered liquidated damages, and the Executive shall
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment nor will any profits, income, earnings
or
other benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive hereunder or
otherwise.
3.
GOOD
REASON.
For
purposes of this Agreement, “Good Reason” means the occurrence of any of the
following events or conditions without the Executive’s written consent
-
| (a) |
Reduction
in Base Salary:
reduction in the Executive’s base salary,
or
|
| (b) |
Reduced
or Discontinued Participation in Bonus, Incentive, Compensation,
and Other
Plans:
Reduction of the Executive’s bonus, incentive, and other compensation
award opportunities under CCOW’s or Subsidiary’s benefit plans, unless a
company-wide reduction of all officers’ award opportunities occurs
simultaneously, or termination of the Executive’s participation in any
officer or employee benefit plan maintained by CCOW or Subsidiary,
unless
the plan is terminated because of changes in law or loss of tax
deductibility to
|
CCOW
for
contributions to the plan, or unless the plan is terminated as a matter of
policy applied equally to all participants, or
| (c) |
Reduced
Responsibilities or Status:
Assignment to the Executive of duties or responsibilities that are
materially inconsistent with the Executive’s duties and responsibilities
immediately before the Change in Control, or any other action by
CCOW or
its successor that results in a material reduction or material adverse
change in the Executive’s position, authority, duties or responsibilities,
or
|
| (d) |
Failure
to Obtain Assumption Agreement:
Failure to obtain an assumption of CCOW obligations under this Agreement
by any successor to CCOW, regardless of whether such entity becomes
a
successor as a result of a merger, consolidation, sale of assets,
or other
form of reorganization, or
|
| (e) |
Relocation
of the Executive:
Relocation of the CCOW’s principal executive offices, or requiring the
Executive to change his principal work location, to any location
that is
more than 50 miles from the location CCOW’s principal executive offices on
the date of this Agreement.
|
4.
TERMINATION
FOR WHICH NO SEVERANCE BENEFITS ARE PAYABLE.
| (a) |
No
Severance for Termination for Cause.
Anything in this Agreement to the contrary notwithstanding, under
no
circumstance shall the Executive be entitled to severance benefits
if his
employment terminates for Cause. For purposes of this Agreement,
“Cause”
means the Executive shall have committed any of the following acts
-
|
| 1) |
Fraud,
Embezzlement, Theft or Other Crime:
an act of fraud, embezzlement, or theft while employed by CCOW or
a
Subsidiary, or conviction of the Executive for or plea of nolo
contendere to
a felony or conviction of or plea of nolo
contendere to
a misdemeanor involving moral turpitude, or the actual incarceration
of
the Executive for 45 consecutive days or more,
or
|
2)
Negligence and Other Actions:
gross
negligence, insubordination, disloyalty, or dishonesty in the performance of
his
duties as an officer of CCOW or Subsidiary; willful or reckless failure by
the
Executive to adhere to CCOW’s or Subsidiary’s written policies; intentional
wrongful damage by the Executive to
the
business or property of CCOW, including without limitation its reputation,
which
in CCOW’s sole judgment causes material harm to CCOW; breach by the Executive of
his fiduciary duties to CCOW and its stockholders, whether in his capacity
as an
officer or as a director of CCOW or Subsidiary,
3)
Removal:
removal
of the Executive from office or permanent prohibition of the Executive from
participating in the Bank’s affairs by an order issued under section 8(e)(4) or
(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1),
or
4)
Disclosure
of Trade Secrets:
intentional wrongful disclosure of secret processes or confidential information
of CCOW or affiliates, which in CCOW’s sole judgment causes material harm to
CCOW or affiliates, or
5)
Termination
for Cause under an Employment Agreement:
any
actions that have caused the Executive to be terminated for cause under any
employment agreement existing on the date hereof or hereafter entered into
between the Executive and CCOW or a Subsidiary, or
6)
Exclusion
from Fidelity Coverage:
the
occurrence of any event that results in the Executive being excluded from
coverage, or having coverage limited for the Executive as compared to
other
executives
of CCOW or affiliates, under a blanket bond or other fidelity or insurance
policy covering directors, officers, or employees.
Definition
of “Intentional”:
For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed to have been intentional if it was due primarily
to an
error in judgment or negligence. An act or failure to act on the Executive’s
part shall be considered intentional if it is not in good faith and if it is
without
a
reasonable belief that the action or failure to act is in the best interests
of
CCOW. Any act or failure to act based upon authority granted by resolutions
duly
adopted by the board of directors or based upon the advice of counsel for CCOW
shall be conclusively presumed to be in good faith and in the best interests
of
CCOW.
(b)
No
Severance under this Agreement for the Executive’s Death or
Disability.
Anything in this Agreement to the contrary notwithstanding, under no
circumstance shall the Executive be entitled to severance
benefits
under this Agreement if -
| 1) |
Death:
the Executive dies while actively employed by CCOW or a Subsidiary,
or
|
2)
Disability:
the
Executive becomes totally disabled while actively
employed
by CCOW or a Subsidiary. For purposes of this agreement, the term “totally
disabled” means that because of injury or sickness, the Executive is unable to
perform his duties. The benefits, if any, payable to the Executive or his
beneficiary(ies) or estate relating to his death or disability shall be
determined solely by such benefit plans or arrangements as CCOW or Subsidiary
may have with the Executive relating to death or disability, not by this
Agreement.
It
is
mutually agreed by the parties that the above referenced Severance Payment
shall
be received by Employee in lieu of any and all claims and/or damages which
may
be sustained by Employee due to the acquisition of Employer and the termination
of Employee’s employment and will be accepted by Employee in full satisfaction
of all such claims and damages.
IV.
Notices
Any
notice to Employee required or permitted under this Agreement shall be given
in
writing to Employee, either by personal service or by certified mail, postage
prepaid, and if mailed, shall be addressed to Employee at Employee’s home
address then shown on Employer’s files. For the purpose of determining
compliance with any time limit in this Agreement, a notice shall be deemed
to
have been duly given (a) on the date of service, if personally served on the
party to whom notice is to be given, or (b) the fifth business day after
mailing, if mailed to the party to whom notice is to be given in the manner
provided in this Section.
V.
Nonassignability
Neither
this Agreement nor any right or interest hereunder shall be assignable by
Employee, his beneficiaries or legal representatives without Employer’s prior
written consent; provided, however, that nothing in this Section shall preclude
Employee from designating a beneficiary to receive any benefit payable hereunder
upon his death, or the executors, administrators, or other legal representatives
of Employee or his estate from assigning any rights hereunder to the person
or
persons entitled thereto.
VI.
No Attachment
Except
as
required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge or hypo-thecation or to execution, attachment, levy or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no
effect.
VII.
Binding Effect.
This
Agreement shall be binding upon, and inure to the benefit of, Employee and
Employer and their respective successors.
VIII.
Modification and Waiver
(a)
Amendment
of Agreement.
This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(b)
Waiver.
No
term
or condition of this Agreement shall be deemed to have been waived nor shall
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to
the
specific term or condition for the future or as to any act other than that
specifically waived. No delay in exercising any rights shall be construed as
a
waiver, nor shall a waiver on one occasion operate as a waiver of such right
on
any future occasion.
IV.
Entire Agreement
This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to this Severance Agreement and contains
all of the covenants and agreements between the parties with respect to this
Severance Agreement. 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 and binding.
X. 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 without being impaired or invalidated in any
way.
XI.
Governing Law
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of California.
XII.
This Agreement Is Not An Employment Contract
The
parties hereto acknowledge and agree that (a) this Agreement is not an
employment agreement and (b) nothing in this Agreement shall give the Executive
any right or impose any obligations to continued employment by CCOW, nor shall
it give CCOW any rights or impose any obligations for the continued performance
of duties by the Executive for CCOW or any subsidiary or successor of
CCOW.
In
witness whereof, the parties hereto have duly executed this Agreement on the
day
and year first above written.
|
EMPLOYER:
|
||
| 3/29/06 | /s/ Xxxxxx Xxxxxx | |
|
Date
|
Xxxxxx
Xxxxxx
|
|
|
EMPLOYEE:
|
||
| 3/29/06 | /s/ Xxxxxxxxx Xxxxxxxx | |
|
Date
|
Xxxxxxxxx
Xxxxxxxx
|
