EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of May
29, 1998, by and between BANK OF XXXXX XXXXX, a California banking
corporation, with its headquarters office located at 00000 Xxxxxxxx Xxxxxxx,
Xxxxx Xxxxx Xxxxxxxxxx 00000 (the "Bank"), and XXXXXX XXX XXXXXX, residing
at 24692 Evening Xxxx Xxxxx, Xxxx Xxxxx, Xxxxxxxxxx 00000 (the "Employee").
A. The Bank is a corporation organized for the purpose of carrying
on the business of banking.
B. The Bank desires to avail itself of the skill, knowledge and
experience of Employee in order to insure the successful management of its
business;
C. The parties hereto desire to specify the terms of Employee's
employment by Bank as an Executive Vice President in this written agreement
which supersedes all prior agreements, whether written or oral; and
D. The employment, the duration thereof, the compensation to be
paid to Employee, 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 May 20, 1998, at which meeting a quorum was present and
voted.
NOW, THEREFORE, on the basis of the foregoing facts and in
consideration of the mutual covenants and agreements contained herein, the
parties hereto agree as follows:
1. TERM
(a) Subject to the provisions below, the Bank agrees to
continue to employ Employee, and Employee agrees to be employed by the Bank,
subject to the terms and conditions of this Agreement, for a three-year
period commencing on May 29, 1998 and ending on May 29, 2001.
The term for which Employee is employed hereunder is hereinafter
referred to as the "Employment Period".
(b) Subject to the notice provisions set forth in this
paragraph, the term of this Agreement shall automatically be extended for one
(1) additional year on June 1 of each calendar year after the expiration of
the three (3) year term described in Paragraph 1(a). The term shall not be
automatically extended as provided in this paragraph if either party shall
give written notice to the other, on or before January 1 of each year, that
the Agreement shall not be automatically renewed on the next June 1. In the
event either party shall give the other written notice as provided in this
paragraph, the term of this Agreement shall thereafter terminate on the next
following agreement termination date.
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2. DUTIES AND AUTHORITY
(a) During the Employment Period, Employee shall devote all
her productive time, ability and attention to the business and affairs of the
Bank. Employee shall not directly render service of a business, commercial or
professional nature to any other person or organization without the consent
of the Board of Directors of the Bank (the "Board of Directors"); provided,
however, that nothing contained herein shall prohibit Employee, or require
the Board of Directors to approve or consent to Employee serving a charitable
or nonprofit organization or serving as an advisor or director of any
corporation which does not compete with the business of the Bank. Employee
agrees during the Employment Period to use her best efforts, skill and
abilities to promote the Bank's interests and to serve as an Executive Vice
President of the Bank. Employee's duties shall include all responsibilities
assigned to the Executive Vice President.
3. BANK'S AUTHORITY. Employee agrees to observe and comply with
all laws and the Bank's rules and regulations as adopted by the Board of
Directors regarding performance of her duties and to carry out and to perform
all appropriate orders, directions and policies stated by the Board of
Directors to her periodically, either orally or in writing.
4. COMPENSATION.
(a) The Bank agrees to pay to Employee during the term of this
Agreement a base salary of $112,000 per annum, beginning on the effective
date of this Agreement and payable on the fifteenth and thirtieth day of each
month during the term of this Agreement; provided, however, that the base
salary shall be reviewed annually by the Board of Directors, on or before
January 31 of each year for that year, and may be changed by mutual agreement
of the parties. Any such change may be subject to review by the Bank's
regulatory agencies.
(b) In addition to all other compensation referred to above,
the Employee shall be entitled to participate in any and all other bonus
plans, employee benefits and other plans currently in effect or that may be
developed and adopted by the Bank.
(c) All compensation shall be subject to the customary
withholding tax and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
(d) The Bank shall provide a car for Employee's use during
the term, and shall pay all insurance, gas and maintenance expenses of such
automobile. Any expenses of such automobile which are paid by the Bank and
which are for the personal use of the automobile by Employee shall be taxable
as income to Employee. The Employee shall use due care and reasonable
efforts to furnish to the Bank adequate written records and other documentary
evidence required by Federal and State laws and regulations substantiating
the extent to which use of the automobile constitutes deductible business
expenses of the Bank.
(e) During the Employment Period, Employee shall be eligible
to participate in any pension or profit-sharing plan, or similar employee
benefit plan or retirement program of the Bank now or hereafter existing, to
the extent that she is eligible under the
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provisions thereof and commensurate with her position in relationship to
other participants. The Bank shall pay for cost of an annual physical
examination of Employee.
(f) Employee shall accrue vacation at the rate of 8.3 hours
per semi-monthly pay period (for a total of 200 hours or 25 days per year)
and shall accumulate sick leave at the rate of 3.3 hours per semi-monthly pay
period (for a total of 80 hours or 10 days per year). Notwithstanding any
terms of the Bank's personnel policy to the contrary, any unused sick leave
shall carry forward to the next year until used, but in no event shall any
compensation for unused sick leave be due to Employee upon her resignation or
upon the termination of this employment for any other reason, including her
death or disability. Vacation time shall not accrue to more than 200 hours
(25 days), except that under special circumstances up to 280 hours (35 days)
of vacation may be accrued if such accrual is approved in advance by the
Board of Directors in its discretion. Employee shall be required to take at
least two consecutive weeks of vacation during each calendar year at a time
mutually convenient to Employee and the Bank.
(g) The Bank agrees to provide medical and dental insurance
for Employee on the same terms as provided for all executive officers of the
Bank. The Bank shall provide for Employee, at the Bank's expense,
participation in medical, accident and health, and life insurance benefits
equivalent to the maximum benefits available from time to time under the
California Bankers Association Group insurance program for Employee's salary
level, as long as Employee is insurable at a normal premium payment. Said
coverage shall take effect as of the Effective Date hereof and shall continue
throughout the Term. The Bank's liability to Employee for any breach of this
paragraph shall be limited to the amount of premiums payable by the Bank to
obtain the coverage contemplated herein.
5. REIMBURSEMENT OF EXPENSES.
The services required by the Bank will require Employee to
incur business, entertainment and community relations expenses and the Bank
hereby agrees to provide credit cards and charge accounts for Employee's use
for such expenses. The Bank agrees to reimburse Employee for all
out-of-pocket expenses which are business related, upon submission of
appropriate documentation therefor and approval thereof by the Board of
Directors or a committee thereof appointed for such purpose. The Board or a
committee thereof shall review such expenses at least monthly so that
reimbursement of appropriate expenses is not unreasonably delayed. Each
expense, to be reimbursed, must be of a nature qualifying it as a proper
deduction on the income tax returns of the Bank as a business expense and not
as deductible compensation to Employee. The records and other documentary
evidence submitted by Employee to the Bank with each request for
reimbursement of such expenses shall be in the form required by applicable
statutes and regulations issued by appropriate taxing authorities for the
substantiation of such expenditures as deductible business expenses of the
Bank and not as deductible compensation to Employee.
6. CONFIDENTIAL INFORMATION.
Without the prior written permission of the Bank in each case,
Employee shall not publish, disclose or make available to any other person,
firm or corporation, either during or after the termination of this
Agreement, any confidential information which Employee
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may obtain during the Employment Period, or which Employee may
create prior to the end of the Employment Period relating to the business of
the Bank, or to the business of any customer or supplier of any of them;
provided, however, Employee may use such information during the Employment
Period for the benefit of the Bank. Prior to or at the termination of this
Agreement, Employee shall return all documents, files, notes, writings and
other tangible evidence of such confidential information to the Bank.
7. COVENANT NOT TO SOLICIT CUSTOMERS OR
FELLOW EMPLOYEES.
Employee agrees that for a period of twelve (12) months
following the termination of her employment hereunder she will not solicit
the banking business of any customer with whom the Bank had done business
during the preceding one year period. Employee further agrees not to solicit
the services of any officer or employee of the Bank during such twelve (12)
month period.
8. REMEDY.
Employee understands that, because of the unique character of
the services to be rendered by Employee hereunder, the Bank would not have
any adequate remedy at law for the material breach or threatened breach by
Employee of any one or more of the covenants set forth in this Agreement and
agrees that in the event of any such material breach or threatened breach,
the Bank may in addition to the other remedies which may be available to it:
(a) Declare forfeited any moneys representing accrued salary,
contingent payments or other fringe benefits due and payable to Employee,
and, or alternatively,
(b) File a suit in equity to enjoin Employee from the breach
or threatened breach of such covenants.
9. TERMINATION OF EMPLOYEE WITHOUT CAUSE.
(a) The Board of Directors may terminate Employee's employment
hereunder without Cause (as defined in subsection 10(b) below) at any time,
provided, however, that such termination by the Board without Cause shall
entitle Employee to the compensation described in subsection 9(b) below.
(b) In the event Employee is terminated by the Bank without
Cause, the Bank shall pay to Employee an amount equal to twelve (12) months
of base salary, auto allowance, vacation pay and insurance benefits, and
accrued bonuses as severance pay in lieu of and in substitution for any other
claims for salary and continued benefits hereunder (based on Employee's base
salary and benefits prevailing at the time of termination). Such severance
payment shall be in addition to all other sums owing to Employee as accrued
vacation pay.
However, if Employee's employment is terminated by the Bank or
the Bank's successor pursuant to this Section 9 within nine (9) months as a
result of the consummation
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of a plan of dissolution or a liquidation of the Bank, or consummation of 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 surviving corporation,
or upon the sale of all or substantially all of the assets of the Bank to
another corporation, or the acquisition of stock representing more than 25%
of the voting power of the Bank then outstanding by another corporation or
person, the Bank shall pay to Employee an amount equal to twenty-four (24)
months of base salary, auto allowance, vacation pay, and insurance benefits,
as severance pay in lieu of and in substitution for any other claims for
salary and continued benefits hereunder (based on Employee's base salary and
benefits prevailing at the time of termination). Such severance payment
shall be in addition to all sums owing to employee as accrued vacation pay.
With respect to any stock options issued to the Employee that
were outstanding on the date of the termination of her employment under this
Section 9, any options which would become exercisable had the Employee
remained in the employ of the Bank through the end of the Employment Period
but which are not exercisable on the effective date of the Employee's
termination of employment under this Section 9 shall automatically become
exercisable upon any such termination, and shall remain exercisable in full
for a period of one year after such termination of employment.
10. TERMINATION OF EMPLOYEE FOR CAUSE.
(a) Notwithstanding anything herein contained, on or after the
date hereof and prior to the end of the Employment Period, the Bank shall
have the right to terminate Employee's employment hereunder for Cause (as
defined in Subsection 10(b) below) by giving to Employee written notice of
such termination as of a date (not earlier than ten (10) days after such
notice) to be specified in such notice, and the Employment Period shall
terminate on the date so specified, whereupon Employee shall be entitled to
receive only her then accrued salary at the rate provided in Section 4(a),
plus her accrued vacation pay, but only to the date on which termination
shall take effect; provided, however, that if termination is due to physical
or mental disability of Employee, such termination shall not affect any
rights which Employee may have at the time of termination pursuant to any
insurance or other death benefit, bonus, retirement, or arrangements of the
Bank; or any stock option plan or any options thereunder, which rights shall
continue to be governed by the provisions of such plans and arrangements.
(b) For purposes of this Agreement, "Cause" shall mean the
determination by the Board of Directors, acting in good faith and by majority
vote, with or without a meeting, that Employee has (i) willfully failed to
perform or habitually neglected the appropriate duties which she is required
to perform hereunder; or (ii) willfully failed to follow any policy of the
Bank which materially adversely affects the condition of the Bank; or (iii)
engaged in any activity in contravention of any Bank policy, statute,
regulation or governmental policy which materially adversely affects the
Bank's condition, or its reputation in the community, or which evidences the
lack of Employee's fitness or ability to perform Employee's duties; or (iv)
willfully refused to follow any appropriate instruction from the Board of
Directors unless Employee asserts that compliance with such instruction would
cause the Bank or Employee to violate any statute, regulation or governmental
or Bank policy; or (v) subject to subsection (c) below, become physically or
mentally disabled or otherwise evidenced her inability to discharge her
duties as an
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Executive Vice President of the Bank, or (vi) been convicted of or pleaded
guilty or nolo contendere to any felony, or (vii) committed any act which
would cause termination of coverage under the Bank's Bankers Blanket Bond as
to Employee, as distinguished from termination of coverage as to the Bank as
a whole.
(c) If Employee becomes disabled and such disability
continues for a period of one hundred eighty (180) consecutive days, then
upon expiration of such 180-day period, if the term of this Agreement has not
already expired, the Bank may, in its discretion, terminate the Agreement and
all benefits due hereunder, but Employee shall be entitled upon such
termination to receive disability payments in accordance with such disability
plan as may be established for the payment of disability benefits as
permitted under the Internal Revenue Code; provided, however, that if such
disability is job related, as determined by an arbitrator mutually acceptable
to the Bank and Employee or Employee's representative, then the compensation
due hereunder shall continue for a period of one year after the commencement
of such disability.
(d) This Agreement shall terminate immediately without
further liability or obligation to Employee if the Bank is closed by any
supervisory authority.
11. TERMINATION UPON EMPLOYEE'S DEATH; EFFECT OF
TERMINATION ON OTHER PLANS
(a) Notwithstanding anything herein contained, if Employee
shall die, this Agreement shall terminate on the date of Employee's death,
whereupon Employee's estate shall be entitled to receive her salary, accrued
vacation, and any bonus earned up through the date of termination. Such
termination shall not affect any rights which Employee may have at the time
of her death pursuant to any of the Bank's plans or arrangements for
insurance or for any other death benefit, bonus, or retirement benefit.
(b) Notwithstanding anything herein contained, any termination
of employment under this Section 11 shall not affect any accrued rights which
Employee may have at the time of such termination, including, but not limited
to, any of the Bank's plans for arrangements for insurance, vacation,
retirement, and stock options, which then accrued rights shall continue to be
governed by the provisions of such plans and arrangements to the extent they
are not inconsistent with the terms of this Agreement.
12. MERGER, CONSOLIDATION OR REORGANIZATION.
In the event of a merger where the Bank is not the surviving
corporation, or in the event of a consolidation, or in the event of a
transfer of all or substantially all of the assets of the Bank, or in the
event of any other corporation reorganization where there is a change in
ownership of at least twenty-five percent (25%) except as may result from a
transfer of shares to another corporation in exchange for at least eighty
percent (80%) control of that corporation, or in the event of the dissolution
of the Bank, this Agreement shall not be terminated, in which case, except in
the event of dissolution, the surviving or resulting corporation, the
transferee of the Bank's assets, or the Bank shall be bound by and shall have
the benefit of the provisions of this Agreement. The Bank shall endeavor to
take all reasonable actions necessary to insure that
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such corporation or transferee, if other than the Bank, is bound by the
provisions of this Agreement.
13. MODIFICATION
This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified
only by written instrument duly executed by each party.
14. NOTICES
Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested or delivered against receipt to the party set forth
in the preamble to this Agreement (or to such other address as the party
shall have furnished in writing in accordance with the provisions of this
Section 14). Notice to the estate of Employee shall be sufficient if
addressed to Employee as provided in this Section 14. Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
15. DISPUTE RESOLUTION PROCEDURES
Any controversy or claim arising out of or this Agreement or
the breach thereof, or the interpretation thereof, shall be settled by
binding arbitration in accordance with the Rules of the American Arbitration
Association; and judgment upon the award rendered in such arbitration shall
be final and may be entered in any court having jurisdiction thereof. Notice
of the demand for arbitration shall be filed in writing with the other party
to this Agreement and with the American Arbitration Association. In no event
shall the demand for arbitration be made after the date when institution or
legal or equitable proceedings based on such claim, dispute or other matter
in questions would be barred by the applicable statute of limitations. This
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law. Any party desiring to initiate arbitration procedures
hereunder shall serve written notice on the other party. The parties agree
that an arbitrator shall be selected pursuant to these provisions within
thirty (30) days of the service of the notice of arbitration. In the event of
any arbitration pursuant to these provisions, the parties shall retain the
rights of all discovery provided pursuant to the California Code of Civil
Procedure and the Rules thereunder, except that all time periods contained in
said Code and Rules shall be shortened by fifty percent (50%) for purposes of
arbitration proceedings hereunder. Any arbitration initiated pursuant to
these provisions shall be on an expedited basis and the dispute shall be
heard within one hundred twenty (120) days following the serving of the
notice of arbitration and a written decision shall be rendered within sixty
(60) days thereafter. All rights, causes of action, remedies and defenses
available under California law and equity are available to the parties hereto
and shall be applicable as though in a court of law. The parties shall share
equally all costs of any such arbitration.
16. MISCELLANEOUS.
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(a) This Agreement is drawn to be effective in the State of
California and shall be construed in accordance with California laws, except
to the extent superseded by any other federal law. No amendment or variation
of the terms of this Agreement shall be valid unless made in writing and
signed by Employee and a duly authorized representative of the Bank.
(b) Any waiver by either party of a breach of any provision of
this Agreement shall not operate as to be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must
be in writing.
(c) Employee's rights and obligations under this Agreement
shall not be transferable by assignment or otherwise, such rights shall not
be subject to commutation, encumbrance or the claims of Employee's creditors,
and any attempt to do any of the foregoing shall be void. The provisions of
this Agreement shall be binding upon and inure to the benefit of the Bank and
its successors and those who are its assigns under Section 12.
(d) This Agreement does not create, and shall not be construed
as creating, any rights enforceable by a person not a party to this Agreement
(except as provided in subsection (c) above).
(e) The headings in this Agreement are solely for the
convenience of reference and shall be given no effect on the construction or
interpretation of this Agreement.
(f) This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall be governed
by and construed in accordance with the laws of the State of California,
without giving effect to conflict of laws, except where federal law governs.
17. RESIGNATION AS DIRECTOR UPON TERMINATION.
Upon termination of this Agreement, Employee, if she is then
serving as a director of the Bank and/or the Bank's holding company, agrees
to immediately resign her position as a director by giving written notice of
her resignation to the Chairman of the Board of Directors of the Bank and/or
the Bank's holding company.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be signed
by its duly authorized officers and Employee has executed this Agreement to
be effective as of the day and year written above.
BANK: BANK OF XXXXX XXXXX
By: /s/ H. Xxxxxx Xxxxxx
-----------------------------------------
H. Xxxxxx Xxxxxx
Chairman of the Board
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EMPLOYEE:
/s/ Xxxxxx Xxx Xxxxxx
-----------------------------------------
Xxxxxx Xxx Xxxxxx
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