(Exhibit 10.4)
EMPLOYMENT AGREEMENT
Pacific State Bank, A State Banking Association, having its principal
place of business at 0 Xxxxx Xx Xxxxxx Xxxxxx in Stockton, California,
hereinafter referred to as "Employer" and Xxxxxx X. Xxxxx, President and Chief
Executive Officer, hereinafter referred to as the "Employee", in consideration
of the mutual promises made herein, agree as follows:
Article 1. Term of Employment
1.01 Employer hereby employs Employee and Employee hereby accepts
employment with Employer from the acceptance and execution date of
this agreement to September 1, 2005.
Renewal
1.02 This agreement shall be renegotiated for succeeding terms. Either
party must give notice to the other at least 90 days prior to the
expiration of any term of his intention not to renegotiate.
"Employment Term" Defined
1.03 As used herein, the phrase "employment term" refers to the entire
period of employment of Employee by Employer hereunder, whether for
the periods provided above, or whether terminated earlier as
hereinafter provided or extended by mutual agreement between
Employer and Employee.
Article 2. Duties and Obligation of Employee
2.01 Employee shall serve as the President/Chief Executive Officer of the
Pacific State Bank. In his capacity as President/CEO he shall report
to the Board of Directors in assuming responsibility for developing
and implementing overall long-range objective, plans and policies,
Strategic Planning, acquisitions, marketing and other major
functions of the Bank subject to approval of the board of directors.
May serve as the principal representative of the Bank with the
press, major customers, community and industry associations, other
businesses and regulatory agencies. Serve as voting member of Bank's
Loan Committee (Xx. Xxxxx is the Vice-Chairman of the Loan
Committee), Executive Committee and a member of all other board
committees (except Audit).
Perform such duties as may, from time to time, be reasonably
requested of him by the Board of Directors of Employee, including
but not limited to
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the hiring and firing of all employees of the Employer. Subject at
all times to the policies set by Employee's Board of Directors.
Devotion to Employer's Business
2.02 (a) Employee shall devote his full time, ability, and attention to
the business of Employer during the term of this contract.
(b) Employee shall not engage in any other business duties or
pursuits whatsoever, or directly or indirectly render any
services of a business, commercial, or professional nature to
any other person or organization, whether for compensation or
otherwise, without the prior written consent of Employer's
Board of Directors. However, the expenditure of reasonable
amounts of time for educational, charitable, or professional
activities shall not be deemed a breach of this agreement if
those activities do not interfere with the service required
under this agreement.
(c) This agreement shall not be interpreted to prohibit Employee
from making passive personal investments or conduction private
business affairs if those activities do not interfere with the
services required under this agreement. However, Employee
shall not directly or indirectly acquire, hold, or retain any
major interest in any business competing with or similar in
nature to the business of Employer, which would be considered
in direct conflict with Employer.
Competitive Activities
2.03 During the term of this contract Employee shall not, directly or
indirectly, either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer, director, or in
any other individual or representative capacity, engage or
participate in any business that is in competition in any manner
whatsoever with the business of Employer.
Should Employee leave, by dismissal or voluntarily, the employ of
Pacific State Bank, and subsequently engage in any competitive
activity with the Bank, Employee shall immediately resign from the
Bank's Board of Directors.
Uniqueness of Employee's Services
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2.04 Employee hereby represents and agrees that the services to be
performed under the terms of this contract are of a special, unique,
unusual, extraordinary, and intellectual character that gives them a
peculiar value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. Employee therefore
expressly agrees that Employer, in addition to any other rights or
remedies that Employer may possess, shall be entitled to injunctive
and other equitable relief to prevent or remedy a breach of this
contract by Employee.
Indemnification for Negligence of Misconduct
2.05 Employee shall indemnify and hold Employer harmless from all
liability for loss, damage, or injury to persons or property
resulting from the negligence or misconduct of Employee.
Disclosure of Information
2.06 Employee shall not either before or after termination of this
Agreement, disclose to anyone any information relating to Employer
or any financial information, trade and business secrets of know-how
germane to the business and operation of Employer. Employee
recognizes and acknowledges that any financial information
concerning any of Employer's customers, as it may exist from time to
time, is strictly confidential and is a valuable, special and unique
asset of Employer's business. Employee shall not, either before or
after termination of this Agreement, disclose to anyone said
financial information or any part thereof, for any reason or purpose
whatsoever.
Surety Bond
2.07 The Employee agrees that he will furnish all information and take
any other steps necessary to enable the Employer to obtain or
maintain a fidelity bond conditional on the rendering of a true
account by the Employee of all moneys, goods, or other property
which may come into custody, charge, or possession of the Employee
during the term of his employment. The Surety Company issuing the
bond and the amount of the bond must be acceptable to the Employer.
All premiums on the bond are to be paid by the Employer. If Employee
cannot qualify for a surety bond at any time during the term of this
Agreement, Employer shall have the option to terminate this
Agreement immediately.
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Article 3. Compensation
3.01 (a) As compensation for the services to be performed hereunder,
Employee shall receive a salary at the current rate of $129,000.00
per annum, payable not less than once a month, during the employment
term in monthly amounts of $10,750.00. Use of a company automobile,
Country Club membership, service clubs, and other private clubs at
the expense of the Bank. The Employee shall have the right to
participate in all employment benefits and retirement plans. The
Employer will note the following additional compensation terms and
benefits.
(b) Employee shall receive such annual adjustments in salary
as may be determined by Employer's Board of Directors in
its sole discretion.
(c) Club dues and other sundry benefits paid by the Bank
such as educational costs, mileage and expenses incurred
on behalf of Pacific State Bank.
(d) The Employer will also make annual deferred compensation
payment in the minimum amount of $5,000.00 to the
Equitable Split Dollar Plan (No. 48220273) for the
benefit of said Employee. In addition all cash value of
the plan is vested to the Employee 100% upon termination
of employment.
Salary Continuation during Disability
3.02 If Employee for any reason becomes temporarily or permanently
disabled so that he is unable to perform the duties prescribed
herein, Employer agrees to pay Employee the difference between the
amounts paid by State Disability Insurance of Workmen's Compensation
benefits and the rate of compensation as defined in paragraph
3.02(a), for a period according to the following formula:
(a) The Employee is to utilize all accrued sick leave and vacation
prior to salary continuation formula begins.
(b) The Employer will continue salary for a maximum of six (6)
months or Employee's qualification for long-term disability
benefits under Employer's paid insurance program, whichever
first occurs.
(c) For purposes of this section "temporarily" shall be defined as
follows: the inability of Employee to perform any work, for
Employer or anyone else, in any capacity". When the Employee
is disabled the Employee cannot work for anyone else without
permission of the Board.
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Exclusion
3.03 Employer shall have no obligation to make payments for a disability
resulting from the deliberate, intentional actions of Employee, such
as, but not limited to, attempted suicide and chemical dependency of
Employee.
Article 4. Incentive Compensation
Management Incentive Plan (annually approved)
Employer agrees to evaluate the performance of the President/CEO
with regard to additional compensation for superior performance.
Employer shall consider the overall performance including growth and
profitability of the Bank in determining whether the President/CEO
and the Management Team are entitled to receive added compensation.
The basis of granting such added compensation will be to reward the
President/CEO and the Management Team for outstanding work and to
provide an incentive for continued performance. However, Employer
shall not be required to grant added compensation to the
President/CEO and the Management Team. In the event that the Board
of Directors establishes a fund for the purpose of the payment of
additional compensation as contemplated, the President/CEO shall be
solely responsible for the distribution of such funds to the Senior
Management Team, subject to ratification by the Board of Directors.
The President/CEO shall not be entitled to receive more than fifty
percent (50%) of the fund.
In the event of a change in the control of the Bank in which
the Bank is not the surviving corporation, the Agreement shall
terminate and he shall receive immediate vesting of all of
Employee's Stock Options. The Employee will also, be entitled to one
years' salary commencing on the closing date of the sale or control
transfer date. This clause only comes into effect if employee does
not assume the position of President and CEO of the new or
reorganized enmity.
4.01 (a) As soon as practical (annually), the Board of Pacific State Bank
will establish the amount of total profit available for incentive
compensation. These decisions will be predicated upon the preceding
years' profit performance of the Bank. Profit performance is defined
as actual pre-tax profits. (See attached Addendum)
(b) In the event of a change in the control of the Bank the
Employer will grant to the employee 5% of the total sale value
at close of the transaction above the book value of the Bank.
The payment will be in cash or stock of the acquiring enmity.
The assets to be received in the transaction will create a
pool benefiting the three current senior personnel management;
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with the address "Employee" receiving at a minimum of 60% of
the "Management" pool.
Plan Stock Option
4.02 (a) Employer adopted a Stock Option Plan in 1987, which was amended
in 1993. Employee has been awarded and not yet exercised options as
follows (Dates & Prices vary):
29,000 Shares Management Options Available @ a number
of variable prices.
1,910 Shares Director options available @ $4/$5 per
share.
Article 5. Benefits
5.01 Employee shall be entitled to those Employee benefits to be enjoyed
by the general employee benefit package adopted by Employer, for all
Employees of Employer.
5.02 To the extent the general Employee benefit package is different,
Employee shall have the following benefits:
Annual Vacation
5.03 Employee shall be entitled to five (5) weeks vacation time each year
without loss of compensation. Employee may be absent from his
employment for vacation as long as such leave is reasonable and does
not jeopardize his responsibilities and duties as President/CEO. The
length of vacation should not exceed two (2) weeks without the
approval of the Board of Directors. Employee must take at least two
(2) consecutive weeks of vacation as required by the superintendent
of Banks. In the event that Employee is unable for any reason to
take the total amount of vacation time authorized herein during any
year, he may not accrue that time and add it to vacation time for
the following year. Vacation will be granted annually.
Medical, Life Insurance Coverage
5.04 Employer shall provide to Employee and his dependents at a nominal
cost to Employee the standard insurance coverage, or other Bank paid
insurance program.
Annual Physical
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5.05 An annual physical must be taken. Employee shall follow the
recommendations of physicians regarding Employees health. The
results of these tests shall be made available to the personnel
committee of the Board of Directors.
Article 6. Business Expenses
6.01 (a) It is understood and agreed by the parties that the services
required for Employer will require Employer will require
Employee to incur entertainment hereby agrees to and shall pay
the Employee in such amounts and at such times as Employee
shall request to meet such expenses.
(b) Employee shall, however, furnish to Employer adequate records
and other documentary evidence required by Federal State
statutes and regulations for the substantiation of each such
expenditure as an income tax deduction or other records as may
be required by the Board of Directors.
(c) Employee is entitled to service club and other club
memberships at the discretion of both the Employer and
Employee.
Article 7. Termination at the Will of Employer or the Regulatory Agencies
7.01 One of the primary needs of the Employer is to maintain flexibility
in its upper management. Employer shall therefore have the right, at
Employer's sole discretion, to terminate the employment of Employee
at the will of Employer.
In the event of such termination Employee shall be entitled to
severance pay as herein set forth, the severance pay shall be one
full year of Employee's current annual salary. All health and
welfare benefits are to be continued during the one-year period. As
well, as the deferred compensation is to be paid/distributed to the
Employee within six (6) months of termination date.
Termination for Cause
7.02 (a) Statutory Grounds for Termination. This Agreement shall
terminate immediately upon the occurrence of any one of the
following events, which are described in Sections 2920, 2921, 2924
and 2925 of the California Labor Code.
(1) The occurrence of circumstances that make it impossible or
impractical for the business of the Employer to be continued.
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(2) The death of the Employee.
(3) The loss by Employee of legal capacity.
(4) The loss by the Employer of legal capacity to contract.
(5) The willful breach of duty by the Employee in the course of his
employment, unless waived by the Employer.
(6) The habitual neglect by the Employee of his employment duties unless
waived by the Employer.
(7) The continued incapacity on the part of the Employee under this
Agreement, unless waived by the Employer.
(8) The unsatisfactory performance of duty by Employee as determined
solely by the Board of Directors of Employer, subject to good faith,
fair dealing and reasonableness by Employer and not as a result of
arbitrary or capricious acts by Employer.
A. Effect of Termination for Cause on Compensation. In the event of the
termination of this Agreement prior to the completion of the term of
employment specified herein and for one of the causes enumerated in
this paragraph, no severance pay is due or payable to Employee,
except for salary to date of termination. This should exclude the
event of death or incapability.
Article 8. General Provisions
Notices
8.01 Any notices to be given hereunder by either party to the other shall
be in writing and may be transmitted by personal delivery or mail,
registered or certified, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at the
addresses listed as follows:
Employer: Principal place of business or Headquarters--6 S. El
Dorado Street
Employee: Principal place of business as shown in Employee's
Personnel Records--1889 W. March Lane; but each party may change
that address by written notice in accordance with this section.
Notices delivered personally shall be deemed communicated as of the
date of actual receipt; mailed notices shall be communicated as of
the date of mailing.
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Arbitration
8.02 (a) Any controversy between Employer and Employee involving the
construction or application of any of the terms, provision, or
conditions of this agreement shall on the written request of either
party served on the other be submitted to arbitration. Arbitration
shall comply with and be governed by the provisions of the
California Arbitration Act.
(b) Employer and Employee shall each appoint one person to hear
and determine the dispute. If the two persons so appointed are
unable to agree, then those persons shall select a third
impartial arbitrator whose decision shall be final and
conclusive upon both parties.
(c) The cost of arbitration shall be borne by the losing party or
in such proportions as the arbitrators decide.
Attorney's Fees and Costs
8.03 If any action at law or in equity is necessary to enforce or
interpret the terms of this agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs, and necessary
expenses in addition to any other relief to which that party may be
entitled. This provision shall be construed as applicable to the
entire contract.
Entire Agreement
8.04 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 Employer and contains all of the covenants
and agreements between the parties wit respect to that employment in
any manner whatsoever. Each party to this agreement acknowledges
that no other representation, 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
other agreement, statement, or promise not contained in this
agreement shall be valued or binding on either party.
Modification
8.05 Any modification of this agreement will be effective only if it is
in writing and signed by the party to be changed.
Effect of Waiver
8.06 The failure of either party to insist on strict compliance with any
of the terms, covenants, or conditions of this agreement by the
other party shall not be deemed a waiver of that term, covenant, or
condition, not shall any
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waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power
for all or any other times.
Partially Invalidity
8.07 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.
Law Governing Agreement
8.08 This agreement shall be governed by a construed in accordance with
the laws of the State of California.
Sums Due Deceased Employee
8.09 If Employee dies prior to the expiration of the term of his
employment, any sums not limited to salary, deferred compensation or
401K benefits that may be due him from Employer under this agreement
as of the date of death shall be paid to Employee's executors,
administrators, heirs, personal representative, successors and
assigns.
Validity of Employment Agreement
8.10 This Employment Agreement dated 10/26/99 supercedes/replaces the May
12, 1995 Employment Agreement.
Executed on, 1999 at Stockton, California
PACIFIC STATE BANK
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
President/Chief Executor Officer
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Secretary
By: /s/ Xxxxxx Hand
Xxxxxx Hand
Chairman of the Board
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