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EXHIBIT 10.1
MERCANTILE NATIONAL BANK
STAY BONUS AGREEMENT
Agreement made as of , 1995 by and between National Mercantile
Bancorp, with its office located at 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000 (the "Company"), Mercantile National Bank (the "Bank"), at the
same location, and who resides at (The "Executive").
WITNESSETH:
WHEREAS, the Executive is employed by the Bank; and
WHEREAS, the Company has retained Sutro & Co. to advise it concerning
enhancing shareholder value; and
WHEREAS, the Bank considers it worthwhile to retain Executive's
services through the completion of whatever process emerges in the next few
months to enhance shareholder value.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable consideration, the
Parties agree as follows:
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1. Definitions.
(a) "Base Salary" shall mean the Executive's highest
annualized base salary in any 30-day period during the three years immediately
preceding the commencement of the Term of Employment, or any increased salary
thereafter granted to the Executive by the Bank.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Cause" shall mean (i) the Executive has committed a
felony involving moral turpitude, or (ii) the Executive in carrying out the
Executive's duties under this Agreement is guilty of (A) willful gross neglect
or (B) willful gross misconduct resulting, in the case of either (A) or (B), in
material harm to the Company or the Bank, unless such act, or failure to act,
under this clause (ii) was believed by the Executive in good faith to be in the
best interests of the Company or the Bank.
(d) A "Change in Control" shall mean the occurrence of any one
of the following events, notwithstanding the prior occurrence of any other
event constituting a "Change in Control":
(i) any "person," as such term is used in Sections 3(a)(9) and 13(d)
of the Securities Exchange Act of 1934 (the "1934 Act"), other than the
Company, another corporation of which the Company owns more that 50% of its
Voting Stock (a "subsidiary") or any employee Benefit plan sponsored by the
Company or a Subsidiary, becomes a "beneficial owner," as such term is used in
Rule 13d-3 promulgated under the 1934 Act, of 24.9% or more of the Voting Stock
of the Company or the Bank;
(ii) the majority of the Board consists of individuals other than the
Incumbent Directors;
(iii) the Company or Bank adopts any plan of liquidation providing for
the distribution of all or substantially all of its assets;
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(iv) all or substantially all of the business of the Company or the
Bank is disposed of pursuant to a merger, consolidation or other transaction in
which the Company or the Bank is not the surviving corporation, or is
substantially or completely liquidated (unless the shareholders of the Company
immediately prior to such merger, consolidation or other transaction
beneficially own, directly or indirectly, in substantially the same proportion
as they owned the Voting Stock of the Company, all of the Voting Stock or other
ownership interests of the entity or entities, if any, that succeed to the
business of the Company); or
(v) the Company or the Bank, combines with another company and is the
surviving corporation but, immediately after the combination, the shareholders
of the Company immediately prior to the combination (other than the
shareholders who, immediately prior to the combination, were "affiliates" of
such other company, as such term is defined in the rules of the Securities and
Exchange Commission), do not beneficially own, directly or indirectly, more
than 50% of the Voting Stock of the combined company; provided, however, that
notwithstanding the occurrence of any events described in clauses (i), (iii),
(iv) and (v) above, no "Change in Control" shall be deemed to have occurred if
immediately following such event (A) members of the Board or employees of the
Company and its Subsidiaries who file or are required to file (or immediately
prior to such event, filed or were required to file), reports under Section
16(a) of the 1934 Act (the "Reporting Employees"), are beneficial owners,
directly or indirectly, in the aggregate of 20% of the Voting Stock of the
Company or its successor, as the case may be, and (B) no person, as defined
above (other than a person (x) in which a Reporting Employee or Reporting
Employees hold an interest of 10% or more and (y) through which such Reporting
Employee or Reporting Employees beneficially own, in the aggregate, at least 5%
of such Voting Stock), is the beneficial owner, directly or indirectly, as a
result of such event, of a greater percentage of such Voting Stock than the
percentage then held by the Reporting Employees as determined pursuant to
clause (A) of this proviso; or that no "Change
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of Control" shall be deemed to have occurred as a result of regulatory takeover
by the Company or the Bank, and in such event this agreement shall be of no
force and effect what-so-ever; or
(vi) the Company or the Bank sells, through a "private placement" or
"public offering" as such terms are used in the Securities Act of 1933 (the
"1933 Act") or any combination of private placements or public offerings a
number of shares equal to 66.7% of its currently outstanding shares during the
Term of this Agreement as set out in Section 2, exclusive of any shares issued
to employees or former employees pursuant to the exercise of employee stock
options.
(e) "Confidential Information" shall mean all nonpublic
information concerning the Company's or the Bank's business relating to its
products, customer lists, financial information, marketing plans and
strategies. Confidential Information shall also include the existence of and
the contents of this Stay Bonus Agreement. Confidential Information does not
include information that is or becomes, available to the public, unless such
availability occurs through an unauthorized act on the part of Executive.
(f) "Disability" shall have the same meaning as is currently
given that term under the Company's or Bank's long-term disability plan, except
that it shall have the meaning given in any amendment to such plan to the
extent that the meaning of such term is modified to the benefit of the
Executive.
(g) "Incumbent Director(s)" shall mean the members of the
Board on the date of this Agreement, provided that any person becoming a
director subsequent to the date of this Agreement whose election or nomination
for election was approved by two-thirds (but in no event less than two) of the
directors who at the time of such election or nomination comprise the Incumbent
Directors shall, for purposes of this Agreement, be considered to be an
Incumbent Director.
(h) "Reference Date" shall mean (i) the date immediately
preceding the date on which one or more Changes in Control occur; or (ii) the
date immediately preceding the date, if any, on which the Executive's
employment is terminated by the Company or the Bank prior to the occurrence of
such first Change in Control, if the Executive can reasonably demonstrate that
the Executive's termination (A) was at the direction or request of a third
party that had taken steps reasonably calculated to
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thereafter effect the Change in Control or (B) otherwise occurred in connection
with or in anticipation of a Change in Control.
(i) "Voting Stock" of any corporation shall mean the capital
stock of any class or classes having general voting power under ordinary
circumstances, in the absences of contingencies, to elect the directors of such
corporation.
2. Term of Agreement.
This Stay Bonus Agreement shall be effective as of the date first
written above and shall terminate upon the earlier of (a) the second
anniversary of that date or (b) the date Executive is no longer employed by
Bank.
3. Stay Bonus.
Upon the occurrence of any Change of Control, the Executive
immediately shall be paid an amount equal to ten per cent (10%) of the
Executive's Base Salary.
4. Indemnifications.
(a) If the Executive is made a party or is threatened to be
made a party to any action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "Proceeding"), by reason of the fact that
the Executive is or was a director or officer of the Company or the Bank, or is
or was serving at the request of the Company or the Bank as a director,
officer, member, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether or not the basis of such Proceeding is an
alleged act or failure to act in an official capacity as a director, officer,
member, employee or agent, the Executive shall be indemnified and held harmless
by the Company or the Bank to the fullest extent authorized by California law,
as the same exists or may hereafter be amended, against all expense, liability
and loss (including, without limitation, attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Executive in connection therewith,
including, without limitation, payment of expenses incurred in defending a
Proceeding prior to final disposition of such Proceeding (subject to receipt of
an undertaking by the Executive to repay such amount if it shall ultimately be
determined that the Executive is not
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entitled to be indemnified by the Company or the Bank under California law),
and such indemnification shall continue as to the Executive even if the
Executive has ceased to be a director, officer, member, employee or agent of
the Company or the Bank or other enterprise and shall inure to the benefit of
the Executive's heirs, executors and administrators.
(b) If the amount owed under 4(a) above is not paid in full
by the Company or the Bank within 30 days after a written claim has been
received by the Company or the Bank, the Executive may at any time thereafter
bring suit against the Company or the Bank to recover the unpaid amount of the
claim and if successful in whole or in part, the Executive shall be entitled to
be paid also the expense of prosecuting such claim. It shall be a defense to
any such action that the Executive has not met the standards of conduct which
make it permissible under California law for the Company or the Bank to
indemnify the Executive for the amount claimed. Neither the failure of the
Company (including the Board, independent legal counsel, or its stockholders)
or the Bank to have made a determination prior to the commencement of such
action that indemnification of the Executive is proper in the circumstances
because the Executive had met the applicable standard of conduct set forth
under California law, nor an actual determination by the Company (including the
Board, independent legal counsel, or its stockholders) or the Bank, that the
Executive has not met such applicable standard of conduct, shall create a
presumption that the Executive has not met the applicable standard of conduct.
(c) The right to indemnification and the payment of expenses
incurred in defending a Proceeding in advance of its final disposition
conferred in this Section 4 shall not be exclusive of any other right which the
Executive may have or hereafter may acquire under any statute, provision of
the certificate of incorporation or by-laws of the Company or the Bank,
agreement, vote of stockholders or disinterested directors or otherwise.
5. Confidentiality.
The Executive shall not, without the prior written consent of
the Company, or the Bank, divulge, disclose or make accessible to any other
person, firm, partnership or corporation or other entity any Confidential
Information
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pertaining to the business of the Company or the Bank, except (a) while
employed by the Company or the Bank in the business of and for the benefit of
the Company or the Bank (b) when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority over the
business of the Company or the Bank, or by any administrative body or
legislative body (including a committee thereof) with purported or apparent
jurisdiction to order the Executive to divulge, disclose or make accessible
such information.
6. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement
shall, at the discretion of the Executive, be resolved by arbitration to be
held in Los Angeles, California in accordance with the American Arbitration
Association's Commercial Arbitration Rules then in effect. Costs of the
arbitration or litigation, including, without limitation, attorney's fees of
both Parties, shall be borne by the Company and the Bank, and pending the
resolution of any arbitration or court proceeding, the Company or the Bank
shall continue payment of all amounts due the Executive under this Agreement
and all benefits to which the Executive is entitled at the time the dispute
arises.
7. Effect of this Agreement on Other Benefits.
Nothing in this Agreement shall curtain the Executive's
entitlement to participate, in accordance with applicable terms and provisions,
in the executive compensation, employee benefit and other plans or programs in
which senior executives of the Company or the Bank are eligible to participate.
8. Assignability: Binding Nature.
This Agreement shall be binding upon and inure to the benefit
of the Parties and their respective successors, heirs and assigns. No rights
or obligations of the Company and the Bank under this Agreement may be
assigned or transferred by the Company or the Bank, except that such rights
or obligations shall be assigned or transferred pursuant to a merger or
consolidation in which the Company or the Bank is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of the
Company or the Bank, provided that the assignee or transferee is the successor
to all or substantially all of the assets of the Company or the Bank and
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such assignee or transferee shall assume the liabilities, obligations, and
duties of the Company or the Bank, as contained in this Stay Bonus Agreement,
either contractually or as a matter of law. The Company and the Bank further
agree that in the event of a merger, consolidation, sale of assets or
liquidation as described in the preceding sentence the Company or the Bank
shall cause such assignee or transferee to assume the liabilities, obligations,
and duties of the Company and the Bank, hereunder. No rights or obligations of
the Executive under this Agreement may be assigned or transferred by the
Executive other than the Executive's rights to compensation and benefits, which
may be transferred only by will or operation of law.
9. Representation.
The Company, the Bank, and the Executive each represent and
warrant that each is fully authorized and empowered to enter into this
Agreement and that the performance of its or the Executive's obligations under
this Agreement will not violate any agreement between it or The Executive and
any other person, form or organization.
10. Entire Agreement.
This Agreement contains the entire agreement between the
Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect hereto.
11. Amendment or Waiver.
No provision in this Agreement may be amended or waived unless
such amendment or waiver is agreed to in writing and signed by the Executive
and a duly authorized officer of the Company or the Bank. No waiver by either
party of any breach by the other Party of any condition or provision of this
Agreement to be performed by the other Party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same or any prior or
subsequent time.
12. Severability.
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, in whole or
in part, the
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remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
13. Survivorship.
The respective rights and obligations of the Parties hereunder
shall survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations, including, but not
limited to, the rights of the Executive under Sections 4, 5 and 6.
14. Beneficiaries References.
The Executive shall be entitled to select (and change) a
beneficiary or beneficiaries to receive any compensation or benefit which had
become due prior to but, by reason of timing might actually be payable
following the Executive's death, and may change such election, in either case
by giving the Company or the Bank written notice thereof. In the event of the
Executive's death or a judicial determination of the Executive's incompetence,
reference in this agreement to the Executive shall be deemed, where
appropriate, to refer to the Executive's beneficiary, estate, committee,
conservator or other legal representative.
15. Governing Law.
This Agreement shall be governed by and construed in accordance
with the laws of California without reference to principles of conflict of
laws.
16. Notices.
Any notice given to either Party shall be in writing and shall
be deemed to have been given when delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested, duly addressed to
the Party concerned at the address indicated below or to such changed address
as such Party may subsequently give notice of:
If to the Company or the Bank;
Xx. Xxxxxx X. Xxxx
Chairman of the Board
Mercantile National Bank
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, XX 00000
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If to the Executive;
17. Headings.
The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning
and construction of any provision of this Agreement.
18. Counterparts.
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
By: _______________________
Executive
National Mercantile Bancorp,
"Company"
By: ________________________
Xxxxxx X. Xxxx
its Chairman
Mercantile National Bank
"Bank"
By: _______________________
Xxxxxx X. Xxxx
its Chairman
