Exhibit 10.21
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement") is made and entered
into this 23rd day of March, 2000 by and between Humboldt Bancorp, a California
corporation, (hereinafter referred to as "Employer") and Xxxxxxx X. Xxxxxxx
(hereinafter referred to as "Officer"). It is the intent of the parties that,
except as otherwise provided in subparagraph (a) of Paragraph 3, this Agreement
shall be retroactively effective to and including December 16, 1997.
WHEREAS, the parties hereto desire to enter into an Agreement for the
purpose of engaging the services of Officer by reason of Officer's experience,
training, reputation and ability.
NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. EMPLOYMENT TERM AND DUTIES. Officer has served and will continue to be
employed as Vice President/Manager of Employer and will perform the
duties as assigned by Employer. This Agreement is in effect until
December 16, 2007, subject only to prior termination as otherwise
provided herein.
2. EXTENT OF SERVICES. During the term of this Agreement, Officer shall
devote Officer's full time, ability and attention to the business of
Employer. Officer shall not, without prior written consent of the Board
of Directors of the Employer, which shall not be unreasonably withheld,
directly or indirectly render any services of a business, commercial or
professional nature to any other person, firm, corporation or
organization for compensation. Further, during the term of this
Agreement, Officer shall not directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner, shareholder,
corporate officer, director or in any individual or representative
capacity, engage or participate in any competing banking, commercial
leasing or bankcard service.
Nothing contained herein shall be construed to prevent Officer from
investing Officer's assets in any form or manner which does not require
any substantial activity on Officer's part as long as said investing
does not in any manner for any amount of time interfere with Officer's
performance or services on behalf of Employer, or involve a conflict of
interest or the perception of a conflict. Employer shall be the sole
judge of activities which have or might appear to be a conflict of
interest.
3. COMPENSATION. In consideration of Officer's services to Employer during
the employment as defined herein, Employer agrees to compensate Officer
as follows:
(a) BASE COMPENSATION. Officer's Base Compensation for the period
December 16, 1997 and August 31, 1999, inclusive, is hereby
agreed to have been Officer's annual base salary actually paid
from time to time to Officer by Employer during such period(s).
From and after September 1, 1999, for Officer's services
hereunder Employer shall pay annually a base salary ("Base
Compensation") to Officer of Eighty Five Thousand Dollars
($85,000.00). Adjustments to the Base Compensation will be at
Employer's sole discretion: provided, however, that the Base
Compensation stated herein shall not be decreased during the term
of this Agreement without the written consent of both Employer
and Officer.
(b) VARIABLE COMPENSATION. In addition to the Base Compensation,
Officer shall receive, subject to the limitations set forth in
paragraph 3(e) below, Variable Compensation in the amount of two
and one-half percent (2.5%) of the Proprietary Portfolio's (as
defined in Addendum 2) net pre-tax annual income as determined in
accordance with generally accepted accounting principles by
Employer's outside independent Certified Public Accountants.
Variable Compensation will be paid quarterly on the first pay
period immediately following each quarter end.
(c) BONUS COMPENSATION. In addition to the Base and Variable
Compensation, Employer may, from time to time, grant Officer a
bonus in amount and at such times and for such reasons as shall
be solely within Employer's discretion. Officer shall have no
right to any bonus compensation unless and until such time, and
only to the extent, as such may be granted in a specific instance
by Employer.
(d) TOTAL CASH COMPENSATION. Officer's total compensation ("Total
Cash Compensation"), which shall include Base Compensation,
Variable Compensation and Bonus Compensation, shall not exceed
Three Hundred Thousand Dollars ($300,000.00) per year unless,
upon recommendation of Management, the Board and Officer agree to
amend this Agreement. Any amendment, to be effective, must be in
writing.
(e) FAIR ALLOCATION OF EFFORTS. It is intended by the parties to this
Agreement that Officer shall fairly allocate his time and
energies between the Proprietary Portfolio and the other duties
to be undertaken by him on behalf of Employer. It is therefore
agreed that Variable Compensation shall not, in any year, exceed
fifty percent (50%) of the Total Cash Compensation paid to
Officer. If, in any quarter, the amount which would otherwise be
paid to Officer as Variable Compensation exceeds fifty percent
(50%) of Officer's Total Cash Compensation for that quarter, the
parties will immediately meet to discuss and consider, in good
faith, whether an amendment to the Agreement would be appropriate
under the circumstances then existing. Neither party, however,
shall have any obligation to amend the Agreement in any respect
and unless both parties agree to amend this Agreement in writing,
the Agreement shall remain in full force and effect.
4. EXPENSES. Employer will pay for and reimburse Officer for all ordinary
and necessary business expenses upon presentation of adequate receipts,
or proof of payment by Officer, or an account of such expenditures
satisfactory to Employer. No expense will be paid
which will not qualify as a proper deduction on the federal and state
income tax returns of Employer as a business expense or as deductible
compensation to Officer.
5. BENEFITS. Employer will provide to Officer and his eligible dependents
Employer's Executive Benefits plan attached hereto as Addendum 1, which
is a part of this Agreement. The benefits as listed on Addendum 1 are
more fully described in Employer's Employee Handbook and related Summary
Plan Description documents. Employer reserves the right to make changes
in its benefit plans, its handbook, and Summary Plan Description
documents from time to time in its sole discretion.
6. EQUITY PARTICIPATION. Officer shall have an interest ("Officer's Share")
in the Proprietary Portfolio (as defined in Addendum 2) as set forth in
this Paragraph.
(a) Employer may sell all or any portion of the Proprietary Portfolio
at any time, and under such terms and conditions as Employer may,
in Employer's sole discretion, decide. In the event of a sale
("Sale") of all or any portion of the Proprietary Portfolio by
Employer at any time (except in circumstances where Employer is
acquired by, merges or consolidates with, another entity or
otherwise reorganizes its corporate structure, or except with
respect to a sale to Officer pursuant to subparagraph 6(g)
below), Officer shall be entitled to ten percent (10%),
irrespective of any vesting provisions set forth hereunder, of
the net proceeds of the Sale ("Sale Proceeds"). Net proceeds
shall reflect deductions for all expenses incurred by Employer in
completing the transaction, including (but not limited to)
commissions and appraisals.
(b) For all other purposes, Officer's Share shall accrue at the rate
of one percent (1%) per year of the Proprietary Portfolio, as it
exists from time to time, for each full year of Officer's
employment pursuant to this Agreement, beginning December 16,
1998, up to a maximum of ten percent (10%) thereof on and after
December 16, 2007.
(c) Officer's Share shall not vest until either:
(i) Officer is continuously employed pursuant to this
Agreement through and until the sixth (6th) anniversary of
this Agreement, at which point Officer will have accrued a
six percent (6%) interest in the Proprietary Portfolio,
and thereafter shall continue to vest at the rate of an
additional one percent (1%) per year on the seventh (7th)
through the tenth (10th) anniversaries of this Agreement;
or
(ii) Officer is terminated at any time by Employer without
cause, in which case Officer's Share shall immediately
vest in the amount of the maximum percentage (10%).
(d) If Officer:
(i) resigns employment or is terminated for cause prior to the
vesting date, Officer's Share shall immediately become
zero (0), and Officer shall have no right to share in any
Sale Proceeds, or thereafter have any interest whatsoever
in the Proprietary Portfolio.
(ii) is terminated for cause or resigns on or after the sixth
(6th) anniversary date of this Agreement, Employer shall
purchase the vested amount of Officer's Share for a
purchase price which shall be equal to the fair market
value of the Proprietary Portfolio on the date of
termination or resignation, determined pursuant to the
provisions of subparagraph 6(e), multiplied by the
percentage of the Officer's Share then vested.
(e) For purposes of subparagraph 6(d)(ii), the fair market value of
the Proprietary Portfolio will be established (unless an election
is made by Employer to sell the entire Proprietary Portfolio
pursuant to subparagraph 6(f)(iii)), within ninety (90) days of
the date of termination or resignation of employment, by
obtaining an independent appraisal by an appraiser mutually
agreed upon by Officer and Employer. If Officer and Employer are
unable to agree upon the selection of an appraiser, either party
may apply to the Humboldt County Superior Court for the
appointment of an appraiser. The appraiser, however selected,
shall be a person having national experience in evaluating
businesses of the type represented by the Proprietary Portfolio.
The determination of the appraiser shall be final and binding
upon the parties.
(f) In the event of a purchase by Employer of the Officer's Share,
pursuant to the provisions of subparagraph 6(d)(ii) above,
Employer may, at Employer's sole option, elect to pay Officer for
such purchase:
(i) in cash or an equivalent value using Employer's stock,
valued at the closing market price therefor on the NASDAQ
on the date of termination or resignation, in either which
case payment shall be due no later than sixty (60) days
from the date of the determination of the purchase price;
(ii) pursuant to a note, fully amortized over a period of sixty
(60) months, which shall bear interest at Employer's prime
rate with principal and interest due in monthly
installments; or
(iii) alternatively, Employer may elect to sell the entire
Proprietary Portfolio to a third party in an arm's length
transaction and remit to Officer his vested Officer's
Share of the Sale Proceeds. The provisions of subparagraph
6(a) above shall not apply to such a sale.
(g) In the event that Employer elects to sell the Proprietary
Portfolio, in its entirety as it then exists at the time of sale,
at any time during Officer's period of employment pursuant to
this Agreement, Employer shall first offer to sell to Officer the
entire Proprietary Portfolio for an amount and upon terms and
conditions set by Employer. Officer must accept this offer within
ninety (90) days of written notice from Employer of the proposed
sale terms. In the event that Officer declines the offer or fails
to accept it within such ninety (90) day period, Employer may at
any time thereafter sell the Proprietary Portfolio to any third
party upon any terms and conditions Employer elects; provided,
however, that with respect to any sale occurring within the six
(6) months following the date of such declination or failure, the
sales price shall be not less than ninety percent (90%) of the
price offered to Officer. Officer's right to purchase the
Proprietary Portfolio, as described herein, shall be a one time
right only, and Employer's failure to sell the Proprietary
Portfolio following a declination to purchase the Proprietary
Portfolio or other failure to accept Employer's offer on
Officer's part shall not create any further or extended right to
purchase the Proprietary Portfolio by Officer; provided, however,
that Employer may make Officer a subsequent offer pursuant to the
terms of this subparagraph at a future date should Employer so
elect, at Employer's sole option.
(h) Except as otherwise provided in Paragraph 11, Officer's Share,
whether vested or contingent, may not be sold, transferred,
assigned or hypothecated by Officer.
7. INDEMNIFICATION. Employer shall indemnify Officer as an agent of
Employer to the fullest extent permitted under California law, including
but not limited to Section 317 of the General Corporation Law as the
same is now in effect or shall be amended. Such indemnification shall
include the advancement of expenses incurred in defending any
indemnifiable proceeding prior to its final disposition.
8. MORAL CONDUCT. Officer agrees to conduct himself at all times with due
regard to public conventions and morals. Officer further agrees not to
do or commit any act that will reasonably tend to degrade him or to
bring him into public hatred, contempt or ridicule, or that will
reasonably tend to shock or offend the community, or to prejudice
Employer or the banking, commercial leasing or finance industry in
general.
9. CONFIDENTIAL INFORMATION.
(a) Officer understands that during the course of his employment with
Employer, he will have access to trade secrets and other
confidential information which is of a special and unique nature,
the value of which would be destroyed by disclosure to any person
or entity not directly affiliated with the management of the
Employer. Such trade secrets and confidential information
include, but are not limited to: Employer's customer lists and
price lists; business and/or personal information about customers
and prospects; customer agreements; identities of key customer
contacts: credit histories; special tracking programs; Employer's
internal procedures, programs, manuals, forms, marketing plans,
pricing structure, business processes, research reports and
studies, sales materials, merchandising aids, records, and the
identity and purchasing preferences of Employer's customers and
suppliers, strategic plans and other knowledge of Employer's
trade secrets that are integral to the products or services of
Employer that could materially damage Employer if known and
utilized in competition with Employer, including other similar
information which is not easily available from public sources, as
well as compilations of information prepared by or for Employer,
where such compilations are not readily available from public
sources in their compiled form (hereinafter "Confidential
Information"). Accordingly, Officer agrees that without the prior
express written consent of the Board of Directors of Employer,
Officer will not, either during the term of this Agreement or at
any time thereafter, disclose any such Confidential Information,
directly or indirectly, to anyone who is not employed directly by
Employer or employed as an executive officer of an affiliate of
Employer. Officer further agrees that he shall not use any
Confidential Information for the benefit of himself or anyone
other than Employer without the prior written consent of the
Board of Directors of Employer.
(b) The terms of this Agreement are confidential, and Officer shall
not, either before or after termination of this Agreement and
except with Employer's consent in writing, disclose to anyone any
information relating to this Agreement other than to Officer's
own attorney or accountant for the express purpose of reviewing
this Agreement or as ordered by a court of competent jurisdiction
or otherwise required to be disclosed by applicable law or
regulation.
(c) All records in any form, including but not limited to: books,
files, manuals, drawings, customer lists, records, documents,
computer files, brochures, equipment, supplies, keys and other
items relating to Employer's business which have been or may be
prepared, possessed or controlled by Officer are, and shall
forever remain, the sole and exclusive property of Employer.
Accordingly, Officer shall surrender any and all such material to
Employer immediately upon request of Employer or upon termination
of this Agreement, whichever occurs earlier and, further, may not
make copies of any such material for his personal use.
10. NO SOLICITATION. Officer agrees that Employer has invested substantial
money, time and effort in assembling its present staff of personnel.
Accordingly, Officer agrees that for a period of three (3) years after
termination of employment, Officer will not in any way directly or
indirectly induce or solicit any of Employer's employees to leave their
employment. In the event of any solicitation, the parties acknowledge
that it would be extremely difficult if not impractical, to fix the
actual damages that Employer would incur. Therefore, the parties agree
that a fair estimate of the damage to Employer resulting from
solicitation of its employees would be sixty percent (60%) of the total
annual compensation paid by Employer during the immediately preceding
twelve (12)
months to the employee(s) solicited, which sum shall become due and
payable to Employer as liquidated damages, and not as a penalty, on the
day following the solicited employee's separation from employment with
Employer. In the event that Humboldt Bancorp is sold, the provisions of
this Section 10 shall no longer be applicable.
11. TERMINATION OF EMPLOYMENT.
(a) Officer's employment is "at will" and may be terminated by
Employer with or without cause or notice but such termination
shall be subject to the provisions of Paragraph 6 hereof.
(b) "Termination for cause," for all purposes of this Agreement,
shall mean (i) Officer's substantial failure to perform the
stated duties of his position, including financial performance,
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, (ii) conduct involving moral turpitude prohibited by
the Employee Handbook, (iii) occurrence of any event involving
moral turpitude specified in the regulations of any federal or
state regulator of competent jurisdiction as grounds for
immediate termination as now or hereafter in effect, (iv)
personal dishonesty, willful misconduct, gross negligence, breach
of fiduciary duty involving personal profit, or willful violation
of any law, rule or regulation (other than a traffic violation or
similar offense); or (v) conduct resulting in the initiation of
any formal action by a regulatory agency to remove Officer from
his employment with Employer or the issuance of a cease and
desist order the subject matter of which includes any conduct of
Officer prohibited by such order.
(c) The provisions of Paragraph 9 (confidentiality) and Paragraph 10
(solicitation) shall survive any termination of this Agreement.
12. NOTICE. Any notices to be given hereunder by either party to the other
may be effected in writing by mail, registered or certified, postage
prepaid with return receipt requested. Notices to Employer shall be
given to Employer at its then current principal office, c/o the Chairman
of the Board of Directors. Notices to Officer shall be sent to Officer's
then current or last known personal residence.
13. ENTIRE AGREEMENT. This Agreement is in addition to any other agreements
either oral or in writing, between the parties hereto with respect to
the employment of Officer by Employer. Any modification of the Agreement
will be effective only if it is in writing signed by the parties hereto.
14. 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.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
16. WAIVER. The parties hereto shall not be deemed to have waived any of
their respective rights under this Agreement unless this waiver is in
writing and signed by such waiving party. No delay in exercising any
rights shall be a waiver nor shall a waiver on one occasion operate as a
waiver of such right on a future occasion,
17. ASSIGNMENT. Neither this Agreement nor any of the rights or benefits
hereunder shall be subject to execution, attachment or similar process.
This Agreement, nor any rights or benefits hereunder, may not be
assigned, transferred, pledged or hypothecated without the written
consent of both parties hereto; provided, however, that in the event of
any sale of substantially all of the assets of, or merger,
consolidation, conversion or other reorganization involving the
Employer, any successor to Employer by reason of such reorganization
shall succeed to all Employer's rights and benefits and shall be subject
to all of Employer's duties and obligations hereunder, without the
necessity of any consent of Officer.
18. CAPTIONS AND PARAGRAPH HEADINGS. Captions and paragraph headings used
herein are for convenience of reference and are not a part of this
Agreement and shall not be used in the construction or interpretation
thereof.
19. ARBITRATION; ATTORNEY'S FEES. Any controversy or claim arising out of or
related to this Agreement or alleged breach of this Agreement shall be
settled by arbitration in accordance with the Commercial Arbitration
Rules (the "Rules") of the American Arbitration Association then in
effect, and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction. The arbitration shall be
conducted in Eureka, California, or such other location as shall be
agreed to by Officer and Employer. There shall be a single arbitrator.
Officer and Employer jointly shall directly appoint such arbitrator
within thirty (30) days after the arbitration is initiated, failing
which the arbitrator shall be appointed as provided in the Rules. The
arbitrator shall be a retired judge of the State of California or an
attorney having at least fifteen (15) years experience as a business
attorney. The reasonable costs of the arbitration, including the cost of
any record or transcripts of the arbitration, administrative fees, the
fees of the arbitrator, attorney's fees, and all other fees and costs
shall be awarded by the arbitrator to the prevailing party in any such
arbitration.
20. OFFICER'S REPRESENTATIONS. Officer represents that he is free to enter
into this contract and is not precluded or limited, by contract or
otherwise, from fulfilling the duties and obligations encompassed by
this contract. Officer further acknowledges that this representation is
material to Employer's decision to enter into this contract and agrees
that if such representation is found to be untrue, this contract may be
terminated as if for cause by Employer.
HUMBOLDT BANCORP
By:
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Xxxxxxxx X. Xxxxx, President & CEO
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Xxxxxxx X. Xxxxxxx
ADDENDUM 1
EXECUTIVE BENEFITS PACKAGE
MEDICAL INSURANCE: Employer pays employee's coverage.
Employee pays cost of family coverage
under Employer's Executive Group Medical
Insurance Plan.
DENTAL INSURANCE: Employer pays employee's coverage.
Employee pays cost of family coverage
under Employer's Executive Group Dental
Insurance Plan.
VISION INSURANCE: Employer pays employee's coverage.
Employee pays cost of family coverage
under Employer's Executive Group Vision
Insurance Plan.
LIFE INSURANCE Employer pays cost of term life
insurance policy in amount of two (2)
times annual Base Compensation naming
beneficiary of Employee's choice.
DISABILITY INSURANCE: Officer shall pay full cost of any
supplemental Disability Insurance
Program.
SALARY AUGMENTATION: Per agreement dated December 1, 1996,
Officer will receive a defined benefit
(annuity) to be paid in 180 monthly
installments beginning on December 1,
2001. Projected base as of starting date
equals $146,665.
VACATION: Four (4) weeks per year with annual
carryover ability of two (2) weeks which
must be taken the following year.
SICK LEAVE/HOLIDAYS: Standard employee package.
MISCELLANEOUS Employer to reimburse Officer for
cellular telephone including airtime
charges. Employer to pay dues and fees
for memberships in professional
organizations approved by Employer.
ADDENDUM 2
PROPRIETARY PORTFOLIO: For purposes of the Agreement, the "Proprietary
Portfolio" referred to in Sections 3(b), 3(e), 6, 11 (d) and 11 (e) thereof
shall consist of all merchant accounts associated with the merchant processing
activity generated through the Bank Identification Number 419404 and FDR System
Number 5379.
As used in Section 3(b) of the Agreement, "net pre-tax income" means all
income generated by the Proprietary Portfolio (including but not limited to
application income, equipment income, discount income, lease income, income from
deposits on hold, American Express income and any other expense and/or income
associated therewith) less all expenses associated with the Proprietary
Portfolio (including but not limited to staff expense, telecommunication
expense, marketing expense, bank occupancy expense, postage expense and
equipment expense, in both cases calculated before provision for taxes.
When determining the value of the principal of the Proprietary Portfolio
for purposes of Section 6 of the Agreement, the entire operation will be
considered so as to recognize the value of the business, its marketing
potential, systems and future new accounts, rather than merely the merchant
accounts themselves.
The Proprietary Portfolio may be expanded to include other newly created
BINs and systems upon the express written consent of the Executive Review
Committee of Humboldt Bank.
