SECOND AMENDMENT TO DIRECTOR COMPENSATION BENEFITS AGREEMENT BY AND BETWEEN HERITAGE COMMERCE CORPORATION AND CHARLES J. TOENISKOETTER
Exhibit 10.30
SECOND
AMENDMENT
BY
AND BETWEEN HERITAGE COMMERCE CORPORATION AND XXXXXXX X.
XXXXXXXXXXXXX
This
Second Amendment (“Second Amendment”) is made and entered into effective this
January 24, 2008, by and between Heritage Commerce Corporation (hereinafter “the
Bank”), and Xxxxxxx X. Xxxxxxxxxxxxx, (hereinafter “the Director”). This Second
Amendment amends the “Director Compensation Benefits Agreement” (hereinafter
“Original Agreement”, effective as of May 23, 2002, by and between the Bank and
the Director, thereafter amended by virtue of “Amendment 1 To
Director Compensation Benefits Agreement by and Between Heritage Commerce
Corporation and Xxxxxxx X. Xxxxxxxxxxxxx” (hereinafter the “First Amendment”),
as follows:
In an
effort to clarify an ambiguity with respect to vesting and employment dates, the
parties now hereby amend the Original Agreement and the First Amendment thereto
as follows:
To delete
the entire vesting schedule entitled “Schedule A”, incorporated into the
Original Agreement by virtue of the First Amendment thereto, and to
replace such “Schedule A” with the modified “Second Amended Schedule
A” attached hereto.
In
addition to the forgoing, the following three paragraphs shall be inserted as
under the heading of Paragraph 12.0 (immediately following the
existing Paragraph 11.13) of the Director Compensation Benefits
Agreement:
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12.0
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Internal
Revenue Code Section 409A Compliance. Notwithstanding
any provision existing in this Agreement or any amendment thereto, it is
the intent of the Bank and the Director that any payment or benefit
provided pursuant to this Agreement shall be made and paid in a manner, at
a time and in a form which complies with the applicable requirements of
IRC Section 409A, in order to avoid any unfavorable tax consequences
resulting from any such failure to comply. Furthermore, for the purposes
of this Agreement, IRC Section 409A shall be read to include any related
or relevant IRS Notices (including but not limited to Notice 2006-79,
2007-78) and any future guidance or clarification of such
statutes.
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In
accordance with the current restrictions on payouts of deferred compensation,
and with respect to any plan amendment or election in 2008, such amendment or
election may not act as to accelerate any payments or cause any payment to be
made in 2008 that would not otherwise be payable in 2008. Furthermore, and in
accordance with IRS Notice 2007-78, this restriction also applies to payments
following a separation from service, and similarly applies to
elections/amendments
and
payments made and to be made in 20078. In the event of any modification or
amendment in 2008 regarding a payment to be made in 2008, such payment shall not
be made or commence until January 1, 2009.
The
parties reserve the right to amend this agreement as necessary in order to
comply with IRC Section 409A. Furthermore, this Agreement shall be administered
in compliance with IRC Section 409A and the related rules, regulations and
notices. Any section of this Agreement which violates IRC Section
409A and the related rules, regulations and notices shall be void and without
effect.
To the
extent that any paragraph, term, or provision of the Director Compensation
Benefits Agreement is not specifically amended herein, or in any other amendment
thereto, said paragraph, term, or provision shall remain in full force and
effect as set forth in said Agreement.
IN
WITNESS WHEREOF, the Director and a duty authorized Bank officer have signed
this Agreement as of the written date.
HERITAGE
COMMERCE CORPORATION
______________________________________
Date:_________________________
By:
Xxxxxxxx X. XxXxxxxx
______________________________________
Date:_________________________
Xxxxxxx
X. Xxxxxxxxxxxxx
______________________________________ _____________________________
Witness Witness
SECOND AMENDED SCHEDULE
A
|
CALENDAR PERIOD
|
APPLICABLE PERCENTAGE
|
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May
23, 2002 to May 22, 2003
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10.00%
|
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May
23, 2003 to May 22, 2004
|
20.00%
|
|
May
23, 2004 to May 22, 2005
|
30.00%
|
|
May
23, 2005 to May 22, 2006
|
40.00%
|
|
May
23, 2006 to May 22, 2007
|
50.00%
|
|
May
23, 2007 to May 22, 2008
|
60.00%
|
|
May
23, 2008 to May 22, 2009
|
70.00%
|
|
May
23, 2009 to May 22, 2010
|
80.00%
|
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May
23, 2010 to May 22, 2011
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90.00%
|
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May
23, 2011 and Thereafter
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100.00%
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AMENDMENT
1
BY
AND BETWEEN HERITAGE COMMERCE CORPORATION AND
XXXXXXX
X. XXXXXXXXXXXXX
This
Amendment (“Amendment”) is made and entered into effective this __________,
2004, by and between Heritage Commerce Corporation (hereinafter “the Bank”), and
Xxxxxxx X. Xxxxxxxxxxxxx, (hereinafter “the Director”). This Amendment
amends the Director Compensation Benefits Agreement, effective as of
May 23, 2002, by and between the Bank and the Director, as
follows:
Because
of an inconsistency with respect to the one hundred percent vesting date
specified in the original “Schedule A” vesting schedule, the parties now hereby
amend the original Agreement as follows:
To delete
the entire vesting schedule attached and incorporated into the original
Agreement as “Schedule A” at page 11, and to replace such “Schedule A” with the
modified “Schedule A” attached hereto.
To the
extent that any paragraph, term, or provision of the Joint Beneficiary Agreement
is not specifically amended herein, or in any other amendment thereto, said
paragraph, term, or provision shall remain in full force and effect as set forth
in said Agreement.
IN
WITNESS WHEREOF, the Insured and a duly authorized Bank officer have signed this
Agreement as of the written date.
HERITAGE
COMMERCE CORPORATION
______________________________________
Date:_________________________
By:
Xxxxxxx X. Xxxxxxx
______________________________________
Date:_________________________
Xxxxxxx
X. Xxxxxxxxxxxxx
______________________________________ _____________________________
Witness Witness
SCHEDULE
A
|
CALENDAR PERIOD
|
APPLICABLE PERCENTAGE
|
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May
1, 1997 to April 30, 2002
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0.00%
|
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May
1, 2002 to April 30, 2003
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10.00%
|
|
May
1, 2003 to April 30, 2004
|
20.00%
|
|
May
1, 2004 to April 30, 2005
|
30.00%
|
|
May
1, 2005 to April 30, 2006
|
40.00%
|
|
May
1, 2006 to April 30, 2007
|
50.00%
|
|
May
1, 2007 to April 30, 2008
|
60.00%
|
|
May
1, 2008 to April 30, 2009
|
70.00%
|
|
May
1, 2009 to April 30, 2010
|
80.00%
|
|
May
1, 2010 to April 30, 2011
|
90.00%
|
|
May
1, 2011 and Thereafter
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100.00%
|
This
Agreement is made and entered into effective as of May 23, 2002, by and
between Heritage Commerce Corporation (“the Bank”), and Xxxxxxx X.
Xxxxxxxxxxxxx, an individual residing in the State of California (the
“Director”).
R E C I T A L
S
WHEREAS,
the Director is a member of the Board of Directors of the Bank and has served in
such capacity since May 23, 2002;
WHEREAS,
the Bank desires to establish a compensation benefit program for directors who
are not also officers or employees of the Bank in order to attract and retain
individuals with extensive and valuable experience as directors;
and
WHEREAS,
the Director and the Bank wish to specify in writing the terms and conditions
upon which this additional compensatory incentive will be provided to the
Director; NOW, THEREFORE, in consideration of the services to be performed by
the Director in the future, as well as the mutual promises and covenants
contained herein, the Director and the Bank agree as follows:
A G R E E M E N
T
1. Terms and
Definitions.
1.1 Administrator. The
Bank shall be the “Administrator” and, solely for the purposes of ERISA as
defined in subparagraph 1.9 below, the “fiduciary” of this Agreement where a
fiduciary is required by ERISA.
1.2 Applicable
Percentage. The term “Applicable Percentage” shall mean that
percentage adjacent to a calendar period listed on Schedule “A” attached
hereto, which percentage shall remain in effect until an adjustment occurs on
each succeeding calendar period during the term of service as a member of the
Board of Directors of the Bank. Notwithstanding the foregoing or the
percentages set forth on Schedule “A”, but subject to all other terms and
conditions set forth herein, the “Applicable Percentage” shall be: (i) provided
payments have mot yet begun hereunder, one hundred percent (100%) upon
termination of termination of service described in subparagraph 5.4
pursuant to a “Change in Control” as defined in subparagraph 1.3 below, or
the Director’s death, or Disability as defined in subparagraph 1.5 below,
which death or Disability occurs prior to the termination of service; and (ii)
notwithstanding subclause (i) of this subparagraph 1.2, zero percent
(0%) in the event the Director takes any intentional action which prevents the
Bank from collecting the proceeds of any life insurance policy which the Bank
may happen to own at the time of the Director’s death and of which the Bank is
the designated beneficiary. Furthermore, notwithstanding the
foregoing, or anything contained in this Agreement to the contrary, in the event
the Director takes any intentional action which prevents the Bank from
collecting the proceeds of any life insurance policy which the Bank may happen
to own at the time of the Director’s death and of which the Bank is the
designated beneficiary: (1) the Director’s estate or designated
beneficiary shall no longer be entitled to receive any of the amounts payable
under the terms of this Agreement, and (2) the Bank shall have the right to
recover from the Directors estate all of the amounts paid to the Director’s
estate (with respect to amounts paid prior to the Director’s death or paid to
the Director’s estate) or designated beneficiary (with respect to amounts paid
to the designated beneficiary) pursuant to the terms of this Agreement prior to
and after the Director’s death.
1.3 Change in
Control. The term “Change in Control” shall mean the
occurrence of any of the following events with respect to the Bank (with the
term “Bank” being defined for purposes of determining whether a “Change in
Control” has occurred to include any parent bank holding company organized at
the direction of the Bank to own one hundred percent (100%) of the Bank’s
outstanding common stock): (i) a change in control of a mature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or in response to any
other form or report to the regulatory agencies or governmental authorities
having jurisdiction over the Bank or any stock exchange on which the Bank’s
shares are listed which requires the reporting of a change in control; (ii) any
merger, consolidation or reorganization of the Bank in which the Bank does mot
survive; (iii) any sale, tease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) of any assets of
the Bank having an aggregate fair market value of fifty percent (50%) of the
total value of the assets of the Bank, reflected in the most recent balance
sheet of the Bank; (iv) a transaction whereby any “person” (as such term is used
in the Exchange Act) or any individual, corporation, partnership, trust or any
other entity becomes the beneficial owner, directly or indirectly, of securities
of the Bank representing twenty-five percent (25%) or more of the combined
voting power of the Bank’s then outstanding securities; or (v) a situation
where, in any one-year period, individuals who at the beginning of such period
constitute the Board of Directors of the Bank cease for any reason to constitute
at least a majority thereof, unless the election, or the nomination for election
by the Bank’s shareholders, of each new director is approved by a vote of at
least three-quarters (3/4) of the directors then still in office who were
directors at the beginning of the period. Notwithstanding the
foregoing or anything else contained herein to the contrary, there shall not be
a “Change of Control” for purposes of this Agreement if the event which would
otherwise come within the meaning of the term “Change of Control” involves (i) a
reorganization at the direction of the Bank solely to form a parent bank holding
company which owns one hundred percent (100%) of the Bank’s common stock
following the reorganization, or (ii) am Employee Stock Ownership Plan sponsored
by the Bank or its parent holding company which is the party that acquires
“control” or is the principal participant in the transaction constituting a
“Change in Control”, as described above.
1.4 The
Code. The “Code” shall mean the Internal Revenue Code of 1986,
as amended (the “Code”).
1.5 Disability/Disabled. The
term “Disability” or “Disabled” shall mean bodily injury or disease (mental or
physical) which wholly and continuously prevents the performance of duty for at
least three months including without limitation, the total irrecoverable loss of
sight in both eyes or the loss by severance of both hands at or above the wrist
or of both feet at or above the ankle or of one hand at or above the wrist and
one foot at or above the ankle.
1.6 Early
Retirement Date. The term “Early Retirement Date” shall mean
the Retirement as defined below, of the Director on a date which occurs prior to
the Director attaining sixty-two (62) years of age, but after the Director has
attained fifty-five (55) years of age.
1.7 Effective
Date. The term “Effective Date” shall mean the date first
written above.
1.8 ERISA. The
term “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.
1.9 Director
Benefits. The term “Director Benefits” shall mean the benefits
determined in accordance with Schedule “B”, and reduced to the
extent: (i) required under the other provisions of this Agreement,
including, but not limited to, Xxxxxxxxxx 0, 0 xxx 0 xxxxxx,
(xx) required by reason of the lawful order of any regulatory agency or
body having jurisdiction over the Bank; or (iii) required in order for the Bank
to properly comply with any and all applicable state and federal laws,
including, but not limited to, income, employment and disability income tax laws
(e.g., FICA, FUTA, SDI).
1.10 Plan
Year. The term “Plan Year” shall mean the Bank’s fiscal
year.
1.11 Retirement. The
term “Retirement” or “Retires” shall refer to the date which the Director
acknowledges in writing to Bank to be the last day of service as a member of the
Board of Directors.
1.12 Removal
for Cause. The term “removal for cause” shall mean termination
of the Director’s service as a member of the Board of Directors of the Bank by
reason of any of the following:
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(a)
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The
willful, intentional and material breach or the habitual and continued
neglect by the Director of his
duties;
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(b)
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The
Director’s willful and intentional violation of (i) any State or Federal
banking or securities laws, or of the Bylaws, rules, policies or
resolutions of Bank, or the rules or regulations of the California
Commissioner of Financial Institutions, Board of Governors or’ the Federal
Reserve System, Federal Deposit Insurance Corporation, or other regulatory
agency or governmental authority having jurisdiction over the Bank, which
has a material adverse effect upon the
Bank;
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(c)
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The
Director’s conviction of (i) any felony or (ii) a crime involving moral
turpitude, or the Director’s willful and intentional commission a
fraudulent or dishonest act; or
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(d)
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The
Director’s willful and intentional disclosure, without authority, of any
secret or confidential information concerning Bank or taking any action
which the Bank’s Board of Directors determines, in its sole discretion and
subject to good faith, fair dealing and reasonableness, constitutes unfair
competition with or induces any customer to breach any contract with the
Bank
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2. Scope,
Purpose and Effect.
2.1 Contract
of Employment. Although this Agreement is intended to provide
the Director with an additional incentive to continue to serve as a member of
the Board of Directors, this Agreement shall not be deemed to constitute a
contract of employment between the Director and the Bank nor shall any provision
of this Agreement restrict the right of the Bank to remove or cause the removal
of the Director including, without limitation, by (i) refusal to nominate the
Director for election for any successive term of office as a member of the Board
of Directors of the Bank, or (ii) complying with an order or other directive
from a court of competent jurisdiction or any regulatory authority having
jurisdiction over the Bank which requires the Bank to take action to remove the
Director.
2.2 Fringe
Benefit. The benefits provided by this Agreement are granted
by the Bank as a fringe benefit to the Director and are not a part of any salary
reduction plan or any arrangement deferring a bonus or a salary increase. The
Director has no option to take any current payments or bonus in lieu of the
benefits provided by this Agreement.
3. Payments
Upon Early Retirement or Retirement and After Retirement.
3.1 Payments
Upon Early Retirement. The Director shall have the right to
Retire from the Board of Directors on a date which constitutes an Early
Retirement Date as defined in subparagraph 1.6 above. In the
event the Director elects to Retire on a date which constitutes an Early
Retirement Date, the Director shall be entitled to be paid the Applicable
Percentage of the Director Benefits, in substantially equal monthly installments
on the first day of each month, beginning with the month following the month in
which the Early Retirement Date occurs or upon such later date as may be
mutually agreed upon by the Director and the Bank in advance of said Early
Retirement Date.
3.2 Payments
Upon Retirement. If the Director shall continue to serve as a
member of the Board of Directors until attaining sixty-two (62) years of age,
the Director shall be entitled to be paid the Applicable Percentage of the
Director Benefits, in substantially equal monthly installments on the first day
of each month, beginning with the month following the month in which the
Director Retires or upon such later date as may be mutually agreed upon by the
Director and the Bank in advance of said Retirement date.
4. Payments
in the Event of Disability Prior to Retirement. In the event
the Director becomes Disabled at any time after the Effective Date of this
Agreement but prior to Retirement, the Director shall be entitled to be paid the
Applicable Percentage of the Director Benefits, in substantially equal monthly
installments on the first day of each month, beginning with the month following
the month in which the Director becomes Disabled.
5. Payments
in the Event Employment Is Terminated Prior to Retirement. As
indicated in subparagraph 2.1 above, the Bank reserves the right to remove
or cause the removal of the Director under certain circumstances, at any time
prior to the Director’s Retirement. In the event that the service of
the Director shall be terminated, other than by reason of death, Disability or
Retirement, prior to the Director’s attaining sixty-two (62) years of age, then
this Agreement shall terminate upon the date of such termination of termination;
provided, however, that the Director shall be entitled to the following benefits
as may be applicable depending upon the circumstances surrounding the Director’s
termination:
5.1 Termination
Without Cause. If the Director’s service as a member of the
Board of Directors is terminated for reasons other than as specified in
paragraph 5.3 below and such termination is not subject to the provisions
of subparagraph 5.4 below, the Director shall be entitled to be paid the
Applicable Percentage of the Director Benefits, in substantially equal monthly
installments on the first day of each month, beginning with the month following
the month in which the Director attains fifty-five (55) years of age or any
month thereafter, as requested in writing by the Director and delivered to the
Bank or its successor thirty (30) days prior to the commencement of installment
payments; provided, however, that in the event the Director does not request a
commencement date as specified, such installments shall be paid on the first day
of each month, beginning with the month following the month in which the
Director attains sixty-two (62) years of age.
5.2 Voluntary
Termination by the Director. If the Director’s employment is
terminated by voluntary resignation and such resignation is not subject to the
provisions of subparagraphs 5.3 or 5.4 below, the Director shall be
entitled to be paid the Applicable Percentage of the Director Benefits, in
substantially equal monthly installments on the first day of each month,
beginning with the month following the month in which the Director attains
fifty-five (55) years of age or any month thereafter, as requested in writing by
the Director and delivered to the Bank or its successor thirty (30) days prior
to the commencement of installment payments; provided, however, that in the
event the Director does not request a commencement date as specified, such
installments shall be paid on the first day of each month, beginning with the
month following the month in which the Director attains sixty-two (62) years of
age.
6. Termination
by Removal for Cause. The Director agrees that if the
Director’s service as a member of the Board of Directors of the Bank is
terminated “removal for cause”, as defined in subparagraph 1.12 of this
Agreement, the Director shall forfeit any and all rights and benefits the
Director may have under the terms of this Agreement and shall have no right to
be paid any of the amounts which would otherwise be due or paid to the Director
by the Bank pursuant to the terms of this Agreement.
6.1 Termination
by the Bank on Account of or After a Chance in Control. In the
event: (i) the Director’s service as a member of the Board of
Directors of the Bank is terminated in conjunction with, or by reason of, a
“Change in Control” (as defined in subparagraph 1.3 above); then the
Director shall be entitled to be paid the Applicable Percentage of the Director
Benefits, as defined above, in substantially equal monthly installments on the
first day of each month, beginning with the month following the month in which
the Director attains fifty-five (55) years of age or any month thereafter, as
requested in writing by the Director and delivered to the Bank or its successor
thirty (30) days prior to the commencement of installment payments; provided,
however, that in the event the Director does not request a commencement date as
specified, such installments shall be paid on the first day of each month,
beginning with the month following the month in which the Director attains
sixty-two (62) years of age.
7. Section
280G Benefits Reduction. If all or any portion of the amounts
payable to the Director under this Agreement, either alone or together with
other payments which the Director has the right to receive from the Bank,
constitute “excess parachute payments” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”), that arc subject
to the excise tax imposed by Section 4999 of the Code (or similar tax
and/or assessment), Director shall be responsible for the payment of such excise
tax and Bank (and its successor) shall be responsible for any loss of
deductibility related thereto; provided, however, that Bank and Director shall
cooperate with each other and use all reasonable efforts to minimize to the
fullest extent possible the amount of excise tax imposed by Section 4999 of
the Code. If, at a later date, it is determined (pursuant to final
regulations or published rulings of the Internal Revenue Service, final judgment
of a court of competent jurisdiction, or otherwise) that the amount of excise
taxes payable by the Director is greater than the amount initially so
determined, then the Director shall pay an amount equal to the sum of such
additional excise taxes and any interest, fines and penalties resulting from
such underpayment. The determination of the amount of any such excise
taxes shall be made by the independent accounting firm employed by the Bank
immediately prior to the change in control or such other independent accounting
firm or advisor as may be mutually agreeable to Bank and Director in the
exercise of their reasonable good faith judgment.
8. Right To
Determine Funding Methods. The Bank reserves the right to
determine, in its sole and absolute discretion, whether, to what extent and by
what method, if any, to provide for the payment of the amounts which may be
payable to the Director under the terms of this Agreement. In the
event that the Bank elects to fund this Agreement, in whole or in part, through
the use of life insurance or annuities, or both, the Bank shall determine the
ownership and beneficial interests of any such policy of life insurance or
annuity. The Bank further reserves the right, in its sole and
absolute discretion, to terminate any such policy, and any other device used to
fund its obligations under this Agreement, at any time, in whole or in
part. Consistent with Paragraph 9 below, the Director shall have
no right, title or interest in or to any funding source or amount utilized by
the Bank pursuant to this Agreement, and any such funding source or amount shall
not constitute security for the performance of the Bank’s obligations pursuant
to this Agreement. In connection with the foregoing, the Director
agrees to execute such documents and undergo such medical examinations or tests
which the Bank may request and which may be reasonably necessary to facilitate
any funding for this Agreement including, without limitation, the Bank’s
acquisition of any policy of insurance or annuity. Furthermore, a
refusal by the Director to consent to, participate in and undergo any such
medical examinations or tests shall result in the immediate termination of this
Agreement and the immediate forfeiture by the Director of any and all rights to
payment hereunder.
9. Claims
Procedure. The Bank shall, but only to the extent necessary to
comply with ERISA, be designated as the named fiduciary under this Agreement and
shall have authority to control and manage the operation and administration of
this Agreement. Consistent therewith, the Bank shall make all
determinations as to the rights to benefits under this Agreement. Any
decision by the Bank denying a claim by the Director for benefits under this
Agreement shall be stated in writing and delivered or mailed, via registered or
certified mail, to the Director. Such decision shall set forth the
specific reasons for the denial of a claim. In addition, the Bank
shall provide the Director with a reasonable opportunity for a full and fair
review of the decision denying such claim.
10. Status as
an Unsecured General Creditor. Notwithstanding anything
contained herein to the contrary: (i) Director shall have no legal or
equitable rights, interests or claims in or to any specific property or assets
of the Bank as a result of this Agreement; (ii) none of the Bank’s assets shall
be held in or under any trust for the benefit of the Director or held in any way
as security for the fulfillment of the obligations of the Bank under this
Agreement; (iii) all of the Bank’s assets shall be and remain the general
unpledged and unrestricted assets of the Bank; (iv) the Bank’s obligation under
this Agreement shall be that of an unfunded and unsecured promise by the Bank to
pay money in the future; and (v) the Director shall be unsecured general
creditors with respect to any benefits which may be payable under the terms of
this Agreement.
Notwithstanding
subparagraphs (i) through (v) above, the Bank and the Director acknowledge
and agree that upon request of the Director at any time during the term of this
Agreement, a Rabbi Trust (the “Trust”) shall be established upon such terms and
conditions as may be mutually agreeable between the Bank and the Director in
order to permit the Bank to make contributions and/or transfer assets to the
Trust to discharge its obligations pursuant to this Agreement. The
principal of the Trust and any earnings thereon shall be held separate and apart
from other funds of the Bank to be used exclusively for discharge of the Bank’s
obligations pursuant to this Agreement and shall continue to be subject to the
claims of the Bank’s general creditors until paid to the Director in such manner
and at such times as specified in this Agreement.
11. Discretion
of Board to Accelerate Payout. Notwithstanding any of the
other provisions of this Agreement, the Board of Directors of the Bank may, if
determined in its sole and absolute discretion to be appropriate, accelerate the
payment of the amounts due under the terms of this Agreement, provided
that: Director (i) consents to the revised payout terms determined
appropriate by the Bank’s Board of Directors; and (ii) does not negotiate or in
any way influence the terms of proposed altered/accelerated payout (said
decision to be made solely by the Bank’s Board of Directors and offered to the
Director on a “take it or leave it basis”).
12. Miscellaneous.
12.1 Opportunity
To Consult With Independent Advisors. The Director
acknowledges that he has been afforded the opportunity to consult with
independent advisors of his choosing including, without limitation, accountants
or tax advisors and counsel regarding both the benefits granted to him under the
terms of this Agreement and the (i) terms and conditions which may affect the
Director’s right to these benefits and (ii) personal tax effects of such
benefits including, without limitation, the effects of any federal or state
taxes, Section 280G of the Code, and any other taxes, costs, expenses or
liabilities whatsoever related to such benefits, which in any of the foregoing
instances the Director acknowledges and agrees shall be the sole responsibility
of the Director notwithstanding any other term or provision of this
Agreement. The Director further acknowledges and agrees that the Bank
shall have no liability whatsoever related to any such personal tax effects or
other personal costs, expenses, or liabilities applicable to the Director and
further specifically waives any right for the Director, himself, and his heirs,
legal representatives, agents, successors, and assigns to claim or assert
liability on the part of the Bank related to the matters described above in this
subparagraph 11.1. The Director further acknowledges and agrees that he has
read, understands and consents to all of the terms and conditions of this
Agreement, and that he enters into this Agreement with a full understanding of
its terms and conditions.
12.2 Arbitration
of Disputes. All claims, disputes and other matters in
question arising out of or relating to this Agreement or the breach or
interpretation thereof, other than those matters which are to be determined by
the Bank in its sole and absolute discretion, shall be resolved by binding
arbitration before a representative member, selected by the mutual agreement of
the parties, of the Judicial Arbitration and Mediation Services, Inc. (“JAMS”),
located in San Francisco, California. In the event JAMS is unable or unwilling
to conduct the arbitration provided for under the terms of this Paragraph, or
has discontinued its business, the parties agree that a representative member,
selected by the mutual agreement of the parties, of the American Arbitration
Association (“AAA”), located in San Francisco, California, shall conduct the
binding arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the other party to this
Agreement and with JAMS (or AAA, if necessary). In no event shall the
demand for arbitration be made after the date when institution of legal or
equitable proceedings based on such claim, dispute or other matter in question
would be barred by the applicable statute of limitations. The
arbitration shall be subject to such rules of procedure used or established by
JAMS, or if there are none, the rules of procedure used or established by
AAA. Any award rendered by JAMS or AAA shall be final and binding
upon the parties, and as applicable, their respective heirs, legal
representatives, agents, successors and assigns, and maybe entered in any court
having jurisdiction thereof. The obligation of the parties to
arbitrate pursuant to this clause shall be specifically enforceable in
accordance with, and shall be conducted consistently with, the provisions of
Title 9 of Part 3 of the California Code of Civil
Procedure. Any arbitration hereunder shall be conducted in San Jose,
California, unless otherwise agreed to by the parties.
12.3 Attorneys’
Fees. In the event of any arbitration or litigation concerning
any controversy, claim or dispute between the parties hereto, arising out of or
relating to this Agreement or the breach hereof, or the interpretation hereof,
the prevailing party shall be entitled to recover from the non-prevailing party
reasonable expenses, attorneys’ fees and costs incurred in connection therewith
or in the enforcement or collection of any judgment or award rendered
therein. The “prevailing party” means the party determined by the
arbitrator(s) or court, as the case may be, to have most nearly prevailed, even
if such party did not prevail in all matters, not necessarily the one in whose
favor a judgment is rendered.
12.4 Notice. Any
notice required or permitted of either the Director or the Bank under this
Agreement shall be deemed to have been duly given, if by personal delivery, upon
the date received by the party or its authorized representative; if by
facsimile, upon transmission to a telephone number previously provided by the
party to whom the facsimile is transmitted as reflected in the records of the
party transmitting the facsimile and upon reasonable confirmation of such
transmission; and if by mail, on the third day after mailing via U.S. first
class mail, registered or certified, postage prepaid and return receipt
requested, and addressed to the party at the address given below for the receipt
of notices, or such changed address as may be requested in writing by a
party.
|
If
to the Bank:
|
Heritage
Bank of Commerce
|
|
|
000 Xxxxxxx Xxxxxxxxx
|
|
|
Xxx Xxxx, Xxxxxxxxxx 00000
|
|
|
Attn: Chairman of the Board
|
|
|
If
to the Director:
|
Xxxxxxx
X. Xxxxxxxxxxxxx
|
|
|
Toeniskoetter
& Breeding
|
| 0000 Xxx Xxxxxxx | |
| Xxx Xxxx, XX 00000 |
12.5 Assignment. The
Director shall have no power or right to transfer, assign, anticipate,
hypothecate, modify, or otherwise encumber any part or all of the amounts
payable hereunder, nor, prior to payment in accordance with the terms of this
Agreement, shall any portion of such amounts be: (i) subject to
seizure by any creditor of the Director, by a proceeding at law or in equity,
for the payment of any debts, judgments, alimony or separate maintenance
obligations which may be owed by the Director; or (ii) transferable by operation
of law in the event of bankruptcy, insolvency or otherwise. Any such
attempted assignment or transfer shall be void and unenforceable without the
prior written consent of the Bank. The Bank’s consent, if any, to one
or more assignments or transfers shall not obligate the Bank to consent to or be
construed as the Bank’s consent to any other or subsequent assignment or
transfer.
12.6 Binding
Effect/Merger or Reorganization. This Agreement shall be
binding upon and inure to the benefit of the Director and the Bank and, as
applicable, their respective heirs, legal representatives, agents, successors,
and assigns. Accordingly, the Bank shall not merge or consolidate into or with
another corporation, or reorganize or sell substantially all of its assets to
another corporation, firm, or person, unless and until such succeeding or
continuing corporation, firm, or person agrees to assume and discharge the
obligations of the Bank under this Agreement. Upon the occurrence of
such event, the term “Bank” as used in this Agreement shall be deemed to refer
to such surviving or successor firm, person, entity or corporation.
12.7 Nonwaiver. The
failure of either party to enforce at any time or for any period of time any one
or more of the terms or conditions of this Agreement shall not be a waiver of
such term(s) or condition(s) or of that party’s right thereafter to enforce each
and every term and condition of this Agreement.
12.8 Partial
Invalidity. If any term, provision, covenant, or condition of
this Agreement is determined by an arbitrator or a court, as the case may be, to
be invalid, void, or unenforceable, such determination shall not render any
other term, provision, covenant, or condition invalid, void or unenforceable,
and the Agreement shall remain in full force and effect notwithstanding such
partial invalidity.
12.9 Entire
Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties with respect to the
subject matter of this Agreement and contains all of the covenants and
agreements between the parties with respect thereto. Each party to
this Agreement acknowledges that no other representations, inducements,
promises, or agreements, oral or otherwise, have been made by any party, or
anyone acting on behalf of any party, which are not set forth herein, and that
no other agreement, statement, or promise not contained in this Agreement shall
be valid or binding on either party.
12.10 Modifications. Any
modification of this Agreement shall be effective only if it is in writing and
signed by each party or such party’s authorized representative.
12.11 Paragraph
Headings. The paragraph headings used in this Agreement are
included solely for the convenience of the parties and shall not affect or be
used in connection with the interpretation of this Agreement.
12.12 No Strict
Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any
person.
12.13 Governing
Law. The laws of the State of California, other than those
laws denominated choice of law rules, and, where applicable, the rules and
regulations of the California Commissioner of Financial Institutions and the
Federal Deposit Insurance Corporation shall govern the validity, interpretation,
construction and effect of this Agreement.
IN
WITNESS WHEREOF, the Sank and the Director have executed this Agreement on the
date first above-written in the City of San Xxxx, Santa Xxxxx County,
California.
BANK DIRECTOR
Heritage Bank of Commerce
By:____________________________
____________________________
Xxxxxxx X.
Xxxxxxx
Xxxxxxx X. Xxxxxxxxxxxxx
President
and Chief Operatiing Officer
SCHEDULE
A
|
CALENDAR PERIOD
|
APPLICABLE PERCENTAGE
|
|
May
1, 1997 to April 30, 2002
|
0.00%
|
|
May
1, 2002 to April 30, 2003
|
10.00%
|
|
May
1, 2003 to April 30, 2004
|
20.00%
|
|
May
1, 2004 to April 30, 2005
|
30.00%
|
|
May
1, 2005 to April 30, 2006
|
40.00%
|
|
May
1, 2006 to April 30, 2007
|
50.00%
|
|
May
1, 2007 to April 30, 2008
|
60.00%
|
|
May
1, 2008 to April 30, 2009
|
70.00%
|
|
May
1, 2009 to April 30, 2010
|
80.00%
|
|
May
1, 2010 to April 30, 2011
|
90.00%
|
|
May
1, 2012 and Thereafter
|
100.00%
|
See
subparagraph 1.2 of the Agreement for a definition and discussion of the
Applicable Percentage.
SCHEDULE
B
DIRECTOR
BENEFITS
a. A
benefit account shall be established as a liability reserve account on the books
of the Bank for the benefit of the Director. The Director Benefits
shall be credited to the benefit account in an amount equal to One Thousand
Dollars ($1,000.00) per year for each year of service as a member of the Board
of Directors of the Bank. The amount of Director Benefits payable
under the Agreement shall be increased at the rate of two percent (2%) each year
from the date of commencement of payments of the Director Benefits until the
death of the Director.
b. If
the Director elects Early Retirement, the Director Benefits shall be decreased
by a percentage calculated by subtracting the Director’s age at Early Retirement
from the normal Retirement age of 62, and multiplying the result by a factor of
five. For example, a 35% reduction of the Director Benefits would
occur if the Director’s Early Retirement age is 55, based on the following
calculation: 62-55=7x5=35%.
