Exhibit 10.8
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), dated as of May __, 1999, is entered
into by and between The Bank of Hemet, a state chartered banking institution
("Bank"), Xxxxx & Associates, LLC ("Consulting Co.") and Xxxxx X. Xxxxx
("Consultant").
RECITALS
A. Bank and Pacific Community Banking Group, a California corporation ("PCBG")
entered into that certain First Restatement of Agreement and Plan of
Reorganization dated as of January 5, 1999, as amended (the "Reorganization
Agreement") whereby Bank will be acquired and become a wholly owned
subsidiary of PCBG.
B. Consultant is a current shareholder of Bank and President, Chief Executive
Officer and a Director of Bank and Chairman of the Board of Directors of
Banklink, a subsidiary of Bank. Consulting Co. is partially owned by
Consultant and provides banking and data processing advisory services.
C. Following the consummation of the acquisition of Bank by PCBG, Bank wishes
to hire Consulting Co. and Consultant wishes to be retained as Chairman of
Banklink and as a Director of PCBG.
D. Unless otherwise provided in this Agreement, capitalized terms shall have
the meanings given to them in the Reorganization Agreement.
NOW THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants, agreements and conditions contained
herein and in the Reorganization Agreement, and intending to be legally bound
hereby, Bank, Consulting Co. and Consultant agree as follows:
ARTICLE I
CONSULTING SERVICES
1.1 CONSULTING SERVICES. From the Effective Time until the third
anniversary of the Effective Time Consulting Co. will serve as a business
development and strategic business consultant for Banklink. Such services shall
be provided by Consulting Co. on a schedule solely determined by Consulting Co.
1.2 DIRECTOR RESPONSIBILITIES. On the Effective Time Consultant will
become a Director of PCBG and shall continue as Chairman of Banklink.
Consultant will be entitled to receive monthly Board and Committee fees or other
forms of consideration for outside Directors, payable to either Consultant or
his designee, at Consultant's sole discretion. In the event that Consultant
resigns as a member of the Board of Directors of PCBG, such Director fees or
other forms of
consideration shall terminate at such time. In the event that PCBG requests
the resignation of Consultant as a member of the Board of Directors of PCBG
or removes Consultant as a Director of PCBG before the third anniversary of
the Effective Date, PCBG shall pay Consultant an amount equal to the monthly
Director and Committee fees, or other forms of compensation, times
thirty-six, minus the number of payments previously paid. Such payment will
be made immediately upon notification that Consultant shall no longer be a
Director of PCBG.
1.3 HEALTH/MEDICAL BENEFITS. From the Effective Time until the third
anniversary of the Effective Time, or so long as Consultant remains a director
of PCBG, Consultant shall be entitled to participate in the health/medical
benefit program of Bank provided to outside Directors which is in place at the
Effective Time.
1.4 INCENTIVE COMPENSATION. From the Effective Time to the third
anniversary of the Effective Time Consulting Co. shall be entitled to additional
incentive compensation for each new data service customer which executes a data
service contract with Bank, Banklink or their affiliates. Such incentive
compensation shall be $10,000 for each financial institution signing a contract
with total assets of up to $50 million, $15,000 for each financial institution
signing a contract with total assets between $50 million and $100 million and
$20,000 for each financial institution signing a contract with total assets over
$100 million. Such incentive compensation shall be paid by Bank and/or PCBG
and/or Banklink within five days of the execution of such new data service
contract, the form and contents of which shall be determined by and approved by
PCBG and/or the Board of Directors of Banklink.
1.5 OTHER BENEFITS. As part of Consulting Co.'s consulting services,
Consulting Co. shall be entitled to reimbursement for all reasonable
entertainment expenses incurred by Consulting Co. in connection with business
development activities for PCBG or Banklink subject to satisfactory evidence of
such expenses, not to excess $500 per month unless previously authorized by the
Chairman of PCBG or the Board of Directors of Banklink, as appropriate.
Furthermore, Consulting Co. will be able to utilize office space of Bank and/or
PCBG or Banklink during the term of this consulting agreement.
1.6 NONDISCLOSURE. Neither Consulting Co. nor Consultant shall at any
time disclose, use, transfer or sell any confidential information or proprietary
data of Bank, Banklink, PCBG or its shareholders so long as such information or
proprietary data remains confidential and has not been disclosed or is not
otherwise in the public domain, except as required by law or pursuant to the
legal process.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CONSULTANT
2.1 PERFORMANCE OF OBLIGATIONS. Consulting Co. and Consultant represent
and warrant to Bank and/or PCBG that execution, delivery and performance of this
Agreement will not result in or constitute a breach of or conflict with any
term, covenant, condition or provision of any
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commitment, contract or other agreement or instrument, including, without
limitation, any other employment agreement, to which Consulting Co. or
Consultant is or has been a party.
2.2 RESIGNATION. At the Effective Time Consultant shall resign as
President and Chief Executive Officer and Director but continue as an employee
of Bank until the end of such month, and be paid at each normal pay period as
per existing bank payroll policy. Consultant agrees and acknowledges that as of
the end of such month, his employment with Bank shall automatically cease and he
shall not continue as an employee of Bank.
2.3 INDEMNIFICATION. Consulting Co. and Consultant shall indemnify,
defend, and hold harmless Bank and PCBG, its directors, officers,
representatives and agents, for, from and against any and all losses, claims,
suits, damages, expenses or liabilities, including court costs and counsel fees,
which Bank and/or PCBG has incurred or to which Bank and/or PCBG may become
subject, insofar as such losses, claims, suits, damages, expenses, liabilities,
costs or fees arise out of or are based upon any failure of any representation
or warranty of Consulting Co. or Consultant in Section 2.1 hereof to be true and
correct when made.
ARTICLE III
GENERAL
3.1 GOVERNING LAW. This Agreement is governed by and is to be construed
and enforced in accordance with the laws of the State of California. If under
such law, any portion of this Agreement is at any time deemed to be in conflict
with any applicable statute, rule, regulation or ordinance, such portion shall
be deemed to be modified or altered to conform thereto or, if that is not
possible, to be omitted from this Agreement; the invalidity of any such portion
shall not affect the force, effect and validity of the remaining portion hereof.
3.2 NOTICES. All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person, or forty-eight (48) hours
after deposit thereof in the U.S. mails, postage prepaid, for delivery as
requested or certified mail, addressed, in the case of:
Consulting Co. and Consultant, to:
Xxxxx X. Xxxxx
000 Xxxxxxx Xxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Bank, to:
The Bank of Hemet
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. E. Xxxx Xxxxxxx, Chairman
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With a copy to:
Mr. E. Xxxx Xxxxxxx
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
3.3 ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
among Bank, PCBG, Consulting Co. and Consultant with respect to the subject
matter hereof and supersedes and cancels all prior written and oral agreements
and understandings with respect to the subject matter of this Agreement, which
shall be interpreted consistently herewith; provided that prior to the Effective
Time, any agreement between Bank, Consulting Co. and Consultant shall remain in
effect and shall not be superseded by this Agreement. This Agreement may be
amended but only by a subsequent written agreement of the parties. This
Agreement shall be binding upon and shall inure to the benefit of Consulting Co.
and Consultant, Consultant's heirs, executors, administrators and beneficiaries,
Bank and/or PCBG and each of their respective successors.
3.4 WITHHOLDING TAXES. All amounts payable to Consulting Co. under this
Agreement shall be subject to applicable income, wage and other taxes, which
shall be the responsibility of Consulting Co. Bank and/or PCBG will not be
responsible for the withholding of any deductions.
3.5 EFFECT OF AGREEMENT. This Agreement shall have no effect until the
Effective Time. In the event that the Reorganization Agreement is terminated,
this Agreement shall automatically terminate.
3.6 DISPUTE RESOLUTION. In the event of a dispute between Bank and
Consulting Co. as to the amount due Consulting Co. under section 1.4 of this
Agreement, the Bank and Consulting Co. shall each provide the other with an
accounting of the amounts each asserts are due. The parties shall then identify
any disputes they have with the other's accounting. Upon identification of any
disputed items, the parties shall attempt to agree upon the amount due to
Consulting Co. within seven days. If no mutual agreement is reached within said
period, the parties shall have their respective accounting firms attempt to
agree upon the correct amount due Consultant, within seven days thereafter. If
the accounting firms are unable to reach a mutual agreement, within said period,
the parties shall agree to an independent "Big Six" accounting firm to resolve
any remaining items that have not been agreed upon, and the opinion of such
accounting firm shall be binding upon the parties for the purposes of this
Agreement. The parties shall cooperate fully with each other and the accounting
firms. The cost of the expert shall be paid by the Bank. Any dispute regarding
this Agreement shall only be heard and resolved in a court of competent
jurisdiction located in the County of Riverside, California.
3.7 LEGAL COSTS. If either party commences an action against the other
party arising or in connection with this Agreement, the prevailing party shall
be entitled to have and recover from the losing party reasonable attorney's fees
and costs of suit.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
year and day first above written.
THE BANK OF HEMET
By________________________________________
Its________________________________________
XXXXX & ASSOCIATES, LLC
_____________________________________________
XXXXX X. XXXXX
_____________________________________________
AGREED TO:
PACIFIC COMMUNITY BANKING GROUP
________________________________________
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