EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (THE “AGREEMENT”) IS ENTERED INTO AS OF JULY 27, 2006 (THE “EFFECTIVE DATE”), BY AND BETWEEN HERITAGE BANK OF COMMERCE, A CALIFORNIA BANKING CORPORATION (THE “BANK”) AND RICHARD HAGARTY, AN INDIVIDUAL...
Exhibit
99.1
THIS
EMPLOYMENT AGREEMENT (THE “AGREEMENT”)
IS
ENTERED INTO AS OF JULY 27, 2006 (THE “EFFECTIVE
DATE”),
BY
AND BETWEEN HERITAGE BANK OF COMMERCE, A CALIFORNIA BANKING CORPORATION (THE
“BANK”)
AND
XXXXXXX XXXXXXX, AN INDIVIDUAL (THE “EXECUTIVE”).
RECITALS
WHEREAS,
THE BOARD OF DIRECTORS OF THE BANK
HAS
APPROVED AND AUTHORIZED THE ENTRY INTO THIS AGREEMENT WITH THE EXECUTIVE;
AND
WHEREAS,
THE PARTIES DESIRE TO ENTER INTO THIS AGREEMENT TO SET FORTH THE TERMS AND
CONDITIONS FOR THE EMPLOYMENT RELATIONSHIP OF THE EXECUTIVE WITH THE
BANK.
AGREEMENT
NOW,
THEREFORE, IN CONSIDERATION OF THE PROMISES AND MUTUAL COVENANTS AND AGREEMENTS
HEREIN CONTAINED AND INTENDING TO BE LEGALLY BOUND HEREBY, THE BANK
AND
THE EXECUTIVE HEREBY AGREE AS FOLLOWS:
1. Employment.
1.1 Title.
The
Executive is employed as Executive Vice President/Chief Credit Officer of the
Bank. In this capacity, the Executive shall have such duties and
responsibilities as may be designated to him by the President of the Bank and
in
accordance with the objectives or policies of the Board of Directors, from
time
to time, in connection with the business activities of the Bank.
1.2 Full-Time
Employment.
During
the Term (as defined in Section 2),
and
excluding any period of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote his full attention and time during
normal business hours to the business and affairs of the Bank in a manner and
with such results as are consistent with his position and compensation and
to
use the Executive’s best efforts to perform such responsibilities. During the
Term it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions
and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive’s responsibilities as an
employee of the Bank in accordance with this Agreement.
1.3 Standard.
The
Executive will set a high standard of professional conduct given his role with
the Bank and his responsibility relative to the Bank’s presence and stature in
the community. The Executive will, at all times, emulate this high professional
standard of conduct in order to develop and enhance the Bank’s reputation and
image. The Executive will comply with all applicable rules, policies and
procedures of the Bank and any of its subsidiaries and all pertinent regulatory
standards as may affect the Bank.
1.4 Location.
The
Executive shall provide services for the Bank at its principal executive offices
located in San Jose California.
The
Executive agrees that the Executive will be regularly present at the Bank’s
principal executive offices and that the Executive may be required to travel
from time to time in the course of performing the Executive’s duties for the
Bank.
1.5 No
Breach of Contract.
The
Executive hereby represents to the Bank that: (i) the execution and
delivery of this Agreement by the Executive and the performance by the Executive
of the Executive’s duties hereunder shall not constitute a breach of, or
otherwise contravene, the terms of any other agreement or policy to which the
Executive is a party or by which he is otherwise bound; (ii) that the
Executive has no information (including, without limitation, confidential
information or trade secrets) of any other person or entity which the Executive
is not legally and contractually free to disclose the Bank; and (iii) that
the Executive is not bound by any confidentiality, trade secret or similar
agreement (other than this Agreement) with any other person or
entity.
2. Term.
The
Bank
hereby agrees to employ and continue in its employ the Executive, and the
Executive hereby accepts such employment and agrees to remain in the employ
of
the Bank, for the period commencing on the date of this Agreement and extending
until this Agreement is terminated in accordance with the provisions of
Section 6 below.
3. Compensation.
3.1 Salary.
Subject
to the further provisions of this Agreement, the Bank shall pay the Executive
a
salary at an annual rate equal to $152,000 which will be paid in accordance
with
the Bank’s normal payroll procedures. Participation in deferred compensation,
discretionary or performance bonus, retirement, stock option and other employee
benefit plans and in fringe benefits shall not reduce the annual
rate.
3.2 Bonus.
The
Executive shall be eligible, for each calendar year ending during the Term
of
this Agreement (prorated for partial years), an annual bonus (the “Annual
Bonus”)
under
the Heritage Commerce Corp (“HCC”) Management Incentive Plan (the “Incentive
Plan”)
or
comparable alternate plan, subject to the terms, conditions and limitations
of
the Incentive Plan.
3.3 Participation
in Employee Benefit Plans.
During
the Term of this Agreement, the Executive and/or the Executive’s family, as the
case may be, shall be eligible to participate in and shall receive all benefits
(pension, thrift, profit sharing, life insurance, medical coverage, disability,
medical, dental and vision, or other retirement or employee benefits) under
employee benefit plans, practices, policies and programs provided by the Bank
to
the extent applicable generally to other executives in comparable positions
with
the Bank.
(a) 401(k).
HCC
maintains a 401(k) plan for its eligible employees. Subject to the terms and
conditions set forth in the official plan documents, the Executive will be
eligible to enroll in the 401(k) plan, and shall receive a matching contribution
in accordance with the terms of the 401(k) plan from HCC.
(b) Employee
Stock Ownership Plan.
The
Executive shall have the option to participate in the HCC’s Employee Stock
Ownership Plan on the same basis as other executives in comparable positions
with the Bank.
(c) Other.
The
Executive’s eligibility and all other terms and conditions of the Executive’s
participation in the Bank’s benefit, insurance and disability plans and programs
will be governed by the official plan documents which may change from
year-to-year. Notwithstanding the foregoing, at a minimum the Executive shall
be
entitled to the same benefits as all other executives in comparable positions
with the Bank.
3.4 2004
Stock Option Plan.
Any
future grant of stock option to the Executive pursuant to the terms of the
HCC’s
2004 Stock Option Plan (the “2004 Plan”), shall be determined by and in the sole
discretion of the Board of Directors of HCC. The exercise price will be the
Fair
Market Value for the HCC’s Common Stock on the date of grant as defined in the
2004 Plan. The Executive’s options will vest in daily increments of 1/1460th
from the date of grant until fully vested and shall expire ten years from the
date of grant. All such options shall be subject to the terms and conditions
of
the 2004 Plan and shall be conditioned upon the Executive’s execution of an
option agreement with HCC in a form specified by HCC.
3.5 Supplemental
Executive Retirement Plan.
HCC
maintains a Supplemental Executive Retirement Plan (“SERP”)
for
its executive officers. Subject to the terms and conditions set forth in the
official plan documents, the Executive will be eligible to receive an annual
benefit of up to $50,000 payable monthly commencing one month after the
Executive’s sixty-second birthday. All terms and conditions of the Executive’s
participation in the SERP will be governed by the official plan documents.
3.6 Business
Expenses.
During
the Term of this Agreement, the Executive shall be entitled to incur and be
reimbursed for all reasonable business expenses. The Bank agrees that it will
reimburse the Executive for all such expenses upon the presentation by the
Executive, from time to time, of an itemized account of such expenditures
setting forth the date, the purposes for which incurred, and the amounts
thereof, together with such receipts showing payments in conformity with the
Bank’s established policies. Reimbursement shall be made within a reasonable
period after the Executive’s submission of an itemized account in accordance
with the Bank’s policies.
3.7 Fringe
Benefits.
During
the Term of this Agreement, the Executive shall be entitled to receive the
following fringe benefits:
(a) a
monthly
auto allowance of $500 per month plus gasoline;
(b) such
other fringe benefits, commensurate with those available to other executives
in
comparable positions with the Bank in accordance with the policies of Bank
as in
effect from time to time.
3.8 Vacations.
During
the Term of this Agreement, the Executive shall be entitled to paid vacation
in
accordance with the most favorable plans, policies, programs and practices
of
the Bank as in effect for the Executive or for other executives in comparable
positions with the Bank; provided,
however,
that
the Executive shall be entitled to earn paid vacation at the rate of not less
than 22 days vacation days for each calendar year, of which at least 10 days
must be taken consecutively. Vacation may be accrued up to a maximum of 30
days
of earned vacation. Once this maximum is reached, the Executive shall cease
to
earn or accrue vacation unless and until the Executive takes vacation and the
Executive’s accrued vacation has dropped below the maximum accrual level, at
which time the Executive shall recommence to earn and accrue paid vacation.
The
date or dates of vacation shall be determined by the Executive and the
President, and will be subject to the Bank's business requirements.
4. Indemnity.
The
Bank shall indemnify and hold the Executive harmless from any cost, expense
or
liability arising out of or relating to any acts or decisions made by the
Executive on behalf of or in the course of performing services for the Bank
to
the same extent the Bank indemnifies and holds harmless other executive officers
and directors of the Bank and in accordance with the Bank’s articles of
incorporation, bylaws and established policies.
5. Certain
Terms Defined.
For
purposes of this Agreement:
5.1 “Accrued
Obligations”
means
the sum of the Executive’s Base Salary and accrued vacation through the Date of
Termination to the extent not theretofore paid, outstanding expense
reimbursements and any compensation previously deferred by the Executive to
the
extent not theretofore paid.
5.2 “Base
Salary”
means,
as of any Date of Termination of employment, the highest annual salary of the
Executive in any of the last three years preceding such Date of
Termination.
5.3 “Cause”
shall
mean (i) the Executive willfully breaches or habitually neglects the duties
which the Executive is required to perform under this Agreement; (ii) the
Executive commits an intentional act of moral turpitude that has a material
detrimental effect on the reputation or business of the Bank; (iii) the
Executive is convicted of a felony or commits any material and actionable act
of
dishonesty, fraud, or intentional material misrepresentation in the performance
of the Executive’s duties under this Agreement; (iv) the Executive engages
in an unauthorized disclosure or use of inside information, trade secrets or
other confidential information; or (v) the Executive breaches a fiduciary
duty, or willfully and materially violates any other duty, law, rule, regulation
or policy of the Bank or an affiliate. If the Bank decides to terminate the
Executive’s employment for Cause, the Bank will provide the Executive with
notice specifying the grounds for termination, accompanied by a brief written
statement stating the relevant facts supporting such grounds.
5.4 “Change
of Control”
shall
mean:
(a) the
acquisition by any individual, entity, or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”)
(a
“Person”)
of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 40% or more of either (i) the then outstanding shares of common
stock of HCC (the “Outstanding
HCC Common Stock”
or
(ii)
the combined voting power of the then outstanding voting securities of the
HCC
entitled to vote generally in the election of directors (the “Outstanding
HCC Voting Securities”);
provided,
however,
that
for purposes of this Subsection (a),
the
following acquisitions shall not constitute a Change of Control; (i) any
acquisition directly from the HCC, (ii) any acquisition by the HCC that reduces
the number of shares issued and outstanding through a stock repurchase program
or otherwise, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the HCC or any corporation controlled by
the
HCC or (iv) any acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of Subsection (c)
of this
Section 5.4;
or
(b) a
majority of the individuals who, as of the Effective Date, constitute the Board
(the “Incumbent
Board”)
cease
for any reason other than resignation, death or disability to constitute at
least a majority of the Board; provided,
however,
that
any individual becoming a director subsequent to the Effective Date whose
election, or nomination for election by the HCC’s shareholders, was approved by
a vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of
a
Person other than the Board; or
(c) consummation
of a reorganization, merger or consolidation or sale or other disposition of
all
or substantially all of the assets of the HCC (a “Business
Combination”),
in
each case, unless, following such Business Combination, (i) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding HCC Common Stock and Outstanding HCC Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors,
as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the HCC or all or substantially all of the HCC’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding HCC Common Stock and Outstanding HCC Voting Securities,
as
the case may be, (ii) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
HCC
or such corporation resulting from such Business Combination) beneficially
owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination, and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution
of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) approval
by the shareholders of the HCC of a complete liquidation or dissolution of
the
HCC.
5.5 “Code”
means
the Internal Revenue Code of 1986, as amended and any successor provisions
to
such sections.
5.6 “Common
Stock”
means
shares of HCC’s common stock, no par value.
5.7 “Date
of Termination”
means
(i) if the Executive’s employment is terminated due to the Executive’s death,
the Date of Termination shall be the date of death; (ii) if the Executive’s
employment is terminated due to Disability, the Date of Termination is the
Disability Effective Date; (iii) if the Executive’s employment is terminated by
the Bank for Cause, the Date of Termination is the date on which the Bank gives
notice to the Executive of such termination; (iv) if the Executive’s employment
is terminated by the Bank without Cause or by the Executive, the Date of
Termination shall be the date specified in the notice of termination (which
date
shall not be more than 30 days after the date on which such notice of
termination is given); and (v) if the Executive’s employment terminates for any
other reason, the Date of Termination shall be the Executive’s final date of
employment.
5.8 “Disability”
shall
mean a physical or mental condition of the Executive which occurs and persists
and which, in the written opinion of a physician selected by the Bank or its
insurers and acceptable to the Executive or the Executive’s legal
representative, and, in the written opinion of such physician, the condition
will render the Executive unable to return to his duties for an indefinite
period of not less than 90 days.
6. Termination.
6.1 This
Agreement may be terminated for the following reasons:
(a) Death.
This
Agreement shall terminate automatically upon the Executive’s death.
(b) Disability.
In the
event of the Executive’s Disability, the Bank may give the Executive a notice of
termination. In such event, the Executive’s employment with the Bank shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”) provided that within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive’ duties.
(c) Cause.
The
Bank may terminate the Executive for Cause.
(d) Without
Cause.
The
Bank may terminate the Executive without Cause.
(e) Voluntary
Termination By Executive.
The
Executive may terminate this Agreement and his employment with the Bank with
or
without cause.
6.2 Certain
Benefits upon Termination.
(a) Termination
without Cause.
If,
during the Term, the Bank shall terminate the Executive’s employment for any
reason other than Cause, death or Disability, the Bank shall pay to the
Executive in a lump sum in cash within 30 days after the Date of Termination
the
aggregate of the following amounts:
(i) the
Accrued Obligations;
(ii) the
amount equal to nine (9) months of Employee’s aggregate annual compensation
[including nine months of the highest Annual Bonus paid or payable, including
any bonus or portion thereof which has been earned but deferred (and annualized
for any year during which the Executive was employed for less than twelve full
months), for the most recently completed three years during the Term, if any];
and
(iii) For
nine
(9) months after the Executive’s Date of Termination, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or
policy, the Bank shall continue benefits to the Executive and/or the Executive’s
family at least equal to those which would have been provided to them in
accordance with the plans, programs, practices and policies described in Section
3.2
of this
Agreement if the Executive’s employment had not been terminated, but not less
favorable than that provided to other executives in comparable positions with
the Bank; provided,
however,
the
Bank’s obligation hereunder with respect to the foregoing benefits shall be
limited to the extent that the Executive obtains any such benefits pursuant
to a
subsequent employer’s benefit plans, in which case the Bank may reduce the
coverage of any benefits it is required to provide the Executive hereunder
so
long as the aggregate coverages and benefits of the combined benefit plans
is no
less favorable to the Executive than the coverages and benefits required to
be
provided hereunder.
(b) Termination
and Change of Control.
If,
during the Term, the Bank shall terminate the Executive’s employment without
Cause in connection with a Change of Control and such termination occurs within
120 days before or 12 months following a Change of Control, the Bank shall
pay
to the Executive in a lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
(i) the
Accrued Obligations;
(ii) the
amount equal to fifteen (15) months of Employee’s aggregate annual compensation
[including fifteen (15) months of the highest Annual Bonus paid or payable,
including any bonus or portion thereof which has been earned but deferred (and
annualized for any year during which the Executive was employed for less than
twelve full months), for the most recently completed three years during the
Term, if any]; and
(iii) for
fifteen (15) months after the Executive’s Date of Termination, or such longer
period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Bank shall continue benefits to the Executive and/or
the
Executive’s family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described
in
Section 3.2
of this
Agreement if the Executive’s employment had not been terminated, but not less
favorable than that provided to other executives in comparable positions with
the Bank; provided,
however,
the
Bank’s obligation hereunder with respect to the foregoing benefits shall be
limited to the extent that the Executive obtains any such benefits pursuant
to a
subsequent employer’s benefit plans, in which case the Bank may reduce the
coverage of any benefits it is required to provide the Executive hereunder
so
long as the aggregate coverages and benefits of the combined benefit plans
is no
less favorable to the Executive than the coverages and benefits required to
be
provided hereunder.
(c) Death.
If the
Executive’s employment terminates during the Term by reason of the Executive’s
death, this Agreement shall terminate without further obligations to the
Executive’s legal representatives under this Agreement, other than for payment
of Accrued Obligations and any Bonus Award for the year in which the death
occurred prorated through the Date of Termination. Accrued Obligations shall
be
paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination; provided,
however,
that
payment may be deferred until the Executive’s executor or personal
representative has been appointed and qualified pursuant to the laws in effect
in the Executive’s jurisdiction of residence at the time of the Executive’s
death. The Executive’s estate and/or beneficiaries shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the Bank
to
the estate and beneficiaries of other executives in comparable positions with
the Bank under such plans, programs, practices and policies relating to death
benefits, if any as in effect on the date of the Executive’s death.
(d) Disability.
If the
Executive’s employment terminates during the Term by reason of the Executive’s
Disability, this Agreement shall terminate without further obligations to the
Executive under this Agreement, other than for payment of Accrued Obligations
and any Bonus Award for the year in which the termination occurs prorated
through the Date of Termination.
(e) Cause/Voluntary
Termination.
If the
Executive’s employment terminates for Cause during the Term, this Agreement
shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive the Accrued Obligations. If the Executive’s
employment terminates due to the Executive voluntarily termination during the
Term, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive the Accrued
Obligations.
(f) Single
Trigger Event.
The
provisions for payments contained in this Section 6.2
may be
triggered only once during the term of this Agreement, so that, for example,
should the Executive be terminated because of a Disability and should there
thereafter be a Change of Control, then the Executive would be entitled to
be
paid only under Section 6.2(d)
and not
under Section 6.2(b)
as well.
In addition, the Executive shall not be entitled to receive severance benefits
of any kind from any parent, wholly owned subsidiary or other affiliated entity
of the Bank if in connection with the same event of series of events the
payments provided for in this Section 6.2
have
been triggered.
7. Assignment.
This
Agreement will inure to the benefit of and be binding upon the Bank and any
of
its successors and assigns. In view of the personal nature of the services
to be
performed under this Agreement by the Executive, the Executive will not have
the
right to assign or transfer any of his rights, obligations or benefits under
this Agreement. The Bank will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all
of
the business and/or assets of the Bank to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Bank would
be
required to perform it if no such succession had taken place. As used in this
Agreement, “Bank” shall mean the Bank as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
8. Confidential
Information.
During
the Term of this Agreement and thereafter, the Executive shall not, except
as
may be required to perform his duties hereunder or as required by applicable
law, disclose to others for use, whether directly or indirectly, any
Confidential Information regarding the Bank, HCC or any subsidiary or affiliate
thereof (“Bank
Group”).
“Confidential
Information”
shall
mean information about the Bank Group, its respective clients and customers
that
is not available to the general public and that was learned by the Executive
in
the course of his employment by the Bank, including (without limitation) any
data, formulae, information, proprietary knowledge, trade secrets and client
and
customer lists and all papers, resumes, records and the documents containing
such Confidential Information. The Executive acknowledges that such Confidential
Information is specialized, unique in nature and of great value to the Bank
Group, and that such information gives the Bank Group a competitive advantage.
Upon the termination of his employment, the Executive will promptly deliver
to
the Bank all documents (and all copies thereof) containing any Confidential
Information.
8.1 Noncompetition.
The
Executive agrees that during the Term of this Agreement, he will not, directly
or indirectly, without the prior written consent of the Bank, provide
consultative service with or without pay, own, manage, operate, join, control,
participate in, or be connected as a stockholder, partner, or otherwise with
any
business, individual, partner, firm, corporation, or other entity which is
then
in competition with the Bank or any present affiliate of the Bank; provided,
however,
that
the “beneficial ownership” by the Executive, either individually or as a member
of a “group,” as such terms are used in Regulation 13D of the Exchange Act, of
not more than 1% of the voting stock of any publicly held corporation shall
not
be a violation of this Agreement. It is further expressly agreed that the Bank
will or would suffer irreparable injury if the Executive were to compete with
the Bank or any subsidiary or affiliate of the Bank in violation of this
Agreement and that the Bank would by reason of such competition be entitled
to
injunctive relief in a court of appropriate jurisdiction, and the Executive
further consents and stipulates to the entry of such injunctive relief in such
a
court prohibiting the Executive from competing with the Bank or any subsidiary
or affiliate of the Bank in violation of this Agreement.
8.2 Right
to Bank Materials.
The
Executive agrees that all lists, materials, books, files, reports,
correspondence, records, and other documents (“Bank
Materials”)
used,
prepared, or made available to the Executive, shall be and shall remain the
property of the Bank. Upon the termination of his employment, all Bank Materials
shall be returned immediately to the Bank, and the Executive shall not make
or
retain any copies thereof.
8.3 Anti-solicitation.
The
Executive promises and agrees that during the Term of this Agreement, and,
for a
period of one (1) year thereafter, he will not influence or attempt to influence
customers, franchisees, landlords, or suppliers of the Bank or any of its
present or future subsidiaries or affiliates, either directly or indirectly,
to
divert their business to any individual, partnership, firm, corporation or
other
entity then in competition with the business of the Bank, or any subsidiary
or
affiliate of the Bank.
9. Soliciting
Employees.
The
Executive promises and agrees that during the Term of this Agreement and for
a
period of one (1) year thereafter, the Executive will not, directly or
indirectly, individually or as a consultant to, or as an employee, officer,
stockholder, director or other owner of or participant in any business, solicit
(or assist in soliciting) any person who is then, or at any time within six
(6)
months prior thereto was, an employee of the Bank who earned annually $25,000
or
more as an employee of the Bank during the last six (6) months of his or her
own
employment to work for (as an employee, consultant or otherwise) any business,
individual, partnership, firm, corporation, or other entity whether or not
engaged in competitive business with any entity in the Bank Group.
10. American
Jobs Creation Act of 2004.
In the
event that either party after consultation with its or his tax adviser
reasonably determines that any item payable by the Bank to the Executive would
be, or is reasonably likely to be, pursuant to Section 409A of the Code, as
amended by the American Jobs Creation Act of 2004, P.L. 108-357 or any
regulations promulgated thereunder includible in the Executive’s gross income in
a taxable year before the year(s) in which the Executive actually receives
the
item, such party shall notify the other party in writing. Any such notice shall
specify: (a) in reasonable detail the basis and reasons for such party’s
determination; (b) any Internal Revenue Service notices, regulations, revenue
rulings or procedures, or other authority for the party’s determination; and (c)
any proposed amendment(s) to this Agreement that the notifying party believes
would prevent the inclusion of such item in a tax year before the Executive’s
actual year of receipt of such item of income. If such notification specifies
proposed amendment(s) to this Agreement, the parties agree to negotiate in
good
faith the terms and conditions of an amendment to this Agreement. Provided,
however, nothing
in this Section 10
shall be
construed or interpreted to require the Bank to increase any amounts payable
to
the Executive pursuant to this Agreement or to consent to any amendment that
would materially and adversely change the Bank’s financial accounting or tax
treatment of the payments to the Executive under this Agreement.
11. Miscellaneous.
11.1 Notice.
For the
purpose of this Agreement, notices and all other communications provided for
in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other addresses as either party may have furnished
to
the other in writing in accordance herewith, except that notice of a change
of
address shall be effective only upon actual receipt:
Company:
HERITAGE
BANK OF COMMERCE
000 Xxxxxxx Xxxx
Xxx Xxxx, Xx 00000
Attn:
President and Chief Executive Officer
with a copy to: Buchalter,
Nemer, Fields & Younger
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attn:
Xxxx X. Xxxxxxxxx, Esq.
Executive:
Xxxxxxx Xxxxxxx
000
Xxxxxxx Xxxxxxxxx
Xxx
Xxxx,
XX 00000
11.2 Amendments
or Additions.
No
amendment, modification or additions to this Agreement shall be binding unless
in writing and signed by both parties hereto.
11.3 Section
Headings.
The
section headings used in this Agreement are included solely for convenience
and
shall not affect, or be used in connection with, the interpretation of this
Agreement.
11.4 Severability.
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
11.5 Counterparts.
This
Agreement may be executed in counterparts, each of which shall be deemed to
be
an original, but both of which together will constitute one and the same
instrument.
11.6 Mediation.
Prior
to engaging in any legal or equitable litigation or other dispute resolution
process, regarding any of the terms and conditions of this Agreement between
the
parties, or concerning the subject matter of the Agreement between the parties,
each party specifically agrees to engage in good faith, in a mediation process
at the expense of the Bank, complying with the procedures provided for under
California Evidence Code Sections 1115 through and including 1125, as then
currently in effect. The parties further and specifically agree to use their
best efforts to reach a mutually agreeable resolution of the matter. The parties
understand and specifically agree that should any party to this Agreement refuse
to participate in mediation for any reason, the other party will be entitled
to
seek a court order to enforce this provision in any court of appropriate
jurisdiction requiring the dissenting party to attend, participate, and to
make
a good faith effort in the mediation process to reach a mutually agreeable
resolution of the matter.
11.7 Arbitration.
To the
extent not resolved through mediation as provided in Section 11.6, any
controversy arising out of or relating to the Executive’s employment (whether or
not before or after the expiration of the Term of employment), any termination
of the Executive’s employment, this Agreement, the enforcement or interpretation
of any such an agreement, or because of an alleged breach, default, or
misrepresentation in connection with any of the provisions of such an agreement,
including (without limitation) any state or federal statutory claims, shall
be
submitted to arbitration in San Xxxx County, California, before a sole
arbitrator (the “Arbitrator”) selected from judicial arbitration mediation
services (“JAMS”), or if JAMS is no longer able to supply the arbitrator, such
arbitrator shall be selected from the American Arbitration Association (“AAA”),
and shall be conducted in accordance with the provisions of California Code
of
Civil Procedure §§ 1280 et seq. as the exclusive remedy of such dispute;
provided, however, that provisional injunctive relief may, but need not, be
sought in a court of law while arbitration proceedings are pending, and any
provisional injunctive relief granted by such court shall remain effective
until
the matter is finally determined by the Arbitrator. Final resolution of any
dispute through arbitration may include any remedy or relief that the Arbitrator
deems just and equitable, including any and all remedies provided by applicable
state or federal statutes. At the conclusion of the arbitration, the Arbitrator
shall issue a written decision that sets forth the essential findings and
conclusions upon which the Arbitrator’s award or decision is based. Any award or
relief granted by the Arbitrator hereunder shall be final and binding on the
parties hereto and may be enforced by any court of competent
jurisdiction.
11.8 THE
BANK
AND THE EXECUTIVE HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
OF
THE TRANSACTIONS CONTEMPLATED HEREIN. THE BANK AND THE EXECUTIVE REPRESENT
THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
11.9 Miscellaneous.
No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
Executive and such officer as may be specifically designated by the Board.
No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement
to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
11.10 Entire
Agreement.
This
Agreement embodies the entire agreement of the parties hereto respecting the
matters within its scope. This Agreement supersedes all prior and
contemporaneous agreements of the parties hereto that directly or indirectly
bears upon the subject matter hereof. Any prior negotiations, correspondence,
agreements, proposals or understandings relating to the subject matter hereof
shall be deemed to have been merged into this Agreement, and to the extent
inconsistent herewith, such negotiations, correspondence, agreements, proposals,
or understandings shall be deemed to be of no force or effect. There are no
representations, warranties, or agreements, whether express or implied, or
oral
or written, with respect to the subject matter hereof, except as expressly
set
forth herein.
11.11 Governing
Law.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of California without regard to its
conflicts of law principles.
11.12 Withholding.
Any
payments provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law.
11.13 Attorney
Fees.
In the
event of any action, suit or proceeding brought under or in connection with
this
Agreement,
the
prevailing party therein shall be entitled to recover, and the other party
hereto agrees to pay, the prevailing party’s costs and expenses in connection
therewith, including reasonable attorneys’ fees.
11.14 Survival.
The
provisions of this Agreement that may be reasonably interpreted as surviving
termination of this Agreement, including Sections 8.1, 8.2, 8.3, 10.6, 10.7,
10.8, 10.10, 10.11, 10.12, 11.6, 11.7 and 11.8 shall continue in effect after
termination of this Agreement.
IN
WITNESS WHEREOF, EACH OF THE PARTIES HERETO HAS EXECUTED THIS AGREEMENT ON
THE
DATE FIRST INDICATED ABOVE.
COMPANY:
HERITAGE
BANK OF
COMMERCE
a
California banking
corporation
By:
______________________
Xxxxxx
X. Xxxxxxxxx,
President
and Chief
Executive Officer
EXECUTIVE:
By:
______________________
Xxxxxxx
Xxxxxxx,
Executive
Vice President / Chief Credit Officer
