Exhibit 10.11
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into as of
the ___ day of ________ , 1998, by and among ELDORADO BANK, a California banking
corporation (the "Bank"), and ___________, the [office] of the Bank
____________________
("Officer").
R E C I T A L S :
A. WHEREAS, the Bank is a wholly owned subsidiary of Commerce
Security Bancorp, Inc., a Delaware corporation (the "Company");
B. WHEREAS, Officer is the [office] and a
___________________________
current employee of the Bank; and
C. WHEREAS, it is deemed to be in the best interest of the Bank
and the Company to take appropriate steps to provide severance arrangements
under certain circumstances to certain officers who remain employees of the
Bank;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, it is agreed as
follows:
1. Definitions. For purposes of this Agreement, the following
terms when used in this Agreement shall have the meanings set forth below:
(a) "Cause" shall mean Officer, after the date of this
Agreement, (i) has been convicted by a court of competent jurisdiction
of any criminal offense involving dishonesty, breach of trust or
misappropriation, or has entered a plea of nolo contendere to such an
offense; or (ii) has committed an act of fraud, embezzlement, theft, or
any act which would cause termination of coverage under the Bank's
Banker's Blanket Bond as to Officer (as distinguished from termination
of coverage as to the Bank as a whole); or (iii) has committed a
willful violation of the Bank's Code of Conduct or any law, rule or
regulation governing the operation of the Bank or any of its affiliates
or the insurance of deposits held by the Bank (A) which is a felony or
misdemeanor, or (B) which the Board of Directors of the Bank determines
in good faith will likely have or has had a material adverse effect on
the business, interests or reputation of the Bank or any of its
affiliates; or (iv) has committed a willful and unauthorized disclosure
of material confidential information regarding the Bank or any of its
subsidiaries or affiliates, which disclosure the Board of Directors of
the Company determines in good faith will likely have or has had a
material adverse effect on the Bank or any of its subsidiaries or
affiliates.
(b) "Change of Control" shall mean any transaction or series
of related transactions as a result of which
(i) the Company consummates a reorganization, merger or
consolidation of the Company, or sale or other disposition of
all or substantially all of the assets of the Company (each a
"Business Combination"), in each case unless immediately
following the consummation of such Business Combination all of
the following conditions are satisfied: (x) Persons, who,
immediately prior to such Business Combination, were the
beneficial owners of the voting securities entitled to vote
generally in the election of directors of the Company (the
"Outstanding Voting Securities"), beneficially own (within the
meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended, the "1934 Act"), directly or
indirectly, more than one-third (1/3) 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 entity (the "Resulting Entity")
resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction
owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries);
(y) no Person (other than any limited partner of Dartmouth
Capital Group, L.P. or shareholder of Dartmouth Capital Group,
Inc., any employee benefit plan (or related trust) of the
Company or the Resulting Entity) beneficially owns (within the
meaning of Rule 13d-3), directly or indirectly, more than
twenty percent (20.0%) of, respectively, the then outstanding
shares of common stock of the Resulting Entity or the combined
voting power of the then Outstanding Voting Securities of the
Resulting Entity, except to the extent that such Person's
beneficial ownership of the Company immediately prior to the
Business Combination exceeded such threshold; and (z) at least
one-half (1/2) of the members of the board of directors of the
Resulting Entity were members of the Board of Directors of the
Company at the time the Company's Board of Directors
authorized the Company to enter into the definitive agreement
providing for such Business Combination; or
(ii) any Person (other than a limited partner of
Dartmouth Capital Group, L.P. or a shareholder of Dartmouth
Capital Group, Inc.) acquires beneficial ownership (within the
meaning of Rule 13d-3) of more than twenty percent (20.0%) of
the combined voting power (calculated as provided in Rule
13d-3 in the case of rights to acquire securities) of the then
Outstanding Voting Securities of the Company; provided,
however, that for purposes of this clause, the following
acquisitions shall not constitute a Change of Control: (x) any
acquisition directly from the Company, (y) any acquisition by
the Company and (z) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company
or any entity controlled by the Company.
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(c) "Disability of Officer" shall mean if Officer is Disabled
and such disability continues for a period of any six (6) months out of
a one (1) year period. "Disabled" shall mean Officer's inability,
through physical or mental illness or other cause, to perform normal
and customary duties which Officer is required to perform for the Bank.
In determining whether Officer is Disabled, the Bank may rely upon the
written statement provided by a licensed physician acceptable to the
Bank. Officer shall allow examination from time to time by any licensed
physician selected by the Bank and agreed to by Officer. All such
examinations will be conducted within a reasonable time period.
(d) "Good Reason" shall mean the occurrence of Officer (i)
being delegated or assigned duties by the Board of Directors (the
"Board") of the Bank or the Chief Executive Officer of the Bank by a
communication in writing which are substantially inconsistent with the
position and status held by Officer immediately prior to the effective
date of the Change of Control; or (ii) having had removed by the Board
or the Chief Executive Officer by a communication in writing such
authority and responsibility which is necessary to carry out the duties
of the position held by Officer immediately prior to the effective date
of the Change of Control; or (iii) having a substantial and adverse
alteration in the nature, status, or prestige of Officer's
responsibilities due to the action of the Board or the Chief Executive
Officer, which is verifiable by tangible evidence; or (iv) being
relocated to an office more than twenty-five (25) miles from the
location of the Bank's executive offices as in effect immediately prior
to the effective date of the Change of Control; or (v) having his or
her base compensation reduced by ten percent (10%) or more from such
base compensation in effect on the date immediately preceding the
effective date of the Change of Control. In addition, without limiting
the scope of the immediately preceding sentence, any action by the Bank
which would constitute a termination without cause within the meaning
of the Company's 1997 Stock Option Plan shall also constitute "Good
Reason" for purposes of this Agreement.
(e) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which definition shall include a "person" within the
meaning of Section 13(d)(3) of the Exchange Act.
(f) "Without Cause" shall mean any termination of Officer by
the Bank except for a termination (i) for Cause, (ii) as a result of
the death of Officer, or (iii) as a result of the Disability of
Officer.
2. Severance Payment.
(a) Except as provided in Section 2(b), if (i) Good Reason
exists within two
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(2) years following a Change of Control, and Officer gives written
notice to the Bank within ninety (90) days after the occurrence of such
Good Reason that Officer is terminating his or her employment with the
Bank for Good Reason, or (ii) the Bank terminates Officer Without Cause
within two (2) years following a Change of Control, and, in either
event, provided that Officer has delivered to Bank a General Release
and Confidentiality Agreement in the form of Exhibit "A" attached
hereto (the "Waiver and Release"), the Bank will pay Officer in a lump
sum an amount (the "Severance Payment") equal to twelve (12) times
Officer's base monthly salary as in effect either at the time of
termination or, if greater, immediately prior to the effective date of
the Change of Control. The Severance Payment shall be reduced by
required deductions for applicable taxes and other withholdings and for
any outstanding obligations owed by Officer to the Bank that are then
due and payable, which deductions and withholdings are specifically
authorized by Officer. The Severance Payment shall be in addition to
any sums to which Officer would be entitled without signing the Waiver
and Release. The Severance Payment will be paid not more than five (5)
calendar days after the "Effective Date" of the Waiver and Release as
provided therein. Each Change of Control and each Good Reason following
a Change of Control shall give Officer a separate right to give the
notice set forth in the first sentence of this paragraph 2.
(b) Notwithstanding any other provision of this Agreement, the
bank shall have no obligations to make the Severance Payment if such
Severance Payment is prohibited by applicable federal or state law,
including without limitation Part 359 of the regulations of the Federal
Deposit Insurance Corporation (12 CFR ss. 359 et seq.) or any successor
provision.
3. IRC Provisions. Notwithstanding any other provision of this
Agreement, in the event it is determined by the Bank in its reasonable
discretion that the payment of the Severance Amount to Officer would be
nondeductible by the Bank for federal income tax purposes because of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), the
Severance Payment shall be reduced to an amount which maximizes the Severance
Payment without causing any portion of the same to be nondeductible by the Bank
because of Section 280G of the Code. Any such reduction shall be applied to the
Severance Payment or the other amounts due to Officer in such manner as Officer
may reasonably specify within thirty (30) days following notice from the Bank of
the need for such reduction or, if Officer fails to so specify timely, as
determined by the Bank.
4. Employee Benefits. All employee benefits provided by the Bank shall
cease upon termination of Officer's employment, whether for Good Reason, Without
Cause, or for any other reason, and the Bank shall have no further
responsibility with respect thereto after such termination; provided, however,
that nothing contained in this Agreement shall affect any right Officer may have
pursuant to the Federal entitlement to continued group health care coverage as
provided in the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA")
or any successor legislation or comparable state law; and provided further that
if
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Officer is entitled to receive a Severance Payment pursuant to paragraph 2
hereof, and if Officer elects under COBRA to continue to receive any benefits
thereunder, the Bank shall reimburse Officer for the amount of such Officer's
COBRA payments for the first six months after such termination.
5. Term. The term of this Agreement shall be a rolling twelve (12)
months, with the Bank being able to terminate the Agreement upon twelve (12)
months prior written notice to the Officer; provided, however, that if a Change
of Control has occurred, no such termination shall be effective prior to the
ninetieth (90th) day after the second (2nd) anniversary of the Change of
Control.
6. Employment "At Will". Neither this Agreement nor the Severance
Payment payable hereunder shall be deemed to limit, replace or otherwise affect
the "at will" nature of Officer's employment with the Bank. Officer's employment
with the Bank continues to be for an unspecified term and may be terminated at
will at any time with or without cause or notice by either the Bank or Officer.
This at-will relationship cannot be changed absent an express intent as set
forth in an individualized written employment contract signed by both Officer
and the Chief Executive Officer of the Bank.
7. Arbitration. (a) It is the intention and agreement of the parties
hereto that no dispute, disagreement, claim or controversy (collectively a
"Controversy") arising in connection with this Agreement, Officer's employment
or the termination of that employment, be subject to civil litigation or other
judicial process (other than to compel compliance with this paragraph or to
enforce an award issued as a result of a proceeding hereunder). Therefore, to
the fullest extent allowed by law, any Controversy arising out of or relating to
this Agreement, the breach of this Agreement, the facts and circumstances
preceding the execution of this Agreement, the interpretation of any provision
of this Agreement, Officer's employment or the termination of that employment,
which cannot be resolved through agreement of the parties, shall be settled by
means of binding arbitration conducted in accordance with the procedures set
forth in paragraph 9 of the Waiver and Release. The matters subject to binding
arbitration shall include, but not be limited to, any Controversy regarding
wrongful termination, employment discrimination, and harassment of any kind, and
shall include statutory claims arising under laws such as Title VII of the Civil
Rights Act, the Age Discrimination in Employment Act, and the California Fair
Employment and Housing Act.
8. Mitigation. Officer shall have no obligation to mitigate damages
based upon Officer's termination pursuant to paragraph 2 above, and the
Severance Payment shall not be reduced as a result of Officer obtaining other
employment within twelve (12) months of Officer's termination.
9. Confidentiality. Officer understands and agrees (a) that Officer
will maintain all proprietary and confidential information of the Bank as
proprietary and confidential at all times during and after his/her
employment, (b) that Officer will not disclose or communicate such
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information to any third party or make use of it on his/her own behalf or on
behalf of any third party, and (c) upon his/her termination, that Officer will
deliver all tangible forms or media which Officer may have containing such
information to the Bank. For purposes of this Paragraph 9, "information"
includes trade secrets and all non-public records, practices, letters, plans,
drawings, computer programs and data, technical data, financial and other
business data pertaining to the Bank or any of its affiliates, customers,
vendors or other persons associated with the Bank. Officer acknowledges and
further agrees that the disclosure of such information would be a material
breach of this Agreement for which the Bank shall be entitled to any remedies
available to it in law or in equity.
10. Covenant Not to Disrupt Business. Officer hereby covenants and agrees
that he or she will not now, or for a period of one (1) year after the effective
date of Officer's termination of employment, whether or not following a Change
of Control, disrupt, damage, impair or interfere with the business of the Bank,
whether by way of interfering with or soliciting its employees, or disrupting
its relationships with customers, loan packagers, representatives, vendors,
brokers or otherwise. After termination of employment, Officer is not, however,
restricted from being employed by or engaged in a competing business.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which,
together, shall constitute one and the same instrument.
12. Partial Invalidity. Any provision of this Agreement which shall prove
to be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof, and such other provisions shall remain in full force and
effect.
13. Time. Time is of the essence with respect to the performance of every
provision of this Agreement.
14. Governing Law. The terms and provisions of this Agreement shall be
governed and construed pursuant to the laws of the State of California except to
the extent governed by Federal law.
15. Construction. Headings at the beginning of each paragraph are solely
for the convenience of the parties and are not a part of this Agreement.
Whenever required by the context of this Agreement, the singular shall include
the plural and the masculine shall include the feminine and vice versa. This
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same. Unless otherwise
indicated, all references to paragraphs are to this Agreement. The exhibit
referred to in this Agreement is attached and incorporated by this reference.
16. Integration. This Agreement represents the entire and integrated
agreement between the Bank and Officer regarding the subject matter hereof and
supersedes all prior
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negotiations, representations or agreements, either written or oral. If the
Officer receives a severance payment pursuant to this Agreement, the Officer
shall not be eligible to receive any severance benefit under the Company's
Severance Pay Plan or any successor plan. Not withstanding the immediately
preceding sentence, if Officer is subject to a "Covered Termination" (as defined
in the Company's Severance Pay Plan), in circumstances not involving a change of
control, Officer shall be eligible to receive severance benefits if and to the
extent provided in the Company's Severance Pay Plan.
17. Successors and Assigns. The terms, covenants and conditions herein
contained shall be binding upon and shall inure to the benefit of the heirs,
successors and assigns of the parties hereto.
18. No Waiver. No waiver by either party of any breach or default
hereunder shall be deemed a waiver of any other breach or default, and no delay
or forbearance by either party hereunder in enforcing any of its rights or
remedies shall be deemed a waiver of any such rights or remedies, unless such
waiver is embodied in a writing signed by the authorized representative of the
party to be bound.
IN WITNESS WHEREOF, this Agreement has been executed effective on the
day and year hereinabove set forth.
"BANK" ELDORADO BANK
By:________________________
Its:_________________
"OFFICER"
___________________________
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