EXHIBIT 10.5
EMPLOYMENT AGREEMENT - XXXXX X. XXXXXX
-141-
AGREEMENT
---------
THIS AGREEMENT dated July 1, 1996, is made by and between ValliCorp
Holdings, Inc., a Delaware corporation (the "Company"), and XXXXX X. XXXXXX (the
"Executive").
WHEREAS, the Company desires to employ the Executive and the Executive
desires to be employed by the Company, on the terms set forth herein; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change in Control (as defined in Section
2.14(E) hereof) exists, as in the case of any publicly-held corporation, and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders; and
WHEREAS, as a part of the terms of the Executive's employment the
Board has determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of the Executive to his
assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a Change in Control.
NOW THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
SECTION 13. EMPLOYMENT
------- ----------
13.1 Employment. The Company hereby employs the Executive and the
----------
Executive hereby accepts employment during the Term of Employment upon the terms
and conditions set forth herein.
13.2 Term of Employment. The "Term of Employment" is the period
------------------
beginning on July 1, 1996 (the "Commencement Date") and ending on June 30, 2000.
The Term of Employment may
-142-
terminate earlier or be extended as provided in this Agreement; provided
however, that this Agreement shall not terminate earlier than the date that the
provisions of Section 2 hereof cease to be applicable.
13.3 Renewal. The Term of Employment shall be extended for one
-------
year on each anniversary of the Commencement Date unless (a) the Company or the
Executive has given three (3) months' written notice of its or his intent not to
extend the termination date or (b) the Term of Employment has been terminated
under the provisions of Section 1.9 or 1.10.
13.4 Duties. The Executive is employed as Executive Vice
------
President and Chief Credit Officer of the Company and, under the direction of
the Board and Chief Operating Officer, shall perform and discharge well and
faithfully the duties that may be assigned to him from time to time by the Chief
Operating Officer in connection with the conduct of the Company's business.
13.5 Extent of Services. The Executive shall devote his entire
------------------
business time, attention, and energies to the business of the Company during the
term of the Executive's employment with the Company. The foregoing, however,
shall not preclude the Executive from engaging in appropriate civic, charitable,
or religious activities or from devoting a reasonable amount of time to private
investments or from serving on boards of directors of other entities, as long as
such activities and services do not interfere or conflict with his
responsibilities to the Company.
13.6 Locations of Performance. The Executive's services shall be
------------------------
performed primarily in the vicinity of Fresno, California. The parties
acknowledge, however, that the Executive may be required to travel in connection
with the performance of his duties hereunder.
13.7 Compensation.
------------
(A) Salary. During the Term of Employment, the Company shall
------
pay the Executive a monthly salary of $12,083.34,
-143-
payable in arrears in installments on the 15th and the last day of each month.
The Executive's salary shall be adjusted annually, on the anniversary of this
Agreement, to reflect such changes as the Board determines appropriate, based on
the Executive's performance for the most recent performance period.
(B) Incentive Programs. During the Term of Employment, the
------------------
Executive shall be entitled to participate in any annual and long-term incentive
programs adopted by the Company and which cover employees in positions
comparable to that of the Executive.
(C) Expenses. The Executive shall be entitled to prompt
--------
reimbursement of all reasonable business expenses incurred by him in the
performance of his duties during the Term of Employment, subject to the
presenting of appropriate vouchers and receipts in accordance with the Company's
policies.
13.8 Employee Benefits. During the Term of Employment, the
-----------------
Executive shall be entitled to participate in employee benefit plans or programs
of the Company, if any, to the extent that his position, tenure, salary, age,
health, and other qualifications make him eligible to participate, subject to
the rules and regulations applicable thereto.
13.9 Termination by the Company; Death. Notwithstanding the
---------------------------------
provisions of Sections 1.2 and 1.3, and except for situations in which the
termination of employment provisions of Section 2 apply, the Term of Employment
and the Executive's employment hereunder may be terminated by the Company
without any breach of this Agreement under the following circumstances:
(A) Involuntary Termination. The Executive's employment is at
-----------------------
will. The Company reserves the right to terminate the Executive's employment at
any time whatsoever, with or without cause, with thirty (30) days' written
notice to the Executive. The Term of Employment shall terminate on the last day
of the notice period, but the Company may require the
-144-
Executive to cease performing services at any time once the notice is given.
(B) Involuntary Termination for Just Cause. The Company
--------------------------------------
reserves the right to terminate the Executive's employment for Just Cause. "Just
Cause" shall exist if the Executive has: (i) willfully breached or habitually
neglected the duties which he was required to perform under the terms of this
Agreement, or (ii) committed act(s) of dishonesty, theft, embezzlement, fraud,
misrepresentation, or other act(s) of moral turpitude against the Company, its
subsidiaries or affiliates, its shareholders, or its employees. The Company
shall give the Executive written notice of the termination and the reasons
therefor. The Term of Employment shall terminate immediately upon receipt of the
notice.
(C) Disability. The Term of Employment shall terminate three (3)
----------
months after the Company gives the Executive written notice that it intends to
terminate his employment on account of Disability or on such later date as the
Company specifies in such notice. If the Executive resumes the performance of
substantially all of his duties under this Agreement before the termination
becomes effective, the notice of intent to terminate shall be deemed to have
been revoked.
(D) Death. The Term of Employment shall terminate upon the
-----
Executive's death.
13.10 Termination By The Executive. Notwithstanding the provisions
----------------------------
of Sections 1.2 and 1.3, the Term of Employment and the Executive's employment
hereunder may be terminated without any breach of this Agreement by the
Executive under the following circumstances:
(A) Voluntary Termination. Subject to Section 2.4 hereof, the
---------------------
Executive may terminate his employment with the Company at any time with three
(3) months' written notice to the Company. The Term of Employment shall end on
the last day on which the Executive performs services for the Company.
-145-
(B) Termination for Good Cause. The Executive may terminate his
--------------------------
employment with the Company for Good Cause by giving the Company thirty (30)
days' notice of its breach, the reasons why the breach constitutes Good Cause
and of his intent to terminate on such basis. If the Company cures its breach
within the thirty (30) day period, the Executive may rescind his notice of
intent to terminate, or terminate his employment under Section 1.10(A) hereof as
though his notice of breach was the notice provided for under Section 1.10(A).
If the Company fails to cure its breach within the thirty (30) day period, the
Term of Employment shall end on the last day of the notice period.
The term "Good Cause" as used herein means a material reduction in the
Executive's compensation under Section 1.7 or benefits under Section 1.8, a
material reduction in the Executive's title or responsibilities, or a relocation
of the Executive's primary place of employment so that the Executive's one-way
commute distance is increased by more than (40) miles.
13.11 Benefits on Termination of Employment. Except as provided in
-------------------------------------
Section 2.1 hereof, if the Executive's employment is terminated during the Term
of Employment, the Executive shall be entitled to receive the following
benefits:
(A) Death; Disability; Voluntary Termination; Termination for Just
--------------------------------------------------------------
Cause. If employment is terminated under Section 1.9 (B), (C), or (D), or
-----
Section 1.10(A), the Executive shall receive (i) salary through the Term of
Employment; (ii) any incentive compensation earned but not yet paid; and (iii)
reimbursement of expenses incurred under Section 1.7(C) but not yet reimbursed.
All other employee benefits and compensation shall cease on the last day on
which the Executive performs services as an employee, except to the extent that
continued coverage is required by law.
(B) Involuntary Termination; Termination For Good Cause. If the
---------------------------------------------------
Executive's employment is terminated under the provisions of Sections 1.9(A) or
1.10(B), the Executive shall receive in a lump sum payment an amount equal to
the sum of
-146-
clauses (i) through (iii) in Section 1.11(A), and, in addition, twelve (12)
months of salary under Section 1.7(A) computed with reference to the annual
salary in effect immediately preceding the date of termination.
All other employee benefits and compensation, including any incentive benefits
for the year in which the Term of Employment ends, shall cease on the last day
on which the Executive performs services as an employee of the Company except to
the extent that continued coverage is required by law.
13.12 Non-Renewal. If the Executive or the Company gives notice of
-----------
intent not to extend the Term of Employment under Section 1.3, the Executive's
salary and benefits shall cease on the last day of the Term of Employment,
except to the extent that continued coverage is required by law.
13.13 Recovery of Litigation Costs. If any legal action or other
----------------------------
preceding is brought for the enforcement of any provision under Section 1 of
this Agreement (or Section 3 of this Agreement in connection with its
applicability under Section 1 of this Agreement) or any agreement or instrument
delivered under or in connection with Section 1 of this Agreement (or Section 3
of this Agreement in connection with its applicability under Section 1 of this
Agreement), or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of Section 1 of this
Agreement (or Section 3 of this Agreement in connection with its applicability
under Section 1 of this Agreement), the successful or prevailing party or
parties shall be entitled to recover reasonable attorney's fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled.
SECTION 14. TERMINATION OF EMPLOYMENT IN CONNECTION WITH A CHANGE IN CONTROL
------- ----------------------------------------------------------------
14.1 Applicability of Section 2. No payments will be required under
--------------------------
Section 1.11 of this Agreement in connection with the Executive's Termination of
Employment to the extent that the
-147-
payments and benefits provided for by Section 2 of this Agreement are paid or
provided to the Executive.
14.2 Term of Change in Control Provisions. Either the Company or
------------------------------------
the Executive may terminate the applicability of the provisions of this Section
2 by giving the other at least one (1) year advance written notice of
termination thereof; provided, however, that if a Change in Control shall have
occurred during the term of this Agreement, the provisions of Section 2
hereunder shall continue in effect until all obligations of either party hereto
have been performed in full. Notwithstanding the foregoing, the provisions of
this Section 2 shall terminate upon the Executive's attaining age sixty-five
(65), except as to obligations of the Company hereunder arising from a Change in
Control and/or a termination of the Executive's employment prior to his having
reached such age.
14.3 Company's Covenants Summarized. In order to induce the
------------------------------
Executive to remain in the employ of the Company and in consideration of the
Executive's covenants set forth in Section 2.4 hereof, the Company agrees, under
the terms and conditions set forth herein, that, upon a Change in Control during
the term of this Agreement, certain benefits shall thereupon become vested as
set forth in Section 2.5 hereof, and paid in accordance with the provisions
thereof, and, in the event that the Executive's employment with the Company is
terminated thereafter during the Coverage Period, the Company shall pay the
Executive the amounts provided for in Section 2.6 hereof.
14.4 The Executive's Covenant. The Executive agrees that, subject
------------------------
to the terms and conditions of this Agreement, and notwithstanding the
provisions in Section 1.10(A) of this Agreement, in the event of a Potential
Change in Control, the Executive will remain in the employ of the Company until
the earliest of (a) a date which is nine (9) months after the date of such
Potential Change of Control, (b) the date of a Change in Control, (c) the date
of termination by the Executive of the Executive's employment for Good Reason
(determined by treating the Potential Change in Control for this purpose as a
Change in
-148-
Control in applying the definition of Good Reason) or by reason of
death or Disability, (d) the termination by the Company of the Executive's
employment for any reason, or (e) the Executive's attaining age sixty-five (65).
14.5 Vesting of Bonus in the Event of a Change in Control. Upon the
----------------------------------------------------
occurrence of a Change in Control, the Executive shall have a vested and
nonforfeitable right to receive in cash an amount equal to the target bonus
amount which the Executive could earn for the year in which the Change in
Control occurs pursuant to the ValliCorp Holdings, Inc. Executive Management
Committee's Management Bonus Program for such year, or under any other
management incentive plan or program in effect in such year, as if 100% of all
objectives provided for thereunder had been met for that year (the "Vested Bonus
Amount"). The Executive's Vested Bonus Amount pursuant to the preceding sentence
shall be promptly paid to the Executive at the date on which such bonus would
have been paid pursuant to such plan or program if no Change in Control had
occurred. Notwithstanding the foregoing, however, in the event that the
Executive's Date of Termination after a Change in Control falls in the fiscal
year in which such Change in Control occurs, the Executive shall not be entitled
to receive a bonus pursuant to this Section 2.5, but shall instead be entitled
to the bonus amount as provided in Section 2.6(B)(iii) hereof.
14.6 Benefits and Rights upon Termination of Employment.
--------------------------------------------------
(A) General Termination Rights and Benefits. If the Executive's
---------------------------------------
employment by the Company is terminated after a Change in Control for any reason
(whether by the Company or the Executive), the Company shall pay to the
Executive the payments described in Subsections (i) through (iii) below.
(i) Previously Earned Salary. The Company shall pay the
------------------------
Executive's full salary to the Executive through the Date of Termination at the
highest rate in effect during the sixty (60) day period preceding the date the
Notice of Intent to
-149-
Terminate is given, together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of any compensation or
benefit plan, program or arrangement maintained by the Company during such
period.
(ii) Previously Earned Benefits. The Company shall pay the
--------------------------
Executive's normal post-termination compensation and benefits to the Executive
as such payments become due. Such post-termination compensation and benefits
shall be determined under, and paid in accordance with, the Company's
retirement, insurance, pension, welfare and other compensation or benefit plans,
programs and arrangements.
(iii) Payment of Vested Bonus Amount. Except to the
------------------------------
extent that the Company has previously paid to the Executive all or a portion of
his Vested Bonus Amount pursuant to Section 2.5 hereof, the Company shall pay to
the Executive a lump sum cash payment equal to the Executive's Vested Bonus
Amount.
(B) Severance Benefits. In addition to the payments provided
------------------
for by Section 2.6(A) hereof, the Company shall pay to the Executive the
payments described in Subsections (i) through (iii) below (the "Severance
Benefits") upon termination of the Executive's employment with the Company
during the Coverage Period, unless such termination is (a) by the Company for
Cause, (b) by reason of the Executive's death or Disability or after the
Executive attains age sixty-five (65) or (c) by the Executive without Good
Reason.
(i) Lump-Sum Severance Payment. In lieu of any further
--------------------------
salary payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum severance
payment, in cash, equal to two (2) (or, if less, the number of years, including
fractions, from the Date of Termination until the Executive would have reached
age sixty-five (65)) times the sum of (a) the Executive's Annual Base Salary and
(b) the Executive's Annual Bonus. Notwithstanding the preceding sentence, the
amount of the lump sum payment provided for therein shall be reduced by any lump
sum cash severance
-150-
payment which is actually paid by the Company to the Executive pursuant to any
other plan or agreement on or prior to the date on which the payment pursuant to
this Subsection 2.6(B)(i) is required to be paid.
(ii) Continued Benefits. For a twenty-four (24) month
------------------
period (or, if less, the number of months from the Date of Termination until the
Executive would have reached age sixty-five (65)) after the Date of Termination
(the "Benefits Period"), the Company shall provide the Executive with group term
life insurance, health insurance and long-term disability insurance benefits
("Welfare Benefits") substantially similar in all respects to those which the
Executive is receiving immediately prior to the Notice of Termination (without
giving effect to any reduction in such benefits subsequent to a Change in
Control which reduction constitutes or may constitute Good Reason). Benefits
otherwise receivable by the Executive pursuant to this Section 2.6(B)(ii) shall
be reduced to the extent substantially similar benefits are actually received by
or made available to the Executive by any other employer during the same time
period for which such benefits would be provided pursuant to this Section
2.6(B)(ii) at a cost to the Executive that is commensurate with the cost
incurred by the Executive immediately prior to the Executive's Date of
Termination (without giving effect to any increased costs paid by the Executive
after the Change in Control which constituted or might have constituted Good
Reason); provided, however, that if the Executive becomes employed by a new
employer which maintains a medical plan that either (i) does not cover the
Executive or a family member or dependent with respect to a preexisting
condition which was covered under the applicable Company medical plan, or (ii)
does not cover the Executive or a family member or dependent for a designated
waiting period, the Executive's coverage under the applicable Company medical
plan shall continue (but shall be limited in the event of noncoverage due to a
preexisting condition, to such preexisting condition) until the earlier of the
end of the applicable period of noncoverage under the new employer's plan or the
end of the Benefits Period. The Executive agrees to report to the Company any
coverage and benefits
-151-
actually received by the Executive from such other employer(s). The Executive
shall be entitled to elect to change his level of coverage and/or his choice of
coverage options (such as the Executive only or family medical coverage) with
respect to the Welfare Benefits to be provided by the Company to the Executive
to the same extent that actively employed senior executives of the Company are
permitted to make such changes; provided, however, that in the event of any such
changes the Executive shall pay the amount of any cost increase that would
actually be paid by an actively employed executive of the Company by reason of
making the same change in his level of coverage or coverage options.
(iii) Bonus for Year in Which Date of Termination Occurs.
--------------------------------------------------
The Company shall pay to the Executive a lump sum cash amount equal to the
product of (x) and (y), where (x) is an amount equal to the target bonus amount
which the Executive could earn for the year in which the Date of Termination
occurs pursuant to the ValliCorp Holdings, Inc. Executive Management Committee's
Management Bonus Program for such year, or under any other management incentive
plan or program in effect in such year, as if 100% of all objectives provided
for thereunder had been met for that year, and (y) is a fraction the numerator
of which is the number of days from and including the first day of the year in
which the Date of Termination occurs until (and including) the Executive's Date
of Termination and the denominator of which is 365 days.
(C) Gross-Up Payment. In the event that the Executive becomes
----------------
entitled to the Severance Benefits or any other benefits or payments under
Section 2 of this Agreement (other than pursuant to this Section 2.6(C)) or the
KESOP or DSOP by reason of the accelerated vesting of stock options thereunder
(together, the "Total Benefits"), and in the event that any of the Total
Benefits will be subject to the Excise Tax, the Company shall pay to the
Executive an additional amount (the "Gross-Up Payment") such that the net amount
retained by the Executive, after deduction of any Excise Tax on the Total
Benefits and any federal, state and local income tax, Excise Taxes and FICA and
-152-
Medicare withholding taxes upon the payment provided for by this Section 2.6(C),
shall be equal to the Total Benefits.
For purposes of determining whether any of the Total Benefits will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by the Executive in connection
with a Change in Control or the Executive's termination of employment (whether
pursuant to the terms of this Agreement or any other agreement, plan or
arrangement with the Company, any Person whose actions result in a Change in
Control or any Person affiliated with the Company or such Person) shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of Section
280G(b)(1) shall be treated as subject to the Excise Tax, unless in the opinion
of tax counsel ("Tax Counsel") selected by the Company's independent auditors
and acceptable to the Executive, such other payments or benefits (in whole or in
part) do not constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in excess of the
Base Amount, or are otherwise not subject to the Excise Tax, (ii) the amount of
the Total Benefits which shall be treated as subject to the Excise Tax shall be
equal to the lesser of (A) the total amount of the Total Benefits reduced by the
amount of such Total Benefits that in the opinion of Tax Counsel are not
parachute payments, or (B) the amount of excess parachute payments within the
meaning of Section 280G(b)(1) (after applying clause (i), above), and (iii) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by the Company's independent auditors in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of Termination, net of the
reduction in federal income taxes
-153-
which could be obtained from deduction of such state and local taxes (calculated
by assuming that any reduction under Section 68 of the Code in the amount of
itemized deductions allowable to the Executive applies first to reduce the
amount of such state and local income taxes that would otherwise be deductible
by the Executive).
In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such reduction
(plus that portion of the Gross-Up Payment attributable to the Excise Tax,
federal, state and local income taxes and FICA and Medicare withholding taxes
imposed on the Gross-Up Payment being repaid by the Executive to the extent that
such repayment results in a reduction in Excise Tax, FICA and Medicare
withholding taxes and/or a federal, state or local income tax deduction) plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the termination of
the Executive's employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment to the Executive in respect of
such excess (plus any interest, penalties or additions payable by the Executive
with respect to such excess) at the time that the amount of such excess is
finally determined.
14.7 Timing of Payments. The payments provided for in Sections
------------------
2.6(A) through 2.6(C) (other than Section 2.6(B)(ii) hereof) shall be made on
the Date of Termination, provided, however, that if the amounts of such payments
cannot be finally determined on or before such day, the Company shall pay to the
Executive on such day an estimate, as determined in good faith by the Company,
of the minimum amount of such payments and shall pay the remainder of such
payments (together with interest at the
-154-
rate provided in Section 1274(b)(2)(B) of the Code from the fifth (5th) day
following the Date of Termination to the payment of such remainder) as soon as
the amount thereof can be determined but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to the Executive, payable on
the fifth (5th) business day after demand by the Company (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code from the fifth (5th)
day following the Date of Termination to the repayment of such excess).
14.8 Reimbursement of Legal Costs. The Company shall pay to the
----------------------------
Executive all legal fees and expenses incurred by the Executive as a result of a
termination which entitles the Executive to any payments under Section 2 of this
Agreement, including all such fees and expenses, if any, incurred in contesting
or disputing any Notice of Intent to Terminate under Section 2.9(C) hereof or in
seeking to obtain or enforce any right or benefit provided by Section 2 of this
Agreement (or Section 3 of this Agreement in connection with its applicability
under Section 2 of this Agreement), or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code to any payment or benefit provided hereunder. Such payments shall be made
within five (5) business days after delivery of the Executive's respective
written requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
14.9 Termination Procedures and Compensation During Dispute
------------------------------------------------------
(A) Notice of Intent To Terminate. After a Change in Control,
-----------------------------
any purported termination of the Executive's employment (other than by reason of
death) must be preceded by a written Notice of Intent to Terminate from one
party hereto to the other party hereto in accordance with Section 3.6 hereof.
For purposes of this Agreement, a "Notice of Intent to Terminate"
-155-
shall mean a notice which shall indicate the notifying party's opinion regarding
the specific provisions of this Agreement that will apply upon such termination
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for the application of the provisions indicated. Further, a
Notice of Intent to Terminate for Cause is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of
conduct set forth in clause (i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
(B) Date of Termination. "Date of Termination", with respect
-------------------
to any purported termination of the Executive's employment after a Change in
Control, shall mean, except as provided in Section 2.9(C) hereof, (a) if the
Executive's employment is terminated for Disability, three (3) months after
Notice of Intent to Terminate is given (provided that the Executive shall not
have returned to the full-time performance of the Executive's duties during such
three (3) month period), and (b) if the Executive's employment is terminated for
any other reason, the date specified in the Notice of Intent to Terminate
(which, in the case of a termination by the Company, shall not be less than
thirty (30) days after Notice of Intent to Terminate is given (except in the
case of a termination for Cause in which case it shall not be less than ten (10)
days after Notice of Intent to Terminate is given, provided that the Company may
require the Executive not to report to work during such ten (10) day period),
and, in the case of a termination by the Executive, shall not be less than
fifteen (15) days nor more than sixty (60) days, respectively, from the date
such Notice of Intent to Terminate is given).
-156-
(C) Dispute Concerning Termination. If within fifteen (15)
------------------------------
days after any Notice of Intent to Terminate is given, or, if later, prior to
the Date of Termination (as determined without regard to this Section 2.9(C)),
the party receiving such Notice of Intent to Terminate notifies the other party
that a dispute exists concerning the termination or the provisions of this
Agreement that apply to such termination, the Date of Termination shall be the
date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
(D) Compensation During Dispute. If a purported termination
---------------------------
occurs following a Change in Control and such termination or the provisions of
Section 2 of this Agreement that apply upon such termination is disputed in
accordance with Section 2.9(C) hereof, the Company shall continue to pay the
Executive the full compensation (including, but not limited to, salary) at the
highest rate in effect during the sixty (60) day period preceding the date that
the Notice of Intent to Terminate was given and continue the Executive as a
participant in all compensation, benefit, insurance and pension and welfare
benefit plans in which the Executive was participating when the Notice of Intent
to Terminate was given (not taking into account any reductions in compensation,
benefits or insurance under such plans occurring during the sixty (60) day
period preceding the date that the Notice of Intent to Terminate was given),
until the dispute is finally resolved in accordance with Section 2.9(C) hereof.
Amounts paid under this Section 2.9(D) are in addition to all other amounts due
under Section 2 of this Agreement (other than those due under Section 2.6(A)(i)
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement.
-157-
14.10 No Mitigation. The Company agrees that, if the Executive's
-------------
employment by the Company is terminated during the Coverage Period, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to this
Agreement. Further, the amount of any payment or benefit provided for under this
Agreement (other than to the extent provided in Section 2.6(B)(ii) and Section
2.6(B)(iii)) shall not be reduced by any compensation earned by the Executive as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company, or
otherwise.
14.11 Terminations in Anticipation of Change in Control. The
-------------------------------------------------
Executive's employment shall be deemed to have been terminated by the Company
without Cause during the Coverage Period if the Executive's employment is
terminated by the Company without Cause prior to a Change in Control and such
termination of employment (a) was at the request of a third party who has taken
steps reasonably calculated to effect a Change in Control or (b) otherwise arose
in anticipation of a Change in Control. The Executive's employment shall be
deemed to have been terminated by the Executive for Good Reason during the
Coverage Period if the Executive terminates his employment with Good Reason
prior to a Change in Control if the circumstance or event which constitutes Good
Reason occurs (a) at the request of a third party who has taken steps reasonably
calculated to effect a Change in Control or (b) otherwise arose in anticipation
of a Change in Control. In the event of a termination of employment described in
this Section 2.11, the Executive shall be entitled to all payments and other
benefits to which the Executive would have been entitled had such termination
occurred during the Coverage Period (other than salary pursuant to Section
2.6(A)(i) hereof for any period after the actual date of termination) and the
Executive shall be entitled to an additional payment in an amount which shall
compensate the Executive to the extent that the Executive was deprived by such
termination of the opportunity prior to termination of employment to exercise
stock options granted to him under the KESOP or DSOP at the highest market
-158-
price of the Company's Common Stock reached in connection with the Change in
Control. Notwithstanding the provisions of Section 2.13 hereof, for purposes of
this Section 2.11 only, the burden of proving that the requirements of clauses
(a) and (b) of the first and second sentences of this Section 2.11 have been met
shall be on the Executive and the standard of proof to be met by the Executive
shall be clear and convincing evidence, except that, in the event that the
termination of employment occurs following a Potential Change in Control or
within two (2) months prior to a Change in Control, the burden of proving that
the requirements of clauses (a) and (b) of the first and second sentences of
this Section 2.11 have not been met shall be upon the Company, and the standard
of proof to be met by the Company shall be clear and convincing evidence.
14.12 Reduction of Benefits By Legally Required Benefits.
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, if the
Company is obligated by law or by contract (other than under this Agreement) to
pay severance pay, a termination indemnity, notice pay, or the like, or if the
Company is obligated by law or by contract to provide advance notice of
separation ("Notice Period"), then any Severance Benefits hereunder shall be
reduced by the amount of any such severance pay, termination indemnity, notice
pay or the like, as applicable, and by the amount of any pay received during any
Notice Period.
14.13 Burden and Standard of Proof. Except as otherwise expressly
----------------------------
provided in Section 2.11 hereof, in any proceeding (regardless of who initiates
such proceeding) in which the payment of Severance Benefits or other benefits
under Section 2 of this Agreement is at issue, the burden of proof as to whether
there exists either Cause or Good Reason for purposes of this Agreement shall be
upon the Company or its successor, and the standard of proof to be met with
respect thereto shall be clear and convincing evidence.
14.14 Definitions
-----------
-159-
(A) "Annual Base Salary" means the higher of (a) the Executive's
------------------
highest annual base salary in effect during the one (1) year period preceding a
Change in Control, or (b) the Executive's highest annual base salary in effect
during the one year period preceding the Executive's Date of Termination.
(B) "Annual Bonus" means the highest of (a) the average of
------------
the three highest bonuses paid or payable, including any bonus or portion
thereof which has been earned but deferred, to the Executive by the Company in
respect of the five fiscal years (or such shorter period during which the
Executive has been employed by the Company) immediately preceding the fiscal
year in which a Change in Control occurs (annualized for any fiscal year during
such period consisting of less than twelve full months or with respect to which
the Executive has been employed by the Company for less than twelve full
months), (b) the bonus paid or payable (annualized as described above),
including any bonus or portion thereof which has been earned but deferred, to
the Executive by the Company in respect of the most recently completed fiscal
year prior to the Change in Control, (c) the bonus paid or payable (annualized
as described above), including any bonus or portion thereof which has been
earned or deferred, for the most recently completed fiscal year preceding the
Executive's Date of Termination, and (d) 100% of the Executive's target bonus
award amount for the year including the Executive's Date of Termination.
(C) "Base Amount" shall have the meaning ascribed to such term in
-----------
Section 280G(b)(3) of the Code.
(D) "Cause" means:
-----
(i) The willful and continued failure of the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the Executive by
the Board or the Chief Executive Officer of the Company which specifically
identifies the manner in which the Board or Chief
-160-
Executive Officer believes that the Executive has not substantially performed
the Executive's duties;
(ii) the willful engaging by the Executive in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Company;
(iii) personal dishonesty or breach of fiduciary duty to
the Company that in either case results or was intended to result in personal
profit to the Executive at the expense of the Company; or
(iv) willful violation of any law, rule or regulation
(other than traffic violations, misdemeanors or similar offenses) or cease-and-
desist order, court order, judgment or supervisory agreement, which violation is
materially and demonstrably injurious to the Company.
For purposes of the preceding clauses, no act or failure to act, on the part of
the Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith and without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon prior approval given by the Board or upon the
instructions or with the approval of the Chief Executive Officer or the
Executive's superior or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in
-161-
clauses (i) through (iv) above, and specifying the particulars thereof in
detail.
(E) A "Change in Control" means: a change of control of the
-----------------
Company of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on
any similar schedule or form) promulgated under the Exchange Act, whether or not
the Company is then subject to such reporting requirement; provided, however,
that without limitation, a Change in Control shall be deemed to have occurred
if:
(i) any Person is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act or any successor
provisions thereto), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities;
(ii) a merger or consolidation of the Company is
consummated with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least fifty percent (50%) of the combined voting power either of the
Company's then outstanding securities or of such surviving entity's securities
outstanding immediately after such merger or consolidation;
(iii) the Company's shareholders approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the combined voting power
either of the Company's then outstanding securities or of such surviving
entity's securities
-162-
outstanding immediately after such merger or consolidation, provided however
that, in the event that such merger or consolidation has not been consummated
by a date which is 180 days after the date of the shareholder vote to approve
such merger or consolidation, no Change in Control shall be deemed to have
occurred pursuant to this subsection 2.14(E)(iii), without prejudice to the
Executive's rights, if any, pursuant to Section 2.11 hereof or, in the event of
a subsequent consummation of such merger or consolidation, pursuant to
Subsection 2.14(E)(ii) hereof;
(iv) the shareholders of the Company approve a plan of
complete liquidation or an agreement for the sale or disposition (in one
transaction or a series of transactions) of all or substantially all of the
Company's assets;
(v) as a result of a proxy contest, individuals who prior
to the conclusion thereof constituted the Board (including for this purpose any
new director whose election or nomination for election by the Company's
shareholders in connection with such proxy contest was approved by a vote of at
least two-thirds of the directors then still in office who were directors prior
to such proxy contest) cease to constitute at least a majority of the Board; or
(vi) during any period of twenty-four consecutive months,
individuals who at the beginning of such period constituted the Board (including
for this purpose any new director whose election or nomination for election by
the Company's shareholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period) cease for any reason to constitute at least a majority of the Board.
(F) "Code" means the Internal Revenue Code of 1986, as amended
----
from time to time.
-163-
(G) "Coverage Period" means the period, commencing on the date on
---------------
which a Change in Control occurs and ending on the second anniversary date
thereof.
(H) "Date of Termination" has the meaning assigned to such term
-------------------
in Section 2.9(B) hereof.
(I) "DSOP" means the ValliCorp Holdings, Inc. Amended and
----
Restated Directors' Stock Option Plan, as last amended effective on May 20,
1996, and any successor or replacement plan thereof.
(J) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended from time to time.
(K) "Excise Tax" means any excise tax imposed under Section 4999
----------
of the Code.
(L) "Good Reason" means:
-----------
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities immediately prior to either the Potential Change in Control
which precedes the Change in Control or the Change in Control or any other
action by the Company which results in a diminution in any respect in such
position, authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice thereof given by the
Executive;
(ii) a reduction by the Company in the Executive's annual
base salary as in effect on the date hereof or as the same may be increased from
time to time;
(iii) the failure by the Company to increase the Executive's
base salary each year after a Change in Control by an amount which at least
equals, on a percentage basis, the
-164-
mean average percentage increase in base salary for all officers of the Company
during the two full calendar years immediately preceding a Change in Control;
(iv) the Company's requiring the Executive to be based at
any office or location that is more than forty (40) miles from the Executive's
office or location immediately prior to either the Potential Change in Control
which precedes the Change in Control or the Change in Control but only if such
change involves a material increase in the employee's cost of living and is not
accompanied by a commensurate increase in compensation and benefits;
(v) the Company's requiring the Executive to travel on
Company business to a substantially greater extent than required immediately
prior to either the Potential Change in Control which precedes the Change in
Control or the Change in Control;
(vi) the failure by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's current
compensation, or to pay to the Executive any portion of an installment of
deferred compensation under any deferred compensation program of the Company
within seven (7) days of the date such compensation is due;
(vii) the failure by the Company to continue in effect any
compensation plan in which the Executive participates immediately prior to
either the Potential Change in Control preceding the Change in Control or the
Change in Control which is material to the Executive's total compensation,
including but not limited to the KESOP or DSOP or any substitute or alternative
plans adopted prior to either the Potential Change in Control preceding the
Change in Control or the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue the Executive's
participation therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of
-165-
benefits provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Change in Control;
(viii) the failure by the Company to continue to provide
the Executive with benefits substantially similar to those enjoyed by the
Executive under any of the Company's pension, life insurance, medical, health
and accident, disability or other welfare plans, including this Agreement, in
which the Executive was participating at the time of the Change in Control, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by the Executive at the time of the Change in Control, or
the failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is entitled on the basis of years of
service with the Company in accordance with the Company's normal vacation policy
in effect at the time of the Change in Control;
(ix) any purported termination by the Company of the
Executive's employment after a Change in Control otherwise than in accordance
with the termination procedures of Sections 2.9(A) through 2.9(D) hereof; or
(x) any failure by the Company to comply with and satisfy
Section 3.3 of this Agreement.
(M) "KESOP" means the ValliCorp Holdings, Inc. Amended and
-----
Restated Key Employee Stock Option Plan, as last amended effective on May 20,
1996, and any successor or replacement plan thereof.
(N) "Notice of Intent to Terminate" shall have the meaning
-----------------------------
assigned to such term in Section 2.9(A) hereof.
(O) "Person" shall have the meaning given in Section 3(a)(9) of
------
the Exchange Act, as modified and used in Section 13(d)(3) thereof.
-166-
(P) "Potential Change in Control" means the occurrence of any of
---------------------------
the following:
(i) the Board approves a transaction described in Subsection
(ii) or (iv) of the definition of Change in Control contained herein;
(ii) the commencement of a proxy contest in which any Person
seeks to replace or remove a majority of the members of the Board; or
(iii) any Person files an application with the Board of
Governors of the Federal Reserve System for approval of the acquisition of more
than five percent (5%) of the Company's voting securities, or of any class
thereof, under the Bank Holding Company Act of 1956, as amended, or any
successor statute thereto, or files a notice of intent to acquire ten percent
(10%) or more of the Company's outstanding voting securities, or any class
thereof, pursuant to the Change in Bank Control Act or any successor statute
thereto.
(Q) "Severance Benefits" has the meaning assigned to such term in
------------------
Section 2.6(B) hereof.
(R) "Vested Bonus Amount" shall have the meaning assigned to such
-------------------
term in Section 2.5 hereof.
SECTION 15. GENERAL
------- -------
15.1 Non-Competition Clause. In addition to his obligations as an
----------------------
executive and whether or not he remains an executive of the Company, the
Executive agrees that during the period commencing with the Commencement Date
and ending upon termination of employment with the Company, however caused, he
will not, without the prior written consent of the Company, engage, directly or
indirectly, in any business that competes with the Company for customers of the
Company. In the event of a breach by the Executive of this Section 3.1, in
addition to other remedies provided by applicable law, the Company will be
entitled
-167-
to issuance of a temporary restraining order or preliminary injunction enforcing
its rights under this Section 3.1.
15.2 Proprietary Information.
-----------------------
(A) The Executive agrees to comply fully with the Company's
policies relating to nondisclosure of the Company's trade secrets and
proprietary information and processes. Without limiting the generality of the
foregoing, the Executive will not, during the term of his employment by the
Company, disclose any such secrets, information, or processes to any person,
firm, corporation, association, or other entity for any reason or purpose
whatsoever, nor shall the Executive make use of any such property for his own
purposes or for the benefit of any person, firm, corporation, or other entity
(except the Company) under any circumstances during or after the term of his
employment, provided that after the term of his employment, this provision shall
not apply to secrets, information, and processes that are then in the public
domain (provided that the Executive was not responsible, directly or indirectly,
for such secrets, information, or processes entering the public domain without
the Company's consent).
(B) The Executive hereby sells, transfers, and assigns to the
Company all of the entire right, title, and interest of the Executive in and to
all inventions, ideas, disclosures, and improvements, whether patented or
unpatented, and copyrightable material, to the extent made or conceived by the
Executive, solely or jointly, during the term of this Agreement, except to the
extent prohibited by Section 2870 of the California Labor Code, a copy of which
is attached hereto as Exhibit A. The Executive shall communicate promptly and
disclose to the Company, in such form as the Company requests, all information,
details, and data pertaining to the aforementioned inventions, ideas,
disclosures, and improvements; and, whether during the term hereof or
thereafter, the Executive shall execute and deliver to the Company such formal
transfers and assignments and such other papers and documents as may be required
of the Executive to permit the Company to file and prosecute any patent
-168-
applications relating to such inventions, ideas, disclosures, and improvements
and, as to copyrightable material, to obtain copyright thereon.
(C) Trade secrets, proprietary information, and processes shall
not be deemed to include information which is:
(i) known to the Executive at the time of the disclosure;
(ii) publicly known (or becomes publicly known) without the
fault or negligence of the Executive;
(iii) received from a third party without restriction and
without breach of this Agreement;
(iv) approved for release by written authorization of the
Company; or
(v) required to be disclosed by law; provided, however,
-------- -------
that in the event of a proposed disclosure pursuant to this subsection
3.2(C)(v), the recipient shall give the Company prior written notice before such
disclosure is made.
In the event of a breach by the Executive of this Section 3.2, in
addition to other remedies provided by applicable law, the Company will be
entitled to issuance of a temporary restraining order or preliminary injunction
enforcing its rights under this Section 3.2.
15.3 Successors. In addition to any obligations imposed by law
----------
upon any successor to the Company, the Company shall be obligated to require any
successor (whether direct or indirect, by purchase, merger, consolidation,
operation of law, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption
-169-
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to compensation and
benefits from the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive were to terminate the
Executive's employment for Good Reason during the Coverage Period, except that,
for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination.
15.4 Incompetency. Any benefit payable to or for the benefit of the
------------
Executive, if legally incompetent, or incapable of giving a receipt therefor,
shall be deemed paid when paid to the Executive's guardian or to the party
providing or reasonably appearing to provide for the care of such person, and
such payment shall fully discharge the Company.
15.5 Death. Except as otherwise provided herein, this Agreement
-----
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive shall die while any amount
would still be payable to the Executive hereunder (other than amounts which, by
their terms, terminate upon the death of the Executive) if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive's estate.
15.6 Notices. For the purpose of this Agreement, notices and
-------
all other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
-170-
To the Company:
ValliCorp Holdings, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention:
Executive Vice President and General Counsel
To the Executive:
XXXXX X. XXXXXX
ValliCorp Holdings, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
15.7 Modification, Waiver. 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 shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
15.8 Entire Agreement. No agreements or representations, oral or
----------------
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
This Agreement supercedes and replaces the Agreement dated as of July 1, 1995,
between the Company and the Executive.
15.9 Governing Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of
Delaware.
-171-
15.10 Statutory Changes. All references to sections of the Exchange
-----------------
Act or the Code shall be deemed also to refer to any successor provisions to
such sections.
15.11 Withholding. Any payments provided for hereunder shall be
-----------
paid net of any applicable withholding required under federal, state or local
law and any additional withholding to which the Executive has agreed.
15.12 Savings Clause. If any term, covenant, or condition of this
--------------
Agreement or the application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term, covenant, or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant, or condition of this Agreement shall
be valid and enforced to the fullest extent permitted by law.
15.13 Authority to Contract. The Company warrants and represents
---------------------
that it has full authority to enter into this Agreement and to consummate the
transactions contemplated hereby and that this Agreement is not in conflict with
any other agreement to which the Company is a party or by which it may be bound.
The Company hereto further warrants and represents that the individuals
executing this Agreement on behalf of the Company have the full power and
authority to bind the Company to the terms hereof and have been authorized to do
so in accordance with the Company's corporate organization.
15.14 No Assignment of Benefits. Except as otherwise provided
-------------------------
herein or by law, no right or interest of the Executive under the Agreement
shall be assignable or transferable, in whole or in part, either directly or by
operation of law or otherwise, including without limitation by execution, levy,
garnishment, attachment, pledge or in any manner; no attempted assignment or
transfer thereof shall be effective; and no right or interest of the Executive
under this Agreement shall be liable for, or subject to, any obligation or
liability of the Executive.
-172-
15.15 Headings. The headings and captions herein are provided for
--------
reference and convenience only, shall not be considered part of the Agreement,
and shall not be employed in the construction of the Agreement.
15.16 Force Majeure. Neither party shall be liable to the other
-------------
for any delay or failure to perform hereunder, which delay or failure is due to
causes beyond the control of said party, including, but not limited to: acts of
God; acts of the public enemy; acts of the United States of America, or any
State territory, or political subdivision thereof or of the District of
Columbia; fires; floods; epidemics; quarantine restrictions; strikes; or freight
embargoes. Notwithstanding the foregoing provisions of this Section, in every
case the delay or failure to perform must be beyond the control and without the
fault or negligence of the party claiming excusable delay.
15.17 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
15.18 Definitions
-----------
(A) "Company" means ValliCorp Holdings, Inc., a Delaware
-------
corporation. If the Executive becomes employed by a direct or indirect
Subsidiary of ValliCorp Holdings, Inc., the "Company" shall be deemed to refer
to the Subsidiary thereof by which the Executive is employed. In such case,
references to payments, benefits, privileges or other rights to be accorded by
"the Company" shall be deemed to refer to such payments, benefits, privileges or
other rights to be provided by the Subsidiary by which the Executive is employed
or to ValliCorp Holdings, Inc., as the case may be, to correspond to the
corporate entity obligated to make payments or provide benefits, privileges or
other rights pursuant to employee benefit plans affected by the provisions
hereof, and in the absence of any such existing plans or provisions, such
reference shall be deemed to be to ValliCorp Holdings, Inc.
-173-
(B) "Disability" means that the Executive has been unable to
----------
perform his duties under this Agreement for a period of three (3) consecutive
months as the result of his incapacity due to physical or mental illness.
(C) "Subsidiary" means any corporation controlled by the Company,
----------
directly or indirectly.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officer, thereunto duly authorized, and the Executive has
executed this Agreement, all as of the day and year first above written.
VALLICORP HOLDINGS, INC.
By
___________________________
Name: J. XXXX XxXXXXX
Title: Chairman and Chief
Executive Officer
---------------------------
XXXXX X. XXXXXX
-174-
EXHIBIT A
---------
Section 2870. Application of provision providing that employee shall assign or
offer to assign rights in invention to employer
(a) Any provision in an employment agreement which provides that an employee
shall assign, or offer to assign, any of his rights in an invention to his
employer shall not apply to an invention that the employee developed entirely on
his own time without using the employer's equipment, supplies, facilities, or
trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the
invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.
(2) Result from any work performed by the employee for the
employer.
(b) To the extent a provision in an employment agreement purports to require an
employee to assign an invention otherwise excluded from being required to be
assigned under subdivision (a), the provision is against the public policy of
this state and is unenforceable.
-175-
