Exhibit 10.15
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT ("Agreement"), dated as of May __, 1999, is
entered into by and between The Bank of Hemet, a state chartered banking
institution ("Bank"), Xxxxx & Associates, LLC ("Consulting Co.") and Xxxxx X.
Xxxxx ("Consultant").
RECITALS
A. Bank and Pacific Community Banking Group, a California corporation ("PCBG")
entered into that certain First Restatement of Agreement and Plan of
Reorganization dated as of January 5, 1999, as amended (the "Reorganization
Agreement") whereby Bank will be acquired and become a wholly owned
subsidiary of PCBG.
B. Consultant is a current shareholder of Bank and President, Chief Executive
Officer and a Director of Bank and Chairman of the Board of Directors of
Banklink, a subsidiary of Bank. Consulting Co. is partially owned by
Consultant and provides banking and data processing advisory services.
C. Bank will continue its business and operations following the reorganization
and pursuant to the Reorganization Agreement, Consultant will receive
substantial consideration from Bank for his common shares and vested
options.
D. The parties recognize and acknowledge the interest of Bank in protecting
its business and goodwill following the reorganization and that Section
16601 of the California Business and Professions Code authorizes this
Agreement for such purpose.
E. Consulting Co. and Consultant will perform consulting services and not
compete with Bank's business in order to protect said business and goodwill
following the reorganization, provided Bank agrees to pay Consulting Co.
fees in accordance with the terms and conditions hereinafter set forth.
F. Unless otherwise provided in this Agreement, capitalized terms shall have
the meanings given to them in the Reorganization Agreement.
NOW THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants, agreements and conditions contained
herein and in the Reorganization Agreement, and intending to be legally bound
hereby, Bank, Consulting Co. and Consultant agree as follows:
ARTICLE I
NON-COMPETITION AGREEMENT
1.1 NONDISCLOSURE. Neither Consulting Co. nor Consultant shall not at any
time disclose, use, transfer or sell any confidential information or proprietary
data of Bank, Banklink, PCBG or its shareholders so long as such information or
proprietary data remains confidential and has not been disclosed or is not
otherwise in the public domain, except as required by law or pursuant to the
legal process.
1.2 CONSIDERATION. In consideration of the covenants contained herein,
Bank shall pay Consulting Co. the amount of $16,750 per month in cash for the
first seventy-two months of the term, within five (5) days of the day of the
month that is the same as the Effective Time's day of the month with the first
payment beginning on the next calender month after the Effective Time. PCBG may
at its option pay Consulting Co. the consideration for the remaining term of
this agreement in a lump sum as shown in column 1 of Exhibit A to this
Agreement. In the event there is a merger or consolidation of PCBG involving a
change of control of PCBG or a sale of substantially all of the assets of PCBG,
Consulting Co. may at its option and by notice to the Bank require the Bank to
pay the remaining amount in a lump sum as shown in column 2 of Exhibit A to this
Agreement. The payment of the lump sum in either case shall not release
Consulting Co. or Consultant from obligations under this Agreement.
1.3 TERM. The term of this Agreement shall begin as of the Effective Time
and shall end upon the expiration of ninety-six months after the Effective Time
(the "Term").
1.4 NONCOMPETITION AGREEMENT.
1.4.1 Consulting Co. and Consultant hereby agrees that during the
Term Consulting Co. or Consultant will not (i) engage in the Banking Business
(which term shall include the business of banks, savings and loan institutions,
credit unions and other financial institutions) other than on behalf of Bank
and/or PCBG or their affiliates within the Designated Area (as hereinafter
defined), (ii) directly or indirectly own, manage, operate, control, be employed
by, or provide management or consulting services in any capacity to any firm,
corporation or other entity (other than Bank and/or PCBG or their affiliates)
engaged in the Banking Business in the Designated Area, or (iii) directly or
indirectly solicit or otherwise intentionally cause any employee, officer, or
member of the respective Boards of Directors of Bank and/or PCBG or any other of
their affiliates to engage in any action prohibited under (i) or (ii) of this
Section 1.4.1 or solicit any customers of Bank that have been customers of the
Bank in the last three years.
1.4.2 Consulting Co. and Consultant acknowledges and agrees that
irreparable injury will result to Bank and/or PCBG in the event of a material
breach of any of the provisions of this Section 1.4 (the "Designated
Provisions") and that Bank and/or PCBG will have no adequate remedy at law with
respect thereto. Accordingly, in the event of a material breach of any
Designated Provision, and in addition to any other legal or equitable remedy
Bank and/or PCBG may have, Bank and/or PCBG shall be entitled to the entry of a
preliminary and permanent injunction (including, without limitation, specific
performance) by a court of competent jurisdiction in Riverside County,
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California, to restrain the violation or breach thereof by Consulting Co. or
Consultant or any affiliates, agents or any other persons acting for or with
Consulting Co. or Consultant in any capacity whatsoever, and Consulting Co. and
Consultant submits to the jurisdiction of such court in any such action.
1.4.3 It is the desire and intent of the parties that the
provisions of this Section 1.4 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Section 1.4 shall be adjudicated to be invalid or unenforceable, such provision
shall be deemed amended to delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such deletion to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
adjudication is made. In addition, should any court determine that the
provisions of this Section 1.4 shall be unenforceable with respect to scope,
duration or geographic area, such court shall be empowered to substitute, to the
extent enforceable, provisions similar hereto or other provisions so as to
provide to Bank and/or PCBG, to the fullest extent permitted by applicable law,
the benefits intended by this Section 1.4.
1.4.4 As used herein, "Designated Area" shall mean the area
contained within Riverside, San Bernardino and Orange Counties.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CONSULTANT
2.1 PERFORMANCE OF OBLIGATIONS. Consulting Co. and Consultant represents
and warrants to Bank and/or PCBG that his execution, delivery and performance of
this Agreement will not result in or constitute a breach of or conflict with any
term, covenant, condition or provision of any commitment, contract or other
agreement or instrument, including, without limitation, any other employment
agreement, to which Consulting Co. or Consultant is or has been a party.
2.2 RESIGNATION. At the Effective Time Consultant shall resign as
President and Chief Executive Officer and Director but continue as an employee
of Bank until the end of such month. Consultant agrees and acknowledges as of
the end of such month, his employment with Bank shall automatically cease and he
shall not continue as an employee of Bank. Consultant agrees and acknowledges
that he will not be entitled to any warrants for existing stock options pursuant
to the Reorganization Agreement and waives all rights to receive such warrants
for stock options upon the Effective Time.
2.3 INDEMNIFICATION. Consulting Co. and Consultant shall indemnify,
defend, and hold harmless Bank and PCBG, its directors, officers,
representatives and agents, for, from and against any and all losses, claims,
suits, damages, expenses or liabilities, including court costs and counsel fees,
which Bank and/or PCBG has incurred or to which Bank and/or PCBG may become
subject, insofar as such losses, claims, suits, damages, expenses, liabilities,
costs or fees arise out of or are based upon any failure of any representation
or warranty of Consulting Co. or Consultant in Section 2.1 hereof to be true and
correct when made or any breach of the provisions of Section 1.4.
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ARTICLE III
GENERAL
3.1 GOVERNING LAW. This Agreement is governed by and is to be construed
and enforced in accordance with the laws of the State of California. If under
such law, any portion of this Agreement is at any time deemed to be in conflict
with any applicable statute, rule, regulation or ordinance, such portion shall
be deemed to be modified or altered to conform thereto or, if that is not
possible, to be omitted from this Agreement; the invalidity of any such portion
shall not affect the force, effect and validity of the remaining portion hereof.
3.2 NOTICES. All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person, or forty-eight (48) hours
after deposit thereof in the U.S. mails, postage prepaid, for delivery as
requested or certified mail, addressed, in the case of:
Consulting Co. and Consultant, to:
Xxxxx X. Xxxxx
000 Xxxxxxx Xxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Bank, to:
The Bank of Hemet
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. E. Xxxx Xxxxxxx, Chairman
With a copy to:
Pacific Community Banking Group
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Mr. E. Xxxx Xxxxxxx, Chairman
3.3 ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
among Bank, PCBG, Consulting Co. and Consultant with respect to the subject
matter hereof and supersedes and cancels all prior written and oral agreements
and understandings with respect to the subject matter of this Agreement, which
shall be interpreted consistently herewith; provided that prior to the Effective
Time, any agreement between Bank, Consulting Co. and Consultant shall remain in
effect and shall not be superseded by this Agreement. This Agreement may be
amended but only by a subsequent written agreement of the parties. This
Agreement shall be binding upon and shall inure to the benefit of Consulting
Co., Consultant, Consultant's heirs, executors, administrators and
beneficiaries, Bank and/or PCBG and each of their respective successors.
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3.4 WITHHOLDING TAXES. All amounts payable to Consulting Co. under this
Agreement shall be subject to applicable income, wage and other taxes, which
shall be the responsibility of Consulting Co. Bank and/or PCBG will not be
responsible for the withholding of any deductions.
3.5 EFFECT OF AGREEMENT. This Agreement shall have no effect until the
Effective Time. In the event that the Reorganization Agreement is terminated,
this Agreement shall automatically terminate.
3.6 DISPUTE RESOLUTION. All claims, disputes and other matters in
question arising out of or relating to this Agreement or the breach or
interpretation thereof within the last two years of its term, other than those
matters which are to be determined by the Bank in its sole and absolute
discretion, shall be resolved by binding arbitration before a representative
member, selected by the mutual agreement of the parties, of the Judicial
Arbitration and Mediation Services, Inc. ("JAMS"), presently located at 000 X.
Xxxxx Xxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxxxxx. In the event JAMS is unable or
unwilling to conduct the arbitration provided for under the terms of this
Paragraph, or has discontinued its business, the parties agree that a
representative member, selected by the mutual agreement of the parties, of the
American Arbitration Association ("AAA"), in Orange County, California, shall
conduct the binding arbitration referred to in this Paragraph. Notice of the
demand for arbitration shall be filed in writing with the other party to this
Agreement and with JAMS (or AAA, if necessary). In no event shall the demand
for arbitration be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations. The arbitration shall be
subject to such rules of procedure used or established by JAMS, or if there are
none, the rules of procedure used or established by AAA. Any award rendered by
JAMS or AAA shall be final and binding upon the parties, and as applicable,
their respective heirs, beneficiaries, legal representatives, agents, successors
and assigns, and may be entered in any court having jurisdiction thereof. The
obligation of the parties to arbitrate pursuant to this clause shall be
specifically enforceable in accordance with, and shall be conducted consistently
with, the provisions of Title 9 of Part 3 of the California Code of Civil
Procedure. Any arbitration hereunder shall be conducted in Southern California,
unless otherwise agreed to by the parties.
In the event there shall have been a material breach of this Agreement by
Consulting Co. or Consultant, Bank shall deliver a notice of such breach to
Consulting Co. and Consultant. If such breach is not cured within a period of
30 calendar days after written notice of such breach, only then may the Bank
proceed with legal action or arbitration for such breach.
In the event it is determined by arbitration that Xx. Xxxxx, during the final
twenty-four months of the Term, Consulting Co. or Consultant has materially
breached any of the designated provisions and has not cured such breach within
the thirty day period for cure, it is agreed that Consulting Co. shall
compensate Bank during the remainder of the Term beginning from the time that
the period for cure for such breach ends at the rate of $5,000 per month.
3.7 LEGAL COSTS. If either party commences an action against the other
party arising or in connection with this Agreement, the prevailing party shall
be entitled to have and recover from the losing party reasonable attorney's fees
and costs of suit.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
year and day first above written.
THE BANK OF HEMET
By________________________________________
Its________________________________________
XXXXX & ASSOCIATES, LLC
_____________________________________________
XXXXX X. XXXXX
_____________________________________________
AGREED TO:
PACIFIC COMMUNITY BANKING GROUP
________________________________________
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EXHIBIT A
NUMBER OF MONTHS
AFTER THE BANK'S
ACQUISITION BY PCBG COLUMN 1 AMOUNT COLUMN 2 AMOUNT
--------------------- --------------- ---------------
7 $979,000 $890,000
10 942,000 856,000
13 905,000 823,000
16 867,000 788,000
19 821,000 753,000
22 782,000 717,000
25 742,000 680,000
28 701,000 643,000
31 653,000 605,000
34 612,000 566,000
37 569,000 527,000
40 525,000 486,000
43 477,000 445,000
46 432,000 403,000
49 386,000 361,000
52 339,000 317,000
55 289,000 273,000
58 241,000 228,000
61 192,000 181,000
64 142,000 134,000
67 91,000 86,000
70 39,000 38,000
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