EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 1st day of January, 1996, by and among WESTERN INTERSTATE BANCORP, a
California corporation, with executive offices located at 0000 Xxxxx Xxxxxx,
Xxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000 ("WIB"), CITIZENS
THRIFT & LOAN ASSOCIATION, a California industrial loan company, located at
00000 Xxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxxxxx 00000 (the "Employer"), and XXXXXXX
X. XXXXXXX, an individual whose residence is located at 0000 Xxxx Xxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000-0000 (the "Employee").
WHEREAS, the Employee is and has been employed as the President of WIB and
as the President and Chief Executive Officer of the Employer and has been
employed by the Employer and/or WIB for more than ten years in various
capacities;
WHEREAS, the Board of Directors of the Employer and the Board of Directors
of WIB believes it is in the best interests of the Employer and WIB to enter
into this Agreement with the Employee in order to assure continuity of
management and to reinforce and encourage the continued attention and dedication
of the Employee to his assigned duties; and
WHEREAS, the Board of Directors of the Employer and the Board of Directors
of WIB have approved and authorized the execution of this Agreement with the
Employee;
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. EMPLOYMENT.
(a) The Employee is employed as the President and Chief Executive Officer
of the Employer with supervision and control over strategic planning and the
daily operations of the Employer and of its wholly-owned subsidiary, Citizens
Group, Inc. ("CGI"). As such, the Employee
shall have such duties and responsibilities as are prescribed for the
President in the by-laws of the Employer and of CGI. At the request of the
Board of Directors of WIB, the Employee serves as President of WIB, with such
duties and responsibilities as are prescribed by the by-laws of WIB. At the
request of the Board of Directors of the Employer or of WIB, the Employee
shall serve also as an officer and/or director of any company or companies
which are subsidiaries, directly or indirectly, of the Employer or of WIB
(such subsidiaries and WIB are hereafter referred to individually as an
"Affiliated Company" and collectively as "Affiliated Companies"). The
Employee shall have such other powers and duties as may be prescribed from
time to time by the Board of Directors of each such entity, PROVIDED THAT such
duties are consistent with the Employee's position as the President and Chief
Executive Officer of the Employer. The Employee shall devote his best efforts
and all his business time and attention to the businesses and affairs of the
Employer and the Affiliated Companies. Employee shall not, directly or
indirectly, acquire, hold or retain any interest in any business competing
with or similar in nature to the business of the Employer and the Affiliated
Companies; PROVIDED that the Employee may purchase, solely for investment, not
more than five percent (5%) of the outstanding stock or other securities of a
financial institution of a class which is traded on any national or regional
securities exchange or is actively traded in the over-the-counter market and
registered under Section 12(g) of the Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx"). The Employee shall not, without specific approval of the
Board of Directors of the Employer, or in the case of an Affiliated Company,
the Board of Directors of such Affiliated Company, do or contract to do any of
the following:
(1) Except in conformance with the policies established by the Board
of Directors of the Employer or such Affiliated Company, as in effect from
time to time, permit such entity to borrow funds without the prior approval
of the Board of Directors of such entity;
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(2) Without the prior approval of the Loan Committee of the Board of
Directors of Employer or such Affiliated Company, permit any customer of
the Employer or the Affiliated Company to become indebted to the Employer
or the Affiliated Company in an aggregate amount in excess of the amount
permitted under the policies established by the Loan Committee of the Board
of Directors of the Employer or the Affiliated Company as in effect from
time to time; and
(3) Without the prior approval of the Board of Directors of the
Employer or such Affiliated Company, permit such entity to purchase capital
equipment for amounts in excess of the amounts budgeted for expenditure by
each such entity.
(b) Except as limited by Section 1(a) of this Agreement and by this
Section 1(b), the Employee may, without the prior consent of the Employer or
WIB, engage in any other business, investment, professional, educational,
charitable or other activities, PROVIDED THAT such activities do not
materially interfere with the services required under this Agreement or create
a conflict of interest where the Employee's loyalties are divided between two
or more competing or adverse parties. The Employee shall notify the Employer
in writing of any potential conflict of interest. In the event that a
conflict of interest is deemed by the Board of Directors of the Employer to
exist, the Board of Directors of the Employer may immediately demand that
Employee cease engaging in the business or activities which are creating the
conflict. Refusal by the Employee to remedy the conflict of interest
situation shall be grounds for termination for cause as defined in Section 7
of this Agreement.
2. COMPENSATION.
(a) SALARY. The Employer agrees to pay the Employee during the term of
this Agreement a salary established by its Board of Directors. The Employee
shall not receive a salary from any Affiliated Company. The per annum salary
hereunder as of January 1, 1996 shall be one hundred
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eighty-five thousand dollars ($185,000). The Employee's salary shall be
payable not less frequently than twice each month. The amount of the
Employee's salary shall be reviewed by the Board of Directors of the Employer
not less often than annually. Any adjustments in such salary or other
compensation shall in no way limit or reduce any other obligation of the
Employer hereunder. The Employee's per annum salary in effect hereunder may
be reduced from time to time during the term of this Agreement, PROVIDED THAT
the amount of the Employee's per annum salary hereunder shall not be less than
one hundred sixty-six thousand five hundred dollars ($166,500).
(b) BONUS PLAN. The Employee shall be paid an annual bonus based on the
return on average equity ("ROAE") and a return on average assets ("ROAA") of
the Employer and other subsidiaries of WIB managed by the Employee as
determined by WIB's independent certified public accounting firm based upon
its audit of WIB's financial statements for each fiscal year during the term
of this Agreement, beginning with the fiscal year ended December 31, 1996.
The bonus shall be an amount equal to the percentage of the Employee's
salary (not to exceed 100%) for such fiscal year that is the sum of the
percentage of salary based on ROAA and the percentage of salary based on ROAE as
set forth below:
(i)(a) if ROAA is at least .70%, the percentage of salary based on
ROAA shall be 15%; or
(b) if ROAA is at least .80%, the percentage of salary based on ROAA
shall be 20%; or
(c) if ROAA is at least .90%, the percentage of salary based on ROAA
shall be 30%; or
(d) if ROAA is at least 1.00%, the percentage of salary based on ROAA
shall be 40%; or
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(e) if ROAA is at least 1.25%, the percentage of salary based on ROAA
shall be 50%; and
(ii)(a) if ROAE is at least 7.50%, the percentage of salary based on
ROAE shall be 15%; or
(b) if ROAE is at least 9.00%, the percentage of salary based on ROAE
shall be 20%; or
(c) if ROAE is at least 10.50%, the percentage of salary based on
ROAE shall be 30%; or
(d) if ROAE is at least 12.50%, the percentage of salary based on
ROAE shall be 40%; or
(e) if ROAE is at least 15.00%, the percentage of salary based on
ROAE shall be 50%.
The bonus will be paid within 30 days following completion of the audited
financial statements for such fiscal year.
(c) EXPENSES. During the term of his employment hereunder, the Employee
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by him in performing services hereunder in accordance with the
policies and procedures established by the Board of Directors of the Employer
and by the Boards of Directors of the Affiliated Companies as in effect from
time to time, PROVIDED that the Employee properly accounts therefor in
accordance with such policies. In that event that the Employer reimburses the
Employee for expenses pursuant to this Section 2(c) or an Affiliated Company
reimburses the Employee for expenses and it is subsequently determined that
any of such expenses or any portion thereof is not reimbursable in accordance
with such policies, then, except to the extent that the Board of Directors of
the Employer or such Affiliated
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Company determines otherwise in its discretion, the Employee shall pay to the
Employer or to the appropriate Affiliated Company the amount of such expenses
previously reimbursed to him.
3. BENEFITS.
(a) PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS. The Employee
shall be entitled while employed hereunder to participate in, and receive
benefits under, all plans relating to pension, thrift, profit-sharing, group
life insurance, medical coverage, education, incentive stock options,
non-qualified stock options, restricted sock plans, stock appreciation rights,
and other retirement or employee benefits or combinations thereof, that are
maintained for the benefit of the Employer's or any Affiliated Company's
executive employees or employees generally, PROVIDED THAT the Board of
Directors of Employer in its discretion may make different provisions for
bonuses and bonus programs for the Employee than those for other executive
employees, and PROVIDED FURTHER THAT the Employee's benefits shall not be less
favorable than the benefits of other executives of WIB or the Employer.
(b) DISABILITY AND SPLIT DOLLAR LIFE INSURANCE. During the term of the
Employee's employment under this Agreement, the Employer shall (i) provide
disability insurance covering the Employee on terms and conditions no less
favorable than those in effect at the date of this Agreement, which in any
event shall pay the Employee not less than five thousand five hundred dollars
($5,500.00) per month and (ii) maintain on a split dollar basis a whole life
insurance policy on the life of Employee in the face amount of two hundred
fifty thousand dollars ($250,000.00) payable to the beneficiary or
beneficiaries designated by Employee. The Employer agrees to pay all premiums
on the disability and the whole life policy during the term of employment
provided herein. Upon any termination of employment of the Employee hereunder
(other than death), the Employee shall have the right to purchase from the
Employer the whole life insurance policy referred to above for a cash
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purchase price equal to the cash surrender value of the policy as of the end
of the calendar month next preceding such termination. Any such election by
the Employee shall be made in writing within thirty (30) days after the date
of his termination of employment and settlement thereon shall take place at
the offices of the Employer within thirty (30) days thereafter. Employee
agrees to submit to a physical examination and other reasonable requests made
at any time by Employer for the purpose of Employer's obtaining and
maintaining life insurance on the life of Employee, PROVIDED, HOWEVER, THAT
Employer shall bear the entire cost of any requested examination.
(c) INDEMNIFICATION.
To the extent permitted by their respective articles of incorporation and
by-laws and by applicable law, WIB and the Employer jointly and severally shall
indemnify, defend, save, hold harmless and protect Employee from and against all
suits, proceedings, claims, demands, liabilities, obligations ("liabilities"),
losses, damages, interest, penalties, costs and expenses, including but not
limited to attorneys' fees, court costs and settlements ("losses"), which
Employee may actually and reasonably sustain or incur, directly or indirectly,
by reason of or arising from his employment with the Employer hereunder, as long
as Employee acted in good faith and in a manner he reasonably believed was in
the best interest of the Employer and its Affiliated Companies. This
indemnification shall not extend to liabilities or losses which are caused by
the Employee willfully or by the Employee's gross negligence.
(d) AUTOMOBILE.
(1) While the Employee is employed under this Agreement, the Employer
shall provide the Employee with the exclusive use of a Mercedes 320 or a
comparable automobile, with optional equipment of Employee's selection.
The automobile shall be used primarily for
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business purposes. The automobile shall be new when first provided and
shall be replaced after three years.
(2) The Employer shall pay all operating expenses of the automobile.
(3) The Employer shall procure and maintain an automobile liability
insurance policy on the automobile, with coverage including the Employee
and the Employee's spouse, in the minimum amounts of three million dollars
($3,000,000) for bodily injury or death to any one person in any one
accident, and one million dollars ($1,000,000) for property damage in any
one accident.
(4) In accordance with the policies of the Employer's Board of
Directors as in effect from time to time, the Employee shall (i) keep
records of personal and business use of the automobile, and (ii) reimburse
the Employer for expenses connected with the personal use of the automobile
by the Employee or his spouse, and/or realize such expenses as taxable
income to the Employee in accordance with such policies.
4. TERM. The term of employment under this Agreement shall be a period
of five (5) years commencing on January 1, 1996.
5. VACATIONS. The Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time, PROVIDED
that:
(a) During the term of employment under this Agreement, the Employee shall
be entitled to not less than twenty (20) days of paid vacation per year; and
(b) During each calendar year, the Employee shall take at least two (2)
consecutive weeks of vacation. The timing of vacations shall be scheduled in
a reasonable manner by the Employee.
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6. INVOLUNTARY TERMINATION OF EMPLOYMENT IN THE ABSENCE OF A CHANGE IN
CONTROL.
(a) The terms "involuntarily terminated" or "involuntary termination" in
this Agreement shall refer to the termination of the employment of Employee
without his express written consent. In addition, a diminution of or
interference with the Employee's duties, responsibilities and benefits as
President and Chief Executive Officer of the Employer shall be deemed and
shall constitute an involuntary termination of employment without cause to the
same extent as express notice of such involuntary termination. Any of the
following actions shall constitute such diminution or interference unless
consented to in writing by the Employee: (1) a change in the principal
workplace of the Employee to a location outside of a thirty-five (35) mile
radius from the Employer's headquarters office as of the date hereof; (2) a
demotion of the Employee, a material reduction in the number or seniority of
other personnel of the Employer reporting to the Employee, or a material
reduction in the frequency with which, or in the nature of the matters with
respect to which, such personnel are to report to the Employee, other than as
part of an Employer-wide reduction in staff; (3) a material reduction or
adverse change in the salary, perquisites, benefits, contingent benefits or
vacation time which had theretofore been provided to the Employee, other than
as permitted under Section 2(a) of this Agreement or as part of an overall
program applied uniformly and with equitable effect to all members of the
senior management of the Employer; and (4) a material permanent increase in
the required hours of work or the workload of the Employee.
(b) The Board of Directors of the Employer may terminate the Employee's
employment at any time, but any such termination other than termination for
cause (as defined below) shall not prejudice the Employee's right to
compensation or other benefits and rights under this Agreement. If during the
term of this Agreement, the employment of the Employee is involuntarily
terminated other than for cause (as defined below) and not in connection with
or within one hundred eighty days
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(180) days following a Change in Control (as defined below), the Employer shall
(i) within five (5) business days after the date of termination of employment,
pay to the Employee in a lump sum the amount of his annual salary at the rate in
effect immediately prior to the date on which his employment terminates, (ii)
for a period of one year immediately following such date, provide him with
substantially the same medical and, if applicable, dental insurance benefits, at
the same cost, if any, to the Employee, as he was receiving immediately before
such date, and (iii) at the time when a bonus would next be payable pursuant to
Section 2(b) of this Agreement, pay to the Employee in cash an amount equal to
the product of (a) the amount of the bonus which would have been payable then
had he continued to be employed, multiplied by (b) a fraction the numerator of
which is the number of days in the period commencing on January 1 of the fiscal
year in which his employment was terminated and concluding on the date on which
his employment was terminated and the denominator of which is 365.
7. TERMINATION FOR CAUSE.
(a) For purposes of this Agreement, termination for cause shall include
termination for personal dishonesty, incompetence, willful misconduct, breach
of a fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order
against the Employee, refusal to remedy a conflict of interest as provided in
Section 1(b) of this Agreement, or material breach of any provision of this
Agreement.
(b) In case of termination of the Employee's employment for cause, the
Employer shall pay the Employee his salary and provide him with his benefits
through the date of termination, and the Employer and WIB shall have no
further obligation to the Employee under this Agreement, except
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relating to the right of the Employee to purchase the whole life insurance
policy as described in Section 3(b)(ii) above.
8. VOLUNTARY TERMINATION OF EMPLOYMENT. The Employee's employment may be
voluntarily terminated by the Employee at any time upon one hundred twenty
(120) days' written notice to the Employer or upon such shorter period as may
be agreed upon between the Employee and the Board of Directors of the
Employer. In the event of such voluntary termination (except in the case of
voluntary termination on account of a diminution of or interference with the
Employee's duties, responsibilities or benefits which shall constitute an
involuntary termination without cause), the Employer shall be obligated to
continue to pay the Employee his salary and benefits only through the date of
termination, and the Employer and WIB shall have no further obligation to the
Employee under this Agreement, except relating to the right of the Employee to
purchase the whole life insurance policy as described in Section 3(b)(ii)
above.
9. DEATH OF THE EMPLOYEE. In the event of the death of the Employee
during the term of employment under this Agreement and prior to any
termination hereunder, the Employee's estate, or such person as the Employee
may have previously designated in writing, shall be entitled to receive from
the Employer in cash in a lump sum the amount of the Employee's per annum
salary at the time of his death. In addition, his surviving spouse, if any,
shall be entitled to receive for a period of one year from the date of the
Employee's death (i) substantially the same medical, and, if applicable,
dental benefits as the spouse received in connection with the Employee's
employment immediately prior to his death, at the same cost to the spouse as
the Employee paid, if any, immediately prior to his death for such insurance
coverage for the spouse, such coverage to be secondary coverage so long as the
spouse has other medical and dental benefits, and (ii) the use of the same
automobile as the Employer provided to the Employee pursuant to Section
3(d)(1) on the date of his death. During
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such one year period, the Employer shall pay the operating expenses of the
automobile and maintain insurance on the automobile with coverage for the
Employee's spouse in the minimum amounts specified in Section 2(d)(3) of this
Agreement, and the Employee's spouse shall maintain records of her use of the
automobile and reimburse the Employer in accordance with Section 3(d)(4) of
this Agreement.
10. INVOLUNTARY TERMINATION OF EMPLOYMENT IN CONNECTION WITH CHANGE IN
CONTROL.
(a) For purposes of this Agreement, the term "Change in Control" shall
mean (1) that any person (as defined below) other than persons who are holders
of record of the common stock of WIB as of the date of this Agreement is or
becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly of securities issued by the Employer or by WIB
representing 50% or more of the Employer's or WIB's outstanding securities; or
(2) a reorganization, merger, consolidation, sale of all or substantially all
of the assets of the Employer or WIB or a similar transaction in which the
Employer or WIB is not the resulting entity. The term "Change in Control"
shall not include an acquisition of securities by an employee benefit plan of
the Employer or WIB. The term "person" shall have the meaning assigned under
Sections 3(a)(9) and 13(d)(3) of the Exchange Act and regulations thereunder.
(b) If during the term of this Agreement, the employment of the Employee is
involuntarily terminated (other than for cause as defined in Section 7 of this
Agreement) in connection with or within one hundred eighty (180) days following
a Change in Control, the Employer shall (i) within five (5) business days after
the date of termination of employment, pay to the Employee in a lump sum twice
the amount of his annual salary at the rate in effect immediately prior to the
date on which his employment terminates, and (ii) for a period of two years
immediately following such date,
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provide him with substantially the same medical and, if applicable, dental
insurance benefits, at the same cost, if any, to the Employee, as he was
receiving immediately before such date.
11. EFFECT OF CERTAIN FDIC ACTIONS.
(a) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Employer's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA"),
12 U.S.C. Section 1818(e)(3) and (g)(1), the Employer's obligations under this
Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, or the
temporary suspension or prohibition terminates without imposition of a
permanent suspension or prohibition, the Employer shall (i) pay the Employee
all or part of the compensation withheld while its obligations under this
Agreement were suspended and (ii) reinstate all of its obligations which were
suspended.
(b) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Employer's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the FDIA, 12 U.S.C. Section 1818(e)(4) and
(g)(1), all obligations of the Employer and WIB under this Agreement shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(c) If the Employer is in default (as defined in Section 3(x)(1)) of the
FDIA, 12 U.S.C. Section 18183(x)(1)) all obligations under this Agreement
shall terminate as of the date of default, but this provision shall not affect
any vested rights of the contracting parties.
(d) All obligations under this Agreement shall be terminable, except to
the extent that continuation of this Agreement is determined necessary for the
continued operation of the Employer: (i) by the Federal Deposit Insurance
Corporation ("FDIC") at the time the FDIC enters into an agreement to provide
assistance to or on behalf of the Employer under the authority contained in
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Section 13(c) of the FDIA; or (ii) by FDIC at the time it approves a
supervisory merger to resolve problems related to operation of the Employer.
Any rights of the parties that have already vested, however, shall not be
affected by any such action.
12. CERTAIN REDUCTION IN PAYMENTS AND BENEFITS IN THE EVENT OF A CHANGE
IN CONTROL. Notwithstanding any other provision of this Agreement, if the
amounts and the value of benefits to be received under this Agreement,
together with any other amounts and the value of benefits received or to be
received by the Employee in connection with a change in ownership or control,
as defined in Section 280G of the Internal Revenue Code of 1986, as amended,
and regulations thereunder ("Section 280G"), would cause any amount to be
nondeductible by the Employer or WIB for federal income tax purposes pursuant
to or by reason of Section 280G, then payments and benefits under this
Agreement shall be reduced (not less than zero) to the extent necessary so as
to maximize amounts and the value of benefits to be received by the Employee
without causing any amount to become nondeductible pursuant to or by reason of
Section 280G. The Employee shall determine the allocation of such reduction
among payments and benefits to the Employee.
13. PAYMENTS BY WIB. To the extent, if any, that WIB pays to the
Employee a bonus pursuant to the bonus plan referred to in Section 2(b) of
this Agreement, or otherwise makes a payment or provides a benefit to the
Employee which is an obligation of the Employer hereunder, such obligation of
the Employer shall be deemed to be satisfied.
14. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and neither
party may assign or delegate any of its rights or obligations hereunder
without first obtaining the written consent of the other party.
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(b) This Agreement and all rights of the Employee hereunder shall inure to
the benefit of and be enforceable by the Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Employee should die while any amounts would
still be payable to the Employee hereunder if the Employee had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Employee's devisee, legatee
or other designee or if there is no such designee, to the Employee's estate.
15. NOTICE. For the purposes 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 personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement (PROVIDED that all
notices to the Employer or to WIB shall be directed to the attention of the
Board of Directors with a copy to the Secretary of such entity), or to such
other address as any party may have previously furnished to the others in
writing. Notices delivered personally shall be deemed communicated as of the
date of actual receipt; mailed notices shall be deemed communicated as of the
date of mailing by certified mail, return receipt requested.
16. EFFECT OF WAIVER. The failure of either party to insist on strict
compliance with any of the terms, covenants or conditions of this Agreement by
the other party shall not be deemed a waiver of that term, covenant or
condition, nor shall any waiver or relinquishment of that right or power at
any one time or times be deemed a waiver or relinquishment of that right or
power for all or any other times.
17. ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Employee by the
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Employer and Affiliated Companies, and contains all of the covenants and
agreements between the parties with respect to that employment in any manner
whatsoever. Each party to this Agreement acknowledges that no representation,
inducements, promises or agreements, orally or otherwise, have been made by
any party or anyone acting on behalf of any party, which are not embodied
herein, and that no other agreement, statement or promise contained in this
Agreement shall be valid or binding on either party.
18. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein
otherwise provided.
19. PARAGRAPH HEADINGS. The paragraph headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
20. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
21. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California and venue for any action
brought to enforce or interpret the terms of this Agreement shall be
exclusively Orange County, California.
22. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or the performance thereof shall be settled by final and
binding arbitration in accordance with the then obtaining Seven Step Rules of
Practice and Procedure (Rules of Practice and Procedure for the Arbitration of
Commercial Disputes) of Judicial Arbitration and Mediation Services, Inc. The
Employee hereby places his initials (________) to indicate that he has read
this provision requiring arbitration of disputes under this Agreement.
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23. PREVAILING PARTY'S ATTORNEYS FEES. In the event that a dispute under
this Agreement is resolved by arbitration pursuant to Section 22 of this
Agreement or by a court of competent jurisdiction, the party or parties which
do not prevail party shall reimburse the prevailing party or parties for the
amount of all of the prevailing party's or parties' reasonable costs incurred
in connection with such arbitration or court proceeding, including without
limitation fees for attorneys and expert witnesses.
24. EMPLOYEE'S COUNSEL. The Employee hereby acknowledges that he has
obtained the advice of his own legal counsel in connection with the
negotiation and drafting of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
WESTERN INTERSTATE BANCORP
By: /s/ XXXXX X. XXXXXXX
--------------------------------
Xxxxx X. Xxxxxxx, Chairman of
the Board
CITIZENS THRIFT & LOAN ASSOCIATION
By: /s/ XXXXX X. XXXXXXX
--------------------------------
Xxxxx X. Xxxxxxx, Chairman of
the Board
EMPLOYEE
/s/ XXXXXXX X. XxXXXXX
------------------------------------
Xxxxxxx X. XxXxxxx
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AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT ("Amendment") is made and
entered into as of the __ day of ________ 1997, by and among RAC FINANCIAL
GROUP, INC., a Nevada corporation ("RAC"), CITIZENS THRIFT & LOAN ASSOCIATION, a
California industrial loan company (the "Employer") and XXXXXXX X. XxXXXXX, an
individual resident of California (the "Employee").
WHEREAS, the Employee is employed by the Employer in an executive capacity
pursuant to the terms of that certain Employment Agreement, dated as of January
1, 1996 (the "Employment Agreement"), by and among WESTERN INTERSTATE BANCORP, a
California corporation ("Western"), and the Employer; and
WHEREAS, Western, RAC and its subsidiary have entered into that certain
Agreement and Plan of Merger, dated as February__, 1997 (the "Merger
Agreement"), pursuant to which such subsidiary is merging with and into Western;
and
WHEREAS, the Employer desires that the Employee continue as an employee of
the Employer pursuant to the terms and provisions of the Employment Agreement,
with such changes and modifications thereto as provided in this Amendment, and
the Employee desires to be so employed;
NOW, THEREFORE, in consideration of the Employee's continued employment by
the Employer and the mutual promises and benefits contained herein and in the
Employment Agreement, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Section 2(a) of the Employment Agreement is hereby amended to add a
new fourth sentence thereto as follows:
"Upon the closing date of the transactions provided for in the Merger
Agreement (the "Effective Date"), the per annum salary of the Employee
shall be Two Hundred Twenty-five Thousand Dollars ($225,000)."
2. Section 2(a) is further amended hereby to amend and restate the seventh
sentence thereof as follows:
"The Employee's per annum salary in effect hereunder may not be
reduced below Two Hundred Twenty-five Thousand Dollars ($225,000)
during the term of this Agreement."
3. Section 2(b) of the Employment Agreement is hereby deleted and a new
Section 2(b) is hereby added as follows:
"(b) BONUS PLAN. The Employee shall be paid an annual bonus by RAC of
One Hundred Eighty-Five Thousand Dollars ($185,000) within 30 days
following the end of each fiscal year of RAC during the term of this
Agreenment. In addition, following the end of each fiscal year of
RAC, the Board of Directors of RAC, or any duly authorized committee
or officer thereof, in their sole discretion, may elect to cause RAC
to award to Executive an additional cash bonus. In addition, the
Employee shall be entitled to receive a bonus within 90 days of the
Effective Date for the period commencing January 1, 1997 and ending on
the Effective Date (the "Interim Bonus Period") equal to the bonus
that the Employee would have been entitled to receive had the Interim
Bonus Period consisted of an entire fiscal year under Section 2(b) of
this Agreement, prior to the Amendment, based upon the unaudited
financial statements of the Employer for the Interim Bonus Period.
Provided, however, that the amount of the bonus paid to the Employee
for the Interim Bonus Period shall be subtracted from the bonus
payable under Section 2(b) as amended by the Amendment."
4. The following language is hereby added to the end of Section 3(a):
"Notwithstanding the foregoing, effective February 7, 1997, the
Employee and the Employer have entered into a Stock Option Agreement
providing the Employee with an option to purchase 50,000 shares of
common stock of RAC at a price equal to $28.50 per share (the "Initial
Options"). The Initial Options shall be vested as to 16,666 shares on
the Effective Date, an additional 16,666 shares on the first
anniversary of the Effective Date, and as to the remaining balance on
the second anniversary of the Effective Date. In addition, during
each year of the term of this Agreement, the Employer shall pay up to
$5,000 of the Employee's legal and accounting expenses related to tax
or estate planning."
5. Except as modified hereby, the provisions of the Employment Agreement
shall remain in full force and effect.
6. This Amendment shall be governed by and construed in accordance with
the laws of the State of California, without regard to principals of conflicts
of laws.
7. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
RAC FINANCIAL GROUP, INC.
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
CITIZENS THRIFT & LOAN ASSOCIATION
------------------------------------
Xxxxx X. Xxxxxxx, Chairman of
the Board
EMPLOYEE
By:
--------------------------------
Xxxxxxx X. XxXxxxx
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