EMPLOYMENT SECURITY AGREEMENT
This EMPLOYMENT SECURITY AGREEMENT (the "Agreement") by and among SC
BANCORP, a California corporation (the "Company"), SOUTHERN CALIFORNIA BANK, a
California corporation and a wholly owned subsidiary of the Company (the
"Bank"), and Mark B. Metzinger (the "Executive"), is entered into as of May 1,
1995 (the "Agreement Date").
W I T N E S S E T H
WHEREAS, the Company and the Bank wish to assure themselves and the
Executive of continuity of senior management during the term of this Agreement
and to provide the Executive with certain termination benefits in the event the
Executive's employment is terminated under certain circumstances; and
WHEREAS, should the possibility of a change in control of the Company
arise, the Board of Directors believes it imperative that the Company, the Bank
and the Board be able to rely upon the Executive to continue in his position,
and that the Company and the Bank be able to receive and rely upon the
Executive's advice,
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if it requests such advice, as to the best interests of the Company, without
concern that he might be distracted by the personal uncertainties and risks
created by the possibility of a change in control; and
WHEREAS, should the possibility of a change in control arise, in addition
to the Executive's regular duties, the Executive may be called upon to assist in
the assessment of such possible change in control, to advise management and the
Board as to whether such change in control would be in the best interests of the
Company and to take such other actions as the Board might determine to be
appropriate;
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties do hereby agree as follows:
SECTION 1. TERM OF AGREEMENT
This Agreement shall be effective as of the Agreement Date and shall
continue in effect until the Expiration Date (as defined below). The
"Expiration Date" shall initially be July 31, 1996, but commencing on August 1,
1995 and each August 1 thereafter, the Expiration Date shall automatically be
extended
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by one additional year unless, not later than April 30 of such year, the
Company shall have given notice to the Executive that it does not wish to
extend the Expiration Date; PROVIDED, HOWEVER, that if a Change in Control (as
defined in Section 2, below) shall have occurred prior to the original or
extended Expiration Date, the Expiration Date shall automatically become the
second anniversary of the last day of the month in which the Change in Control
occurred. Notwithstanding the foregoing, the Expiration Date shall be any
earlier date on which the Executive's employment with the Company or the Bank
terminates, in the event such termination occurs prior to a Change in Control.
SECTION 2. DEFINITION OF "CHANGE IN CONTROL"
For purposes of the Agreement, a "Change in Control" shall be deemed to
have occurred if and when:
(a) the Company shall consummate a merger or consolidation (a
"Transaction") with another corporation; PROVIDED, HOWEVER, that
a Change of Control shall not be deemed to have occurred with
respect to a Transaction if the beneficial owners of the
outstanding shares entitled to vote in the election of directors
immediately prior to such Transaction will beneficially own more
than fifty percent (50%) of the outstanding shares entitled to
vote in the election of directors of the
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corporation resulting from the consummation of the Transaction;
or
(b) thirty percent (30%) of the Company's securities then entitled to
vote in the election of directors shall be acquired by any
"person" (as such term is used in Sections 13(d) of the
Securities Exchange Act of 1934, as amended); or
(c) during any period of twenty-four (24) consecutive months,
individuals who at the beginning of such period were members of
the Board of Directors of the Company (the "Incumbent Board")
shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company, provided that any
person becoming a director subsequent to the beginning of such
period whose election or nomination for election was approved by
a vote of at least seventy-five percent (75%) of the directors
comprising the Incumbent Board shall be, for purposes hereof,
considered as though such person were a member of the Incumbent
Board; or
(d) the Company shall sell substantially all of its assets to another
corporation.
SECTION 3. COVERED TERMINATION
The termination benefits described in Section 4 hereof shall be provided to
the Executive in the event that his employment with the Company or the Bank is
terminated following a Change of Control on account of a "Covered Termination".
"Covered Termination" shall mean (i) termination of employment by the
Company or the Bank other than for "Cause" as
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described below or (ii) termination of employment by the Executive for "Good
Reason" as described below.
A. TERMINATION BY COMPANY OR BANK FOR CAUSE.
For purposes hereof, the Company and the Bank shall have "Cause" to
terminate the Executive's employment if:
(i) the Executive is grossly negligent or engages in willful
misconduct in the performance of his material duties; or
(ii) the Executive commits an act or acts of dishonesty resulting or
intended to result directly or indirectly in gain or personal
enrichment at the expense of the Company or the Bank; or
(iii) the Executive discloses to a third party information that is of a
confidential or proprietary nature to the Company or the Bank,
other than as appropriate in the normal course of the performance
of his duties; or
(iv) the Executive suffers from an illness, injury or other incapacity
that prevents him from performing his material duties for a total
of six (6) months, whether or not consecutive, within a twelve
(12) month period; or
(v) the Executive's death occurs.
B. TERMINATION BY EXECUTIVE FOR GOOD REASON.
For purposes hereof, following a Change in Control the Executive may
terminate his employment for Good Reason if:
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(i) the Executive's then-current level of annual base salary (whether
payable by the Company or the Bank) is reduced; or
(ii) there is any reduction in the employee benefit coverage provided to
the Executive (including pension, profit sharing and welfare
benefits and perquisites, but not including incentive bonuses) from
the coverage levels in effect immediately prior to the Change in
Control, unless, however, the Company or the Bank provides
substantially equivalent employee benefits to the Executive; or
(iii) the Executive suffers a material diminution in his title, position,
reporting relationship, responsibilities, authority or offices; or
(iv) there is a relocation of the Executive's principal business office
by more than fifty (50) miles from its existing location; or
(v) the Company fails to obtain assumption of this agreement by any
successor or assign of the Company;
PROVIDED, HOWEVER, that any termination by the Executive for Good Reason must be
made in good faith.
C. NOTICE.
Notwithstanding the foregoing provisions of this Section 3, no such
termination of the Executive's employment for Good Reason under paragraph B
above shall be treated as a Covered Termination unless (i) the Executive shall
give written notice to the Company, not later than thirty (30) days prior to the
effective date of any such termination for Good Reason and within six (6) months
after the date the Executive first becomes entitled to
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terminate for Good Reason on account of the event(s) forming the basis for such
termination, setting forth in specific detail the basis for such termination for
Good Reason, and (ii) the Company or the Bank shall not, within thirty (30) days
after receipt of such notice, take actions reasonably acceptable to the
Executive to remedy the circumstances leading to the termination for Good
Reason.
SECTION 4. CONSEQUENCES OF COVERED TERMINATION
In the event that the employment of the Executive shall have been terminated
after a Change in Control in a manner that shall constitute a Covered
Termination under Section 3 above, the Company shall make payments to, and
provide benefit coverage for, the Executive as described below in this Section
4.
A. BASE SALARY.
The Executive shall receive an initial installment (the "Initial"
Installment") equal to one-half of the highest annual base salary amount paid
(by either the Company or the Bank) to the Executive within the three years
preceding the Covered Termination. The Initial Installment shall be paid to the
Executive within fifteen (15) business days following the Covered Termination.
In addition, the Executive shall receive four (4)
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subsequent installments, each equal to one-fourth of the highest annual base
salary amount paid to the Executive within the three years preceding the Covered
Termination (each such installment a "Quarterly Installment", and in the
aggregate, the "Quarterly Installments"). The first Quarterly Installment shall
be paid to the Executive within one hundred and eighty days (180) following the
payment of the Initial Installment. The remaining three Quarterly Installments
shall be paid to the Executive within one hundred and twenty (120) days of the
payment of the prior Quarterly Installment. The highest annual base salary
amount shall not include any bonuses awarded to the Executive.
B. STOCK OPTIONS.
Immediately upon a Covered Termination, any stock options granted to the
Executive under any Company incentive plan that were not fully vested and
exercisable shall become fully vested and immediately exercisable. Such options
will be exercisable for a period of 90 days from the date of the Covered
Termination (or such greater period as may be provided in the related plan).
Any restrictions on payment or transfer of previously granted incentive awards
shall immediately lapse.
C. WELFARE BENEFITS.
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The Company and the Bank shall continue to maintain, in full force and
effect, any "Welfare Benefits," such as life insurance coverage and health and
disability benefits, which were being provided to the Executive at the time of
the Covered Termination during the "Continuation Period." The Continuation
Period shall mean the eighteen (18) month period following the date of a Covered
Termination.
Notwithstanding the above, the Company or the Bank may provide coverage and
benefits under separate insured arrangements that provide benefits substantially
identical to those being provided to the Executive at the time of the Covered
Termination.
In addition, the Executive's right to any particular type of Welfare Benefit
shall be subject to cancellation by the Company or the Bank if the Executive
obtains alternative coverage of a similar type during the Continuation Period
that is at least as favorable to the Executive as the corresponding Welfare
Benefit. The Executive shall be obligated to notify the Company of any such
alternative coverage within thirty (30) days of it first becoming applicable to
him.
D. WITHHOLDING FOR TAXES.
All payments required to be made by the Company to the Executive under this
Agreement shall be subject to the
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withholding of such amounts, if any, relating to tax, excise tax and other
payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation.
SECTION 5. ARBITRATION
Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration, conducted before a panel of three
arbitrators in the State of California, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. If the Company or the Bank
is found to have breached this Agreement, the Company shall bear the expense of
the arbitration proceeding and shall reimburse the Executive for all of his
reasonable costs and expenses relating to such arbitration proceeding,
including, without limitation, reasonable attorneys' fees and expenses. In no
event shall the Executive be required to reimburse the Company or the Bank for
any of the costs or expenses relating to such arbitration proceeding.
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SECTION 6. NOTICES
All notices, requests, demands and other communications provided for by this
Agreement shall be in writing and shall be sufficiently given if and when mailed
in the continental United States by registered or certified mail or personally
delivered to the party entitled thereto at the address stated below or to such
changed address as the addressee may have given by a similar notice:
TO THE COMPANY:
SC Bancorp
3800 East LaPalma Avenue
Anaheim, California 92807
TO THE EXECUTIVE:
Mark B. Metzinger
33935 Faeroe Bay
Dana Point, California 92629
SECTION 7. GENERAL PROVISIONS
A. ENTIRETY OF AGREEMENT.
This Agreement constitutes the entire agreement between the Company, the Bank
and the Executive relating to the subject matter hereof and shall supersede any
right under any other agreement relating to the subject matter hereof between
the Company or the Bank and the Executive existing as of the
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Agreement Date. Any compensation or benefits to which the Executive is entitled
under this Agreement shall be provided based solely upon its terms, without
regard to any materials used in the preparation or consideration of this
Agreement, including any summary of terms or estimate of amounts relating to
this Agreement.
B. ENFORCEABILITY.
If any provision of this Agreement shall be determined by a court of
competent jurisdiction to be, in whole or in part, unenforceable or contrary to
any statute, law, order, rule, regulation, directive or other action of any
federal or state regulatory agency having jurisdiction over the Company or its
subsidiary, then the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law. The validity,
interpretation, performance and enforcement of this Agreement shall be governed
by the laws of the State of California, without giving effect to the principles
of conflict of laws thereof.
C. MITIGATION.
The Executive shall not be obligated to seek other employment in mitigation
of the amounts payable and benefits to be provided under this Agreement.
Executive shall be obligated, however, to
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disclose to the Company his earned income (within the meaning of Internal
Revenue Code Section 911(d)(2)(A)) during the period ending eighteen (18) months
following the Covered Termination (the "Repayment Period"), and to remit to the
Company such earned income up to the amount of the Quarterly Installments. The
Company shall have the right to request Executive to produce reasonable evidence
substantiating the amount of Executive's earned income during the Repayment
Period.
D. ASSIGNMENT OF INTEREST.
No right to or interest in any payments shall be assignable by the Executive;
PROVIDED, HOWEVER, that this Agreement shall inure to the benefit of, and be
enforceable by, the Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees after the Executive's
death to the extent of any payments due in respect of the Executive hereunder.
E. COMPANY, BANK AND SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of the Company,
the Bank and any successor thereof including, without limitation, any
corporation or corporations acquiring directly or indirectly all or
substantially all of the assets of the Company, whether by merger,
consolidation, sale or otherwise
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(and such successor shall thereafter be deemed "the Company" for the purposes of
this Agreement), but shall not otherwise be assignable by the Company.
F. AMENDMENT, MODIFICATION AND WAIVER.
No provision of this Agreement may be amended, modified or waived unless such
amendment, modification or waiver shall be agreed to in a written agreement
signed by the Executive and by a duly authorized Company officer.
G. NO GUARANTEE OF EMPLOYMENT.
The parties hereto explicitly acknowledge that notwithstanding any provision
to the contrary contained herein, this Agreement shall not, in any way, be
interpreted to provide the Executive with any fixed or minimum term of
employment with the Company or the Bank.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SC BANCORP
BY
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Name:
Title:
SOUTHERN CALIFORNIA BANK
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BY
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Name:
Title:
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Mark B. Metzinger
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