Exhibit 10.5
AGREEMENT
THIS AGREEMENT entered into this 17th day of August, 1994, by and between
Northbay Savings Bank, F.S.B. (the "Bank"), and Granville I. Stark (the
"Employee"), effective as of the date hereof.
WHEREAS, the Employee has heretofore been employed by the Bank as Senior
Vice President; and
WHEREAS, the Bank deems it to be in its best interest to enter into this
Agreement as additional incentive to the Employee to continue as an executive
employee of the Bank; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event of
termination of Employee's employment under the circumstances set forth in this
Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. Payment in the Event of Change in Control.
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(a) If the Employee's employment is terminated by the Bank, without
the Employee's prior written consent and for a reason other than Just Cause, in
connection with or within twenty-four (24) months after any change in control of
the Bank or Northbay Financial Corporation (the "Company"), the Employee shall
be paid an amount equal to two and one half (2 1/2) times the Employee's "base
amount," as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code") and regulations promulgated thereunder, plus the cost of
obtaining all health benefits which Employee would have been eligible to
participate in through the then remaining term of this Agreement based upon the
benefit levels substantially equal to those that the Bank provided to the
Employee at the date of termination of employment. In no event, however, shall
such payments be greater than the product of 2.99 and the Employee's "base
amount" as defined in Section 280G(b)(3) of the Code. Said sum shall be paid in
one lump sum within ten (10) days of such termination. The term "change in
control" shall mean (1) the ownership, holding or power to vote more than 25% of
the Bank's or Company's voting stock, (2) the control of the election of a
majority of the Bank's or Company's directors, (3) the exercise of a controlling
influence over the management or policies of the Bank or Company by any person
or by persons acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934) (except in the case of (1), (2) and (3) hereof,
ownership or control of the Bank by the Company itself shall not constitute a
"change in control"), or (4) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Bank or Company (the "Continuing Directors") cease for any
reason to constitute at least two-thirds thereof, provided that any individual
whose election or nomination for election as a member of the Bank or Company
Board was approved by a vote of at least two-thirds of the Continuing Directors
then in office
shall be considered a Continuing Director. Notwithstanding the foregoing, a
change in control shall not be deemed to have occurred with respect to the
purchase of shares by underwriters in connection with a public offering. The
term "person" means an individual other than the Employee, or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.
(b) Notwithstanding any other provision of this Agreement to the
contrary, the Employee may voluntarily terminate his employment within twenty-
four (24) months following a change in control of the Bank and the Employee
shall thereupon be entitled to receive the payment described in Section 1(a) of
this Agreement, upon the occurrence of any of the following events, or within
ninety (90) days thereafter, which have not been consented to in advance by the
Employee in writing: (i) the requirement that the Employee move his personal
residence, or perform his principal executive functions, more than thirty-five
(35) miles from his primary office as of the date of a change in control; (ii) a
material reduction in the Employee's base compensation, perquisites or benefits
as in effect on the date of a change in control or as the same may be increased
from time to time; (iii) the assignment to the Employee of duties and
responsibilities other than those normally associated with his position as
referenced in the recitals introducing this Agreement; or (iv) a material
diminution or reduction in the Employee's responsibilities or authority
(including reporting responsibilities) in connection with his employment with
the Bank.
2. Term. This Agreement shall remain in effect for the period commencing
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on the Effective Date and ending on the earlier of (i) the date thirty-six
months after the Effective Date, and (ii) the date on which the Employee
terminates employment with the Bank; provided that the Employee's rights
hereunder shall continue following the termination of this employment with the
Bank under any of the circumstances described in Sections 1(a) or (b) hereof.
Additionally, on each annual anniversary date from the Effective Date, the term
of this Agreement shall be extended for an additional one-year period beyond the
then effective expiration date provided the Board of Directors of the Bank
determines in a duly adopted resolution that the performance of the Employee has
met the Board's requirements and standards, and that this Agreement shall be
extended.
3. Termination or Suspension Under Federal Law.
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(a) Termination for "Just Cause" shall mean termination because of, in
the good faith determination of the Bank's Board of Directors, the Employee's
personal dishonesty, incompetence, willful misconduct, breach of 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, or material breach of any
provision of this Agreement. The Employee shall have no right to receive
compensation or other benefits for any period after termination for Just Cause.
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(b) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C. 1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement
shall terminate, as of the effective date of the order, but the vested rights of
the parties shall not be affected.
(c) If the Bank is in default (as defined in Section 3(x)(1) of FDIA),
all obligations under this Agreement shall terminate as of the date of default;
however, this Paragraph shall not affect the vested rights of the parties.
(d) All obligations under this Agreement shall terminate, except to the
extent that continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the Director of the Office of Thrift Supervision
("Director of OTS"), or his or her designee, at the time that the Federal
Deposit Insurance Corporation ("FDIC") or the Resolution Trust Corporation
enters into an agreement to provide assistance to or on behalf of the Bank under
the authority contained in Section 13(c) of FDIA; or (ii) by the Director of the
OTS, or his or her designee, at the time that the Director of the OTS, or his or
her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director of the OTS
to be in an unsafe or unsound condition. Such action shall not affect any
vested rights of the parties.
(e) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12
U.S.C. 1818(e)(3) and (g)(1)) suspends and/or temporarily prohibits the Employee
from participating in the conduct of the Bank's affairs, the Bank's obligations
under this agreement shall be suspended as of the date of such service, unless
stayed by appropriate proceedings. If the charges in the notice are dismissed,
the Bank shall (i) pay the Employee all or part of the compensation withheld
while its contract obligations were suspended, and (ii) reinstate (in whole or
in part) any of its obligations which were suspended.
4. Expense Reimbursement.
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In the event that any dispute arises between the Employee and the Bank
as to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, including any action that the Employee
takes to enforce the terms of this Agreement or to defend against any action
taken by the Bank, the Employee shall be reimbursed for all costs and expenses,
including reasonable attorneys' fees, arising from such dispute, proceedings or
actions, provided that the Employee shall obtain a final judgment by a court of
competent jurisdiction in favor of the Employee. Such reimbursement shall be
paid within ten (10) days of Employee's furnishing to the Bank written evidence,
which may be in the form, among other things, of a cancelled check or receipt,
of any costs or expenses incurred by the Employee.
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5. Successors and Assigns.
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(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank.
(b) Since the Bank is contracting for the unique and personal skills
of the Employee, the Employee shall be precluded from assigning or delegating
his rights or duties hereunder without first obtaining the written consent of
the Bank.
6. Amendments. No amendments or additions to this Agreement shall be
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binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
7. Applicable Law. Except to the extent preempted by Federal law, the
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laws of the State of California shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
8. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
9. Entire Agreement. This Agreement, together with any understanding or
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
ATTEST: NORTHBAY SAVINGS BANK, F.S.B.
_________________________ By: _______________________________
Secretary
Its: ______________________________
WITNESS:
_________________________ ___________________________________
Employee
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