EXHIBIT 10.3
EMPLOYMENT AGREEMENT
Agreement made as of the first day of January, 2001, between THE BANK OF
HEMET with its administrative office at 3715 Sunnyside Drive, Riverside, CA
92506, hereinafter referred to as "EMPLOYER", and JAMES B. JAQUA, 440 Emerald
Bay, Laguna Beach, California 92651, hereinafter referred to as "EXECUTIVE".
WITNESSETH
WHEREAS, EMPLOYER is desirous of employing EXECUTIVE in the capacity
hereinafter stated, and EXECUTIVE is desirous of entering into the employ of
EMPLOYER in such capacity, for the period and on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and conditions herein contained, the parties hereto, intending to be
legally bound, do hereby agree as follows:
1. EMPLOYMENT
EMPLOYER hereby employs EXECUTIVE as President and Chief
Executive Officer of EMPLOYER, and EXECUTIVE accepts the duties
that are customarily performed by the President and Chief
Executive Officer of a commercial bank in California, and accepts
all other duties described herein, and agrees to discharge the
same faithfully to the best of his ability and consistent with
the customary standards of the banking industry, in accordance
with the policies of the Board of Directors of EMPLOYER as
established, and in compliance with all laws and EMPLOYER'S
Articles of Incorporation and Bylaws. EXECUTIVE shall devote his
full business time and attention to the business and affairs of
EMPLOYER to which he may be elected or appointed and shall
perform the duties thereof to the best of his ability. For the
duration of this Agreement, EMPLOYER shall continue to nominate
EXECUTIVE as a Director of EMPLOYER. In the event that EMPLOYER
shall hire a new President and Chief Operating Officer of The
Bank of Hemet, EMPLOYER and EXECUTIVE agree that EXECUTIVE shall
assume the title of Chairman of the Board and Chief Executive
Officer of The Bank of Hemet.
2. TERM
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EMPLOYER hereby employs EXECUTIVE and EXECUTIVE hereby accepts
employment with EMPLOYER for the period of three (3) years,
hereinafter called the "TERM", commencing with the date of this
Agreement, subject however, to prior termination of this
Agreement as hereinafter provided. Where used herein, TERM shall
refer to the entire three year period of employment of EXECUTIVE
by EMPLOYER, whether for the period provided above, or whether
terminated earlier as hereinafter provided, or extended by mutual
agreement in writing by EMPLOYER and EXECUTIVE.
3. COMPENSATION
In consideration for all services to be rendered by EXECUTIVE to
EMPLOYER, EXECUTIVE'S base salary for 2001 shall be Two Hundred
Thirty-Eight Thousand Three Hundred Dollars ($238,300).
EXECUTIVE'S salary shall be paid semi-monthly as per the policy
of EMPLOYER. EMPLOYER shall deduct from EXECUTIVE'S salary all
taxes and withholding which may be required to be deducted or
withheld under any provision of California law.
4. INCENTIVE COMPENSATION
Immediately following each calendar year end throughout the term
of this Agreement EXECUTIVE shall be given a performance
evaluation by the Compensation Committee of EMPLOYER'S Board of
Directors, which shall address his achievement of corporate
goals, both quantitative and qualitative. Based upon this
evaluation, the Committee shall make a decision concerning
incentive compensation for EXECUTIVE. The granting of such
compensation and the amount thereof shall be entirely
discretionary on the part of the Committee and must be
appropriate to the contribution and performance of EXECUTIVE and
the performance of EMPLOYER as a whole. Such additional
compensation, if any, shall be paid to EXECUTIVE no later than
sixty (60) days after each year end, or thirty (30) days after
release of EMPLOYER'S audited financial statements, whichever is
later. If EXECUTIVE shall terminate employment prior to the
termination of this Agreement, EXECUTIVE shall receive a pro-rata
portion (based on the amount of time EXECUTIVE worked during the
partial year, exclusive of any vacation or sick time) of the
additional compensation, if any, provided in this paragraph.
5. REIMBURSEMENT
EMPLOYER agrees to reimburse EXECUTIVE for all ordinary and
necessary expenses incurred by EXECUTIVE on behalf of EMPLOYER,
including entertainment, meals and
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travel expenses. Any costs incurred by EXECUTIVE for conventions,
meetings, and seminars will be reimbursed, as will special social
entertainment expenses, provided the Board of Directors of
EMPLOYER approves such. EXECUTIVE agrees to maintain and provide
EMPLOYER with adequate records of expenses incurred in connection
with any cost which EMPLOYER has agreed to provide reimbursement.
EMPLOYER also agrees to pay the cost of an annual Executive
Physical Examination at a location of EXECUTIVE'S choice.
6. INSURANCE
EMPLOYER agrees to provide EXECUTIVE and his wife with such
medical insurance benefits as are provided by the group insurance
programs of EMPLOYER which are now or hereinafter be in effect.
EMPLOYER may apply for a "Keyman" life insurance policy with
EMPLOYER as beneficiary of the policy.
7. VACATION
EXECUTIVE shall be entitled to five (5) weeks of vacation, two
(2) weeks of which shall be consecutive, during each year of the
TERM. EXECUTIVE shall not be entitled to vacation pay in lieu of
vacation, and any vacation time not used shall be deemed waived.
EMPLOYER may waive the provision with respect to unused vacation
time.
8. TERMINATION
EMPLOYER shall have the right to terminate this Employment
Agreement for any of following reasons by serving written notice
upon EXECUTIVE:
(a) Willful breach of, or acts amounting to gross negligence
with respect to, or willful misconduct in the performance
of EXECUTIVE'S duties and obligations as President or
Chairman of the Board and Chief Executive Officer;
(b) Conviction of a felony;
(c) Removal order from a banking regulatory agency;
(d) Physical or mental disability rendering EXECUTIVE
incapable of performing his duties;
(e) Determination by a majority of EMPLOYER'S Board of
Directors that the continued employment of EXECUTIVE is
detrimental to the best interest of EMPLOYER'S
shareholders, or for any reason whatsoever as determined
by a majority of EMPLOYER'S Board of Directors and in
their sole and absolute discretion.
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(f) Death
In the event this Agreement is terminated for any of the reasons
specified in the paragraphs (a), (b), or (c) above, EXECUTIVE
shall be paid no further salary, but shall receive any pay in
lieu of vacation accrued but not taken, as of the date of
termination. The medical insurance benefits provided herein shall
be extended at EMPLOYEE'S sole cost, pursuant to C.O.B.R.A.
regulations.
In the event this Agreement is terminated for the reasons
specified in paragraph (d) above, EMPLOYER shall be responsible
for continuing the base salary and benefits due EXECUTIVE for a
period of twelve (12) months from the date of the disability, to
be offset by any disability insurance proceeds received during
the twelve (12) month period. In the event this Agreement is
terminated for the reason specified in paragraph (f) above,
EMPLOYER shall have no obligation to pay any salary or benefits
after the date of EXECUTIVE'S death, other than any pay in lieu
of vacation, accrued but not taken, prior to EXECUTIVE'S death,
which shall be paid to EXECUTIVE'S estate within thirty (30)
days. In the event this Agreement is terminated for the reasons
specified in paragraph (e) above, EXECUTIVE shall, within thirty
(30) days, be paid lump-sum termination pay in the amount of the
remainder of the base salary called for in this Agreement. Where
termination is pursuant to paragraph (e) above, any pay in lieu
of vacation accrued to, but not taken as of the date of
termination, shall be paid within thirty (30) days. In such case,
the medical insurance benefits provided herein shall be extended
at EMPLOYER'S sole cost for twelve (12) months following the date
of termination.
EXECUTIVE shall give one hundred twenty (120) days prior notice,
in writing, to EMPLOYER in the event EXECUTIVE resigns or
voluntarily terminates employment. The Board of Directors, at its
sole discretion, may reduce the number of days of prior notice
required or may waive the provision in its entirety.
Should EXECUTIVE resign or voluntarily terminate employment,
EXECUTIVE shall, for a period of one year, not become employed
with another banking institution whose Head Office is within a
fifty (50) mile radius of the Head Office of EMPLOYER. As the
degree of damage to EMPLOYER, should EXECUTIVE violate the
preceding non-competition clause, would be difficult and
impractical to determine, EXECUTIVE and EMPLOYER agree that any
sums owed by EMPLOYER to EXECUTIVE at the time a
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violation might occur would constitute the total liquidated
damages owed by EXECUTIVE to EMPLOYER.
EXECUTIVE may exercise his right to exercise any stock options
vested prior to termination or resignation, if any, and as
provided in a Stock Option Plan and a Stock Option Agreement to
which EXECUTIVE is a party.
9. ACQUISITION OR DISSOLUTION OF EMPLOYER
This Employment Agreement shall not be terminated by the
voluntary or involuntary dissolution of EMPLOYER or by any merger
of consolidation affecting EMPLOYER. In the event of any merger
or consolidation, or upon transfer of all or substantially all of
the assets of EMPLOYER, the provisions of this Employment
Agreement shall be binding upon and inure to the benefit of the
surviving or resulting corporation or the corporation to which
such assets shall be transferred. Notwithstanding the foregoing,
in the event proceedings for liquidation of EMPLOYER are
commenced by a banking regulatory agency, this Agreement and all
rights and benefits hereunder shall terminate.
10. INDEMNIFICATION
To the fullest extent permitted by law, EMPLOYER shall indemnify
EXECUTIVE, who may be a party or is threatened to be made a party
to any action brought by a third party against the EXECUTIVE
(whether or not EMPLOYER is joined as a party defendant), against
expenses, judgements, fines, settlements, and other amounts
actually and reasonably incurred in connection with said action
if EXECUTIVE acted in good faith and in a manner EXECUTIVE
reasonably believed to be in the best interest of the EMPLOYER,
provided that the alleged conduct of EXECUTIVE arose out of and
was within the course and scope of his employment as an officer
of EMPLOYER.
11. RETURN OF DOCUMENTS
EXECUTIVE expressly agrees that all manuals, documents, files,
reports, studies, instruments or other materials used or
developed by EXECUTIVE during the TERM are solely the property of
EMPLOYER, and EXECUTIVE has no right, title or interest therein.
Upon termination of this Agreement, EXECUTIVE or EXECUTIVE'S
representative shall promptly deliver possession of all said
property to EMPLOYER in good condition.
12. NOTICES
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Any notice, request, or demand, or other communication required
or permitted hereunder shall be deemed to be properly given when
personally served in writing, when deposited in the United States
mail, postage prepaid, addressed to the party at the address
given at the beginning of the Agreement or at any other address
as EMPLOYER or EXECUTIVE may designate to the other in writing.
13. BENEFIT OF AGREEMENT
This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective executors,
administrators, successors and assigns.
14. APPLICABLE LAW
This agreement is to be governed by and construed under the laws
of the State of California.
15. CAPTIONS AND PARAGRAPH HEADINGS
Captions and paragraph headings used herein are for convenience
only and are not part of this Agreement and shall not be used in
construing it.
16. INVALID PROVISIONS
Should any provision of this Agreement for any reason be declared
invalid, void, or unenforceable by a Court of competent
jurisdiction, the validity and binding effect of any remaining
portion shall not be affected and the remaining portions of this
Agreement shall remain in full force and effect as if this
Agreement had been executed with said provisions eliminated.
17. ENTIRE AGREEMENT
This Agreement contains the entire agreement of the parties and
it supersedes any and all other agreements, either oral or in
writing, between the parties hereto with respect to the
employment of EXECUTIVE by EMPLOYER. Each party to this Agreement
acknowledges that no representations, inducements, promises, or
agreements, oral 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 not
contained in this Agreement shall be valid or binding. This
Agreement may not be modified or amended by oral agreement, but
only in an Agreement in signed by EMPLOYER and EXECUTIVE.
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18. ARBITRATION
Any controversy or claim arising out of or relating to this
Employment Agreement, breach thereof, shall be settled in
accordance with the rules of the American Arbitration Assoc and
judgement upon the award rendered by the arbitrator(s) may be
entered into any court having jurisdiction thereof.
19. LEGAL COSTS
If either party commences an action against the other party
arising out of, or in connection with this Agreement, the
prevailing party shall be entitled to have and recover from the
losing party reasonable attorney's fees, costs of arbitration,
and costs of suit.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE BANK OF HEMET, "EMPLOYER"
By: /s/ Eric J. Gosch Director
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By: /s/ John J. McDonough Director
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By: /s/ James B. Jaqua "EXECUTIVE"
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