1
EXHIBIT 10.5
AGREEMENT
This Agreement (the "Agreement"), dated this ______ day of ___________,
1996, is made between Home Bank, a California chartered commercial bank (the
"Bank"), and _____________________ ("Executive").
RECITALS
A. The Board of Directors of the Bank has concluded that it would be in the
best interests of the Bank, its shareholder, Home Interstate Bancorp, a
California corporation ("Bancorp"), and Bancorp's shareholders to enter into
agreements with certain members of senior management in the form set forth below
to accomplish the following objectives:
1. To minimize the distraction to existing senior managers occasioned by
the proposed Business Combination (as defined below); and
2. TO ENHANCE THE ABILITY OF THE BANK TO RETAIN CAPABLE SENIOR MANAGERS.
B. The Bank and Executive entered into an Agreement, dated ____________,
1995 (the "Original Agreement"), pursuant to which the Bank agreed to make
certain payments to Executive upon the occurrence of certain events, as more
fully described therein.
C. This Agreement pertains to a Business Combination (as defined below) as
a result of which Executive, to the extent Executive has a position with the
successor company in the Business Combination, will suffer a substantial
alteration in the nature or status of Executive's responsibilities from those in
effect immediately prior to the Effective Date (as defined below) of the
Business Combination.
D. Executive is willing to serve the Bank in accordance with the terms and
provisions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties, intending to
be legally bound, agree and covenant as follows:
1. Definitions. For purposes of this Agreement, the terms set forth below
have the following meanings:
(a) "Business Combination" means the consummation of a merger or other
extraordinary transaction between CU Bancorp, a California corporation ("CU
1
2
Bancorp"), and Bancorp (each a "Company" and, collectively, the "Companies") on
or prior to December 31, 1996. For purposes of this Agreement, "merger or other
extraordinary transaction" shall mean any transaction or related series or
combinations of transactions whereby, directly or indirectly, (i) one of the
Companies or all or substantially all of its assets are merged with and into the
other Company or any of its subsidiaries or affiliates, or (ii) both Companies
or all or substantially all of their assets are merged with or into a company
newly formed for the purpose of effecting a merger in a sale or exchange of
stock, business combination or consolidation, sale of assets or other
transaction.
(b) "Cash Compensation" means Executive's annual rate of regular
salary or wages immediately prior to the Effective Date, including vacation and
holiday pay, sick leave pay and any amount reduced from the Executive's pay and
contributed on his behalf to any 401(k) plan and/or Section 125 plan maintained
by the Employee, but excluding all extra pay, such as overtime, commissions,
premiums, bonuses and living or other allowances.
(c) "Code" means the United States Internal Revenue Code of 1986, as
amended, and all regulations thereunder.
(d) "Effective Date" means the date on which the Business Combination
shall become effective in accordance with the laws of the jurisdiction governing
such Business Combination.
(e) "Leave of Absence" means a period of absence from regular
employment which is approved by the Bank in a non-discriminatory manner for
reasons such as, but not limited to, sickness, disability, education, jury duty,
convenience to the Bank, maternity or paternity leave, family leave, or for
periods of military duty during which the Executive's reemployment rights are
protected by law.
(f) "Release Agreement" means the Release Agreement, substantially in
the form of Exhibit A attached hereto, to be entered into by and among
Executive, Bancorp and the Bank.
2. Payments Upon Consummation of Business Combination.
(a) Retention Benefits. If Executive is employed by the Bank on the
Effective Date, Executive shall be entitled to receive the benefits set forth
below:
(i) An aggregate amount equal to the Cash Compensation (the
"Retention Payment"). The Retention Payment shall be payable to Executive in
substantially equal installments on a semi-monthly basis for twelve (12)
consecutive months (the "Term") commencing on the first business day of the
first full calendar month after the Effective Date.
2
3
(ii) For the duration of the Term, the continuation of
substantially the same medical benefits on substantially the same terms as
Executive and his or her spouse and dependents received immediately prior to the
Effective Date.
(iii) Payment for any out placement services for Executive up to
$5,000 if Executive's employment is terminated on or following the Effective
Date, but prior to the expiration of the Term. This benefit shall be paid
directly by the Bank or through a reimbursement of Executive within ten (10)
business days upon presentation of the appropriate receipts.
For purposes of this Section 2(a), Executive is not considered to be
"employed" by the Bank on the Effective Date if he has been on a Leave of
Absence for more than seven (7) months as of the Effective Date.
(b) Full Payment. Executive acknowledges and agrees that the payment
of the Retention Payment and the other consideration payable hereunder is in
lieu of any other severance payments otherwise payable to Executive pursuant to
any plan, agreement or other arrangement with the Bank in existence as of the
date hereof including without limitation, any and all payments pursuant to the
Home Bank Severance Pay Plan.
3. Effect of Termination of Employment. Executive has no vested right to a
benefit hereunder except as provided under Section 2. If Executive's employment
with the Bank is terminated for any reason prior to the Effective Date this
Agreement shall terminate automatically and shall be declared null and void, as
of the date of such termination, and no benefit shall be payable to Executive.
4. No Mitigation. Following the Effective Date, Executive shall not be
required to mitigate the amount of any payments provided for by this Agreement
by seeking employment or otherwise, nor shall the amount of any cash payments or
benefits provided under this Agreement be reduced by any compensation or
benefits earned by Executive after the Effective Date.
5. Limitation on Executive's Rights. Nothing herein contained shall be
deemed to create an employment agreement between the Bank and Executive
providing for the employment of Executive by the Bank for any fixed period of
time. Executive's employment with the Bank is terminable at will by the Bank or
Executive and each shall have the right to terminate Executive's employment with
the Bank at any time, with or without cause.
6. Original Agreement. Upon the execution of this Agreement, the Original
Agreement shall be declared null and void and be of no further force or effect.
The terms and conditions set forth in this Agreement shall supersede in all
respects those set forth in the Original Agreement.
3
4
7. Condition Precedent to the Bank's Obligations. The obligations of the
Bank hereunder shall be subject to, and expressly conditioned on, Executive's
execution and delivery of the Release Agreement, which agreement shall be dated
as of the Effective Date.
8. Successors; Binding Agreement.
(a) The Bank will require any successor company in the Business
Combination to assume and agree expressly to perform this Agreement in the same
manner and to the same extent that the Bank would be required to perform it if
no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representative, executors, administrators,
successors, heirs, distributees, devisees and legatees.
9. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the signature page of this
Agreement, provided that all notices to the Bank shall be directed to the
attention of ________________ with a copy to the Secretary of the Bank, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
10. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Executive and such officer as may be specifically
designated by the Board of Directors of the Bank. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement, and any such agreements are expressly superseded. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of California, except to the extent that
federal law is otherwise applicable.
11. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
4
5
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
13. Arbitration. Any controversy arising out of or relating to this
Agreement of the transactions contemplated hereby shall be referred to
arbitration strictly in accordance with the terms of this Agreement and the
applicable Rules of the American Arbitration Association. The board of
arbitrators shall convene at a place mutually acceptable to the parties in Los
Angeles, California, U.S.A. The parties hereto agree to accept the decision of
the board of arbitrators, and judgment upon any award rendered hereunder may be
entered in any court having jurisdiction thereof. No party shall institute a
proceeding hereunder until that party has furnished to the other parties, by
registered mail, at least thirty (30) days prior written notice of its intent to
do so.
14. Attorneys' Fees and Expenses. If any dispute arises between the Bank
and Executive with respect to the interpretation or performance of this
Agreement, the prevailing party in any arbitration or other proceeding shall be
entitled to recover from the other party his or its attorneys' fees, arbitration
or court costs, and other expenses incurred in connection with any such
proceeding.
15. Limitations on Benefits.
(a) In the event that the compensation and other benefits provided to
Executive above, combined with any other payments, benefits, or other items
provided to or for Executive, would (in whole or in part) be nondeductible as a
result of Section 280G of the Code or cause imposition of an excise tax pursuant
to Section 4999 of the Code (or successor provisions to such sections), the
payments to Executive shall be reduced to the extent necessary to make such
sections of the Code inapplicable. The specific payments or benefits to be
reduced shall be as designated by Executive, subject to reasonable approval
rights of the Bank. In the event that there is a dispute among the parties
regarding whether or the extent to which payments must be reduced pursuant to
this section, such dispute shall be settled exclusively by arbitration, and no
such disputed payment shall be made until the dispute is settled.
(b) Notwithstanding any other provision to the contrary, the Bank
shall not be obligated pursuant to the terms of this Agreement to provide any of
the compensation or other benefits contemplated above to the extent that the
payment or transfer thereof would violate any prohibition or limitation on
termination payments under any applicable federal or state statute or rule or
regulatory promulgated, or effective order issued, by any federal or state
regulatory agency having jurisdiction over the Bank.
16. Payment Out of General Assets. The Bank shall pay Executive his
Retention Payment out of its general assets.
5
6
17. Separate Representation. The law firm of Manatt, Phelps & Phillips
prepared the foregoing Agreement solely at the request of the Bank and has
advised solely the Bank with respect to this Agreement. Executive acknowledges
that Executive has been afforded the opportunity to obtain tax, legal and
business advice with respect to this Agreement from Executive's own independent
advisors. Executive acknowledges that Executive has not relied on Manatt, Phelps
& Phillips for tax, legal or business advice with respect to this Agreement. The
Bank and Executive waive any actual or potential conflict of interest of Manatt,
Phelps & Phillips in the drafting, negotiation, and execution of this Agreement
and completely release and hold harmless said law firm and its partners,
employees and independent contractors from any damages, costs, losses, or
expenses as a result of any actual or potential conflict of interest with
respect to this Agreement.
IN WITNESS WHEREOF, Home Bank, pursuant to resolution of its Board of
Directors, and Executive have executed this Agreement, as of the date above
first written.
HOME BANK
By:__________________________________
Its:_________________________________
Address:_____________________________
_____________________________________
_____________________________________
_____________________________________
[Name of Executive]
Title:_______________________________
Address:_____________________________
_____________________________________
_____________________________________
6
7
EXHIBIT A
WAIVER AND RELEASE AGREEMENT
This Waiver and Release Agreement (the "Waiver Agreement") is entered into
by and among [name] _______________ (hereinafter "Executive"), Home Bank, a
California chartered bank (the "Bank"), and Home Interstate Bancorp, a
California corporation ("Bancorp"), their officers, directors, employees,
agents, affiliates and subsidiaries (collectively, hereinafter referred to as
the "Company"). Terms not otherwise defined herein shall have the meanings
ascribed to such terms in the Agreement (as hereafter defined).
RECITALS
WHEREAS, Executive and the Bank have entered into the Agreement, dated
____________________, 1996 (the "Agreement"), pursuant to which Executive shall
receive, subject to the terms and conditions set forth therein, certain cash and
other compensation in the event Executive is employed by the Bank as of the
Effective Date; and
WHEREAS, a condition precedent to the Bank's obligations under the
Agreement is the execution of this Waiver Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties intending to
be legally bound, agree and covenant as follows:
1. Release.
(a) In consideration for the execution of the Agreement, and the
agreements set forth therein, Executive agrees unconditionally and forever to
release and discharge the Company and its affiliated business entities, their
respective current and former shareholders, officers, directors, employees,
representatives, attorneys, agents and assigns, from any and all claims,
actions, causes of action, demands, rights, or damages of any kind or nature
which she/he may now have, or ever have, whether known or unknown, including any
claims, causes of action or demands of any nature arising out of or in any way
relating to her/his employment with, or separation from the Company on or before
the date of the execution of this Waiver Agreement.
(b) This release specifically includes, but is not limited to, any
claims for discrimination and/or violation of any statutes, rules, regulations
or ordinances, whether federal, state or local, including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended, age claims under the Age
Discrimination in Employment Act of 1967,
1
8
as amended by the Older Workers Benefits Protection Act of 1990, Section 1981 of
Title 42 of the United States Code, and the California Fair Employment and
Housing Act.
(c) Executive further agrees knowingly to waive the provisions and
protections of Section 1542 of the California Civil Code, which reads:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which, if known by him, must have materially affected his settlement with
the debtor.
2. Representations of Executive.
(a) Executive represents and agrees that, prior to the execution of
this Waiver Agreement, Executive has had the opportunity to discuss the terms of
this Waiver Agreement with legal counsel of his/her choosing.
(b) Executive affirms that no promise or inducement was made to cause
him/her to enter into this Waiver Agreement, other than the execution of the
Agreement and the inducements provided therein. Executive further confirms that
he/she has not relied upon any other statement or representation by anyone other
than what is in this Waiver Agreement as a basis for his/her agreement.
3. Miscellaneous.
(a) Except for the Agreement, this Waiver Agreement sets forth the
entire agreement between Executive and the Company and shall be binding upon
both party's heirs, representatives and successors. This Waiver Agreement shall
be construed under the laws of the State of California, both procedural and
substantive. Any and all disputes or claims arising out of or in any way related
to Executive's employment with, or separation from the Company, as well as any
and all disputes or claims arising out of or in any way related to this Waiver
Agreement, including without limitation, fraud in the inducement of this Waiver
Agreement, or relating to the general validity or enforceability of this Waiver
Agreement, shall be submitted to final and binding arbitration before an
arbitrator of the American Arbitration Association in Los Angeles County in
accordance with the rules of that body, and the prevailing party shall be
entitled to reasonable costs and attorney's fees. Judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof. If
any portion of this Waiver Agreement is found to be illegal or unenforceable,
such action shall not affect the validity or enforceability of the remaining
paragraphs or subparagraphs of this Waiver Agreement.
(b) Executive acknowledges that he/she has been advised that he/she
has twenty-one (21) days to consider this settlement and that he/she was
informed that he/she has the right to consult with counsel regarding this Waiver
Agreement. To the extent Executive has taken less than twenty-one (21) days to
consider this Waiver Agreement,
2
9
Executive acknowledges that he/she has had sufficient time to consider the
Waiver Agreement and to consult with counsel and that he/she does not desire
additional time.
(c) This Waiver Agreement is revocable by Executive for a period of
seven (7) days following Executive's execution of this Waiver Agreement. The
revocation by Executive of this Waiver Agreement must be in writing, must
specifically revoke this Waiver Agreement, and must be received by the Company
prior to the eighth (8th) day following the execution of this Waiver Agreement
by Executive. This Waiver Agreement becomes effective, enforceable and
irrevocable on the eighth (8th) day following Executive's execution of the
Waiver Agreement.
The undersigned agree to the terms of this Waiver Agreement and voluntarily
enter into it with the intent to be bound thereby.
Dated: ____________, 1996 ___________________________________
Executive (name printed)
___________________________________
Executive Signature
Dated: ____________, 1996 HOME BANK
By_________________________________
Name:____________________________
Title:___________________________
HOME INTERSTATE BANCORP
By_________________________________
Name:____________________________
Title:___________________________
3
10
AGREEMENT
This Agreement (the "Agreement"), dated this ______ day of ___________,
1996, is made between Home Bank, a California chartered commercial bank (the
"Bank"), and James P. Staes ("Executive").
RECITALS
A. The Board of Directors of the Bank has concluded that it would be in the
best interests of the Bank, its shareholder, Home Interstate Bancorp, a
California corporation ("Bancorp"), and Bancorp's shareholders to enter into
agreements with certain members of senior management in the form set forth below
to accomplish the following objectives:
1. To minimize the distraction to existing senior managers occasioned
by the proposed Business Combination (as defined below); and
2. To enhance the ability of the Bank to retain capable senior
managers.
B. The Bank and Executive entered into an Agreement, dated ____________,
1995 (the "Original Agreement"), pursuant to which the Bank agreed to make
certain payments to Executive upon the occurrence of certain events, as more
fully described therein.
C. This Agreement pertains to a Business Combination (as defined below) as
a result of which Executive is expected to continue to serve the successor
company in the Business Combination in an executive capacity for no less than a
two-year period after the Effective Date (as defined below) of the Business
Combination.
D. Executive agrees to refrain from competing with the successor company in
the Business Combination and to provide consulting services following the
expiration of the Term (as defined below), as more fully described herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties, intending to
be legally bound, agree and covenant as follows:
1. Definitions. For purposes of this Agreement, the terms set forth
below have the following meanings:
(a) "Business Combination" means the consummation of a merger or
other extraordinary transaction between CU Bancorp, a California corporation
("CU
1
11
Bancorp"), and Bancorp (each a "Company" and, collectively, the "Companies") on
or prior to December 31, 1996. For purposes of this Agreement, "merger or other
extraordinary transaction" shall mean any transaction or related series or
combinations of transactions whereby, directly or indirectly, (i) one of the
Companies or all or substantially all of its assets are merged with and into the
other Company or any of its subsidiaries or affiliates, or (ii) both Companies
or all or substantially all of their assets are merged with or into a company
newly formed for the purpose of effecting a merger in a sale or exchange of
stock, business combination or consolidation, sale of assets or other
transaction.
(b) "Cash Compensation" means Executive's annual rate of regular
salary or wages immediately prior to the Effective Date, including vacation and
holiday pay, sick leave pay and any amount reduced from the Executive's pay and
contributed on his behalf to any 401(k) plan and/or Section 125 plan maintained
by the Employee, but excluding all extra pay, such as overtime, commissions,
premiums, bonuses and living or other allowances.
(c) "Code" means the United States Internal Revenue Code of 1986, as
amended, and all regulations thereunder.
(d) "Effective Date" means the date on which the Business Combination
shall become effective in accordance with the laws of the jurisdiction governing
such Business Combination.
(e) "Leave of Absence" means a period of absence from regular
employment which is approved by the Bank in a non-discriminatory manner for
reasons such as, but not limited to, sickness, disability, education, jury duty,
convenience to the Bank, maternity or paternity leave, family leave, or for
periods of military duty during which the Executive's reemployment rights are
protected by law.
(f) "Release Agreement" means the Release Agreement, substantially in
the form of Exhibit A attached hereto, to be entered into by and among
Executive, Bancorp and the Bank.
2. Payments Upon Consummation of Business Combination.
(a) Retention Benefits. If Executive is employed by the Bank on the
Effective Date, Executive shall be entitled to receive the benefits set forth
below:
(i) An aggregate amount equal to two (2) times Executive's Cash
Compensation (the "Retention Payment"). The Retention Payment shall be payable
to Executive in substantially equal installments on a semimonthly basis for
twenty-four (24) consecutive months (the "Term") commencing on the first
business day of the first full calendar month after the Effective Date.
2
12
(ii) For the duration of the Term, the continuation of
substantially the same medical benefits on substantially the same terms as
Executive and his or her spouse and dependents received immediately prior to the
Effective Date.
(iii) Payment for any out placement services for Executive up to
$5,000 if Executive's employment is terminated on or following the Effective
Date, but prior to the expiration of the Term. This benefit shall be paid
directly by the Bank or through a reimbursement of Executive within ten (10)
business days upon presentation of the appropriate receipts.
For purposes of this Section 2(a), Executive is not considered to be
"employed" by the Bank on the Effective Date if he has been on a Leave of
Absence for more than seven (7) months as of the Effective Date.
(b) Full Payment. Executive acknowledges and agrees that the payment
of the Retention Payment and the other consideration payable hereunder is in
lieu of any other severance payments otherwise payable to Executive pursuant to
any plan, agreement or other arrangement with the Bank in existence as of the
date hereof including without limitation, any and all payments pursuant to the
Home Bank Severance Pay Plan.
3. Effect of Termination of Employment. Executive has no vested right to a
benefit hereunder except as provided under Section 2. If Executive's employment
with the Bank is terminated for any reason prior to the Effective Date this
Agreement shall terminate automatically and shall be declared null and void, as
of the date of such termination, and no benefit shall be payable to Executive.
4. No Mitigation. Following the Effective Date, Executive shall not be
required to mitigate the amount of any payments provided for by this Agreement
by seeking employment or otherwise, nor shall the amount of any cash payments or
benefits provided under this Agreement be reduced by any compensation or
benefits earned by Executive after the Effective Date.
5. Limitation on Executive's Rights. Nothing herein contained shall be
deemed to create an employment agreement between the Bank and Executive
providing for the employment of Executive by the Bank for any fixed period of
time. Executive's employment with the Bank is terminable at will by the Bank or
Executive and each shall have the right to terminate Executive's employment with
the Bank at any time, with or without cause.
6. Original Agreement. Upon the execution of this Agreement, the Original
Agreement shall be declared null and void and be of no further force or effect.
The terms and conditions set forth in this Agreement shall supersede in all
respects those set forth in the Original Agreement.
3
13
7. Condition Precedent to the Bank's Obligations. The obligations of the
Bank hereunder shall be subject to, and expressly conditioned on, Executive's
execution and delivery of the Release Agreement, which agreement shall be dated
as of the Effective Date.
8. Successors; Binding Agreement.
(a) The Bank will require any successor company in the Business
Combination to assume and agree expressly to perform this Agreement in the same
manner and to the same extent that the Bank would be required to perform it if
no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representative, executors, administrators,
successors, heirs, distributees, devisees and legatees.
9. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the signature page of this
Agreement, provided that all notices to the Bank shall be directed to the
attention of ____________________ with a copy to the Secretary of the Bank, or
to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
10. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Executive and such officer as may be specifically
designated by the Board of Directors of the Bank. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement, and any such agreements are expressly superseded. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of California, except to the extent that
federal law is otherwise applicable.
11. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
4
14
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
13. Arbitration. Any controversy arising out of or relating to this
Agreement of the transactions contemplated hereby shall be referred to
arbitration strictly in accordance with the terms of this Agreement and the
applicable Rules of the American Arbitration Association. The board of
arbitrators shall convene at a place mutually acceptable to the parties in Los
Angeles, California, U.S.A. The parties hereto agree to accept the decision of
the board of arbitrators, and judgment upon any award rendered hereunder may be
entered in any court having jurisdiction thereof. No party shall institute a
proceeding hereunder until that party has furnished to the other parties, by
registered mail, at least thirty (30) days prior written notice of its intent to
do so.
14. Attorneys' Fees and Expenses. If any dispute arises between the Bank
and Executive with respect to the interpretation or performance of this
Agreement, the prevailing party in any arbitration or other proceeding shall be
entitled to recover from the other party his or its attorneys' fees, arbitration
or court costs, and other expenses incurred in connection with any such
proceeding.
15. Limitations on Benefits.
(a) In the event that the compensation and other benefits provided to
Executive above, combined with any other payments, benefits, or other items
provided to or for Executive, would (in whole or in part) be nondeductible as a
result of Section 280G of the Code or cause imposition of an excise tax pursuant
to Section 4999 of the Code (or successor provisions to such sections), the
payments to Executive shall be reduced to the extent necessary to make such
sections of the Code inapplicable. The specific payments or benefits to be
reduced shall be as designated by Executive, subject to reasonable approval
rights of the Bank. In the event that there is a dispute among the parties
regarding whether or the extent to which payments must be reduced pursuant to
this section, such dispute shall be settled exclusively by arbitration, and no
such disputed payment shall be made until the dispute is settled.
(b) Notwithstanding any other provision to the contrary, the Bank
shall not be obligated pursuant to the terms of this Agreement to provide any of
the compensation or other benefits contemplated above to the extent that the
payment or transfer thereof would violate any prohibition or limitation on
termination payments under any applicable federal or state statute or rule or
regulatory promulgated, or effective order issued, by any federal or state
regulatory agency having jurisdiction over the Bank.
16. Payment Out of General Assets. The Bank shall pay Executive his
Retention Payment out of its general assets.
5
15
17. Non-Competition. Executive covenants and agrees with the Bank that for
a period of three (3) years from the Effective Date, Executive will not, without
the prior written consent of the Bank, serve as an executive officer or director
of another bank, savings and loan association, credit union or thrift and loan
which has an office which is located within five miles of a branch office of
Home Bank existing immediately prior to the Effective Date.
18. Consulting Services. During a one (1)-year period following the
expiration of the Term, Executive will, as an independent consultant and upon
request of the Bank (or any successor corporation), render to the Bank (or any
successor company) up to one hundred hours, and any additional hours as may be
mutually agreeable to Executive and the Bank (or any successor company) of
consulting services. Such services shall be performed at such time and in a
manner as may reasonably be determined by Executive and may, to the extent
reasonable, be performed through telephone conference calls and facsimile
transmissions. The obligations of Executive under this Section 18 shall not
prohibit or in any way restrict Executive from any association or from serving
in any capacity with any other bank, or financial institution or other business
enterprise, provided that such service does not violate the provisions of
Section 17 above or prohibit Executive from performing his duties hereunder.
19. Separate Representation. The law firm of Manatt, Phelps & Phillips
prepared the foregoing Agreement solely at the request of the Bank and has
advised solely the Bank with respect to this Agreement. Executive acknowledges
that Executive has been afforded the opportunity to obtain tax, legal and
business advice with respect to this Agreement from Executive's own independent
advisors. Executive acknowledges that Executive has not relied on Manatt, Phelps
& Phillips for tax, legal or business advice with respect to this Agreement. The
Bank and Executive waive any actual or potential conflict of interest of Manatt,
Phelps & Phillips in the drafting, negotiation, and execution of this Agreement
and completely release and hold harmless said law firm and its partners,
employees and independent contractors from any damages, costs, losses, or
expenses as a result of any actual or potential conflict of interest with
respect to this Agreement.
6
16
IN WITNESS WHEREOF, Home Bank, pursuant to resolution of its Board of
Directors, and Executive have executed this Agreement, as of the date above
first written.
HOME BANK
By:_________________________________
Its:________________________________
Address:____________________________
____________________________________
____________________________________
____________________________________
JAMES P. STAES
Title:______________________________
Address:____________________________
____________________________________
____________________________________
7
17
EXHIBIT A
WAIVER AND RELEASE AGREEMENT
This Waiver and Release Agreement (the "Waiver Agreement") is entered into
by and among James P. Staes (hereinafter "Executive"), Home Bank, a California
chartered bank (the "Bank"), and Home Interstate Bancorp, a California
corporation ("Bancorp"), their officers, directors, employees, agents,
affiliates and subsidiaries (collectively, hereinafter referred to as the
"Company"). Terms not otherwise defined herein shall have the meanings ascribed
to such terms in the Agreement (as hereafter defined).
RECITALS
WHEREAS, Executive and the Bank have entered into the Agreement, dated
____________, 1996 (the "Agreement"), pursuant to which Executive shall receive,
subject to the terms and conditions set forth therein, certain cash and other
compensation in the event Executive is employed by the Bank as of the Effective
Date; and
WHEREAS, a condition precedent to the Bank's obligations under the
Agreement is the execution of this Waiver Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties intending to
be legally bound, agree and covenant as follows:
1. Release.
(a) In consideration for the execution of the Agreement, and the
agreements set forth therein, Executive agrees unconditionally and forever to
release and discharge the Company and its affiliated business entities, their
respective current and former shareholders, officers, directors, employees,
representatives, attorneys, agents and assigns, from any and all claims,
actions, causes of action, demands, rights, or damages of any kind or nature
which she/he may now have, or ever have, whether known or unknown, including any
claims, causes of action or demands of any nature arising out of or in any way
relating to her/his employment with, or separation from the Company on or before
the date of the execution of this Waiver Agreement.
(b) This release specifically includes, but is not limited to, any
claims for discrimination and/or violation of any statutes, rules, regulations
or ordinances, whether federal, state or local, including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended, age claims under the Age
Discrimination in Employment Act of 1967,
1
18
as amended by the Older Workers Benefits Protection Act of 1990, Section 1981 of
Title 42 of the United States Code, and the California Fair Employment and
Housing Act.
(c) Executive further agrees knowingly to waive the provisions and
protections of Section 1542 of the California Civil Code, which reads:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which, if known by him, must have materially affected his settlement with
the debtor.
2. Representations of Executive.
(a) Executive represents and agrees that, prior to the execution of
this Waiver Agreement, Executive has had the opportunity to discuss the terms of
this Waiver Agreement with legal counsel of his/her choosing.
(b) Executive affirms that no promise or inducement was made to cause
him/her to enter into this Waiver Agreement, other than the execution of the
Agreement and the inducements provided therein. Executive further confirms that
he/she has not relied upon any other statement or representation by anyone other
than what is in this Waiver Agreement as a basis for his/her agreement.
3. Miscellaneous.
(a) Except for the Agreement, this Waiver Agreement sets forth the
entire agreement between Executive and the Company and shall be binding upon
both party's heirs, representatives and successors. This Waiver Agreement shall
be construed under the laws of the State of California, both procedural and
substantive. Any and all disputes or claims arising out of or in any way related
to Executive's employment with, or separation from the Company, as well as any
and all disputes or claims arising out of or in any way related to this Waiver
Agreement, including without limitation, fraud in the inducement of this Waiver
Agreement, or relating to the general validity or enforceability of this Waiver
Agreement, shall be submitted to final and binding arbitration before an
arbitrator of the American Arbitration Association in Los Angeles County in
accordance with the rules of that body, and the prevailing party shall be
entitled to reasonable costs and attorney's fees. Judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof. If
any portion of this Waiver Agreement is found to be illegal or unenforceable,
such action shall not affect the validity or enforceability of the remaining
paragraphs or subparagraphs of this Waiver Agreement.
(b) Executive acknowledges that he/she has been advised that he/she
has twenty-one (21) days to consider this settlement and that he/she was
informed that he/she has the right to consult with counsel regarding this Waiver
Agreement. To the extent Executive has taken less than twenty-one (21) days to
consider this Waiver Agreement,
2
19
Executive acknowledges that he/she has had sufficient time to consider the
Waiver Agreement and to consult with counsel and that he/she does not desire
additional time.
(c) This Waiver Agreement is revocable by Executive for a period of
seven (7) days following Executive's execution of this Waiver Agreement. The
revocation by Executive of this Waiver Agreement must be in writing, must
specifically revoke this Waiver Agreement, and must be received by the Company
prior to the eighth (8th) day following the execution of this Waiver Agreement
by Executive. This Waiver Agreement becomes effective, enforceable and
irrevocable on the eighth (8th) day following Executive's execution of the
Waiver Agreement.
The undersigned agree to the terms of this Waiver Agreement and voluntarily
enter into it with the intent to be bound thereby.
Dated: , 1996 JAMES P. STAES
---------------- -------------------------------------
Executive (name printed)
-------------------------------------
Executive Signature
Dated: , 1996 HOME BANK
----------------
By Name:
-----------------------------
Title:
-----------------------------
HOME INTERSTATE BANCORP
By Name:
-----------------------------
Title:
-----------------------------
3