Exhibit 10.6
SCRIPPS BANK
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made between
______________ and SCRIPPS BANK, a California banking corporation (the "Bank").
In consideration of the mutual covenants and promises of the parties
hereto, it is agreed that from and after the Commencement Date, as defined in
Section 1.2 below, the Bank shall employ Employee, and Employee shall work for
the Bank, on the following terms and conditions:
1. TERM OF EMPLOYMENT
1.1 TERM. The Bank hereby employs Employee and Employee hereby
accepts employment with the Bank for a period of five (5) years, commencing on
the Commencement Date, subject to such earlier termination as is hereinafter
provided.
1.2 COMMENCEMENT DATE. The term of this Agreement shall commence on
_______________ (the "Commencement Date").
2. DUTIES OF EMPLOYEE.
2.1 DUTIES. Employee shall serve as ______________________ of the
Bank and shall perform such duties and have such responsibilities as may be
prescribed by the Board of Directors of the Bank. Such service shall be
performed by the Employee faithfully, diligently and to the best of his ability
and effort, consistent with the highest and best standards of the banking
industry, and Employee shall devote his full time and effort to such employment.
2.2 CONFLICTS OF INTEREST. Except as permitted by the prior written
consent of the Board of Directors of the Bank, Employee shall not during the
term of this Agreement (i) directly or indirectly render any services of a
business, commercial or professional nature, to any other person, firm or
corporation, whether for compensation or otherwise, which is in conflict with
the Bank's interests, (ii) engage in any activity which is directly or
indirectly competitive with or adverse to the Bank's business or welfare,
whether alone, as a partner, or as an officer, director or employee of another
entity, or (iii) be more than a ten percent (10%) shareholder of any competitive
entity.
3. COMPENSATION. In exchange for the services rendered by the Employee
hereunder, the Bank shall pay or cause to be paid to the Employee as base salary
("Base Salary") the amount of _____________________________________________
_____________________________________________ per month during the term of this
Agreement, beginning on the Commencement Date. Employee's Base Salary shall be
paid in equal semi-monthly installments. In addition to the Base Salary,
Employee may receive such bonus compensation as the Board of Directors, in its
sole discretion, shall determine is appropriate. Compensation shall be reviewed
and adjusted annually by the
Board of Directors of the Bank in accordance with the Board's evaluation of
performance of the Employee.
4. EMPLOYEE/EXECUTIVE BENEFITS.
4.1 EMPLOYEE/EXECUTIVE BENEFITS shall be in accordance with general
policy of the Bank as published in the Scripps Bank Employee Handbook. Such
policy may be modified from time to time in the sole discretion of the Bank.
4.2 GROUP MEDICAL INSURANCE BENEFITS. The Bank shall provide
benefits to the Employee under group insurance programs in conformance with
general bank policy, including participation in employee premium payment.
4.3 VACATION. Employee shall accrue on a pro rated basis providing
for four (4) weeks paid vacation for each year during the term of this
Agreement. The time for such vacation shall be determined by mutual agreement
of Employee and the Bank. Accrued and earned vacation may accumulate until
taken without forfeiture of benefit.
4.4 AUTOMOBILE. The Bank will provide to Employee the use of a Bank
owned or leased automobile suitable for the conduct of Bank business at the
level of responsibility assigned or an automobile lease allowance not less than
$_____ per month. The Bank shall also provide insurance coverage on its
primary insurance policy as determined appropriate by the Bank to supplement
general liability coverage while using the vehicle for Bank business.
Additionally, operating expenses of Bank owned or leased automobiles shall be
paid by the Bank and reported as W-2 compensation of the Employee in compliance
with IRS guidelines for reporting personal usage of the automobile. Operating
expenses of Employee owned or leased vehicles shall be reimbursed at rates per
mile in accordance with Bank policy.
4.5 SICK LEAVE. Employee shall be entitled to one (1) day of paid
sick leave for each calendar month that Employee works during the first year of
the term of this Agreement and thereafter to twelve (12) days of sick leave each
year with a maximum accrual of 480 hours. Said sick leave shall accumulate
according to general policy as published in the Scripps Bank Employee Handbook.
5. BUSINESS EXPENSES AND REIMBURSEMENTS.
5.1 BUSINESS EXPENSES. Employee shall be entitled to reimbursement
by the Bank for any reasonable, ordinary and necessary business expenses
incurred by Employee in the performance of Employee's duties on behalf of the
Bank during the term of this Agreement, which types of expenditures shall be
determined by the Bank, including without limitation memberships, or the payment
of regular monthly dues (but not assessments) applicable to continued
membership, in such clubs and civic groups as the Bank determines will assist in
developing the business of the Bank, provided that:
(a) Each such expenditure is of a nature such that it
qualifies for deduction as a business expense on the federal and
state income tax returns of the Bank and not as deductible
compensation to Employee; and
(b) Employee furnishes to the Bank adequate records and
other documentary evidence as required by laws and regulations
issued by the appropriate federal and state taxing authorities for
the substantiation of such expenditures as deductible compensation
to Employee.
5.2 CONFERENCE EXPENSES. Employee shall be entitled to reimbursement
by the Bank for reasonable and ordinary expenses incurred by Employee and his or
her spouse in attending banking conferences conducted by recognized banking
groups such as Western Bank Association, Independent Bankers Association, and
American Bankers Association; provided, however, that the prior approval of the
Board of Directors of the Bank shall be necessary for reimbursement of the
expenses of attending any conference outside the State of California.
6. TERMINATION.
6.1 WITHOUT CAUSE. Notwithstanding anything to the contrary herein,
if during the term of this Agreement the Bank elects to discharge the Employee
and terminate this Agreement without cause, and not in conjunction with an event
as defined in Section 7 of this Agreement, the Bank shall pay the Employee an
amount equal to the remaining compensation due the Employee under this Agreement
or six (6) months' compensation, including Base Salary and awarded bonuses plus
accrued but unused vacation pay, whichever is less, as termination pay. Such
payment shall conform to the Bank's normal payroll schedule.
6.2 FOR CAUSE. The Bank may terminate this Agreement at any time
without further obligation or liability to Employee if discharge or termination
is by reason of any of the following:
(a) Death of Employee;
(b) The mental or physical disability of Employee
continuing for a period exceeding nine months, which
prevents Employee from performing a major portion of
his duties;
(c) For cause consisting of the commission by Employee
of a criminal act related to the performance of his
duties or the furnishing of proprietary confidential
information of Bank to a competitor or potential
competitor except in the bona fide belief that such
action was for the benefit and best interests of
Bank;
(d) Habitual intoxication by alcohol or drugs during
work hours;
(e) Habitual neglect of duties as determined in the sole
discretion of the Bank not corrected following
written notice from Bank specifying the details
thereof;
(f) Required retirement of Employee at or after Bank's
normal retirement age for senior executives, in
accordance with established policies applied on a
nondiscriminatory basis;
(g) If the Bank is closed or taken over by the State
Banking Department or other supervisory authority,
including the Federal Deposit Insurance Corporation
or if any such supervisory authority exercises its
cease and desist powers to remove Employee from
office;
(h) For cause consisting of engaging in illegal activity
which materially and adversely affects the Bank's
reputation in the community or which evidences the
lack of Employee's fitness or ability to perform
Employee's duties, as reasonably determined in the
sole discretion of the Board of Directors of the
Bank. Breach of any of the provisions of Section
2.2 of this Agreement shall be deemed an illegal
activity which materially and adversely affects the
Bank's reputation in the community and therefore
constitutes cause for termination pursuant to this
Section 6.2
(i) Voluntary resignation by the Employee.
7. "TERMINATION IN CONJUNCTION WITH AN EVENT" DEFINED. The term
"Termination in Conjunction with an Event" as used in this Section shall mean
any one or a combination of the following:
7.1 The discharge of Employee by Bank or its successor in interest
for any reason whatsoever, excepting only discharge for cause pursuant to
Section 6.2 of this Agreement.
7.2 Resignation of Employee following the occurrence of any one of
the following:
(a) Relocation of the principal place at which
Employee's duties are to be performed to a location
outside a 50-mile radius around the main offices in
La Jolla, California;
(b) A reduction in Employee's compensation;
(c) A substantial, adverse change in the benefits or
perquisites provided to Employee;
(d) A substantial, adverse change in Employee's
responsibilities, authorities or functions;
(e) A substantial, adverse change in Employee's work
conditions.
7.3 COMPENSATION. In the event that a Termination, as clarified in
this Section, occurs concurrently with or within sixty (60) days following the
date of the occurrence of an Event (whether Event is not corrected by the Bank
upon notification by Employee), as defined in this Section 7 of this Agreement,
forthwith upon such Termination occurring, the Bank or its successor in interest
shall provide to Employee the following items of compensation:
(a) Payment of Employee's full base salary through the
date of Termination, as clarified in this Section,
at the rate in effect (i) at the date of Termination
or (ii) immediately prior to the occurrence of an
Event, whichever is the higher;
(b) Payment of twenty-four (24) months' compensation at
the rate in effect (i) at the date of Termination,
as clarified in this Section, or (ii) immediately
prior to the occurrence of an Event, whichever is
higher. Such payment shall occur in conformance
with the Bank's normal payroll schedule. In the
event Employee obtains other employment during such
twenty-four (24) month period, the amount of the
payment shall be reduced by fifty (50%);
(c) Payment of an amount equal to the value of
Employee's accrued unused vacation through the date
of Termination, as clarified in this Section, based
on Employee's annual base salary at the rate in
effect (i) at the date of Termination or (ii)
immediately prior to the occurrence of an Event,
whichever is higher;
(d) Immediate vesting and exercisability of any stock
options held by Employee which have not otherwise
become vested as of the date of the occurrence of an
Event;
(e) Extension of the expiration date of the exercise
period following Termination, as clarified in this
Section, for any stock option held by Employee at
the time of the occurrence of an Event to a date
ninety (90) days following the date of Termination;
PROVIDED, HOWEVER, that such extension shall be
limited to less than ninety (90) days at the
election of Employee if necessary to keep the option
from being disqualified from treatment as an
incentive stock option under the Internal Revenue
Code.
7.4 TAXES.
(a) Definitions:
i. "Parachute Payment" shall have the meaning
ascribed to it in Section 280G(b)(2)(A) of the
Code, without regard to Section
280G(b)(2)(A)(ii) of the Code, and excluding
any amount not treated as a Parachute Payment
pursuant to Section 280G(b)(4)(A) or (6) of the
Code.
ii. "Present Value" shall be determined according
to Section 280G(d)(4) of the Code.
iii. "Base Amount" shall have the meaning ascribed
to it in Section 280G(b)(3)(A) of the Code.
iv. "Reasonable Compensation" shall have the
meaning ascribed to it in Section 280G(b)(4) of
the Code.
v. "Illegal Parachute Payment" shall mean a
payment described in Section 280G(b)(1)(B) of
the Code.
(b) Notwithstanding anything in this Section to the
contrary, any Parachute Payments to be paid to or for the benefit
of Employee, whether pursuant to this Section or otherwise, shall
be modified to the extent necessary to satisfy the requirements of
subparagraph (i) or (ii) below:
i. The aggregate Present Value of all Parachute
Payments payable to or for the benefit of
Employee, whether pursuant to this Section or
otherwise, shall be less than three times
Employee's Base Amount;
ii Each Parachute Payment payable to or for the
benefit of Employee, whether pursuant to this
Section or otherwise, shall be in an amount
which does not exceed the amount of Reasonable
Compensation allocable to such Parachute
Payment.
(c) In the event that the amount of any Parachute
Payment which would be payable to or for the benefit of Employee
without regard to this Section of the Agreement must be modified to
comply with this Section, Employee shall direct which Parachute
Payments are to be waived or modified; provided, however, that no
change in the timing of the payments shall be made without the
consent of Bank.
(d) Payment of amounts pursuant to this Section shall
not, unless directed by Employee, be delayed pending determination
of the status of a payment as a Parachute Payment or Illegal
Parachute Payment by the Internal Revenue Service, a court or a
similar body of competent jurisdiction.
(e) Any compensation derived from the accelerated
vesting of Employee's employee stock options due to the occurrence
of an Event or of Termination shall be valued in the manner
described in Proposed Internal Revenue Regulation Section 1.280G-1
at A-24(c) and Example (8) of A-24(e), as proposed on May 5, 1989.
(e) This Section shall be interpreted so as to avoid the
imposition of excise taxes on Employee under Section 4999 of the
Code or the disallowance of a deduction to Bank pursuant to Section
280G(a) of the Code. Notwithstanding any other provision of this
Section to the contrary, no Illegal Parachute Payments shall be
made to or for the benefit of Employee.
8. GENERAL PROVISIONS.
8.1 RETURN OF DOCUMENTS. Employee expressly agrees and acknowledges
that all manuals, documents, files, reports, studies, instruments, customer
lists (including any files, documents, computers files which identify customers,
past or present, or potential customers), addresses and telephone lists, and
other materials used and/or developed by Employee are solely the property of the
Bank and that Employee has no right, title or interest therein. Upon
termination of this Agreement, Employee or Employee's representative shall
promptly deliver possession of all such property in good condition to the Bank.
8.2 NOTICES. Any notice, 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, or when
communicated to a public telegraph company for transmittal, addressed to the
other party at its address. Employee's address for purposes of this section
shall be the last address provided by Bank by Employee.
8.3 APPLICABLE LAW. Except to the extent governed by the laws of the
United States, this Agreement shall be governed and construed in accordance with
the laws of the State of California.
8.4 INVALID PROVISIONS. Should any provisions of this Agreement be
declared invalid, void or unenforceable by a court of competent jurisdiction for
any reason, the validity and binding effect of any remaining portion shall not
be affected, and the remaining provisions of
this Agreement shall remain in full force and effect as if this Agreement had
been executed without such invalid, void or unenforceable provisions.
8.5 CONFIDENTIALITY. Employee expressly recognizes that all
persons dealing with the Bank expect that their confidence will be respected and
that information with respect to such persons' affairs will not be improperly
divulged. Further, Bank expects that matters concerning the Bank and its
business will be kept in strict confidence regardless of the source or origin of
information reaching Employee This obligation of confidentiality shall be
continuing and shall survive any termination whether voluntary or involuntary.
8.6 ENTIRE AGREEMENT; MODIFICATION. This Agreement contains the
entire agreement of the parties hereto and supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the employment of Employee by the Bank. Each party to this
Agreement acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by either party, or anyone
acting on behalf of either party, which are not embodied herein and that no
agreement, statement or promise not contained or referenced in this Agreement
shall be valid or binding on the parties hereto. This Agreement may be
modified or amended only by an agreement in writing duly executed by the Bank
and Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
Dated: ___________________ SCRIPPS BANK, a California
banking corporation
By:___________________________________
Its:
Dated: ___________________ Employee:
_______________________________________