Amended and Restated Severance Agreement
Amended
and Restated Severance Agreement
This
Amended and Restated Severance Agreement (“Agreement”) is entered into as of
this 29th day of December, 2006, by and between Capital Corp of the West,
a
California corporation (“CCOW”), and ▇▇▇▇▇▇▇ de ▇▇ ▇▇▇▇ (the “Executive”). This
Agreement amends and restates the severance agreement (“Original Agreement”)
dated June 26, 2006 and entered into by and between CCOW and the Executive
to
make technical changes to comply with section 409A of the Internal Revenue
Code
of 1986, as amended (“Code”), and make other changes.
1. Term
of Agreement.
The
initial term of this Agreement shall be for a period of two years, commencing
December 29, 2006. On the first anniversary of this Agreement and on each
anniversary thereafter, this Agreement shall be extended automatically for
one
additional year unless CCOW’s Board of Directors gives notice to the Executive
in writing at least 90 days before the anniversary that the term of this
Agreement will not be extended. If the Board of Directors determines not
to
extend the term, it shall promptly notify the Executive. Unless terminated
earlier, this Agreement shall terminate when the Executive attains age 65
or
such age as shall be mutually agreed upon by the Executive and Board. If
the
Board of Directors decides not to extend the term of this Agreement, this
Agreement shall nevertheless remain in force until its term
expires.
2. Change
in Control Combined with Employment Termination.
(a)
Lump-Sum
Severance.
. CCOW
shall make a lump-sum payment (“Severance Benefit”) to the Executive in an
amount in cash equal to the Executive’s annual compensation if (i) the
Executive’s employment with CCOW or a subsidiary of CCOW is involuntarily
terminated within 12 months after a Change in Control of CCOW, except for
termination for Cause under section 5(a) of this Severance Agreement or (ii)
if
the Executive terminates employment with CCOW or a subsidiary of CCOW for
Good
Reason within 12 months after a Change in Control of CCOW. Subject to section
16, the payment required under this section 2(a) is payable no later than
15
business days after the date the Executive’s employment terminates and shall not
be reduced to account for the time value of money or discounted to present
value. If the Executive terminates employment for Good Reason, the date of
termination shall be the date specified by the Executive in the notice of
termination. If the Executive is removed from office or if the Executive’s
employment terminates before the Change in Control of CCOW occurs but after
a
confidentiality agreement is entered into with a third party regarding a
Change
in Control of CCOW, and if those discussions ultimately conclude with a Change
in Control of CCOW within 12 months of the date of such confidentiality
agreement, then for purposes of this Agreement Executive’s Separation of Service
with CCOW or a subsidiary of CCOW shall be deemed to have occurred after
the
Change in Control of CCOW, and Executive shall be entitled to the Severance
Benefit subject to the application of the provisions in section 16,
herein.
For
purposes of this Agreement, annual compensation means (x)
the
Executive’s annual base salary on the date of the Change in Control excluding
any compensation that may be earned in the Executive’s capacity as a director if
the Executive is serving as a director, plus (y)
the
average bonus earned by the Executive in the three calendar years immediately
preceding the year in which the Change in Control occurs, regardless of when
the
bonus is paid. CCOW recognizes that the bonus compensation earned by the
Executive for a particular year’s service might be paid in the year after the
calendar year in which the bonus is earned. The term bonus means the sum
of any
nonperformance based bonus compensation and nonequity incentive compensation
(performance based bonus) of the type that is required to be reported by
the
Securities and Exchange Commission’s rules governing disclosure of executive
compensation, specifically Regulation S-K Item 402.
(b) Additional
Severance Benefits.
If the
Executive is entitled to a Severance Benefit, Executive shall also be entitled
to the following additional benefits (“Additional Severance Benefit”), subject
to the application of the provisions of section 16, herein:
1) CCOW
shall cause the Executive to become fully vested in any qualified and
non-qualified plans, programs, or arrangements, in which the Executive
participated if the plan, program, or arrangement does not address the effect
of
a change in control,
2) CCOW
shall have contributed or cause to be contributed to the Executive’s 401(k) plan
account the matching and profit-sharing contributions, if any, that the
Executive is entitled to based upon all W-2 income earned by the Executive
for
the plan year,
3) CCOW
shall cause to be continued for 12 months after Executive’s termination of
employment, health insurance coverage under the Consolidated Omnibus
Reconciliation Act (“COBRA”) substantially identical to the coverage maintained
for the Executive before employment termination with payment of such coverage
to
be paid by CCOW, and
4) In
lieu
of providing Executive with continued life and disability coverage for 12
months, CCOW shall pay to Executive an additional lump-sum amount equal to
CCOW’s cost (determined as of the time immediately prior to the date of the
Executive’s termination of employment) of providing Executive with group life
and disability coverage for 12 months.
(c) No
Mitigation Required.
CCOW
hereby acknowledges that it will be difficult and could be impossible
(x)
for the
Executive to find reasonably comparable employment after termination, and
(y)
to
measure the amount of damages the Executive suffers as a result of termination.
Additionally, CCOW acknowledges that its general severance pay plans do not
provide for mitigation, offset, or reduction of any severance payment received
thereunder. Accordingly, CCOW further acknowledges that the payment of severance
benefits under this Agreement is reasonable and shall constitute liquidated
damages, and the Executive shall not be required to mitigate the amount of
any
payment provided for in this Agreement by seeking other employment or otherwise,
nor will any profits, income, earnings, or other benefits from any source
whatsoever create any mitigation, offset, reduction, or any other obligation
on
the part of the Executive hereunder or otherwise.
(d) Severance
Benefits Are in Full Satisfaction of Any Claims the Executive May
Have.
The
Executive agrees that CCOW’s payment of the Severance Benefit and Additional
Severance Benefit are in lieu of any and all claims and/or damages that the
Executive may have with respect to (i) the Change in Control of CCOW, other
than
claims to benefits expressly provided in other written agreements that provide
for Change in Control benefits or (ii) the termination of the Executive’s
employment. In addition, Executive agrees that CCOW’s payment of the Severance
Benefit and Additional Severance Benefit are in full satisfaction of all
such
claims and damages.
3.Definition
of Change in Control.
For
purposes of this Agreement, “Change in Control” means a change in control of
CCOW as defined in section 409A of the Internal Revenue Code of 1986, as
amended
(“Code”) and the regulations promulgated thereunder, and to the extent
consistent with section 409A of the Code means the earliest occurrence of
one of
the following events:
A. A
Change In Ownership of the Employer.
A
change
in ownership of the Employer occurs on the date that any person (or group
of
persons) acquires ownership of stock of the Employer that, together with
stock
held by such person or group, constitutes more than fifty percent (50%) of
the
total fair market value or total voting power of the stock of the Employer,
respectively.
B. A
Change in Effective Control of the Employer.
A
change
in effective control of the Employer occurs on the date that:
1. Any
person (or group of persons) acquires (or has acquired during the twelve
(12)
month period ending on the date of the most recent acquisition by such person
or
persons) ownership of stock of the Employer possessing thirty-five percent
(35%)
or more of the total voting power of the stock of the Employer, respectively;
or
2. A
majority of members of the Employer’s Board is replaced during any twelve (12)
month period by directors whose appointment or election is not endorsed by
a
majority of the members of the Employer’s Board, respectively prior to the date
of the appointment or election.
C. A
Change in Ownership of a Substantial Portion of the Employer’s
Assets.
A
change
in the ownership of a substantial portion of the Employer’s assets occurs on the
date that any person (or group of persons) acquires (or has acquired during
the
twelve (12) month period ending on the date of the most recent acquisition
by
such person or persons) assets from the Employer, respectively that have
a total
gross fair market value equal to, or more than, forty percent (40%) of the
total
gross fair market value of all of the assets of the Employer, respectively
immediately prior to such acquisition or acquisitions.
4. Definition
of Separation of Service and Good Reason.
For
purposes of this Agreement “Separation of Service” means the Executive’s service
as a director, executive, or independent contractor to the CCOW and any member
of a controlled group, as defined in section 414 of the Code, terminates
for any
reason, other than because of a leave of absence approved by CCOW and other
than
because of the Executive’s death. For purposes of this Agreement, if there is a
dispute about the Executive’s status or the date of the Executive’s Separation
from Service, the Board of Directors of CCOW shall have the sole and absolute
right to determine the date of Executive’s Separation of Service in conformance
with section 409A of the Code and regulations promulgated
thereunder.
For
purposes of this Severance Agreement, the term Good Reason means the occurrence
of any of the following without the Executive’s written consent -
(a) reduction
of the Executive’s base salary, or
(b) reduction
of the Executive’s bonus, incentive, and other compensation award opportunities
under CCOW’s or subsidiary’s benefit plans, unless a company-wide reduction of
all officers’ award opportunities occurs simultaneously, or termination of the
Executive’s participation in any officer or employee benefit plan maintained by
CCOW or a subsidiary, unless the plan is terminated because of changes in
law or
loss of tax deductibility to CCOW for contributions to the plan, or unless
the
plan is terminated as a matter of policy applied equally to all participants,
or
(c) assignment
to the Executive of duties or responsibilities that are materially inconsistent
with the Executive’s duties and responsibilities immediately before the Change
in Control, or any other action by CCOW or its successor that results in
a
material reduction or material adverse change in the Executive’s position,
authority, duties, or responsibilities, or
(d) failure
to obtain an assumption of CCOW’s obligations under this Severance Agreement by
a successor to CCOW, regardless of whether the entity becomes a successor
as a
result of a merger, consolidation, sale of assets, or other form of
reorganization, or
(e) relocation
of CCOW’s principal executive offices or requiring the Executive to change the
Executive’s principal work location to any location that is more than 50 miles
from the location of CCOW’s principal executive offices on the date of this
Severance Agreement.
5. Termination
for Which No Severance Benefits Are Payable.
(a)
Termination
for Cause.
Despite
any contrary provision of this Agreement, under no circumstance shall the
Executive be entitled to severance benefits if the Executive’s employment
terminates for Cause. For purposes of this Agreement, “Cause” means the
Executive shall have committed any of the following acts -
1) an
act of
fraud, embezzlement, or theft while employed by CCOW or a subsidiary, or
conviction of the Executive for or plea of no contest to a felony or conviction
of or plea of no contest to a misdemeanor involving moral turpitude, or the
actual incarceration of the Executive for 45 consecutive days or more,
or
2) gross
negligence, insubordination, disloyalty, or dishonesty in the performance
of the
Executive’s duties as an officer of CCOW or subsidiary (for purposes of this
Agreement, the term subsidiary means any entity in which CCOW directly or
indirectly beneficially owns 50% or more of the outstanding voting securities);
willful or reckless failure by the Executive to adhere to CCOW’s or subsidiary’s
written policies; intentional wrongful damage by the Executive to the business
or property of CCOW, including without limitation its reputation, which in
CCOW’s sole judgment causes material harm to CCOW; breach by the Executive of
fiduciary duties to CCOW and its stockholders, whether in the Executive’s
capacity as an officer or as a director of CCOW or subsidiary,
3) removal
of the Executive from office or permanent prohibition of the Executive from
participating in the Bank’s affairs by an order issued under section 8(e)(4) or
(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. 1818(e)(4) or (g)(1),
or
4) intentional
wrongful disclosure of secret processes or confidential information of CCOW
or
affiliates, which in CCOW’s sole judgment causes material harm to CCOW or
affiliates, or
5) any
actions that have caused the Executive to be terminated for cause under any
employment agreement existing on the date hereof or hereafter entered into
between the Executive and CCOW or a subsidiary, or
6) the
occurrence of any event that results in the Executive being excluded from
coverage, or having coverage limited for the Executive as compared to other
executives of CCOW or affiliates, under a blanket bond or other fidelity
or
insurance policy covering directors, officers, or employees.
For
purposes of this Agreement, no act or failure to act on the part of the
Executive shall be deemed to have been intentional if it was due primarily
to an
error in judgment or negligence. An act or failure to act on the Executive’s
part shall be considered intentional if it is not in good faith and if it
is
without a reasonable belief that the action or failure to act is in the best
interests of CCOW. Any act or failure to act based upon authority granted
by
resolutions duly adopted by the board of directors or based upon the advice
of
counsel for CCOW shall be conclusively presumed to be in good faith and in
the
best interests of CCOW.
(b) Death
or Disability.
Despite
any contrary provision of this Agreement, under no circumstance shall the
Executive be entitled to severance benefits if the Executive dies while actively
employed by CCOW or a subsidiary, or if the Executive becomes disabled while
actively employed by CCOW or a subsidiary. For purposes of this Agreement,
the
term “disabled” means disabled as defined in section 409A of the Internal
Revenue Code of 1986, as amended (“Code”) and the regulation promulgated
thereunder. The benefits, if any, payable to the Executive or the Executive’s
beneficiary or estate for death or disability shall be determined solely
by such
benefit plans or arrangements as CCOW or subsidiary may have with the Executive
relating to death or disability, not by this Agreement.
6. Notices.
Any
notice to the Executive required or permitted under this Agreement shall
be
given in writing to the Executive, either by personal service or by certified
mail, postage prepaid, and if mailed shall be addressed to the Executive
at the
Executive’s home address then shown on CCOW’s files. For the purpose of
determining compliance with any time limit in this Agreement, a notice shall
be
deemed to have been duly given (x)
on the
date of service if personally served on the party to whom notice is to be
given,
or (y)
the
fifth business day after mailing if mailed to the party to whom notice is
to be
given in the manner provided in this section.
7. Nonassignability.
Neither
this Agreement nor any right or interest hereunder shall be assignable by
the
Executive, beneficiaries or legal representatives without CCOW’s prior written
consent. However, nothing in this section shall preclude the Executive from
designating a beneficiary to receive any benefit payable hereunder upon his/her
death, or the executors, administrators, or other legal representatives of
the
Executive or the Executive’s estate from assigning any rights hereunder to the
person or persons entitled thereto.
8. No
Attachment.
Except
as required by law, no right to receive payments under this Agreement shall
be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to execution, attachment, levy, or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no
effect.
9. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the Executive
and
CCOW and their respective successors.
10. Modification
and Waiver.
(a)
Amendment
of Agreement.
This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(b) Waiver.
No term
or condition of this Agreement shall be deemed to have been waived nor shall
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to
the
specific term or condition for the future or as to any act other than that
specifically waived. No delay in exercising any rights shall be construed
as a
waiver, nor shall a waiver on one occasion operate as a waiver of such right
on
any future occasion.
11. Entire
Agreement.
This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to this Agreement and contains all
of
the covenants and agreements between the parties with respect to this Agreement.
Each party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally 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 and binding.
12. Severability.
The
provisions of this Agreement shall be deemed severable. The invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions of this Agreement. Any provision held
to
be invalid or unenforceable shall be reformed to the extent (and only to
the
extent) necessary to make it valid and enforceable.
13. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of California.
14. This
Agreement Is Not an Employment Contract.
The
parties hereto acknowledge and agree that (x)
this
Agreement is not an employment agreement and (y)
nothing
in this Agreement shall give the Executive any right or impose any obligations
to continued employment by CCOW, nor shall it give CCOW any rights or impose
any
obligations for the continued performance of duties by the Executive for
CCOW or
any subsidiary or successor of CCOW.
15. Withholding
of Taxes.
CCOW
may withhold from any benefits payable under this Agreement all Federal,
state,
local or other taxes as may be required by law, governmental regulation,
or
ruling.
16. Compliance
with Internal Revenue Code Section 409A.
CCOW
and the Executive intend that their exercise of authority or discretion under
this Agreement shall comply with section 409A of the Code. If when the
Executive’s employment terminates the Executive is a specified employee, as
defined in section 409A of the Code, and if any payments or benefits under
this
Agreement will result in additional tax or interest to the Executive because
of
section 409A of the Code, then despite any provision of this Agreement to
the
contrary the Executive will not be entitled to the payments or benefits until
the earliest of (x)
the
date that is at least six months after termination of the Executive’s employment
for reasons other than the Executive’s death, (y)
the
date of the Executive’s death, or (z)
any
earlier date that does not result in additional tax or interest to the Executive
under section 409A of the Code. As promptly as possible after the end of
the
period during which payments or benefits are delayed under this provision,
the
entire amount of the delayed payments shall be paid to the Executive in a
single
lump sum. If any provision of this Agreement does not satisfy the requirements
of section 409A of the Code, such provision shall be applied in a manner
consistent with those requirements, despite any contrary provision of this
Agreement. If any provision of this Agreement would subject the Executive
to
additional tax or interest under section 409A of the Code, CCOW shall reform
the
provision. However, CCOW shall maintain to the maximum extent practicable
the
original intent of the applicable provision without subjecting the Executive
to
additional tax or interest, and CCOW shall not be required to incur any
additional compensation expense as a result of the reformed provision.
References in this Agreement to section 409A of the Code include rules,
regulations, and guidance of general application issued by the Department
of the
Treasury under section 409A of the Code.
17. CODE
SECTION 280G.
The
Executive and CCOW acknowledge that for federal income tax purposes there
is (i)
the limitation on the deductibility by CCOW and (ii) the imposition of an
excise
tax on the Executive for certain change in control benefits under, but not
limited to section 280G of the Code and any successor to section 280G of
the
Code. If, after taking into account the Severance Benefit and Additional
Severance Benefit to Executive and all other compensation payments to or
for the
benefit of the Executive that are included in determining the deductibility
of
such payments under section 280G of the Code or any successor to section
280G of
the Code, it is determined that section 280G of the Code and section 4999
of the
Code apply and result in an excess tax payable by Executive for such payments,
then the amount of the Severance Payment shall be increased to include a special
lump sump payment payable to the Executive at the time of the Change in Control
equal to 60% of the amount of the Severance Payment and Additional Severance
Benefit that is included for purposes of determining the deductibility of
such
payments under section 280G of the Code or any successor to section 280G
of the
Code.
7
In
Witness Whereof,
the
parties have executed this Agreement as of the date first written
above.
Executive Capital
Corp of the West
By:
/S/ ▇▇▇▇▇▇▇
de ▇▇ ▇▇▇▇ By: /S/▇▇▇▇▇▇
▇. Hawker__________
▇▇▇▇▇▇▇
de la ▇▇▇▇ ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇, President and
EVP
and
General Counsel Chief
Executive
Officer