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Exhibit
10.4
EMPLOYMENT
AGREEMENT
THIS AGREEMENT is entered
into as of the 14th day of February, 2008, by and between Heritage
Bank (the “Bank”) and Michael F. Stalls (the
“Employee”).
WHEREAS, the Employee serves
in a position of substantial authority; and
WHEREAS, the Bank desires to
ensure the Employee’s services for the term of this
Agreement; and
WHEREAS, the Employee is
willing to continue to serve in the employ of the Bank on the terms
and conditions set forth below, and the Board of Directors of the
Bank (the “Board”) has determined that such terms and
conditions are reasonable and in the best interests of the
Bank.
NOW, THEREFORE, it is AGREED
as follows:
1. Employment . The
Employee is hereby employed by the Bank as its Vice President,
Chief Credit Officer. Except to the extent that the President and
Chief Executive Officer of the Bank shall have delegated a portion
of such authority to one or more other officers, as Vice President,
Chief Credit Officer of the Bank the Employee shall perform such
administrative and management services for the Bank as are
currently rendered and as are customarily performed by persons
situated in a similar executive capacity. The Employee shall also
promote, by entertainment or otherwise, as and to the extent
permitted by law, the business of the Bank.
2. Base Compensation .
The Bank agrees to pay the Employee as Vice President, Chief
Financial Officer and Treasurer during the term of this Agreement a
salary (the “Base Salary”) at the rate of $144,779 per
annum, payable in cash not less frequently than monthly. The Board
shall review, not less often than annually, the rate of the
Employee’s Base Salary, and in its sole discretion may decide
to increase his Base Salary.
3. Discretionary
Bonuses . The Employee shall participate in an equitable manner
with all other senior management employees of the Bank in
discretionary bonuses that the Board may award from time to time to
the Bank’s senior management employees. No other compensation
provided for in this Agreement shall be deemed a substitute for the
Employee’s right to participate in such discretionary
bonuses.
4. (a) Participation in
Retirement, Medical and Other Plans . The Employee shall be
entitled to participate in any plan that the Bank maintains for the
benefit of its employees if the plan relates to (i) pension,
profit-sharing, or other retirement benefits, (ii) medical
insurance or the reimbursement of medical or dependent care
expenses, or (iii) other group benefits, including disability
and life insurance plans.
(b) Employee Benefits
. The Employee shall participate in any fringe benefits that are or
may become available to the Bank’s senior management
employees, including, for example: any stock option or incentive
compensation plans and any other benefits that are commensurate
with the responsibilities and functions to be performed by the
Employee under this Agreement.
(c) Expenses . The
Employee shall be reimbursed for all reasonable out-of-pocket
business expenses that he shall incur in connection with his
services under this Agreement upon substantiation of such expenses
in accordance with the policies of the Bank.
5. Term . The Bank
hereby employs the Employee, and the Employee hereby accepts such
employment under this Agreement, for the period commencing on the
date hereof and ending June 30, 2010 (or such earlier date as
is determined in accordance with Section 9 hereof).
Additionally, prior to July 1 of each year, the
Employee’s term of employment
and this Agreement shall be extended for
an additional one-year period beyond the then effective expiration
date; provided, however, that the Compensation Committee of the
Board determines in a duly adopted resolution that the performance
of the Employee has met the Board’s requirements and
standards and that the term of this Agreement shall be extended.
Prior to July 1 of each such year, the Compensation Committee
and the Board shall meet to review the Employee’s performance
and determine whether the term of this Agreement shall be extended.
By written notice, the Board or the Chief Executive Officer will
inform the Employee as soon as possible after the Board’s
annual review whether the Board has determined to extend the term
of this Agreement.
6. Loyalty, Full Time and
Attention .
(a) During the period of his
employment hereunder and except for illness, reasonable vacation
periods, and reasonable leaves of absence, the Employee shall
devote all his full business time, attention, skill, and efforts to
the faithful performance of his duties hereunder; provided that,
from time to time, the Employee may serve on the board of directors
of, and hold any other offices or positions in, companies or
organizations, that will not present any conflict of interest with
the Bank or any of its subsidiaries or affiliates, or unfavorably
affect the performance of Employee’s duties pursuant to this
Agreement, or will not violate any applicable statute or
regulation. “Full business time” is hereby defined as
that amount of time usually devoted to like companies by similarly
situated executive officers. During the term of his employment
under this Agreement, the Employee shall not engage in any business
or activity contrary to the business affairs or interests of the
Bank, or be gainfully employed in any other position or job other
than as provided above.
(b) Nothing contained in this
Section 6 shall be deemed to prevent or limit the
Employee’s right to invest in capital stock or other
securities of any business dissimilar from that of the Bank, or,
solely as a passive or minority investor, in any
business.
7. Standards . The
Employee shall perform his duties under this Agreement in
accordance with such reasonable standards as the Board may
establish from time to time. The Bank will provide the Employee
with the working facilities and staff customary for similar
executive officers and necessary for him to perform his
duties.
8. Vacation and Sick
Leave . The Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his duties under
this Agreement in accordance with the terms set forth below, all
such voluntary absences to count as vacation time; provided
that:
(a) The Employee shall be
entitled to an annual vacation in accordance with the policies
periodically established by the Board for senior management
employees at the Bank.
(b) The Employee shall not
receive any additional compensation from the Bank on account of his
failure to take a vacation, and the Employee shall not accumulate
unused vacation from one fiscal year to the next, except in either
case to the extent authorized by the Board.
(c) In addition to the
aforesaid paid vacations, the Employee shall be entitled without
loss of pay, to absent himself voluntarily from the performance of
his employment obligations with the Bank for such additional
periods of time and for such valid and legitimate reasons as the
Board may in its discretion approve. Further, the Board may grant
to the Employee a leave or leaves of absence, with or without pay,
at such time or times and upon such terms and conditions as the
Board in its discretion may determine.
(d) In addition, the Employee
shall be entitled to an annual sick leave benefit as established by
the Board.
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9. Termination and
Termination Pay . Subject to Section 11 hereof, the
Employee’s employment hereunder may be terminated under the
following circumstances:
(a) Death . The
Employee’s employment under this Agreement shall terminate
upon his death during the term of this Agreement, in which event
the Employee’s estate shall be entitled to receive the
compensation due the Employee through the last day of the calendar
month in which his death occurred.
(b) Disability . The
Bank may terminate the Employee’s employment after having
established, through a determination by the Board, the
Employee’s Disability. For purposes of this Agreement,
“Disability” means a physical or mental infirmity that
impairs the Employee’s ability to substantially perform his
duties under this Agreement and that results in the Employee
becoming eligible for long-term disability benefits under the
Bank’s long-term disability plan (or, if the Bank has no such
plan in effect, that impairs the Employee’s ability to
substantially perform his duties under this Agreement for a period
of 180 consecutive days). The Employee shall be entitled to the
compensation and benefits provided for under this Agreement for
(i) any period during the term of this Agreement and prior to
the establishment of the Employee’s Disability during which
the Employee is unable to work due to the physical or mental
infirmity or (ii) any period o
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