Exhibit 10.2
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (the
“Agreement”) is made and entered into as of
August 14, 2006 (the “Effective Date”) by and
between PLACER SIERRA BANCSHARES, a California corporation (the
“Company”) and FRANK J. MERCARDANTE (the
“Executive”) (collectively sometimes referred to as the
“Parties”).
1. Employment Period. The
Company hereby agrees to employ the Executive, and the Executive
hereby agrees to enter into the employ of the Company, subject to
the terms and conditions of this Agreement for a term of two
(2) years commencing August 14, 2006, and continuing
until December 31, 2008, unless earlier terminated as provided
in Section 3. Commencing on January 1, 2007, and on each
January 1 st thereafter, the term of
Executive’s employment under this Agreement automatically
shall be extended for an additional one (1) year (ending two
(2) years following such January 1
st
anniversary date),
unless prior to such anniversary date either Party gives written
notice to the other Party in accordance with Section 17(e) of
this Agreement that the term of Executive’s employment under
the Agreement is not to be so extended. The period of the
Executive’s employment hereunder is herein referred to in
this Agreement as the “Employment Period.”
2. Terms of
Employment.
(a) Position and
Duties.
(i) The Executive shall serve as a
member of the Board of Directors and as Chief Executive Officer of
the Company, with such authority, duties and responsibilities as
are commensurate and consistent with such position, including, but
not limited to, the roles and responsibilities described in
Exhibit B hereto.
(ii) The Executive’s services
shall be performed primarily at the Company’s office in
Sacramento, California (generally three business days per week at
Executive’s discretion) and also at the Company’s
Southern California offices in Carlsbad, California and Anaheim,
California (generally two business days per week at
Executive’s discretion).
(iii) The Executive shall also
serve, without additional compensation, as Chairman of the Board
and Chief Executive Officer of Placer Sierra Bank, a subsidiary of
the Company, with such authority, duties and responsibilities as
are commensurate and consistent with such position.
(iv) The Executive shall devote his
full time, ability and attention to the business of the Company
during the term of this Agreement, and shall neither directly nor
indirectly render any services of a business, commercial or
professional nature to any other person, firm, corporation or
organization for compensation without the prior written consent of
the Board of Directors of the Company (the “Board”).
Notwithstanding the foregoing, it is also understood and agreed
that the Executive currently serves and may continue to serve as a
member of the Finance Council of the Diocese of San
Diego.
(b) Compensation.
(i) Base Salary. The
Executive shall receive a base salary at an annual rate of
$540,000, subject to annual review at the discretion of the Board
(the “Base Salary”). The Base Salary shall be payable
in semi-monthly installments in accordance with the Company’s
normal
payroll procedures, and shall be
reduced by payroll taxes and withholding required by federal, state
or local law and any additional withholding to which the Executive
agrees in writing.
(ii) Incentive Bonus. On or
before December 31, 2006, the Company and the Executive shall
agree upon an incentive bonus plan for the Executive (the
“Bonus Plan”), effective as of January 1, 2007.
The Bonus Plan shall provide for incentive compensation to be paid
to the Executive for each year during the Employment Period based
upon a combination of the Company’s achievement of earnings
targets and the performance of the Company’s Common
Stock.
(iii) Stock Options. The
Executive shall be granted an option to purchase 150,000 shares of
the Company’s Common Stock at fair market value on the date
of grant, which date shall be the date this Agreement is executed
by both Parties (the “Employee Stock Option”). The
Employee Stock Option shall be granted for a term of six
(6) years pursuant to the stock option plan of the Company.
The Employee Stock Option shall be vested and exercisable as to
50,000 of the underlying option shares on the date of grant and
shall further vest and become exercisable as to an additional
50,000 underlying shares on January 1, 2007, and as to the
final 50,000 underlying shares on January 1, 2008, in each
case subject to acceleration of vesting as described in this
Agreement.
(iv) Other Employee Benefit
Plans. The Executive shall be entitled to participate in all
employee benefit, welfare and other plans, practices, policies and
programs generally applicable to similarly situated executives of
the Company as in effect from time to time. Notwithstanding the
foregoing, the Executive shall not participate in the
Company’s Executive Incentive Compensation Plan or any other
plan which provides incentive compensation generally to executive
officers or other employees of the Company.
(v) General Expenses. The
Company shall, upon submission and approval of written statements
and bills in accordance with the then-regular procedures of the
Company, pay or reimburse the Executive for any and all necessary,
customary and usual expenses (including entertainment) incurred by
the Executive while traveling for or on behalf of the Company, and
any and all other necessary, customary or usual expenses incurred
by the Executive for or on behalf of the Company in the normal
course of business, as reasonably determined to be appropriate by
the Company.
(vi) Automobile Allowance.
During the term of this Agreement, the Executive shall be entitled
to an automobile allowance in the amount of $1,200 per month (less
payroll taxes and withholding required by federal, state or local
law). In addition, Company shall pay the amounts incurred by
Executive for fuel for business related travel and for scheduled
maintenance of the Executive’s automobile used principally
for business related travel. Except for this automobile allowance
and payment of fuel and scheduled maintenance charges, Company
shall not be obligated to pay any other expenditure with respect to
the ownership or operation of Executive’s automobile, and
Executive will be responsible for all out-of-pocket expenses,
including, but not limited to, registration, insurance, repairs and
unscheduled maintenance. The Executive shall procure and maintain
an automobile liability insurance policy on the Executive’s
automobile used principally for business related travel, with
coverage including at least $100,000 for bodily injury or death to
any one person, $300,000 for bodily injury or death in any one
accident, and $50,000 for property damage in any one accident. The
Company shall be named as an additional insured and the Executive
shall provide the Company with copies of all policies evidencing
insurance and the Company’s inclusion as an additional
insured.
(vii) Signing Bonus. Within
ten (10) business days following the Executive’s first
day of employment, the Company shall pay the Executive a bonus of
$7,000.00 (less payroll taxes and withholding required by federal,
state or local law) to compensate the Executive for the
cancellation of his previously scheduled European vacation and
other personal expenses incurred in connection with the
commencement of his employment with the Company.
(viii) Vacation. The
Executive shall be entitled to six weeks (30 business days) paid
vacation leave per year, which shall accrue on a daily basis. Such
vacation leave shall be taken at such time or times as are mutually
agreed upon by the Executive and the Board and in accordance with
the Company’s vacation leave policy, provided, that at least
two (2) weeks of such vacation shall be taken consecutively.
The Executive acknowledges that the requirement of two
(2) consecutive weeks of vacation is required by sound banking
practice. For each calendar year, the Board shall decide, in its
discretion, either (1) to pay the Executive for any unused
vacation time for such calendar year or (2) to carry over any
unused vacation time for such calendar year to the next calendar
year, provided, however, that the Executive shall not accrue
additional vacation time at any time that the Executive has accrued
and unused vacation time of seven (7) weeks.
(ix) Executive Retirement
Plan. The Company or Placer Sierra Bank has succeeded to and
assumed the obligations of Southwest Community Bank
(“Southwest”) under the Executive Supplemental
Compensation Agreement by and between Southwest and the Executive
dated October 17, 2001, as amended, and such Executive
Supplemental Compensation Agreement shall continue in full force
and effect.
3. Termination of
Employment.
(a) Death or Disability. The
Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Period. If the
Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to
the definition of Disability set forth below), it may give the
Executive written notice in accordance with Section 17(e) of
this Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with
the Company shall terminate effective on the 30
th
day after receipt of
such notice by the Executive (the “Disability Effective
Date”), provided that, within the 30 days after such receipt,
the Executive shall not have returned to full-time performance of
the Executive’s duties. For purposes of this Agreement, the
“Disability” of the Executive has occurred if the
Executive is not able, as a result of an illness or other physical
or mental disability, to perform the essential functions of his
position as required by this Agreement for a period of ninety
(90) consecutive days or in excess of one hundred eighty
(180) days in any one (1) year period, notwithstanding
reasonable accommodation by the Company to the Executive’s
known physical or mental disability, solely in accordance with, and
to the extent required by, the Americans with Disabilities Act, 29
U.S.C. sections 12101-213 or any other state or local law governing
the employment of disabled persons (the “ADA”) provided
such accommodation would not impose an undue hardship on the
operation of the Company’s business or a direct threat to the
Executive or others pursuant to the ADA.
(b) Cause. The Company may
terminate the Executive’s employment for Cause or without
Cause. For purposes of this Agreement, “Cause” shall
mean:
(i) Any act of material
dishonesty;
(ii) Any material breach of this
Agreement;
(iii) Any breach of a fiduciary duty
(involving personal profit);
(iv) Any habitual neglect of, or
habitual negligence in carrying out, those duties contemplated
under Sections 1 and 2 of this Agreement;
(v) Any willful violation of any
law, rule or regulation, which, by virtue of bank regulatory
restrictions imposed as a result thereof, would have a material
adverse effect on the business or financial prospects of the
Company;
(vi) Any conviction of any felony
which may be reasonably interpreted to be harmful to the
Company’s reputation;
(vii) The requirement to comply with
any final cease-and-desist order or written agreement with any
applicable state or federal bank regulatory authority which
requests or orders the Executive’s dismissal or limits the
Executive’s employment duties;
(viii) Any conduct which constitutes
unfair competition with the Company or any parent company,
shareholder, subsidiary, division or affiliate thereof;
(ix) The inducement of any client,
customer, agent or employee to break any contract or terminate the
agency or employment relationship with the Company or any parent
company, shareholder, subsidiary, division or affiliate thereof;
or
(x) Any willful engaging in illegal
conduct or gross misconduct, which is materially and demonstrably
injurious to the business or reputation of the Company or any of
its subsidiaries. For purposes of this subsection (x), in
determining whether cause exists, no act or failure to act on part
of Employee shall be considered “willful” unless done,
or omitted to be done, by Employee in bad faith and without
reasonable belief that the action or omission was in, or not
opposed to, the best interest of the Company or its affiliates. Any
act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board is conclusively presumed to be
done, or omitted to be done, by Employee in good faith and in the
best interest of the Company. The Company must notify Employee of
any event constituting cause within ninety (90) days following
the Company’s knowledge of its existence or such event shall
not constitute cause for purpose of this subparagraph
(x).
Termination for Cause by the Company
shall not constitute a waiver of any remedies that may otherwise be
available to the Company under law, equity, or this
Agreement.
(c) Good Reason. The
Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good
Reason” shall mean in the absence of a written consent of the
Executive:
(i) The assignment to the Executive
of duties inconsistent with the Executive’s status as Chief
Executive Officer of the Company or a substantial adverse
alteration in the nature or stature of the Executive’s
responsibilities from those described herein, which is not cured by
the Company within seven (7) business days after the Executive
delivers written notice to the Company of such assignment or
alteration;
(ii) A reduction by the Company of
the Executive’s then current Base Salary;
(iii) Any material breach by the
Company of any provisions of this Agreement, which breach is not
cured by the Company within seven (7) business days after the
Executive delivers written notice of such breach to the
Company.
(iv) The Company’s requiring
the Executive to be based at any office location outside of
Sacramento, California or Carlsbad, California;
(v) Any purported termination by the
Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement; and
(vi) Any failure by the Company to
comply with and satisfy Section 14 (c) of this
Agreement.
(d) Change in Control. The
Executive may terminate this Agreement upon a Change in Control of
the Company, provided that the Executive provides Notice of
Termination pursuant to Section 3(e) of this Agreement not
later than two (2) years after the Change in Control occurs.
“Change in Control” shall mean
(i) The consummation of a plan of
dissolution or liquidation of the Company;
(ii) The consummation of a plan of
reorganization, merger or consolidation involving the Company,
except for a reorganization, merger or consolidation where
(A) the shareholders of the Company immediately prior to such
reorganization, merger or consolidation own directly or indirectly
more than 50% of the combined voting power of the outstanding
voting securities of the corporation resulting from such
reorganization, merger or consolidation (the “Surviving
Corporation”) and the individuals who were members of the
Board immediately prior to the execution of the agreement providing
for such reorganization, merger or consolidation constitute at
least 50% of the members of the board of directors of the Surviving
Corporation, or a corporation beneficially directly or indirectly
owning a majority of the voting securities of the Surviving
Corporation; or (B) the Company is reorganized, merged or
consolidated with a corporation in which any shareholder owning at
least 50% of the combined voting power of the outstanding voting
securities of the Company immediately prior to such reorganization,
merger or consolidation, owns at least 50% of the combined voting
power of the outstanding voting securities of the corporation
resulting from such reorganization, merger or
consolidation;
(iii) The sale of all or
substantially all of the assets of the Company to another person or
entity;
(iv) The acquisition of beneficial
ownership of stock representing more than fifty percent
(50%) of the voting power of the Company then outstanding by
another person or entity.
(e) Notice of Termination.
Any termination by the Company whether for Cause or otherwise, or
by the Executive for Good Reason or otherwise, shall be
communicated by Notice of Termination to the other Party hereto
given in accordance with Section 17(e) of this Agreement. For
purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon; and
(ii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty (30) days after
the giving of such notice). The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or
circumstance which contributes
to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing
the Executive’s or the Company’s rights
hereunder.
(f) Date of Termination.
“Date of Termination” means (i) if the
Executive’s employment is terminated by the Company for any
reason other than death or Disability, or by the Executive for Good
Reason or incident to a Change in Control, the date of receipt of
the Notice of Termination or any later date specified therein
within 30 days of such notice, as the case may be; (ii) if the
Executive’s employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be;
and (iii) if the Executive terminates his employment other
than for Good Reason, the Date of Termination shall be 30 days
after the date of Notice of Termination, unless the Company, at its
option, chooses an earlier date.
4. Obligations of the Company
upon Termination.
(a) Good Reason; Other Than for
Cause, Change in Control, Death or Disability. If, during the
Employment Period, the Company shall terminate the
Executive’s employment other than for Cause, death or
Disability or the Executive shall terminate employment for Good
Reason (other than incident to a Change in Control):
(i) The Company shall pay to the
Executive a lump sum payment in an amount equal to the balance of
Executive’s then current Base Salary for the remainder of the
Employment Period (less payroll taxes and withholding required by
any federal, state or local law, any additional withholding to
which the Executive has agreed, and any outstanding obligations
owed by the Executive to the Company). No portion of such amount
shall be payable unless and until Executive tenders his resignation
from the Board (if Executive is then serving on the Board) and from
the Board of Directors of Placer Sierra Bank and eight days have
passed following Executive’s delivery to the Company of a
duly executed Release in the form of Exhibit “A”
hereto.
(ii) Any and all stock options
granted to the Executive under any stock option plan of the Company
and held by the Executive at the Date of Termination shall become
fully vested and shall be exercisable for a period of three
(3) years after the Date of Termination (provided, however,
that the exercise period shall not extend past the original term of
the option). No stock options shall become fully vested pursuant to
this section 4(a) unless and until Executive tenders his
resignation from the Board (if Executive is then serving on the
Board) and from the Board of Directors of Placer Sierra Bank and
eight days have passed following Executive’s delivery to the
Company of a duly executed Release in the form of Exhibit
“A” hereto.
(iii) The Executive shall receive
those benefits, if any, that have vested by operation of state or
federal law or under any written term of a plan, including, if any,
accrued bonus and/or accrued but unused vacation days
(“Vested Benefits”).
(iv) The Executive shall be entitled
to receive health care coverage continuation rights under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA Rights”), which will be paid for at the
Company’s expense while the COBRA Rights are
available.
The payments by the Company
specified in Section 4(a)(i) above shall constitute liquidated
damages in lieu of any and all claims by the Executive against the
Company and each of its parent
companies, shareholders,
subsidiaries, divisions and affiliates, and each of their
respective directors, partners, members, officers, employees and
agents, arising out of this Agreement or out of the employment
relationship or termination of the employment relationship between
the Executive and the Company, and shall be in full and complete
satisfaction of any and all rights which the Executive may enjoy
hereunder, and are expressly conditioned upon receipt by the
Company of an executed, unconditional Release from the Executive in
the form of Exhibit “A”.
(b) Change in Control. In the
event of a Change in Control and, during the two (2) year
period following such Change in Control, the Executive terminates
employment with the Company (pursuant to
Section 3(d)):
(i) The Company shall pay to the
Executive a single sum severance payment calculated to consist of
an amount equal to two (2) times the Executive’s then
current Base Salary, as defined in Section 2(b)(i) (less
payroll taxes and withholding required by any federal, state or
local law, any additional withholding to which the Executive has
agreed, and any outstanding obligations owed by the Executive to
the Company). No portion of such severance pay shall be payable
unless and until Executive tenders his resignation from the Board
(if Executive is then serving on the Board) and from the Board of
Directors of Placer Sierra Bank and eight days have passed
following Executive’s delivery to the Company of a duly
executed Release in the form of Exhibit “A”
hereto.
(ii) Any and all stock options
previously granted to the Executive under any stock option plan of
the Company and held by the Executive at the Date of Termination
shall become fully vested and shall be exercisable for a period of
three (3) years after the Date of Termination (provided,
however, that the exercise period shall not extend past the
original term of the option). No stock options shall become fully
vested pursuant to this section 4(b) unless a
