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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.
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(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.
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(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.
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(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:
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(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.
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(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:
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(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
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(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.
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(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):
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(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)):
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(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 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
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