Exhibit 10.1
ABD INSURANCE AND FINANCIAL
SERVICES
Employment
Agreement
This Employment Agreement (the
“ Agreement ”) is made and entered into as of
December 2, 2005 by and between ABD Insurance and Financial
Services (“ ABD ”), a California corporation,
Greater Bay Bancorp, a California corporation (“ GBB
”) and Frederick J. de Grosz (“ Executive
”).
RECITALS
A. Executive has served as President
and Chief Executive Officer of ABD for many years and as such has
been a significant factor in ABD’s growth and
success.
B. ABD and GBB have determined that
the continued service of Executive as Co-Chairman of the ABD Board
of Directors will serve the best interests of ABD and GBB, and
Executive desires to continue in the employ of ABD as Co-Chairman.
Accordingly, ABD, GBB and Executive have agreed to the terms and
conditions of such continued employment as set forth in this
Agreement.
C. Commencing upon the end of the
Employment Term (as defined below), Executive and ABD agree to
enter into the Consulting Agreement attached hereto as Exhibit
A.
NOW THEREFORE
, in consideration of the foregoing
recitals and the respective undertakings of ABD, GBB and Executive
set forth below, ABD, GBB and Executive agree as
follows:
1. Duration . This Agreement shall
commence on January 1, 2006 (the “Effective Date”)
and shall continue until February 28, 2009, unless earlier
terminated as provided in Section 6 of this Agreement (the
“Employment Term”).
2. Position and Duties
.
2.1 Co-Chairman . The
Executive shall be employed by ABD as Co-Chairman of ABD’s
Board of Directors (the “ABD Board”).
2.2 Duties and
Responsibilities . As Co-Chairman, Executive will report
directly to the GBB Chief Executive Officer. Executive’s
duties and responsibilities shall include, but not be limited to,
assisting ABD with business development and retention, mergers and
acquisitions, external marketing and goodwill;
providing support to ABD’s management as
requested; preparing for and chairing all meetings of ABD’s
Board; and providing other assistance, duties or oversight to ABD
or GBB as, from time to time, may reasonably be designated by
GBB’s Chief Executive Officer.
2.3 Full-time Position
. The parties acknowledge that the Co-Chairman position
is a full-time position, and Executive agrees to devote all of his
business time, energy and skill to the affairs of ABD. However, ABD
agrees that Executive may devote reasonable time for personal
business, charitable or professional activities, so long as such
activities do not materially interfere with the Executive’s
performance of services under this Agreement.
3. Salary, Benefits, and Bonus.
3.1 Base Salary . As payment
for the services to be rendered by Executive as provided in
Section 2 of this Agreement, ABD shall pay the Executive a
“Base Salary” at the rate of Thirty-seven Thousand Five
Hundred Dollars ($37,500) per month (Four Hundred Fifty Thousand
Dollars ($450,000) annually), payable on ABD’s normal payroll
schedule and subject to normal withholdings and other applicable
deductions.
3.2 Restricted Stock Award and
Option Grant . Executive shall be granted 18,000
restricted shares of GBB common stock under GBB’s Amended and
Restated 1996 Stock Option Plan (the “Option Plan”),
subject to approval by the Compensation Committee of GBB’s
Board of Directors (the “Compensation Committee”) in
January 2006. The restrictions on such restricted shares shall
lapse in four equal annual installments commencing one year from
the date of grant. Issuance of the restricted shares shall be
subject, in all respects, to the terms and conditions of a
restricted stock grant agreement to be entered into between
Executive and GBB. In addition, Executive shall be granted an
option to purchase 35,000 shares of GBB common stock under the
Option Plan, subject to approval by the Compensation Committee in
January 2006. Such option shall vest in three equal annual
installments commencing one year from the date of grant.
3.3 Annual Bonus . For
each full calendar year in which Executive is employed under this
Agreement, Executive shall be eligible for an annual bonus
(“Annual Bonus”) in an amount to be determined in the
discretion of the Chief Executive Officer of GBB; provided,
however, that the range of the Annual Bonus shall be from 0% to
120% of Executive’s Base Salary, with a target of 60% of
Executive’s Base Salary. Eligibility for such Annual Bonus
shall be conditioned upon Executive’s attainment of
performance objectives, including annual profitability, growth,
shareholder return and other performance metrics, as determined in
the discretion of the Chief Executive Officer of GBB. Executive
shall be eligible for payment of such bonus only if the Executive
is
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employed by ABD on the date such bonus is paid.
The Annual Bonus shall be paid in equivalent restricted shares,
rounded to the nearest whole share, under the Option Plan or any
successor plan maintained by GBB at or around the time the Annual
Bonus is due and payable. The restrictions on such restricted
shares shall lapse in three equal annual installments; provided,
however, that any restrictions remaining at the end of the
Consulting Term (as defined below) shall lapse at the end of such
Term.
3.4 Long Term Incentive Award
. Executive shall not be eligible to participate in
ABD’s excess earnings retention plan (“Plan”).
However, in the event that the Plan is funded and participants in
the Plan receive Plan distributions in accordance with the terms
and conditions set forth therein, Executive will be eligible to
receive a payment from ABD in an amount equal to 5% of the total
funded value of the Plan, payable in accordance with the terms and
conditions set forth in the Plan.
3.5 Stock Options . During
the Employment Term, the Compensation Committee, in its discretion,
may award Executive one or more options to purchase shares of GBB
common stock. The decision to grant such options will be determined
by several factors, including, but not limited to,
Executive’s individual performance, the grant opportunities
generally provided by GBB to executives and any decision by GBB
whether to continue to award options as equity compensation. The
terms and conditions of such option grants, including the vesting
schedule and the exercise price of the options, shall be governed
by the Option Plan or any successor plan, as well as any applicable
stock option agreements between Executive and GBB under such
plan.
3.6 Fringe Benefits
.
(a) Fringe Benefits .
Executive shall be entitled to participate in the employee group
benefit plans and programs of ABD, if any, on the same terms and
conditions as other similarly-situated Executives to the extent
that Executive’s position, tenure, salary, age, health and
other qualifications make Executive eligible to participate in such
plans or programs, subject to the rules and regulations applicable
thereto. Upon termination of his employment, except termination for
“Cause” (as defined below), Executive will be eligible
to continued participation, at his own cost (without any
contribution to the premium from ABD or GBB), in the employee
health benefit plans of ABD in which he was participating as of the
termination date to the extent such plans or any successor plans
continue to be offered by ABD. Such participation shall be on the
same terms and conditions as he participated in such plans during
the Employment Term, provided that Executive meets the eligibility
requirements of the plans.
(b) Expense Reimbursement .
ABD agrees to reimburse the Executive for all reasonable, ordinary
and necessary business expenses incurred by the Executive in
conjunction with his services to ABD consistent with ABD’s
standard reimbursement policies. ABD shall pay travel costs
incurred by the Executive in conjunction with his services to ABD
consistent with ABD’s standard travel policy.
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(c) Vacation . Executive
shall be entitled to six (6) weeks of paid vacation annually.
Any such vacation shall be subject to the terms and conditions of
ABD’s vacation policy.
4. Consulting Agreement. Except as may be
provided below in Section 6, upon the end of the Employment
Term, Executive and ABD agree to enter into the Consulting
Agreement, attached hereto as Exhibit A. The Consulting Agreement
shall provide for a two (2) year term, commencing with the end
of the Employment Term, under which Executive will provide
consulting services to ABD (the “Consulting
Term”).
5. Covenants .
5.1 Compliance with Policies
. In connection with the performance of his duties and
responsibilities, Executive shall comply with all policies, rules,
and procedures reasonably adopted from time to time by ABD and GBB,
including, but not limited to, GBB’s Code of Conduct and
Ethics.
5.2 No Conflicting
Employment. Executive shall not, during the Employment Term,
engage in any other employment, occupation, consulting or other
business activity directly related to the business in which ABD,
GBB or its or their subsidiaries and affiliates are now involved or
become involved during the Employment Term, nor will Executive
engage in any other activities that conflict with Executive’s
obligations to ABD. Executive may deliver speeches to outside
organizations, provided, however, that any honoraria received for
such speeches be turned over to ABD. Executive shall not provide
services to any board of directors of any organization without the
prior written approval of GBB’s Chief Executive
Officer.
5.3 Confidential Information
.
(a) ABD Confidential
Information. Except as herein provided, Executive agrees that
during and after the term of this Agreement, he (i) shall keep
Confidential Information (as defined below) confidential and shall
not directly or indirectly, use, divulge, publish or otherwise
disclose or allow to be disclosed any aspect of Confidential
Information without the prior written consent of the GBB Chief
Executive Officer except in the performance of Executive’s
duties for ABD; (ii) shall refrain from any action or conduct
which might reasonably or foreseeably be expected to compromise the
confidentiality or proprietary nature of the Confidential
Information; and (iii) shall follow recommendations made by
the ABD Board or the GBB Chief Executive Officer with respect to
Confidential Information. For purposes of this Agreement,
“Confidential Information” includes but is not limited
to trade secrets, confidential information,
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knowledge or data of ABD, or any of its clients,
customers, consultants, shareholders, licenses, licensors, vendors
or affiliates, that Executive may produce, obtain or otherwise
acquire or have access to during the course of his employment by
ABD (whether before or after the date of this Agreement), including
but not limited to: business plans, records, and affairs; customer
files and lists (including but not limited to: customers of ABD on
whom Executive called or with whom Executive became acquainted
during the term of his employment); special customer matters; sales
practices; methods and techniques; merchandising concepts,
strategies and plans; sources of supply and vendors; special
business relationships with vendors, agents and brokers;
promotional materials and information; financial matters; mergers;
acquisitions; equipment, technologies and processes; selective
personnel matters; inventions; developments; product
specifications; procedures; pricing information; intellectual
property; technical data; software programs; finances; operations
and production costs; ideas; plans technology; brokers or other
entities which refer customers to ABD; proposals; market analyses;
technical services; incentives; customer needs; customer risks or
risk factors; customer purchasing patterns; customer renewal or
expiration data; customer concerns; ABD pricing and profit margins;
ABD’s commissions and/or fees; insurer information unique to
or tailored to ABD; and other information which ABD has developed
at significant expenditure of time, effort and/or expense. All
Confidential Information and all tangible materials containing
Confidential Information are and shall remain the sole property of
ABD.
(b) Third Party Information
. Executive recognizes that ABD may have received, and
in the future may receive, from third parties their confidential or
proprietary information subject to a duty on ABD’s part to
maintain the confidentiality of such information and to use it only
for certain limited purposes. Executive agrees that he owes ABD and
such third parties, during the term of the Agreement and
thereafter, a duty to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to
any person or firm and to use it in a manner consistent with, and
for the limited purposes permitted by, ABD’s agreement with
such third party.
(c) Return of Confidential
Material . In the event of Executive’s termination
of employment with ABD for any reason whatsoever, Executive agrees
promptly to surrender and deliver to ABD all records, notes,
materials, equipment, drawings, documents and data of any nature
pertaining to any Confidential Information or to his employment,
and Executive will not retain or take with him or her any tangible
materials containing or pertaining to any Confidential Information
that Executive may produce, acquire or obtain access to during the
term of this Agreement.
5.4 Nonsolicitation
.
(a) Nonsolicitation of Employees
. Executive agrees that during the period of his
employment and for two years after the date of termination of his
employment, he will not, directly or indirectly, induce, solicit,
recruit or encourage any
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employee of ABD to leave the employ of ABD,
which means that he will not: (i) disclose to any third party
the names, backgrounds or qualifications of any employees or
otherwise identify them as potential candidates for employment; or
(ii) personally or through any other person approach, recruit,
interview or otherwise solicit employees to work for Executive or
any other employer.
(b) Nonsolicitation of Customers
Using Confidential Information . Executive agrees that
during the period of his employment with ABD and thereafter, he
will not solicit, either on behalf of Executive of any third party,
the business of any client or customer of ABD, whether past,
present or prospective, using any Confidential
Information.
(c) Nonsolicitation of Identified
Customers . In addition to Executive’s obligations
under Section 5.4(b), Non-Solicitation of Customers Using
Confidential Information, Executive further agrees that during the
period of his employment and for two years after the date of
termination of his employment, he will not solicit, either on
behalf of Executive or any third party, the business of any client
or customer of ABD, whether past, present or prospective;
(i) whose business Executive was directly or indirectly
involved in soliciting or recruiting on behalf of ABD during the
one-year period prior to the date of Executive’s termination
of employment with ABD; or (ii) whose account Executive was
assigned to or whose account Executive serviced during the one-year
period prior to the date of Executive’s termination of
employment with ABD. Such restriction shall not apply to any
customer of ABD that terminated its relationship with ABD and
became a customer of a competitor of ABD (other than a competitor
with which Executive was affiliated) at least 12 months prior to
the acceptance of business by Executive.
(d) Independence of Terms.
The Non-Solicitation terms of this Agreement, except as provided
herein, are independent of and in addition to the non-solicitation
terms of the Non-Competition Agreement, dated as of March 12,
2002, entered into between Executive and GBB (the
“Non-Competition Agreement”).
6. Termination. This Agreement and all related obligations of
the Parties under this Agreement (excluding Executive’s
obligations that expressly extend beyond termination of employment)
shall terminate on February 28, 2009 unless earlier terminated
as follows:
6.1 Termination of Employment
With Cause . During the Employment Term, ABD or GBB may
terminate this Agreement with “Cause” at any time
without advance notice. For purposes of this Agreement,
“Cause” shall mean any of the following that has a
material adverse effect upon ABD or GBB: (i) willful failure
or refusal to perform a substantial or material lawful directive of
the ABD Board, the ABD Chief Executive Officer, the GBB Board of
Directors, or the GBB Chief Executive Officer; (ii) willful
misconduct or deliberate violation of any fiduciary obligations
or
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other duties owed ABD; (iii) performance of
material duties in a grossly negligent manner or material violation
of applicable laws or regulations in the performance of
Executive’s duties as set forth herein;
(iv) Executive’s conviction of a felony;
(v) Executive’s conviction of a crime involving moral
turpitude, fraudulent conduct or dishonest conduct; or
(vi) revocation of Executive’s insurance agent or
insurance broker license. In the event ABD terminates this
Agreement for Cause, Executive shall be paid only his Base Salary
earned through the date of termination, as well as pay for any
vacation accrued but not used by Executive as of that date. In
addition, if ABD or GBB terminates this Agreement for Cause,
neither ABD nor GBB shall have any obligation to enter into the
Consulting Agreement, make any payments to Executive under the
Consulting Agreement, or otherwise retain Executive’s
services as a consultant.
6.2 Termination of Employment
Without Cause (Other Than in a Change of Control). If ABD or
GBB terminates this Agreement during the Employment Term without
Cause, and provided that the termination is not in connection with
a “Change of Control” as defined below, then ABD shall
pay to Executive (i) his Base Salary earned through the
termination date, as well as any accrued but unused vacation pay as
of that date; (ii) his Base Salary from the date of
termination through February 28, 2009, payable in one lump sum
on the first day of the seventh calendar month following the date
of termination; and (iii) the total sum of Two Hundred Forty
Thousand Dollars ($240,000.00), representing an amount equal to the
value of consulting services Executive would have provided under
the Consulting Agreement, payable in one lump sum on the first day
of the seventh calendar month following the date of termination
(unless otherwise required by law, such payment shall not be
subject to withholding of any federal or state income tax, nor will
payments or withholdings be made for the employer or employee share
of any FICA, FUTA, SDI or other employment or payroll tax). In
addition, if ABD or GBB terminates this Agreement without Cause,
neither ABD nor GBB shall have any obligation to enter into the
Consulting Agreement, make any payments to Executive under the
Consulting Agreement except as provided in this Section, or
otherwise retain Executive’s services as a
consultant.
For purposes of this Section, a
termination without Cause shall include (a) any adverse and
material change in the scope of Executive’s position,
responsibilities or duties; (b) a diminution in
Executive’s Base Salary, bonus opportunities and benefits;
(c) an increase in his normal commuting miles to reach a new
worksite such that the normal commute from his home to the new
worksite exceeds 35 miles each way; or (d) ABD or GBB causes
an event to occur which reasonably constitutes or results in a
constructive termination (by forcing a resignation or otherwise) of
the Executive’s employment.
6.3 Termination of Employment as
a Result of a Change in Control. Executive shall be entitled to
participate in GBB’s Change in Control Pay Plan II, amended
and restated effective January 1, 2005, and as it may be
further amended from
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time to time by the GBB Board of Directors. All
the terms and conditions of such plan shall govern any payments
that may be due to Executive as a result of termination of his
employment or this Agreement in connection with a “Change in
Control” as defined in such plan. In addition, if
Executive’s employment or this Agreement is terminated as a
result of a Change in Control, Executive shall be entitled to
receive an additional Two Hundred Forty Thousand Dollars
($240,000), representing an amount equal to the value of consulting
services Executive would have provided under the Consulting
Agreement, payable either in one lump sum within thirty
(30) days of the date of termination o
