EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT
AGREEMENT (the
"Agreement") is made and entered into as of
the 1st day of August, 2005 by and between The Vintage Bank, a California
corporation (the "Bank"), and John A.
Nerland (the "Employee").
BACKGROUND
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WHEREAS,
the Employee is currently employed by the Bank and possesses
valuable knowledge and skills that have
contributed to the operation of the Bank
and its Solano Bank division;
WHEREAS,
the Bank desires to continue Employee's employment and the
Employee is willing to continue to be employed by the
Bank, upon the terms
and
subject to the conditions hereinafter set
forth; and
WHEREAS,
the Bank is a
wholly-owned
subsidiary
of North Bay Bancorp,
a
California corporation (the "Company").
NOW,
THEREFORE,
in consideration
of the premises,
agreements and
mutual
covenants set forth herein, the parties
hereto hereby agree as follows:
1.
Employment
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1.1 General. The Bank hereby employs the Employee as President of its
Solano Bank division on the terms and subject
to the conditions
contained in
this Agreement, and the Employee hereby
accepts such employment on the terms and
subject to the conditions contained in this
Agreement.
1.2 Duties of
Employee. During the Term of this
Agreement,
the Employee
shall diligently perform all duties and
responsibilities
reasonably accorded to
and expected of the President of the Solano
Bank division of the Bank and as may
be assigned to him by the Board of Directors of the Bank (the "Board of
Directors"), the Chief Executive Officer of
the Bank, or the President and Chief
Executive Officer of the Company, and shall
exercise such power and authority as
may from time to time be delegated to him
thereby. The Employee shall devote his
full business time and attention to the business and affairs of the Bank
as
necessary to perform his duties and responsibilities hereunder, render such
services to the best of his ability and use his best efforts to promote the
interests of the Bank. The Employee shall faithfully adhere to, execute and
fulfill all policies established by the
Bank.
1.3 Place of Performance. Except for required travel for the Bank's
business, the Employee shall perform his
duties and
responsibilities from
the
offices of the Company and the Solano Bank
division of the Bank.
<PAGE>
2. Term.
Subject to the
provisions
of Section 4 of this
Agreement,
the
initial term of Employee's employment hereunder shall commence on the date of
this Agreement (the "Effective Date") and shall continue
thereafter
until the
third anniversary of the Effective Date (the "Initial Term"). Unless the
Employee shall have notified the Bank, or the Bank shall have
notified the
Employee, not less than sixty days prior to
the expiration of the
Initial Term
of such party's election not to continue the Term of this Agreement, upon
expiration of the Initial Term, the Employee's employment hereunder shall
continue until the fourth anniversary of
the Effective Date and thereafter shall
continue on a year-to-year basis unless either party
notifies the other,
not
less than sixty days prior to expiration of the then current Renewal Term, of
such party's election not to continue
the Term of this
Agreement (each such
additional one-year period, a "Renewal Term"; the
Initial Term and any Renewal
Term are collectively referred to hereinafter as the
"Term"). The election
by
the Bank not to continue the Term of
Employee's
employment
for a Renewal Term
shall not be deemed a termination without Cause pursuant to Section 4.1(b)
hereof except as expressly provided in
Section 4.1(d) hereof.
3.
Compensation.
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3.1 Salary.
During the Term of the
Employee's employment
hereunder,
the
Employee shall receive an annual salary of one hundred thirty four thousand
dollars ($134,000) payable at such times
and in such manner as the Bank's normal
payroll schedule may from time to time
provide. Employee's
annual salary
shall
be subject to annual adjustment as may be determined by the Board
of Directors
in its sole and absolute discretion.
3.2 Incentive
Compensation.
The Employee
shall be eligible to
receive as
additional compensation each year during
his employment hereunder, as determined
by the Board of Directors or an applicable
committee thereof, in accordance with
the terms of an Incentive Compensation Plan adopted annually by the Board of
Directors. Such additional compensation (if any) to be paid
at a time or times
and in a manner consistent with the Bank's normal
practices for the
payment of
bonuses, or as the Board of Directors or
applicable
committee may otherwise
determine.
3.3 Benefits. During his employment hereunder, the Employee shall be
entitled to participate in all plans adopted for the general benefit of the
Bank's management employees, including medical plans and 401(k) plan, to
the
extent that the Employee is and remains
eligible to
participate
therein and
subject to the eligibility provisions of
such plans in effect from time to time.
In the event Employee's employment hereunder is terminated and the
Employee is
entitled to compensation pursuant to Section 4.4(d), the Employee shall be
entitled to continue to participate in the
Bank's medical plan until the earlier
of (a) expiration of the applicable payment period set forth in Section
4.4(d)(i) or (b) the date Employee obtains
new employment.
3.4 Paid Time
Off ("PTO").
During each
calendar year of his employment
hereunder, the Employee shall be entitled to twenty-five (25) days of PTO in
accordance with the Bank's PTO policy,
prorated for any
period of employment of
less than an entire year, provided that PTO
will continue to accrue only so long
as Employee's total accrued PTO does not
exceed thirty-five
(35) days.
Should
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<PAGE>
Employee's accrued PTO reach thirty-five (35) days, Employee will cease to
accrue further PTO until Employee's accrued PTO falls below that level.
Notwithstanding anything contained in the foregoing, Employee shall take not
less than ten (10) consecutive days of PTO during
each calendar year during the
Term of this Agreement. Employee may be absent from his
employment for PTO only
at such time as the President and Chief
Executive Officer of the Company shall
determine from time to time.
3.5 Withholding. Notwithstanding any provision in this Agreement to the
contrary, all payments required to be made
by the Bank to the Employee hereunder
or otherwise arising out of, related or
incidental to or in connection with the
Employee's employment hereunder shall be
subject to withholding of such amounts
relating to taxes as the Bank may reasonably determine it should withhold
pursuant to any applicable law or
regulation.
3.6 Reimbursement of Expenses. The Bank agrees to reimburse the
Employee
for all reasonable business travel and
other out-of-pocket
expenses incurred by
the Employee in the discharge of his duties
hereunder,
subject to the
Bank's
reimbursement policies in effect from time to
time. All reimbursable
expenses
shall be appropriately documented in reasonable detail by the Employee upon
submission of any request for reimbursement, and in a format and manner
consistent with the Bank's expense reporting policy, as well as applicable
federal and state record keeping
requirements.
3.7.
Automobile.
The Bank will pay to
Employee an automobile allowance in
the amount of five hundred dollars ($500) per month. The Employee shall be
responsible for insurance and maintenance costs associated with such
automobile's operation. The Employee shall not be entitled
to reimbursement for
mileage. Employee shall procure and
maintain an automobile
liability insurance
policy on the automobile, with coverage including Employee for at least a
minimum of $300,000 for bodily injury or death to any one person
in any one
accident, and $100,000 for property
damage in any one
accident. The Employer
shall be named as an additional insured and Employee shall provide Employer
copies of policies evidencing insurance and Employer's inclusion as an
additional insured.
4.
Termination
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4.1 By Bank.
--------
(a) With Cause.
Notwithstanding any
provision in this Agreement
to the contrary, the Employee's employment hereunder may be terminated by
the
Bank at any time for "Cause," and such termination shall be effective
immediately upon written notice to the
Employee. For purposes of this Agreement,
"Cause" for the termination of the Employee's employment hereunder shall be
deemed to exist if, in the reasonable judgment of the Board of
Directors: (i)
the Employee commits fraud, theft or embezzlement against the Bank, or any
subsidiary or affiliate thereof; (ii) the Employee commits a felony
or a crime
involving moral turpitude; (iii) the
Employee compromises trade secrets or other
proprietary information of the Bank, or any subsidiary or affiliate
thereof;
(iv) the Employee breaches any
non-solicitation
agreement with the Bank, or any
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<PAGE>
subsidiary or affiliate thereof; (v) the Employee breaches any of
the terms of
this Agreement (other than those referenced in clauses (iii) and
(iv) of this
Section 4.1(a)) and fails to cure such
breach within ten (10) days after the
receipt of written notice of such breach from the Bank; (vi) the Employee
engages in any grossly negligent act or
willful misconduct that causes, or could
be reasonably expected to cause, harm to
the business,
operations or reputation
of the Bank, or any subsidiary or affiliate
thereof; or (vii) the Bank, or any
subsidiary or affiliate thereof, is ordered to terminate this
Agreement by any
governmental regulatory agency with supervisory
authority over the Bank, or any
subsidiary or affiliate thereof.
(b) Without
Cause. The Bank may at any time, in its sole and
absolute discretion, terminate the employment of the
Employee hereunder without
Cause, or otherwise without any cause,
reason or justification, provided that
the Bank provides to the Employee written
notice (the
"Termination Notice")
of
such termination. In the event of any such termination by the Bank, the
Employee's employment with the Bank shall cease and terminate on the date
specified in the Termination Notice.
(c) For Disability of the Employee. If, as a result of
incapacity
due to physical or mental illness or injury, the Employee is determined to be
disabled under any disability policy maintained by the Bank or,
in the event no
such policy is maintained by the Bank,
the Employee
shall have been unable
to
perform the essential functions of his position, with or without reasonable
accommodation, on a full-time basis for a
period of sixty (60) consecutive days,
or for a total of ninety (90) days in any
twelve-month period (a
"Disability"),
then thirty (30) days after written notice
to the Employee (which
notice may be
given before or after the end of the
aforementioned periods, but which shall not
be effective earlier than the last day of
the applicable
period), the Bank
may
terminate the Employee's employment hereunder if the Employee is unable to
resume his full-time duties at the
conclusion of such notice period.
4.2 Death of the
Employee. This Agreement shall immediately cease and
terminate upon the death of Employee.
4.3 Termination by Employee. The Employee may terminate
his employment
under this Agreement upon not less than
thirty (30) days prior written notice to
the Bank. Upon learning that the Employee is
terminating his
employment under
this Agreement, the Bank may, in its sole
discretion but subject
to its other
obligations under this Agreement, relieve Employee of his duties
under this
Employment Agreement, and assign Employee other reasonable duties and
responsibilities to be performed until the
termination becomes effective.
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<PAGE>
4.4 Compensation
Upon Early Termination.
------------------------------------
(a) As a Result of Death, Cause or Resignation. If the
Employee's
employment under this Agreement is
terminated prior to the scheduled expiration
of the Term by reason of his death, termination by the Bank for Cause or
resignation by the Employee, the Employee shall be entitled to be paid
solely
(i) the Employee's salary then in effect through the effective date of
termination, (ii) any accrued PTO due
pursuant to Section 3.4, (iii) any amounts
due pursuant to Section 3.6, (iv) those benefits, if any, that have vested by
operation of state or federal law or under
any written term of a
plan ("Vested
Benefits"), and (v) health care coverage continuation rights under the
Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA Rights"), and the
Bank shall have no further liability or other obligation of
any kind whatsoever
to the Employee. In the case of termination as a result of the death of
Employee, any amounts due pursuant to this
Section 4.4(a) shall
be paid to the
Employee's estate, heirs (at law), devisees, legatees or other proper and
legally entitled descendants, or the personal representative, executor,
administrator or other proper legal representative on behalf of such
descendants.
(b) By the Bank
other than for Cause. Except as otherwise
expressly provided in Section 4.4(d),
if, prior to the
scheduled expiration
of
the Term, the Bank terminates the Employee's employment without Cause, the
Employee shall be entitled to receive and be paid solely (i) the Employee's
salary then in effect until the expiration
of six months following the effective
date of the termination of Employee's
employment payable over such period at the
Bank's regular and customary intervals for the payment of
salaries as in effect
from time to time ("Severance Pay"), (ii) any accrued PTO due pursuant to
Section 3.4, (iii) any amounts due pursuant to Section 3.6, (iv) any Vested
Benefits, and (v) any COBRA Rights, and the
Bank shall have no further liability
or other obligation of any kind whatsoever to the Employee. The payment of
Severance Pay shall constitute liquidated damages in lieu of any
and all claims
by the Employee against the Bank, shall be
in full and complete
satisfaction of
any and all rights which the Employee may
enjoy hereunder, and
shall constitute
consideration for a full and unconditional release of any and all liability
of
the Bank or any of its shareholders, benefit plans, affiliate companies,
subsidiaries, and the directors, officers, employees, trustees and agents of
such entities and their successors or
assigns, arising out
of this Agreement or
out of the employment relationship between the Employee and the Bank (in the
form of Exhibit A, hereafter the "Release"). Payment of the Severance Pay
is
expressly conditioned upon receipt by the Bank of the
Release executed by
the
Employee.
(c) Disability. For
the sixty (60) day period following onset of
the Employee's Disability, Employee shall be entitled to receive and
be paid
solely (i) the Employee's salary then in effect until the
expiration
of said
sixty (60) day period payable over such
period of time at the Bank's regular and
customary intervals for the payment of
salaries as in effect from time to time,
(ii) any accrued PTO due pursuant to
Section 3.4, (iii) any amounts due pursuant
to Section 3.6, (iv) any Vested
Benefits, and (v) any COBRA rights.
Following
expiration of the sixty (60) day period, the Employee shall be entitled to
receive and be paid solely a salary at a rate
commensurate
with the benefit
Employee is eligible to receive under any
disability
policy maintained by the
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<PAGE>
Bank for a period of one hundred twenty
(120) days or until Employee's benefits
under any disability policy maintained by the Bank for the
Employee
commences,
whichever period is shorter, payable over such period of time at the Bank's
regular and customary intervals for the payment of salaries as in
effect from
time to time, and the Bank shall have no
further liability or
other obligation
of any kind whatsoever to the Employee.
(d) Change
in Control.
Notwithstanding anything contained in the
foregoing, if within one year of the
effective date of a
Change in Control (as
defined below), of the Company (i)
Employee's employment under this Agreement is
terminated by the Bank, its assignee or
successor, without Cause (including, for
purposes of this Section 4.1(d), an
election by the Bank not to continue to Term
of Employee's employment) or (ii) Employee
terminates his employment under this
Agreement on account of (y) Employee's position, responsibilities or working
conditions being substantially diminished or (z) a material
reduction in the
Employee's compensation or benefits,
the Employee shall be
entitled to receive
and be paid compensation as follows in lieu
of compensation
payable pursuant to
Section 4.4(b):
(i) Less Than Five Years of Service. If as of the
effective date of the Change in Control of the Company the Employee has
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