EXHIBIT 10.7
Form of Noncompetition and Consulting Agreements (Xxxxx and XxXxxxxxx)
for
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NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT ("Agreement"), dated as of ___ __, 1999, is
entered into by and between The Bank of Hemet, a state chartered banking
institution ("Bank"), and ___________________ ("Consultant").
RECITALS
A. Bank and Pacific Community Banking Group, a California corporation ("PCBG")
entered into that certain First Restatement of Agreement and Plan of
Reorganization dated as of December 31, 1998 (the "Reorganization
Agreement") whereby Bank will be acquired and become a wholly owned
subsidiary of PCBG.
B. Consultant is a current shareholder of Bank and President, Chief Executive
Officer and a Director of Bank and Chairman of the Board of Directors of
Banklink, a subsidiary of Bank.
C. Bank will continue its business and operations following the reorganization
and pursuant to the Reorganization Agreement, Consultant will receive
substantial consideration from Bank for his common shares and vested
options.
D. The parties recognize and acknowledge the interest of Bank in protecting
its business and goodwill following the reorganization and that Section
16601 of the California Business and Professions Code authorizes this
Agreement for such purpose.
E. Consultant will perform consulting services and not compete with Bank's
business in order to protect said business and goodwill following the
reorganization, provided Bank agrees to pay Consultant fees in accordance
with the terms and conditions hereinafter set forth.
F. Unless otherwise provided in this Agreement, capitalized terms shall have
the meanings given to them in the Reorganization Agreement.
NOW THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants, agreements and conditions
contained herein and in the Reorganization Agreement, and intending to be
legally bound hereby, Bank and Consultant agree as follows:
ARTICLE I
NON-COMPETITION AGREEMENT
1.1 NONDISCLOSURE. Consultant shall not at any time disclose, use,
transfer or sell any confidential information or proprietary data of Bank,
Banklink, PCBG or its shareholders so long as such information or proprietary
data remains confidential and has not been disclosed or is not otherwise in
the public domain, except as required by law or pursuant to the legal process.
1.2 CONSIDERATION. In consideration of the covenants contained herein,
Bank shall pay Consultant the amount of $____ per month in cash for the first
eight months of the term and $_____ per month in cash for the remaining of
the term hereof, within five (5) days following each month's end.
1.3 TERM. The term of this Agreement shall begin as of the Effective
Time and shall end upon the expiration of _______________________ after the
Effective Time (the "Term").
1.4 NONCOMPETITION AGREEMENT.
1.4.1 Consultant hereby agrees that during the Term and for a
period of one year thereafter, Consultant will not (i) engage in the Banking
Business (which term shall include the business of banks, savings and loan
institutions, credit unions and other financial institutions) other than on
behalf of Bank and/or PCBG or their affiliates within the Designated Area (as
hereinafter defined), (ii) directly or indirectly own, manage, operate,
control, be employed by, or provide management or consulting services in any
capacity to any firm, corporation or other entity (other than Bank and/or
PCBG or their affiliates) engaged in the Banking Business in the Designated
Area, or (iii) directly or indirectly solicit or otherwise intentionally
cause any employee, officer, or member of the respective Boards of Directors
of Bank and/or PCBG or any other of their affiliates to engage in any action
prohibited under (i) or (ii) of this Section 1.4.1 or solicit any customers
of Bank that have been customers of the Bank in the last three years.
1.4.2 Consultant acknowledges and agrees that irreparable injury
will result to Bank and/or PCBG in the event of a breach of any of the
provisions of this Section 1.4 (the "Designated Provisions") and that Bank
and/or PCBG will have no adequate remedy at law with respect thereto.
Accordingly, in the event of a material breach of any Designated Provision,
and in addition to any other legal or equitable remedy Bank and/or PCBG may
have, Bank and/or PCBG shall be entitled to the entry of a preliminary and
permanent injunction (including, without limitation, specific performance) by
a court of competent jurisdiction in Riverside County, California, to
restrain the violation or breach thereof by Consultant or any affiliates,
agents or any other persons acting for or with Consultant in any capacity
whatsoever, and Consultant submits to the jurisdiction of such court in any
such action.
1.4.3 It is the desire and intent of the parties that the
provisions of this Section 1.4 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction
in which enforcement is sought. Accordingly, if any particular provision of
this Section 1.4 shall be adjudicated to be invalid or unenforceable, such
provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable, such deletion to apply only with
respect to the operation of such provision in the particular jurisdiction in
which such adjudication is made. In addition, should any court determine
that the provisions of this Section 1.4 shall be unenforceable with respect
to scope, duration or geographic area, such court shall be empowered to
substitute, to the extent enforceable, provisions similar hereto or other
provisions so as to provide to Bank and/or PCBG, to the fullest extent
permitted by applicable law, the benefits intended by this Section 1.4.
1.3.4 As used herein, "Designated Area" shall mean the area
contained within Riverside, San Bernardino and Orange Counties.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CONSULTANT
2.1 PERFORMANCE OF OBLIGATIONS. Consultant represents and warrants to
Bank and/or PCBG that his execution, delivery and performance of this
Agreement will not result in or constitute a breach of or conflict with any
term, covenant, condition or provision of any commitment, contract or other
agreement or instrument, including, without limitation, any other employment
agreement, to which Consultant is or has been a party.
2.2 RESIGNATION. At the Effective Time Consultant shall resign as
President and Chief Executive Officer and Director but continue as an
employee of Bank until the end of such month. Consultant agrees and
acknowledges as of the end of such month, his employment with Bank shall
automatically cease and he shall not continue as an employee of Bank.
Consultant agrees and acknowledges that he will not be entitled to any
warrants for existing stock options pursuant to the Reorganization Agreement
and waives all rights to receive such warrants for stock options upon the
Effective Time.
2.3 INDEMNIFICATION. Consultant shall indemnify, defend, and hold
harmless Bank and PCBG, its directors, officers, representatives and agents,
for, from and against any and all losses, claims, suits, damages, expenses or
liabilities, including court costs and counsel fees, which Bank and/or PCBG
has incurred or to which Bank and/or PCBG may become subject, insofar as such
losses, claims, suits, damages, expenses, liabilities, costs or fees arise
out of or are based upon any failure of any representation or warranty of
Consultant in Section 2.1 hereof to be true and correct when made or any
breach of the provisions of Section 1.4.
ARTICLE III
GENERAL
3.1 GOVERNING LAW. This Agreement is governed by and is to be
construed and enforced in accordance with the laws of the State of
California. If under such law, any portion of this Agreement is at any time
deemed to be in conflict with any applicable statute, rule, regulation or
ordinance, such portion shall be deemed to be modified or altered to conform
thereto or, if that is not possible, to be omitted from this Agreement; the
invalidity of any such portion shall not affect the force, effect and
validity of the remaining portion hereof.
3.2 NOTICES. All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person, or forty-eight (48) hours
after deposit thereof in the U.S. mails, postage prepaid, for delivery as
requested or certified mail, addressed, in the case of:
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Consultant, to:
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Bank, to:
The Bank of Hemet
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. E. Xxxx Xxxxxxx, Chairman
With a copy to:
Pacific Community Banking Group
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Mr. E. Xxxx Xxxxxxx, Chairman
3.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding among Bank, PCBG and Consultant with respect to the subject
matter hereof and supersedes and cancels all prior written and oral
agreements and understandings with respect to the subject matter of this
Agreement, which shall be interpreted consistently herewith; provided that
prior to the Effective Time, any agreement between Bank and Consultant shall
remain in effect and shall not be superseded by this Agreement. This
Agreement may be amended but only by a subsequent written agreement of the
parties. This Agreement shall be binding upon and shall inure to the benefit
of Consultant, Consultant's heirs, executors, administrators and
beneficiaries, Bank and/or PCBG and each of their respective successors.
3.4 WITHHOLDING TAXES. All amounts payable to Consultant under this
Agreement shall be subject to applicable income, wage and other taxes, which
shall be the responsibility of Consultant. Bank and/or PCBG will not be
responsible for the withholding of any deductions.
3.5 EFFECT OF AGREEMENT. This Agreement shall have no effect until the
Effective Time. In the event that the Reorganization Agreement is terminated,
this Agreement shall automatically terminate.
3.6 DISPUTE RESOLUTION. Any dispute regarding this Agreement shall
only be heard and resolved in a court of competent jurisdiction located in
the County of Riverside, California.
3.7 LEGAL COSTS. If either party commences an action against the other
party arising or in connection with this Agreement, the prevailing party
shall be entitled to have and recover from the losing party reasonable
attorney's fees and costs of suit.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
year and day first above written.
THE BANK OF HEMET
By ______________________________________
Its _____________________________________
_________________________________________
__________________
ACKNOWLEDGED:
PACIFIC COMMUNITY BANKING GROUP
_______________________________
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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ("Agreement"), dated as of ___ __, 1999, is entered
into by and between The Bank of Hemet, a state chartered banking institution
("Bank"), and ___________________ ("Consultant").
RECITALS
A. Bank and Pacific Community Banking Group, a California corporation ("PCBG")
entered into that certain First Restatement of Agreement and Plan of
Reorganization dated as of December 31, 1998 (the "Reorganization
Agreement") whereby Bank will be acquired and become a wholly owned
subsidiary of PCBG.
B. Consultant is a current shareholder of Bank and President, Chief Executive
Officer and a Director of Bank and Chairman of the Board of Directors of
Banklink, a subsidiary of Bank.
C. Following the consummation of the acquisition of Bank by PCBG, Consultant
wishes to be retained by Banklink in a consulting capacity, as Chairman of
Banklink and as a Director of PCBG.
D. Unless otherwise provided in this Agreement, capitalized terms shall have
the meanings given to them in the Reorganization Agreement.
NOW THEREFORE, in consideration of the premises and of the respective
representations, warranties and covenants, agreements and conditions
contained herein and in the Reorganization Agreement, and intending to be
legally bound hereby, Bank and Consultant agree as follows:
ARTICLE I
CONSULTING SERVICES
1.1 CONSULTING SERVICES. From the Effective Time until the second
anniversary of the Effective Time Consultant will serve as a business
development and strategic business consultant for Banklink. Such services
shall be provided by Consultant on a schedule solely determined by Consultant.
1.2 DIRECTOR RESPONSIBILITIES. On the Effective Time Consultant will
become a Director of PCBG and shall continue as Chairman of Banklink.
Consultant will be entitled to receive monthly Board and Committee fees or
other forms of consideration for outside Directors, payable to either
Consultant or his designee, at Consultant's sole discretion. In the event
that Consultant resigns as a member of the Board of Directors of PCBG, such
Director fees or other forms of consideration shall terminate at such time.
In the event that PCBG requests the resignation of Consultant as a member of
the Board of Directors of PCBG or removes Consultant as a Director
Exhibit 2.1(d)(1)
before the third anniversary of the Effective Date, PCBG shall pay Consultant
an amount equal to the monthly Director and Committee fees or other forms of
compensation times thirty-six, minus the number of payments previously paid.
Such payment will be made immediately upon notification that Consultant shall
no longer be a Director of PCBG.
1.3 HEALTH/MEDICAL BENEFITS. From the Effective Time until the third
anniversary of the Effective Time, Consultant shall be entitled to
participate in the health/medical benefit program of Bank provided to outside
Directors which is in place at the Effective Time.
1.4 INCENTIVE COMPENSATION. From the Effective Time to the third
anniversary of the Effective Time Consultant shall be entitled to additional
incentive compensation for each new data service customer which executes a
data service contract with Bank, Banklink or their affiliates. Such
incentive compensation shall be $______ for each financial institution
signing a contract with total assets of up to $50 million, $______ for each
financial institution signing a contract with total assets between $50 million
and $100 million and $______ for each financial institution signing a
contract with total assets over $100 million. Such incentive compensation
shall be paid by Bank and/or PCBG and/or Banklink within five days of the
execution of such new data service contract, the form and contents of which
shall be determined by and approved by PCBG and/or the Board of Directors of
Banklink.
1.5 OTHER BENEFITS. As part of Consultant's consulting services,
Consultant shall be entitled to reimbursement for all reasonable
entertainment expenses incurred by Consultant in connection with business
development activities for PCBG or Banklink subject to satisfactory evidence
of such expenses, not to excess $____ per month unless previously authorized
by the Chairman of PCBG or the Board of Directors of Banklink, as
appropriate. Furthermore, Consultant will be able to utilize office space of
Bank and/or PCBG or Banklink during the term of this consulting agreement.
1.6 NONDISCLOSURE. Consultant shall not at any time disclose, use,
transfer or sell any confidential information or proprietary data of Bank,
Banklink, PCBG or its shareholders so long as such information or proprietary
data remains confidential and has not been disclosed or is not otherwise in
the public domain, except as required by law or pursuant to the legal process.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CONSULTANT
2.1 PERFORMANCE OF OBLIGATIONS. Consultant represents and warrants to
Bank and/or PCBG that his execution, delivery and performance of this
Agreement will not result in or constitute a breach of or conflict with any
term, covenant, condition or provision of any commitment, contract or other
agreement or instrument, including, without limitation, any other employment
agreement, to which Consultant is or has been a party.
2.2 RESIGNATION. At the Effective Time Consultant shall resign as
President and Chief Executive Officer and Director but continue as an
employee of Bank until the end of such month, and be paid at each normal pay
period as per existing bank payroll policy. Consultant agrees and
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acknowledges that as of the end of such month, his employment with Bank shall
automatically cease and he shall not continue as an employee of Bank.
2.3 INDEMNIFICATION. Consultant shall indemnify, defend, and hold
harmless Bank and PCBG, its directors, officers, representatives and agents,
for, from and against any and all losses, claims, suits, damages, expenses or
liabilities, including court costs and counsel fees, which Bank and/or PCBG
has incurred or to which Bank and/or PCBG may become subject, insofar as such
losses, claims, suits, damages, expenses, liabilities, costs or fees arise
out of or are based upon any failure of any representation or warranty of
Consultant in Section 2.1 hereof to be true and correct when made.
ARTICLE III
GENERAL
3.1 GOVERNING LAW. This Agreement is governed by and is to be
construed and enforced in accordance with the laws of the State of
California. If under such law, any portion of this Agreement is at any time
deemed to be in conflict with any applicable statute, rule, regulation or
ordinance, such portion shall be deemed to be modified or altered to conform
thereto or, if that is not possible, to be omitted from this Agreement; the
invalidity of any such portion shall not affect the force, effect and
validity of the remaining portion hereof.
3.2 NOTICES. All notices under this Agreement shall be in writing and
shall be deemed effective when delivered in person, or forty-eight (48) hours
after deposit thereof in the U.S. mails, postage prepaid, for delivery as
requested or certified mail, addressed, in the case of:
Consultant, to:
----------------
------------------
----------------------------
Bank, to:
The Bank of Hemet
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. E. Xxxx Xxxxxxx, Chairman
With a copy to:
Mr. E. Xxxx Xxxxxxx
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxxx, Xxxxxxxxxx 00000
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3.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding among Bank, PCBG and Consultant with respect to the subject
matter hereof and supersedes and cancels all prior written and oral
agreements and understandings with respect to the subject matter of this
Agreement, which shall be interpreted consistently herewith; provided that
prior to the Effective Time, any agreement between Bank and Consultant shall
remain in effect and shall not be superseded by this Agreement. This
Agreement may be amended but only by a subsequent written agreement of the
parties. This Agreement shall be binding upon and shall inure to the benefit
of Consultant, Consultant's heirs, executors, administrators and
beneficiaries, Bank and/or PCBG and each of their respective successors.
3.4 WITHHOLDING TAXES. All amounts payable to Consultant under this
Agreement shall be subject to applicable income, wage and other taxes, which
shall be the responsibility of Consultant. Bank and/or PCBG will not be
responsible for the withholding of any deductions.
3.5 EFFECT OF AGREEMENT. This Agreement shall have no effect until the
Effective Time. In the event that the Reorganization Agreement is terminated,
this Agreement shall automatically terminate.
3.6 DISPUTE RESOLUTION. In the event of a dispute between Bank and
Consultant as to the amount due Consultant under section 1.4 of this
Agreement, the Bank and Consultant shall each provide the other with an
accounting of the amounts each asserts are due. The parties shall then
identify any disputes they have with the other's accounting. Upon
identification of any disputed items, the parties shall attempt to agree upon
the amount due to Consultant within seven days. If no mutual agreement is
reached within said period, the parties shall have their respective
accounting firms attempt to agree upon the correct amount due Consultant,
within seven days thereafter. If the accounting firms are unable to reach a
mutual agreement, within said period, the parties shall agree to an
independent "Big Six" accounting firm to resolve any remaining items that
have not been agreed upon, and the opinion of such accounting firm shall be
binding upon the parties for the purposes of this Agreement. The parties
shall cooperate fully with each other and the accounting firms. The cost of
the expert shall be paid by the Bank. Any dispute regarding this Agreement
shall only be heard and resolved in a court of competent jurisdiction located
in the County of Riverside, California.
3.7 LEGAL COSTS. If either party commences an action against the other
party arising or in connection with this Agreement, the prevailing party
shall be entitled to have and recover from the losing party reasonable
attorney's fees and costs of suit.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
year and day first above written.
THE BANK OF HEMET
By ______________________________________
Its _____________________________________
_________________________________________
_______________
ACKNOWLEDGED:
PACIFIC COMMUNITY BANKING GROUP
_______________________________
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EXHIBIT A
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