**Exhibit 10.10**

 

**SEVERANCE AGREEMENT**

 

THIS SEVERANCE AGREEMENT(this “**Agreement**”) is made andentered into as of 11/14/2002, by and between National Mercantile Bancorp, aCalifornia corporation (the “**Company**”),and David Brown (“**Officer**”) withreference to the following facts:

 

A.            Officer is an officer of the Company and/or one or moresubsidiaries of the Company; and

 

B.            In order to induce Officer to remain employed by theCompany and/or its subsidiaries, the Company is willing to agree to payseverance to Officer under certain circumstances.

 

NOW, THEREFORE, inconsideration of the foregoing and of the respective covenants and agreementsof the parties herein contained, it is agreed as follows:

 

1.             Definitions. For purposes of this Agreement, thefollowing terms when used in this Agreement shall have the meanings set forthbelow:

 

1.1           “**Board**” shallmean the Board of Directors of the Company.

 

1.2           “**Cause**” shallmean Officer, after the date of this Agreement, (i) has been convicted by acourt of competent jurisdiction of any felony or any criminal offense involvingdishonesty, breach of trust or misappropriation, or has entered a plea of *nolo contendere* to such an offense; or(ii) has committed an act of fraud, embezzlement, theft, dishonesty or any actwhich would cause termination of coverage under the Company’s Banker’s BlankerBond as to Officer (as distinguished from termination of coverage as to theCompany as a whole); or (iii) has committed a willful violation of the Code ofConduct of any member of the Company Group or any law, rule or regulationgoverning the operation of the Company Group which the Board determines in goodfaith will likely have or has had a material adverse effect on the business,interests or reputation of the Company Group or any Member thereof, or (iv) haswillfully refused to perform the duties assigned to him; or (v) has committed awillful and unauthorized disclosure of material confidential informationregarding the Company Group, which disclosure the Board determines in good faithwill likely have or has had a material adverse effect on the Company Group orany member thereof.

 

1.3           “**Change of Control**”shall mean any transaction or series of related transactions as a result ofwhich

 

(i)            the Company consummates a reorganization, merger orconsolidation, or sale or other disposition of all or substantially all of itsassets (each a “**Business Combination**”),in each case *unless* immediatelyfollowing the consummation of such Business Combination all of the followingconditions are satisfied: (x) Persons, who,

 

 

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immediately prior to such BusinessCombination, were the beneficial owners of the Outstanding Voting Securities ofthe Company, beneficially own (within the meaning of Rule 13d-3 promulgatedunder the Exchange Act, directly or indirectly, more than one-third of thecombined voting power of the then Outstanding Voting Securities of the entity(the “**Resulting Entity**”) resultingfrom such Business Combination (including, without limitation, an entity whichas a result of such transaction owns the Company or all or substantially all ofthe Company’s assets either directly or through one or more subsidiaries); (y)no Person, other than the Existing Shareholder Group, beneficially owns (withinthe meaning of Rule 13d-3), directly or indirectly, more than 20% of the thenoutstanding combined voting power of the Outstanding Voting Securities of theResulting Entity, except to the extent that such Person’s beneficial ownershipof the Company immediately prior to the Business Combination exceeded suchthreshold; and (z) at least one-half of the members of the board of directorsof the Resulting Entity were members of the Board at the time the Boardauthorized the Company to enter into the definitive agreement providing forsuch Business Combination; or

 

(ii)           any Person acquires beneficial ownership (within themeaning of Rule 13d-3) of more than 20% of the combined voting power(calculated as provided in Rule 13d-3 in the case of rights to acquiresecurities) of the then Outstanding Voting Securities of the Company; provided,however, that for purposes of this clause, the following acquisitionsshall not constitute a Change of Control (x) any acquisition directly from theCompany (or related trust) sponsored or maintained by the Company or any entitycontrolled by the Company; or (zz) any acquisition by the Existing ShareholderGroup.

 

1.4           “**Company Group**”shall mean at any time the Company and each subsidiary of the Company at suchtime which is consolidated with the Company for financial reporting purposes.

 

1.5           “**Disability of Officer**”shall mean if Officer is Disabled and such disability continues for a period ofany six months out of a one-year period. “**Disabled**”shall mean Officer’s inability, through physical or mental illness or other cause,to perform normal and customary duties which Officer is required to perform forthe Company. In determining whether Officer is Disabled, the Company may relyupon the written statement provide by a licensed physician acceptable to theCompany.  Officer shall allowexamination from time to time by any licensed physician selected by the Companyand agreed to by Officer.  All suchexaminations will be conducted within a reasonable time period.

 

1.6           “**Exchange Act**”shall mean the Securities Exchange Act of 1934, as amended, or any successorstatute.

 

1.7           “**Existing ShareholderGroup**” shall mean Carl R. Pohlad, members of the immediate family ofCarl R. Pohlad, and any affiliated Person of Carl R. Pohlad or any member ofhis immediate family.

 

1.8           “**Good Reason**”shall mean with respect to Officer (i) Officer being delegated or assignedmaterial duties by the Board or the Chief Executive Officer of the

 

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Company, by a communication in writing, whichare substantially inconsistent with the position and status held by Officerimmediately prior to the effective date of the Change of Control; or (ii)Officer having had removed by the Board or the Chief Executive Officer of theCompany by a communication in writing such authority and responsibility whichis necessary to carry out the duties of the position held by Officerimmediately prior to the effective date of the Change of Control; or (iii)Officer having a substantial and adverse alteration in the nature, status, orprestige of Officer’s responsibilities due to the action of the Board or theChief Executive Officer, which is verifiable by tangible evidence; or (iv)Officer being forced to relocate permanently to an office more than 25 milesfrom the location of the Company’s executive offices as in effect immediatelyprior to the effective date of the Change of Control; or (v) Officer having hisor her base compensation reduced by 10% or more from such base compensation ineffect on the date immediately preceding the effective date of the Change ofControl.  Notwithstanding the foregoing,the loss of one or more titles, and corresponding responsibility(ies), shallnot be deemed to be “**Good Reason**” under (i), (ii) or (iii) aboveprovided that the Officer retains at least one title no less senior thanExecutive Vice President and Chief Financial Officer at the Company or at leastone subsidiary bank of the Company.

 

1.9           **“Outstanding Voting Securities”** of anyPerson means the outstanding securities of such Person entitling the holdersthereof to vote generally in the election of directors of such Person.

 

1.10**         “Person”**shall have the meaning ascribed to such term in Section 3(a)(9) of the ExchangeAct, which definition shall include a “person” within the meaning of Section13(d)(3) of the Exchange Act.

 

1.11**         “WithoutCause”** shall mean any termination of Officer’s employment by theCompany except for a termination (i) for Cause, (ii) as a result of the deathof Officer, or (iii) as a result of the Disability of Officer.

 

2.             Severance Payment.

 

2.1           Except as provided in Section 2.2, if (i) Good Reasonexists within one year following a Change of Control, and Officer gives writtennotice to the Company within 90 days after the occurrence of such Good Reasonthat Officer is terminating his or her employment with the Company for GoodReason, or (ii) the Company terminates Officer’s employment Without Causewithin one year following a Change of Control, the Company will pay Officer ina lump sum an amount (the “**Severance Payment**”) equal to nine timesOfficer’s base monthly salary as in effect at the time of termination or, ifgreater, immediately prior to the effective date of the Change of Control.  The Severance Payment shall be reduced byrequired deductions for applicable taxes and other withholdings and for anyoutstanding obligations owed by Officer to the Company that are then due andpayable, which deductions and withholdings are specifically authorized byOfficer.  The Severance Payment shall bein lieu of any other severance payments to which Officer would be entitledunder the plans or policies of the Company and any of its subsidiaries.  The Severance Payment will be paid at thetime of termination of the Officer’s employment with the Company.  Each Change of

 

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Control and each Good Reason following aChange of Control shall give Officer a separate right to give the notice setforth in the first sentence of this Section 2.

 

2.2           Notwithstanding any other provision of this Agreement, theCompany shall have  no obligations tomake the Severance Payment if such Severance Payment is prohibited byapplicable federal or state law, including without limitation Part 359 of theregulations of the Federal Deposit Insurance Corporation (12 CFR § 359 *et seq*.)or any successor provision.

 

2.3           As a condition to the obligation of the Company to pay theSeverance Payment, the Officer must execute and deliver a release in form andsubstance satisfactory to the Company releasing the Company Group and itsdirectors, officers, employees and agents (“**Released Parties**”) from anyand all claims the Officer may have against the Released Parties, whether suchclaims are known or unknown, absolute or contingent, other than claims underthis Agreement, claims for salary and other compensation and benefits accruedprior to termination, and rights under employee benefit plans.

 

3.             IRC Provisions. Notwithstanding any other provision of this Agreement, if the Companyreasonably determines that the payment of the Severance Payment to Officerwould be nondeductible by the Company for federal income tax purposes becauseof Section 280G of the Internal Revenue Code of 1986, as amended (the “**Code**”),the Severance Payment shall be reduced to an amount which maximizes theSeverance Payment without causing any portion of the same to be nondeductibleby the Company because of Section 280G of the Code.  Any such reduction shall be applied to the Severance Payment orthe other amounts due to Officer in such manner as Officer may reasonablyspecify within 30 days following notice from the Company of the need for suchreduction or, if Officer fails to so specify timely, as determined by theCompany.

 

4.             Employee Benefits.  All employee benefits provided by the Company shall cease upontermination of Officer’s employment, whether for Good Reason, Without Cause, orfor any other reason, and the Company shall have no further responsibility withrespect thereto after such termination, provided, however, that: (a)nothing contained in this Agreement shall affect any right Officer may havepursuant to the federal entitlement to continued group health care coverage asprovided in the Consolidated Omnibus Budget Reconciliation Act of 1985 (“**COBRA**”)or any successor legislation or comparable state law; (b) if Officer isentitled to receive a Severance Payment pursuant to Section 2 hereof, and ifOfficer elects under COBRA to continue to receive any benefits thereunder, theCompany shall reimburse Officer for the amount of such Officer’s COBRA paymentfor the first six months after such termination; and (c) nothing shall alter ormodify the post termination rights of Officer under any employee benefit plan(such as the right to exercise vested options for a specified period under theStock Incentive Plan).

 

5.             Term.  TheAgreement shall commence on the date set forth above and shall terminate upon12 months prior written notice to the Officer.

 

6.             Employment “At Will”.  Neither this Agreement nor the Severance Payment payable hereundershall be deemed to limit, replace or otherwise affect the “at will” nature of

 

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Officer’s employment with the CompanyGroup.  Officer’s employment with anymember of the Company Group continues to be for an unspecified term and may beterminated at will at any time with or without cause or notice by such memberof the Company Group or by Officer (but in the case of Officer, without thewritten consent of the Company Officer must terminate his employment with allmembers of the Company Group).  Thisemployment “at-will” relationship cannot be changed absent an express intent asset forth in an individualized written employment contract signed by bothOfficer and the Chief Executive Officer of the Company.

 

7.             Mitigation. Officer shall have no obligation to mitigate damages based uponOfficer’s termination pursuant to Section 2 of this Agreement, and theSeverance Payment shall not be reduced as a result of Officer obtaining otheremployment within nine months of Officer’s termination.

 

8.             Counterparts. This Agreement may be executed in any number of counterparts, each ofwhich shall be deemed an original, and all of which, together, shall constituteone and the same instrument.

 

9.             Partial Invalidity.  Any provision of this Agreement which shall prove to be invalid,void, or illegal shall in no way affect, impair or invalidate any otherprovision hereof, and such other provisions shall remain in full force andeffect.

 

10.           Governing Law. The terms and provisions of this Agreement shall be governed andconstrued pursuant to the laws of the State of California except to the extentgoverned by federal law.

 

11.           Construction. Headings at the beginning of each section are solely for the convenienceof the parties and are not a part of this Agreement.  Whenever required by the context of this Agreement, the singularshall include the plural and the masculine shall include the feminine and viceversa.  This Agreement shall not beconstrued as if it had been prepared by one of the parties, but rather as ifboth parties had prepared the same. Unless otherwise indicated, all references to sections are to thisAgreement.

 

12.           Integration. This Agreement represents the entire and integrated agreement betweenthe Company and Officer regarding the subject matter hereof and supersedes allprior negotiations, representations or agreement, either written or oral.

 

13.           Successors and Assigns.  The terms, covenants and conditions herein contained shall bebinding upon and shall inure to the benefit of the heirs, successors andassigns of the parties hereto.

 

14.           No Waiver. No waiver by either party of any breach or default hereunder shall bedeemed a waiver of any other breach or default, and no delay or forbearance byeither party hereunder in enforcing any of its rights or remedies shall bedeemed a waiver of any such rights or remedies, unless such waiver is embodiedin a writing signed by the authorized representative of the party to be bound.

 

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IN WITNESS WHEREOF, thisAgreement has been executed effective on the day and year hereinabove setforth.

 
| THE “COMPANY” | NATIONAL MERCANTILE  BANCORP |
|-------------------------|------------------------------|
|                    |                         |   |
|                    | By:                          | Scott G. Montgomery |
|                    |                         |   |
|                    | Its:                         | President & CEO |
|                    |                         |   |
| “OFFICER”     | /s/ Scott G. Montgomery      |

 

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