**Exhibit 10**

 

EMPLOYMENT AGREEMENT

 

**DATE****:****                                                          **January 1, 2002

 

**PARTIES****:****                                      **CAPITAL CORP OF THE WEST, a Californiacorporation, hereinafter referred to as “Employer”: and

 

THOMAS T. HAWKER, herein after referred to as“Employee”.

 

**RECITALS****:**

 

1.               Employee is currently employed as the ChiefExecutive Officer of Employer under a written Employment Agreement datedSeptember 12, 2000, which will expire at the close of business on December 31,2001.

 

2.               The parties desire to enter into a newEmployment Agreement for an additional three (3) year term.

 

**AGREEMENT****:**

 

Employer hereby agrees to extend the employment of Employee, andEmployee hereby accepts said extension of employment with Employer, upon termsand conditions hereinafter set forth.

 

1.                                       Duties.

 

Employee is hereby employed as the President and Chief ExecutiveOfficer of Employer.  Employee shallperform the customary duties of a Chief Executive Officer of a California bankholding company, including but not limited to, the supervision of Employer’sbusiness and all subsidiary corporations and businesses owned or related toEmployer and such kindred duties as may from time to time be reasonablyrequested of Employee by the Board of Directors of

 

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Employer.  As used herein the term “business ofEmployer” shall include the business of any Employer’s subsidiaries and relatedentities.

 

2.                                       Appointment to Board of Directors.

 

Employer hereby agrees that Employee shall remain a member of the Boardof Directors of Employer for so long as Employee is elected to a position onthe board by the shareholders of Employer, or until this agreement has beenterminated.  During the period ofEmployee’s election to the Board of Directors, Employee shall serve as a memberof any and all committees to which he is appointed, except the auditcommittee.  Employee also hereby agreesto accept appointment to other boards of directors and committees of subsidiaryand related organizations of Employer. Employee shall fulfill all of Employee’s duties as a board and committeemember without additional compensation. Upon the termination of this Agreement by either Employee or Employer,Employee agrees to immediately resign from the Board of Directors, from allcommittees and from all corporate offices of Employer and from all ofEmployer’s subsidiaries and related companies; further, all fringe benefits,such as insurance, shall be terminated on the last day of service of Employee,unless otherwise mandated by the terms of this Agreement, Employer’s personnelpolicy, or any other benefit policies in effect at the time of suchtermination.

 

3.                                       Term.

 

Provided Employee is still employed by Employer through December 31,2001, this Agreement shall be effective for a period of thirty-six (36) monthsthereafter, and employment under this agreement shall commence on January 1,2002 and unless sooner terminated as provided herein, shall end on December 31,2004 (“Term”).

 

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4.                                       Extent of Service.

 

Employee shall donate his full time attention, and energies to thebusiness of Employer, and shall not during the Term of this Agreement beengaged in any other business activities, except personal investments, withoutthe prior written consent of Employer.

 

5.                                       Regular Compensation.

 

In consideration for the services which Employee is to render underthis Agreement, Employer shall pay to Employee a base salary (“Base Salary”) ofTwo Hundred Sixty Thousand Dollars ($260,000). The Base Salary shall be payable to Employee in equal semi-monthlyinstallments on the fifteenth and last working day of each month during theperiod of employment.  Cost of livingadjustments will be made effective January 1 of the second and third years in amountsindicated by the Consumer Price Index for the Western Urban Area published bythe U.S. Department of Labor Statistics for the preceding twelve (12) months.

 

6.                                       Discretionary Incentive Compensation.

 

Employee shall be entitled to participate in any incentive programswhich may be adopted from time to time by Employer for Employee.  Amounts awarded to Employee under any saidincentive program shall be determined at the sole discretion of Employer,including the vesting of any incentive awards. If either the Employer or Employee choose not to negotiate a subsequentAgreement, for reasons other than those included in paragraph 19, on theconclusion of this Agreement, the incentive award earned for the 2004 year willbe paid in full as if Employee were still employed.

 

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7.                                       Business Expenses.

 

Employee shall be reimbursed for all ordinary and necessary, documentedexpenses reasonably incurred by Employee in connection with his employmentassociated with managing the business of Employer and other expenses which maybe authorized from time to time by the Board of Directors of Employer,including expenses for club membership, entertainment, travel and similaritems.  Travel and other expenses forattendance at conventions and banking education programs that are approved bythe Board of Directors shall also be reimbursed.   Employer will pay for or will reimburse Employee for suchexpenses upon presentation by Employee from time to time of receipts evidencingsuch expenditures.

 

8.                                       Automobile.

 

Employer shall provide an automobile for the use of employee.  Employer shall pay all fuel, operating,maintenance and insurance costs associated with such automobile.  Employee shall be entitled to limited use ofthe automobile for personal use, but shall primarily use it for businesspurposes associated with his employment. As the Chief Executive Officer of Employer, Employee has been providedan automobile for the convenience of Employer. Employer expects the Employee will frequently visit Employer’s various businesslocations, customers, business partners, vendors, regulatory agencies, ratingsand market making agencies and travel for various trade associations in whichEmployer is actively engaged.  For thesecurity of the automobile, the convenience of the Employer, and theconservation of the time of Employee dedicated to the business of Employer,Employee agrees to garage the automobile at his personal residence.  Employee is authorized to commence his worktravel as set forth above from such personal residence.

 

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9.                                       Vacation.

 

During the term of employment Employee shall be entitled to vacationleave at full salary at the discretion of Employee as time allows, so long asit is reasonable and does not jeopardize his responsibilities, of twenty (20)business days; provided that Employee shall take as a portion of his vacationat least ten (10) consecutive business days.

 

10.                                 Disability.

 

If employee becomes permanently disabled during the Term because ofsickness, physical or mental disability, so that he is unable to perform hisfull duties hereunder, Employer agrees to continue the salary (i) ninety (90)days from commencement of the disability, (ii) until Employee is able to returnto work, or (iii) when any payments commence to Employee under the separateSalary Continuation Agreement executed between the parties, whichever is less.

 

11.                                 Insurance.

 

Employer shall provide to Employee, his wife and qualifying children,during the Term at Employer’s expense the same medical insurance, dentalinsurance, life insurance, and disability insurance coverage, if any, which maybe offered to Employer’s other full-time employees under any benefit plans asmay be in effect from time to time.

 

The parties acknowledge that Employee’s Base Salary has been set highenough under this contract so that Employee may pay for life insurance.  However, Employee shall have the right todetermine whether to maintain life insurance and use part of his Base Salary tocover the premiums thereon, or to use the Base Salary for other purposes.  Employer shall have no duty under this

 

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agreementto give Employee any additional compensation to cover life insurance premiumsor to maintain any life insurance on Employee’s life.

 

12.                                 Stock Options.

 

As part of the consideration for entering this agreement, the Board ofDirectors has agreed to grant 7,000 incentive stock options each year onJanuary 1 of 2002, 2003, and 2004 at the then market value provided employee isstill actively employed by employer on each of said dates.  Each stock option grant will vest 25% ongrant and 25% each year thereafter.

 

13.                                 Retirement Plan.

 

Employer shall be entitled to participate in any retirement plansoffered to other employees of Employer such as Employee’s participation inEmployer’s 401K plan.

 

14.                                 Printed Material.

 

All written, printed, visual or audio materials used by Employee inperforming duties for Employer, other than Employee’s personal notes and diaries,are and shall remain the property of Employer. Upon termination of employment on any basis, Employee shall return allsuch materials to Employer.

 

15.                                 Disclosure of Information.

 

In the course of employment, Employee may have access to confidentialinformation and trade secrets relating to Employer’s business.  Except as required in the course ofemployment by Employer, Employee shall not, without Employers’ prior writtenconsent, directly or indirectly disclose to anyone any confidential informationrelating to Employer or any financial information, trade

 

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secretsor “know-how” which is germane to Employer’s business and operations.  Employee recognizes and acknowledges thatany financial information concerning any of Employers’ customers, as it mayexist from time to time, is strictly confidential and is a valuable, specialand unique asset of Employers’ business. Employee shall not, either before or after termination of thisAgreement, disclose to anyone said financial information, or any part thereof,for any reason or purposes whatsoever.

 

16.                                 Prohibited Activities and Investments.

 

During the Term of this Agreement, Employee shall not, directly orindirectly, either as an employee, employer, consultant, agent, principal,partner, principal stockholder (i.e., ten percent or more) or corporateofficer, directly, or in any other individual or representative capacity,engage or participate in any business competitive with that of Employer.

 

17.                                 Surety Bond.

 

Employee agrees to furnish all information and take any other stepsnecessary to enable Employer to obtain and maintain a fidelity bond conditionalon the rendering of a true account by Employee of all moneys, goods, or otherproperty which may come into the custody, charge, or possession of Employeeduring the Term of Employee’s employment. The surety company issuing such bond and the amount of the bond must beacceptable to Employer.  All premiums onthe bond are to be paid by Employer.  IfEmployee cannot personally qualify for a surety bond at any time during theTerm of this Agreement, Employer shall have the option to terminate thisAgreement immediately and said termination shall be deemed to be a terminationfor cause.

 

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18.                                 Moral Conduct.

 

Employee agrees to conduct himself at all times with due regard topublic conventions and morals and to abide by and reflect in his personalactions all of the “core values” adopted by Employer and its subsidiaries fromtime to time.  Employee further agreesnot to do or commit any act that will reasonably tend to degrade him or tobring him into public hatred, contempt or ridicule, or that will reasonablytend to shock or offend any community in which Employer engages in business, orto prejudice Employer or the banking industry in general.

 

19.                                 Termination of Agreement.

 

(a)          Termination for Cause.

 

Employer reserves the right to terminate this Agreement “forcause”.  Termination for cause shallinclude termination because of Employee’s (i) personal dishonesty, (ii)incompetence, (iii) willful misconduct, (iv) breach of fiduciary duty involvingpersonal profit, (v) material breach of any of the terms of this Agreement,(vi) substantial failure to perform assigned duties, (vii) willful violation ofany law, rule or regulation (other than traffic violations or similar offenses)or final cease-and desist order, or (viii) the willful or permanent breach byEmployee of any obligations owed to Employer pursuant to this Agreement.  In addition, Employer reserves the right toterminate this Agreement “for cause” in the event that actions are effected byany regulatory agency having jurisdiction to remove or suspend Employee fromoffice, or upon the directive of any such regulatory agency that Employer mustremove Employee as its Chief Executive Officer, regardless of whether suchdirective is given orally or in writing.

 

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(b)         Statutory Grounds for Termination.

 

Employee’s employment under this Agreement shall terminate immediatelyupon the occurrence of any of the following events, which events are describedin sections 2920 and 2921 of the California Labor Code:

 

1)                                      The occurrence of circumstances that make itimpossible or impractical for the business of Employer to be continued.

 

2)                                      The death of Employee.

 

3)                                      The loss of Employee’s legal capacity.  This does not affect Employee’s rights underSection 10 of this Agreement.

 

4)                                      The loss by employer of legal capacity tocontract.

 

5)                                      Subject to Section 10 of this Agreement, thecontinued incapacity on the part of Employee under this Agreement, unlesswaived by Employer.

 

(c)          Termination for Bankruptcy.

 

This Agreement may be terminated immediately by either party at theoption of either party and without prejudice to any other remedy to whicheither party may be entitled at law, in equity or under this Agreement ifeither party:

 

1)                                      Files a petition in bankruptcy court or isadjudicated a bankrupt;

 

2)                                      Institutes or suffers to be institutedagainst it or him any procedure in bankruptcy court for reorganization orrearrangement of his financial affairs;

 

3)                                      Has a receiver of his assets or propertyappointed because of insolvency; or

 

4)                                      Makes a general assignment for the benefitof creditors.

 

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(d)         Automatic Termination in the Event ofAcquisition of Employer.

 

This Agreement shall automatically terminate upon the consummation ofany event by which substantially all of the stock and/or assets of Employer areacquired by a person, a group of persons, a financial institution or otherentity, and if the acquiring entity within a one (1) year period from date ofacquisition no longer desires that the Executive remain or if the acquiringentity substantially changes the title, salary or position of the Executive.

 

In the event that termination should occur, Employee shall receive anacquisition payment (“Acquisition Payment”) in the amount equal to eighteen(18) month severance period.

 

In the event of any such acquisition of Employer and the consequentautomatic termination of this Agreement, no provision contained in thisAgreement should be construed to prevent Employee from negotiating a newemployment agreement with either Employer or the acquirer of Employer, shouldthe parties desire to do so.

 

It is mutually agreed by the parties that the above-referencedAcquisition Payment shall be received by Employee in lieu of any and all claimsand/or damages which may be sustained by Employee due to the acquisition ofEmployer and the termination of Employee’s employment and will be accepted byEmployee in full satisfaction of all such claims and damages.

 

20.                                 Severance Pay.

 

Upon early termination of this Agreement (i) pursuant to Section 19(d)of this Agreement, (ii) by Employee for any reason, (iii) by Employer “forcause” (pursuant to Section 19(a) of this Agreement), or (iv) because of thedeath, incapacity or disability of Employee, Employee shall not receive anySeverance

 

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Paymentof any sort or any bonus for the calendar year in which termination iseffected.

 

The parties acknowledge that it would be difficult to determine thedamages which Employee would suffer if his employment is terminated by Employerwithout cause or on statutory grounds. Therefore it is agreed that if this agreement is terminated early byEmployer on any basis other than those listed in the first paragraph of thisSection 20, then Employee shall be entitled to receive a cash payment(“Severance Payment”) in the amount equal to one year’s Base Salary at the thencurrent rate of compensation and benefit continuation to include health, lifeand disability coverage for a period of one (1) year.  It is mutually agreed by the parties that the payment of the cashSeverance Payment set forth above shall be received by Employee by reason ofhis early termination and will be accepted by Employee in full satisfaction ofall such claims and damages and as payment in full for all benefits receivedfrom Employee’s services.  The partiesunderstand and agree under no circumstances would Employee be entitled toreceive both the Acquisition Payment described in Subsection (2) of Section 19and the Severance Payment described in this Section 20.

 

21.                                 Notices.

 

Any notice to Employer required or permitted under this agreement shallbe given in writing to Employer, either by personal service or by certifiedmail, postage prepaid, addressed to the chairman of the Board of Directors ofEmployer at its then principal place of business.  Any such notice to Employee shall be given in like manner and, ifmailed, shall be addressed to Employee at Employee’s home address then shown onEmployer’s files.  For the purpose ofdetermining compliance with any time limit in this Agreement, a notice shall bedeemed to have been duly given, or (b) the fifth business day after mailing, if

 

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mailedto the party to whom notice is to be given in the manner provided in thisSection.

 

22.                                 Nonassignability.

 

Neither this Agreement nor any right or interest hereunder shall beassignable by Employee, his beneficiaries or legal representative withoutEmployer’s prior written consent; provided, however, that nothing in thisSection 22 shall preclude (i) Employee from designating a beneficiary toreceive any benefit payable hereunder upon his death, or (ii) the executors,administrators, or other legal representatives of Employee or his estate fromassigning any rights hereunder to the person or persons entitled thereto.

 

23.                                 No Attachment.

 

Except as required by law, no right to receive payments under thisAgreement shall be subject to anticipation, commutation, alienation, sale,assignment, encumbrance, charge, pledge or hypothecation or to execution,attachment, levy or similar process or assignment by operation of law, and anyattempt, voluntary or involuntary, to effect any such action shall be null,void and of no effect.

 

24.                                 Binding Effect.

 

The Agreement shall be binding upon, and inure to the benefit of,Employee and Employer and their respective permitted successors and assigns.

 

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25.                                 Modification and Waiver.

 

(a)          Amendment of Agreement.

 

This Agreement may not be modified or amended except by an instrumentin writing signed by the parties hereto.

 

(b)         Waiver.

 

No term or condition of this Agreement shall be deemed to have beenwaived nor shall there be any estoppels against the enforcement of any provisionof this Agreement, except by written instrument of the party charge with suchwaiver unless specifically stated therein, and each such waiver shall operateonly as to the specific term or condition for the future or as to any act otherthan that specifically waived.  No delayin exercising may right shall be construed as a waiver, nor shall a waiver onone occasion operate as a waiver of such right on any future occasion.

 

26.                                 Entire Agreement.

 

This Agreement supersedes any and all agreements, either oral or inwriting, between the parties hereto with respect to the employment of Employeeby Employer.  This Agreement containsall of the covenants and agreements between the parties with respect to suchemployment in any manner whatsoever. Each party to this Agreement acknowledges that no representations,inducements, promises or agreements, orally or otherwise, have been made by anyparty, or anyone acting on behalf of any party, which are not embodied herein,and that no other agreement, statement or promise not contained in thisAgreement shall be valid and binding.

 

27.                                 Partial Invalidity.

 

If any provision in this Agreement is held by a court of competentjurisdiction to be invalid, void or unenforceable, the remaining provisionsshall nevertheless continue in full force without being impaired or invalidatedin any way.

 

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28.                                 Governing Law.

 

This Agreement shall be governed by, and construed in accordance with,the laws of the State of California.

 

29.                                 Injunctive Relief.

 

Employer and Employee acknowledge and agree that the services to beperformed under this Agreement are of a special, unique, unusual, extraordinaryand intellectual character which give them a peculiar value, the loss of whichcannot be reasonably or adequately compensated in damages in an action atlaw.  Employer and Employee thereforeexpressly agree that Employer and Employee, in addition to any other rights orremedies which Employer and Employee may possess, shall be entitled toinjunctive and other equitable relief to prevent a breach of this Agreement byEmployee and Employer.

 

30.                                 Bank Regulatory Agencies.

 

The obligations and rights of the parties hereunder are expresslyconditioned upon the approval or non-disapproval of (i) this Agreement and/or(ii) Employee, in the event such approvals are required, by those bankingregulatory agencies which have jurisdiction over Employer or any of itssubsidiaries.

 

31.                                 Duplicate Originals.

 

This Agreement may be executed simultaneously in one or morecounterparts, each of which shall be deemed an original, but all of whichtogether constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the parties hereto have duly executed thisAgreement on the day and year first above written.

 

 
| EMPLOYER: | CAPITAL CORP OF THE WEST |
|-----------|--------------------------|
|      |                     |
|      | By:                      | /s/ James W. Tolladay |   |
|      |                     | James W. Tolladay |
|      |                     | Chairperson of the Board |
|      |                     |
|      |                     |
| EMPLOYEE: | /s/ Thomas T. Hawker     |   |
|      |                     | Thomas T. Hawker |
|           |                          |  |  |  |  |

 

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