Document:

exv10w3

 

EXHIBIT 10.3

BURT ADAMS EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered into effective as of December
18, 2006, by and between Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), and
Burt A. Adams, an individual (the “Executive”).

RECITALS

     WHEREAS, the Company desires to employ Executive as its Vice Chairman
and the Company and Executive desire to specify the terms and conditions with respect to
Executive’s employment; and

     WHEREAS, the Company and Executive have determined that it is in their respective best
interest to enter into this Agreement on the terms and conditions as set forth below.

AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the respective covenants and promises
contained herein, and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

     1. DEFINITIONS. In addition to the capitalized terms defined elsewhere herein, the
following definitions shall be in effect under this Agreement:

          1.1 “Board” means the Company’s Board of Directors or its Compensation Committee thereof (or
any other committee subsequently granted authority by the Board), subject to Section 5.5
below.

          1.2 “Cause” means (i) Executive’s conviction of, or plea of nolo contendere or guilty to (a) a
felony or (b) any other crime which involves moral turpitude; or (ii) that Executive commits a
material breach of any of the terms and provisions hereof or fails to obey written directions
delivered to Executive by the Company’s Board or Chief Executive Officer that are not inconsistent
with Executive’s rights under this Agreement.

     2. EMPLOYMENT TERM AND DUTIES.

          2.1 Term. The Company hereby agrees to employ Executive, and Executive hereby accepts
such employment for a term commencing as of December 18, 2006 (the “Hire Date”) and ending on the
third anniversary of such date, and thereafter may automatically be extended for one year periods
subject to Board approval unless sooner terminated in accordance with the provisions of Section
2.5 below (the “Employment Term”). Except as otherwise provided herein, this Agreement
supersedes and terminates any and all prior agreements, discussions and writings between Executive
and any employee or representative of the Company concerning and/or relating to Executive’s
employment.

          2.2 Position. Executive shall serve as Vice Chairman and shall
report directly to the Chief Executive Officer and/or the Board (the “Service”). At the Company’s
request, Executive shall serve the Company’s subsidiaries and affiliates in other offices and
capacities in addition to the foregoing and is intended to be a director of the Board pursuant to
the Company’s Investor

 

 

Rights Agreement dated as of the date hereof. If Executive serves any one or more of such
additional capacities, Executive’s compensation and benefits shall not be increased beyond that
provided in Section 2.4 below. Further, if Executive’s service in one or more of such
additional capacities is terminated, such termination shall not constitute a termination without
Cause as defined in Section 2.5.3.  

          2.3 Duties. Executive shall have the authority and perform the duties customarily
associated with his title and office, together with such additional duties of a Company officer
nature and commensurate with Executive’s title as may from time to time be assigned by the Chief
Executive Officer and the Board. During the term of Executive’s employment under this Agreement,
Executive shall devote his full working time and best efforts to the performance of his duties and
the furtherance of the interests of the Company. Executive may not serve as an officer or director
of, make investments in, or otherwise be employed by, or participate in, any other entity without
the prior written consent of the Company; provided that, so long as it does not interfere with
Executive’s employment, Executive may (a) with the prior written consent of the Company, serve as a
director in a non-competing company, (b) serve as an officer, director or otherwise participate in
a purely educational, welfare, social, religious and civic organization, and (c) manage personal
and family investments.

          2.4 Compensation and Benefits.

               2.4.1 Base Salary. In consideration of the Services rendered to the Company hereunder
by Executive, the Company shall pay Executive a base salary per annum of Three Hundred Fifty
Thousand Dollars ($350,000), less applicable statutory deductions and withholdings (the “Base
Salary”), payable in accordance with the Company’s regular payroll procedures as presently in
effect and amended from time to time. The Company, by action of its Board or the Compensation
Committee, may increase Executive’s Base Salary at any time and from time to time during the
Employment Term.

               2.4.2 Benefits. In addition to the Base Salary, Executive shall be eligible to
receive the following:

                    (i) Vacation, Sick Leave and Holidays. Executive shall be entitled to paid vacation
of four weeks, sick leave and holidays in accordance with applicable Company policies, as presently
in effect and amended from time to time.

                    (ii) Employee Benefits. Executive and his spouse and eligible dependents, if any, and
their respective designated beneficiaries where applicable, shall be eligible for and entitled to
participate in other benefits maintained by the Company for its senior executive officers in
accordance with applicable Company policies and the terms of the applicable benefit plans as
presently in effect and amended from time to time, such as, without limitation, any medical,
dental, pension, 401(k), accident, disability, stock options and life insurance benefits.

                    (iii) Expenses. The Company shall pay or reimburse Executive for all reasonable
out-of-pocket expenses actually incurred by Executive in the performance of Executive’s Services
under this Agreement, provided he properly accounts for such expenses in accordance with Company
policy as presently in effect and amended from time to time.

                    (iv) Continuation. Executive’s compensation and benefits provided herein shall not be
reduced for so long as Executive otherwise remains employed by the Company under the terms of this
Agreement.

               2.4.3 Incentive Compensation. In addition to the Base Salary, Executive shall be
eligible for incentive compensation in a maximum amount equal to fifty percent (50%) of Base

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Salary upon achieving the goals and objectives set for Executive by the Board. Such goals
shall first be provided to Executive not later than sixty (60) days after the Hire Date and shall
be amended each year thereafter in the discretion of the Company. Such bonus shall be paid
annually within thirty (30) days after the completion of the Company’s audited financial statements
for each year. In the sole discretion of the Board or the Compensation Committee, Executive may be
granted additional incentive compensation. No incentive compensation shall be paid for partial
years of service under this Agreement.

          2.5 Termination.

               2.5.1 Termination Upon Death or Disability. If Executive dies during the Employment
Term, Executive’s employment shall terminate as of the date of Executive’s death. If Executive is
Disabled, the Company shall have the right to terminate this Agreement upon thirty (30) days notice
in writing to Executive. If Executive’s employment is terminated because of death or Disability,
then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii) Executive
or, in the case of the death of Executive, Executive’s estate, heirs, next of kin, distributes,
executors or administrators (the “Executor’s Estate”) shall be entitled to receive payment of the
aggregate amount of (A) Executive’s Base Salary then earned but unpaid, (B) incentive compensation
earned but unpaid, (C) vested benefits under any employee benefit plan applicable to Executive, (D)
any other benefits earned and accrued prior to the date of termination, and (E) reimbursement for
approved expenses incurred prior to the date of termination. Such aggregate payment shall be made
thirty (30) days after the occurrence of Executive’s death or Disability. No provision of this
Agreement shall limit any of Executive’s rights under any insurance, pension or other benefit
programs of the Company for which Executive shall be eligible at the time of such death or
Disability. For this purpose, “Disabled” or “Disability” shall mean that Executive meets the
definition of disability under the Company’s then current long-term disability policy or, if no
such policy is in force, that Executive by virtue of a physical or mental disability is unable to
perform substantially and continuously the essential functions of his usual duties, even with
reasonable accommodation, for a period in excess of one hundred eighty (180) consecutive or
non-consecutive days during any consecutive twelve (12) month period.

               2.5.2 Termination For Cause. The Company may terminate Executive’s employment for
Cause. Such termination shall be communicated by the delivery of a notice of termination to
Executive in accordance with Section 5.1 and shall be effective as of the date of delivery
of the notice of termination. Executive shall have no right to receive any compensation on and
after the effective date of such termination other than (A) Executive’s Base Salary then earned but
unpaid, (B) vested benefits under any employee benefit plan applicable to Executive, and (C)
reimbursement for approved expenses incurred prior to the date of termination. Such aggregate
payment shall be made thirty (30) days after the occurrence of Executive’s termination.

               2.5.3 Termination Without Cause. The Company may terminate Executive’s employment
without Cause upon thirty (30) days prior written notice thereof given to Executive in
accordance with Section 5.1. If Executive’s employment is involuntarily terminated without
Cause, then (i) the Company’s obligations under this Agreement shall immediately cease, and (ii)
Executive shall be entitled to receive payment of the aggregate amount of (A) Executive’s Base
Salary then earned but unpaid, (B) Executive’s Base Salary as it becomes due for a period equal to
the greater of six (6) months or the then remaining Employment Term, (C) vested benefits under any
employee benefit plan applicable to Executive, (D) any other benefit or compensation earned and
accrued prior to the date of termination, and (E) reimbursement for approved expenses incurred
prior to the date of termination. Such aggregate payment shall be made thirty (30) days after the
occurrence of Executive’s termination.

               2.5.4 Termination By Executive. Beginning one (1) year after the Hire Date, Executive
may terminate his employment for any reason upon thirty (30) days prior written notice thereof

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given to the Company in accordance with Section 5.1. If Executive’s employment is
terminated hereunder, then (i) the Company’s obligations under this Agreement shall immediately
cease, and (ii) Executive shall be entitled to receive payment of the aggregate amount of (A)
Executive’s Base Salary then earned but unpaid, (B) vested benefits under any employee benefit plan
applicable to Executive, (C) any other benefit earned and accrued prior to the date of termination,
and (D) reimbursement for approved expenses incurred prior to the date of termination. Such
aggregate payment shall be made thirty (30) days after the occurrence of Executive’s termination.

               2.5.5 No Limit on Rights Under Benefit Programs. No provision of this Agreement shall
limit any of Executive’s rights under any insurance, pension or other benefit programs of the
Company for which Executive shall otherwise be eligible at the time of such termination.

     3. PROTECTION OF COMPANY’S PROPRIETARY INFORMATION. Executive acknowledges that he
will not disclose, use or make available to a third party unless expressly authorized by the
Company, any of the Company’s trade secrets or confidential information.

     4. REPRESENTATIONS AND WARRANTIES BY EXECUTIVE. Executive represents and warrants to
the Company that (i) this Agreement is valid and binding upon and enforceable against him in
accordance with its terms, (ii) Executive is not bound by or subject to any contractual or other
obligation that would be violated by his execution or performance of this Agreement, including, but
not limited to, any non-competition agreement presently in effect, and (iii) Executive is not
subject to any pending or, to Executive’s knowledge, threatened claim, action, judgment, order, or
investigation that could adversely affect his ability to perform his obligations under this
Agreement or the business reputation of the Company. Executive has not entered into, and agrees
that he will not enter into, any agreement either written or oral in conflict with this Agreement.

     5. MISCELLANEOUS.

          5.1 Notices. All notices, requests, and other communications hereunder must be in
writing and will be deemed to have been duly given only if (i) delivered personally against written
receipt, (ii) delivered by facsimile transmission with answer back confirmation, (iii) mailed
(postage prepaid by certified or registered mail, return receipt requested), (iv) delivered by
overnight courier to the parties, or (v) delivered by electronic communication (as set forth below)
at the following addresses, facsimile numbers, or electronic mail addresses:

          If to Executive, to:

Burt A. Adams

612 Techview Drive

Berwick, LA 70340

          If to the Company, to:

Allis-Chalmers Energy Inc.

5075 Westheimer, Suite 890

Houston, Texas 77056

Facsimile: (713) 369-0555

Attn: Theodore F. Pound III, General Counsel and Secretary

All such notices, requests and other communications will (i) if delivered personally or by
overnight carrier to the address as provided in this Section 5.1, be deemed given upon
delivery, (ii) if delivered by

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facsimile transmission to the facsimile number as provided in this Section 5.1, be deemed
given five (5) days after the date of deposit in the United States mail, and (iii) if delivered by
mail in the manner described above to the address as provided in this Section 5.1, be
deemed given upon receipt (in each case regardless of whether such notice, request, or other
communication is received by any other person to whom a copy of such notice, request or other
communication is to be delivered pursuant to this Section). An electronic communication
(“Electronic Notice”) shall be deemed written notice for purposes of this Section 5.1 if
sent with return receipt requested to the electronic mail address specified by the receiving party,
in a signed writing in a nonelectronic form. Electronic Notice shall be deemed received at the
time the party sending Electronic Notice receives verification of receipt by the receiving party.
Any party from time to time may change its address, facsimile number, electronic mail address, or
other information for the purpose of notices to that party by giving written notice specifying such
change to the other parties hereto.

          5.2 Entire Agreement. This Agreement supersedes all prior discussions and agreements
among the parties with respect to the subject matter hereof and contain the sole and entire
agreement between the parties hereto with respect to Executive’s employment.

          5.3 Survival. The respective rights and obligations of the parties set forth in (i)
Sections 3 and this Section 5 shall survive the termination of this Agreement, the
Employment Term and/or Executive’s employment with the Company, and (ii) Section 2.5 shall
survive the termination of this Agreement, the Employment Term and/or Executive’s employment with
the Company to the extent of any unfulfilled obligations thereunder.

          5.4 Waiver. Any term or condition of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the party waiving such term or
condition. No waiver by any party hereto of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under this Agreement or
by law or otherwise afforded, will be cumulative and not alternative.

          5.5 Amendment; Committee Authority. This Agreement may be amended, supplemented, or
modified only by a written instrument duly executed by or on behalf of each party hereto. All
determinations and other actions required or permitted hereunder to be made by or on behalf of the
Company or the Board may be made by either the Board (excluding Executive therefrom) or the
Compensation Committee of the Board (or any other committee subsequently granted authority by the
Board); provided that the actions of the Compensation Committee (or any other committee
subsequently granted authority by the Board) shall be subject to the authority then vested in such
committee by the Board; and provided further that a decision or action by the Compensation
Committee (or any other committee subsequently granted authority by the Board) hereunder shall be
subject to review or modification by the Board if the Board so chooses.

          5.6 Tax and Legal Advice. Executive has had an opportunity to consult with his legal
counsel and tax and other advisors regarding the preparation of this Agreement.

          5.7 No Third Party Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and the Company’s successors or assigns, and
it is not the intention of the parties to confer third-party beneficiary rights upon any other
person, except as provided in Section 2.5.1 as to the Executor’s Estate.

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          5.8 No Assignment; Binding Effect. This Agreement shall inure to the benefit of any
successors or assigns of the Company. Executive shall not be entitled to assign his obligations
under this Agreement.

          5.9 Headings. The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.

          5.10 Severability. The Company and Executive intend all provisions of this Agreement
to be enforced to the fullest extent permitted by law. Accordingly, if a court of competent
jurisdiction determines that the scope and/or operation of any provision of this Agreement is too
broad to be enforced as written, the Company and Executive intend that the court should reform such
provision to such narrower scope and/or operation as it determines to be enforceable. If, however,
any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or
future law, and not subject to reformation, then (i) such provision shall be fully severable, (ii)
this Agreement shall be construed and enforced as if such provision was never a part of this
Agreement, and (iii) the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by illegal, invalid, or unenforceable provisions or by their
severance.

          5.11 General Creditor Status. All cash payments to which Executive may become
entitled hereunder will be paid, when due, from the general assets of the Company, and no trust
fund, escrow arrangement or other segregated account will be established as a funding vehicle for
such payment. Accordingly, Executive’s right (or the right of the personal representatives or
beneficiaries of Executive’s estate) to receive such cash payments hereunder will at all times be
that of a general creditor of the Company and will have no priority over the claims of other
general creditors.

          5.12 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.

          5.13 Jurisdiction. WITH RESPECT TO ANY SUIT, ACTION, OR OTHER PROCEEDING ARISING FROM
(OR RELATING TO) THIS AGREEMENT, THE COMPANY AND EXECUTIVE HEREBY IRREVOCABLY AGREE TO THE
EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS (AND ANY TEXAS STATE COURT WITHIN HARRIS COUNTY, TEXAS).

          5.14 Reaffirmation. Immediately at the time Executive’s employment with the Company
ends, Executive will ratify Sections 5.12 and 5.13 of this Agreement.

          5.15 Counterparts. This Agreement may be executed in any number of counterparts and
by facsimile, each of which will be deemed an original, but all of which together will constitute
one and the same instrument.

[Signature Page to Employment Agreement Follows]

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     IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to be executed on
the date first written above.

	 	 	 	 	 
	COMPANY:

	 	ALLIS-CHALMERS ENERGY INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ Victor M. Perez	 	 
	 

	 	 

Name:   Victor M. Perez
	 	 
	 

	 	Title:     Chief Financial Officer	 	 
	 
	 	 	 	 
	EXECUTIVE:

	 	/s/ Burt A. Adams	 	 
	 

	 	 

Burt A. Adams
	 	 

7exv10w15

 

	 	 	 	 	 

Exhibit 10.15

BANK OF COMMERCE HOLDINGS

SALARY CONTINUATION AGREEMENT

FOR CARYN A. BLAIS

This Salary Continuation Agreement (the “Agreement”) is made effective as of April 1, 2006,
and is entered into by and between Bank Of Commerce Holdings, a California corporation (the
“Bank”), and Caryn A. Blais (the “Executive”), each a “Party” and together the “Parties.”

RECITALS

     A.     The Executive is the Chief Information Officer of Bank.

     B.     The Bank desires to encourage the Executive to remain the Chief Information Officer of the
Bank by providing salary continuation benefits to the Executive from the Bank’s general assets as
set forth in this Agreement.

AGREEMENT

     In consideration of the mutual promises, covenants, and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged
the Parties agree as follows:

I.     DEFINITIONS

     Whenever used in this Agreement, the following words and phrases shall have the meanings
specified herein:

     1.     "Board” means the Board of Directors of the Bank.

     2.     "Change in Control” means (i) a Change in the Ownership of the Relevant Corporation, (ii) a
Change in the Effective Control of the Relevant Corporation, or (iii) or a Change in the Ownership
of a Substantial Portion of the Assets of the Relevant Corporation, as those terms are defined
herein. The events giving rise to the Change in Control must be objectively determinable, and the
Board, in a ministerial capacity, shall certify there is a Change in Control only when the events
giving rise to the Change in Control are objectively determinable. The Board shall not have any
discretionary authority to certify that there has been a Change in Control except as provided in
the preceding sentence. Notwithstanding anything to the contrary, (i) the term “Change in Control”
shall be interpreted in accordance with Section 409A; (ii) any event which constitutes a “Change in
Control” under Section 409A shall constitute a “Change in Control” for purposes of this Agreement;
(iii) and any event which does not constitutes a “Change in Control” under Section 409A shall not
constitute a “Change in Control” for purposes of this Agreement.

          A.     "Change in the Effective Control of the Relevant Corporation” means either of the
following:

               i.     That one person, or more than one person acting as a group, acquires (or has acquired
during the twelve (12) month period ending on the date of the most recent acquisition by such
person or persons) ownership of stock of the Relevant Corporation possessing thirty-five percent

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(35%) or more of the total voting power of the stock of the Relevant Corporation, provided that no
other corporation is a majority shareholder of the Relevant Corporation; or

               ii.     That a majority of the members of the board of directors of the Relevant Corporation are
replaced during any twelve (12) month period by directors whose appointment or election is not
endorsed by a majority of the board members of the Relevant Corporation prior to the date of the
appointment or election, provided that no other corporation is a majority shareholder of the
Relevant Corporation.

          B.     "Change in the Ownership of the Relevant Corporation” means that any one person, or more
than one person acting as a group, acquires ownership of stock of the Relevant Corporation that,
together with stock held by such person or group, constitutes more than fifty percent (50%) of the
total fair market value or total voting power of the stock of the Relevant Corporation. However, if
any one person, or more than one person acting as a group, is considered to own more than fifty
percent (50%) of the total fair market value or total voting power of the stock of the Relevant
Corporation, the acquisition of additional stock by the same person or persons is not considered to
cause a Change in the Ownership of the Relevant Corporation (or to cause a Change in the Effective
Control of the Relevant Corporation as defined herein). An increase in the percentage of stock
owned by any one person, or persons acting as a group, as a result of a transaction in which the
Relevant Corporation acquires its stock in exchange for property will be treated as an acquisition
of stock for purposes of this Agreement. A Change in the Ownership of the Relevant Corporation
only occurs when there is a transfer of stock of the Relevant Corporation (or issuance of stock of
the Relevant Corporation) and stock in the Relevant Corporation remains outstanding after the
transaction.

          C.     "Change in the Ownership of a Substantial Portion of the Assets of the Relevant
Corporation” means that any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve (12) month period ending on the date of the most recent acquisition by
such person or persons) assets from the Relevant Corporation that have a total gross fair market
value equal to or more than forty percent (40%) of the total gross fair market value of all of the
assets of the Relevant Corporation immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of the Relevant Corporation, or the
value of the assets being disposed of, determined without regard to any liabilities associated with
such assets.

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          D.     "Relevant Corporation” means (i) the corporation for whom the Executive is performing
services at the time of the Change in Control event; (ii) the corporation that is liable for the
payment of the deferred compensation under this Plan; or (iii) a corporation that is a majority
shareholder of a corporation identified in sections (i) or (ii) above, or any corporation in a
chain of corporations in which each corporation is a majority shareholder of another corporation in
the chain, ending in a corporation identified in sections (i) or (ii) above. A majority
shareholder is a shareholder owning more than fifty percent (50%) of the total fair market value
and total voting power of such corporation. Stock underlying a vested option is considered owned
by the individual who holds the vested option, and the stock underlying an unvested option is not
considered owned by the individual who holds the unvested option. However, if a vested option is
exercisable for stock that is not substantially vested, the stock underlying the option is not
treated as owned by the individual who holds the option.

     3.     "Change of Control Annual Benefit” means the Change of Control Annual Benefit amount set
forth in Schedule A for the Plan Year ending immediately prior to the date in which a Change of
Control occurs. Notwithstanding the foregoing, if a Change of Control occurs during the first Plan
Year, the Change of Control Annual Benefit shall be the Change of Control Annual Benefit set forth
in Schedule A for Plan Year One.

     4.      “Code” means the Internal Revenue Code of 1986, as amended.

     5.      “Disability” or “Disabled” means: (i) if the Executive is covered by a Bank-sponsored
disability policy, total disability as defined in such policy without regard to any waiting period,
provided the definition of total disability in such policy is consistent with the definition of
“disability” in Section 409A; or (ii) if the Executive is not covered by such a policy, Disability
means the Executive is, in the judgment of a physician who is satisfactory to the Bank, unable to
engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve months. As a condition to receiving any Disability
benefits, the Bank may require the Executive to submit to such physical or mental evaluations and
tests as the Bank’s Board of Directors deems appropriate and reasonable. Notwithstanding anything
to the contrary, the terms “Disability” or “Disabled” shall be interpreted in accordance with
Section 409A.

     6.     "Disability Annual Benefit” means the Disability Annual Benefit amount set forth in
Schedule A for the Plan Year ending immediately prior to the date in which the respective
Termination of Employment occurs. Notwithstanding the foregoing, for Termination of Employment due
to Disability during the first Plan Year, the benefit shall be the Disability Annual Benefit set
forth in Schedule A for Plan Year One.

     7.     “Early Termination” means the Termination of Employment before Normal Retirement Age for
reasons other than death, Disability, Termination for Cause or termination following a Change of
Control.

     8.     “Early Termination Date” means the month, day and year in which Early Termination occurs.

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     9.        “Early Termination Lump Sum” means the amount set forth on Schedule A for the Plan Year
ending immediately prior to the respective Early Termination Date, which benefit is determined by
vesting the Executive in one hundred percent (100%) of the Accrual Balance set forth on Schedule A.

     10.     “Effective Date” means April 1, 2006.

     11.      “Executive Beneficiary” means the beneficiary designated by Executive pursuant to Article
3.

     12.      “Normal Retirement Age” means the Executive’s 61st birthday.

     13.      “Normal Retirement Date” means the later of the Normal Retirement Age or Termination of
Employment.

     14.      “Normal Retirement Annual Benefit” means Thirty Five Thousand Dollars ($35,000.00) per
year.

     15.      “Plan” means this Salary Continuation Agreement.

     16.      “Plan Year” means a twelve (12) month period commencing on April 1 and ending on March 31
of each year. The initial Plan Year shall commence on the Effective Date.

     17.      “Section 409A” means Code Section 409A together with IRS regulations and guidance
promulgated thereunder, as amended from time to time.

     18.      “Specified Employee” means any employee who meets the requirements of a “key employee” set
forth in Code section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations
thereunder and disregarding section 416(i)(5)) at any time during the 12-month period ending on
December 31. If a person is a key employee on any given December 31, the person is treated as a
“Specified Employee” for the 12-month period beginning on April 1 of the next year.

     19.      “Terminated for Cause” or “Termination for Cause” means that Bank terminates the
Executive’s employment for:

          A.      Habitual alcohol abuse or drug addition or abuse;

          B.      Commission of a felony, or acts involving moral turpitude;

          C.      Acts which cause detrimental publicity for the Bank;

          D.      Habitual neglect of duty, willful or gross negligence in carrying out the activities for
which employed, including negligence or neglect in carrying out the directions of the Board, or
willful breach of the obligations of Executive to the Bank, including persistent, malfeasance,
misfeasance or nonfeasance in connection with the performance of Executive’s duties.

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     20.      “Termination of Employment” means that the Executive ceases to be employed by the Bank,
and actually separates from service to the Bank, for any reason, voluntary or involuntary, other
than by reason of a leave of absence approved by the Bank or by Termination for Cause.

II.      BENEFITS

     1.      Normal Retirement Benefit.

          A.      Benefit Amount. Upon Termination of Employment on or after the Normal Retirement
Age for reasons other than death, the Bank shall pay to the Executive the Normal Retirement Annual
Benefit for a period of ten years in lieu of any other benefit under this Agreement.

          B.      Payment Terms. The Normal Retirement Annual Benefit shall be paid each year in
twelve (12) equal monthly installments payable on the first day of each month commencing with the
month following the Executive’s Normal Retirement Date, for a period of ten years. Notwithstanding
the foregoing, in the event Executive is a Specified Employee on the Executive’s Normal Retirement
Date, payments made under this section shall commence on the date which is six (6) months after the
date of Executive’s Normal Retirement Date.

          C.      Commencement Date Change. Executive may change the commencement date of the Normal
Retirement Annual Benefit by notifying the Board in writing, subject to the following rules:

               i.      The change to the commencement must be made by giving written notice to the Board of the
change at least twelve (12) months before the date on which the first Normal Retirement Annual
Benefit payment would otherwise be made;

               ii.      All Normal Retirement Annual Benefit payments due must be deferred for a period of at
least five years from the date such payment would have been made in the absence of the change.

     2.      Early Termination Benefit.

          A.      Benefit Amount. Upon Early Termination, the Bank shall pay to the Executive the
Early Termination Lump Sum in lieu of any other benefit under this Agreement.

          B.      Payment Terms. The Bank shall pay the Early Termination Lump Sum to the Executive
in a lump sum within sixty (60) days following Early Termination. Notwithstanding the foregoing,
in the event Executive is a Specified Employee at Early Termination, the Bank shall pay the Early
Termination Lump Sum to the Executive in a lump sum on the date which is six (6) months after the
date of Early Termination.

          C.      Commencement Date Change. Executive may change the commencement date of payment of
the Early Termination Lump Sum by notifying the Board in writing, subject to the following rules:

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               i.     The change to the commencement must be made by giving written notice to the Board of the
change at least twelve (12) months before the date on which the Early Termination Lump Sum payment
would otherwise be made; and

               ii.     Payment of the Early Termination Lump Sum must be deferred for a period of at least five
years from the date such payment would have been made in the absence of the change.

     3.     Disability Benefit.

          A.     Benefit Amount. Upon Termination of Employment due to Disability prior to the
Normal Retirement Age, the Bank shall pay to the Executive the Disability Annual Benefit each year
for a period of ten years in lieu of any other benefit under this Agreement.

          B.     Payment Terms. The Disability Annual Benefit shall be paid each year in twelve
(12) equal monthly installments payable on the first day of each month commencing with the month
following the Executive’s Termination of Employment due to Disability, for a period of ten years.

     4.     Change of Control Benefit.

          A.     Benefit Amount. Upon a Change of Control, the Bank shall pay to the Executive the
Change of Control Annual Benefit each year for a period of ten years in lieu of any other benefit
under this Agreement.

          B.     Payment Terms. The Change of Control Annual Benefit shall be paid each year in
twelve (12) equal monthly installments payable on the first day of each month commencing with the
month following the Executive’s Normal Retirement Age, for a period of ten years.

          C.     Excess Parachute Payment. Notwithstanding any other provision of this Agreement,
the Bank shall not pay any benefit under this Agreement to the extent the benefit would constitute
an “Excess Parachute Payment” as defined in Section 280G(b) of the Code and applicable regulations,
as amended form time to time.

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     5.     Death Benefits

          A.      Death During Active Service. If the Executive dies while in the active service of
the Bank, the Bank shall pay to the Executive Beneficiary the Normal Retirement Annual Benefit for
a period of ten years in lieu of any other benefit under this Agreement.
The Normal Retirement Annual Benefit shall be paid to the Executive Beneficiary in twelve (12)
equal monthly installments payable on the first day of each month commencing with the month
following the Executive’s Death, for a period of ten years.

          B.      Death during Payment of a Lifetime Benefit. If the Executive dies after any
lifetime benefit payments have commenced under this Agreement but before receiving all such
payments, the Bank shall pay all remaining benefits to the Executive Beneficiary at the same time
and in the same amounts they would have been paid to the Executive had the Executive survived.

          C.      Death after Termination of Employment But Before Payment of a Lifetime Benefit
Commences. If the Executive is entitled to a lifetime benefit under this Agreement, but dies
prior to the commencement of payments of such benefit, the Bank shall pay the same benefit to the
Executive Beneficiary that the Executive would have received had she survived. Such benefits shall
commence on the first day of the month following the date of the Executive’s death.

III.      BENEFICIARIES

     1.      Beneficiary Designations. The Executive shall designate an Executive Beneficiary
by filing a written beneficiary designation with the Bank. The Executive may revoke or modify the
designation at any time by filing a new designation. However, designations will only be effective
if signed by the Executive and received by the Bank during the Executive’s lifetime. The
Executive’s beneficiary designation shall be deemed automatically revoked if the Executive
Beneficiary predeceases the Executive, or if the Executive names a spouse as Executive Beneficiary
and the marriage is subsequently dissolved. If the Executive dies without a valid Executive
Beneficiary, all payments which would have been paid to Executive’s Beneficiary shall be made to
the Executive’s estate.

     2.      Facility of Payment. If a benefit is payable to a minor, to a person declared
incompetent, or to a person incapable of handling the disposition of his or her property, the Bank,
in its discretion, may pay such benefit to the guardian, legal representative or person having the
care or custody of such minor, incapacitated person or incapable person. The Bank may require
proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of
the benefit. Such distribution shall completely discharge the Bank from all liability with respect
to such benefit.

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IV.      GENERAL LIMITATIONS

     1.      Termination for Cause. Notwithstanding any provisions of this Agreement to the
contrary, the Bank shall not pay any benefit under this Agreement if the Executive is Terminated
for Cause.

     2.      Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement
if the Executive commits suicide within three (3) years after the date of this Agreement.

In addition, the Bank shall not pay any benefit under this Agreement if the Executive has made any
material misstatement of fact on an employment application or resume provided to the Bank, or on
any application for any benefits provided by the Executive to the Bank.

     3.      Delaying Payments. Bank may delay any payments under his Agreement under the
following circumstances:

          A.      The Bank reasonably anticipates that the Executive’s deduction with respect to such payment
otherwise would be limited or eliminated by application of Code section 162(m), provided that
payment is made either at the earliest date at which the Bank reasonably anticipates that the
deduction of the payment of the amount will not be limited or eliminated by application of Cade
section 162(m) or the calendar year in which the Executive separates from service.

          B.      The Bank reasonably anticipates that the making of the payment will violate a term of a
loan agreement to which the Bank is a party, or other similar contract to which the Bank is a
party, and such violation will cause material harm to the Bank, provided that payment is made at
the earliest date at which the Bank reasonably anticipates that the making of the payment will not
cause such violation, or such violation will not cause material harm to the Bank, and provided that
the Bank entered into the loan agreement for legitimate business reasons, and not for purposes of
deferring the payment.

          C.      The Bank reasonably anticipates that the making of the payment will violate Federal
securities laws or other applicable law, provided that payment is made at the earliest date at
which the Bank reasonably anticipates that the making of the payment will not cause such violation.

V.      CLAIMS AND REVIEW PROCEDURES

     1.      Claims Procedure. The Bank shall notify any person or entity that makes a claim
under this Agreement (the “Claimant”) in writing, within ninety (90) days of Claimant’s written
application for benefits, of his or her eligibility or non-eligibility for benefits under the
Agreement.

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If the Bank determines that the Claimant is not eligible for benefits or full benefits, the notice
shall set forth (1) the specific reasons for such denial, (2) a specific reference to the
provisions of the Agreement on which the denial is based, (3) a description of any additional
information or material necessary for the Claimant to perfect his or her claim, and a description
of why it is needed, (4) an explanation of this Agreement’s claims review procedure and other
appropriate information as to the steps to be taken if the Claimant wishes to have the claim
reviewed, and (5) a time within which review must be requested. If the Bank determines that there
are special circumstances requiring additional time to make a decision, the Bank shall notify the
Claimant of the special circumstances and the date by which a decision is expected to be made, and
may extend the time for up to an additional ninety (90) days.

     2.      Review Procedure. If the Claimant is determined by the Bank not to be eligible for
benefits, or if the Claimant believes that he or she is entitled to greater or different benefits,
the Claimant shall have the opportunity to have such claim reviewed by the Bank by filing a
petition for review with the Bank within sixty (60) days after receipt of the notice issued by the
Bank. Said petition shall state the specific reasons which the Claimant believes entitle him or
her to benefits or to greater or different benefits. Within sixty (60) days after receipt by the
Bank of the petition, the Bank shall afford the Claimant (and counsel, if any) an opportunity to
present his or her position to the Bank verbally or in writing, and the Claimant (or counsel) shall
have the right to review the pertinent documents. The Bank shall notify the Claimant of its
decision in writing within the sixty (60) day period, stating the basis of its decision, written in
a manner calculated to be understood by the Claimant and referencing the specific provisions of the
Agreement on which the decision is based. If, because of the need for a hearing, the sixty (60)
day period is not sufficient, the decision may be deferred for up to another sixty (60) days at the
election of the Bank, but notice of this deferral shall be given to the Claimant.

VI.      GENERAL TERMS

     1.      Purpose. The Plan is intended to constitute an unfunded arrangement maintained by
the Bank primarily for the purpose of providing deferred compensation plan for a select group of
management or highly compensated employees, as described in sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”).

     2.      Amendments and Termination. This Agreement may be amended or terminated only by a
written agreement signed by the Bank and the Executive. Notwithstanding the preceding, the Bank
may amend or terminate this Agreement at any time upon notice to the Executive if, pursuant to
legislative, judicial or regulatory action, continuation of this Agreement without such amendment
would: (1) cause benefits to be taxable to the Executive prior to actual receipt; or (ii) result in
significant financial penalties or other significantly detrimental ramifications to the Bank (other
than the financial impact of paying any provided benefits).

     3.      Binding Effect. This Agreement shall bind the Executive and the Bank, and their
beneficiaries, survivors, executors, successors, administrative and transferees.

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     4.      No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of the Bank, nor does it
limit or restrict the Bank’s right to discharge the Executive. It also does not require the
Executive to remain an employee nor does it limit or restrict the Executive’s right to terminate
employment at any time.

     5.      Non-Transferability. Benefits under this Agreement cannot be sold, transferred,
assigned, pledged, attached or encumbered in any manner.

     6.      Reorganization. The Bank shall not merge or consolidate into or with another
company, or reorganize, or sell substantially all of its assets to another company, firm, or person
unless such succeeding or continuing company, firm, or person agrees to assume and discharge the
obligations of the Bank under this Agreement or unless any such activity would constitute a Change
of Control. Upon the occurrence of such event, the term “Bank” as used in this Agreement shall be
deemed to refer to the successor or survivor company.

     7.      Tax Withholding. The Bank shall withhold any taxes that are required to be
withheld from the benefits provided under this Agreement.

     8.      Applicable Law. The Agreement and all rights hereunder shall be governed by the
laws of California, except to the extent preempted by the laws of the United States of America.

     9.      Interpretation of Plan. To the extent not preempted by federal law, the Plan shall
be governed and construed under the laws of the state of California (other than its choice of law
rules) as in effect from time to time. Notwithstanding any provision to the contrary, this Plan
shall be interpreted and construed to comply with Section 409A and the applicable provisions of
ERISA.

     10.      Unfunded Arrangement. The Executive and the Executive Beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this Agreement. The benefits
represent the mere promise by the Bank to pay such benefits. The rights to benefits are not
subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive’s life is a general asset
of the Bank to which the Executive and Executive Beneficiary have no preferred or secured claim.

     11.      Entire Agreement. This Agreement constitutes the entire agreement between the
Bank and the Executive as to the subject matter hereof. No rights are granted to the Executive by
virtue of this Agreement other than those specifically set forth herein.

     12.      Administration. The Bank shall have powers which are necessary to administer this
Agreement, including but not limited to:

          A.      Establishing and revising the method of accounting for the Agreement;

          B.      Maintaining a record of benefit payments; and

          C.      Establishing rules and prescribing any forms necessary or desirable to administer the
Agreement.

13

 

     13.      Named Fiduciary. The Bank shall be the named fiduciary and Plan administrator
under this Agreement. It may delegate to others certain aspects of the management and operational
responsibilities including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

     14.      Attorney’s Fees and Costs. If any action at law or in equity, including
arbitration, is necessary to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys’ fees, costs, and expert witness fees, in addition to any
other relief to which that party may be entitled.

IN WITNESS WHEREOF, the Executive and the Bank have signed this Agreement.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	By  	                                            /s/ Caryn A. Blais
 	 
	 	 	CARYN A. BLAIS 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	BANK OF COMMERCE HOLDINGS

 	 
	 	By  	/s/ Harry L. Grashoff, Jr.
 	 
	 	 	HARRY L. GRASHOFF, JR., 	 
	 	 	Chairman 	 
	 

	 	 	 	 	 
	 	 	 
	 	By  	
/s/ David H. Scott
 	 
	 	 	DAVID H. SCOTT, Secretary 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	REDDING BANK OF COMMERCE

 	 
	 	By  	/s/ Harry L. Grashoff, Jr.
 	 
	 	 	HARRY L. GRASHOFF, JR., 	 
	 	 	Chairman 	 
	 

	 	 	 	 	 
	 	 	 
	 	By  	                                            /s/ David H. Scott
 	 
	 	 	DAVID H. SCOTT, Secretary 	 
	 	 	 	 
	 

 

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