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EXHIBIT 10.1  

 
 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT    
    

        THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"), dated as of June 17, 2002 (the "Signing Date") and effective as of January 1,
2002, by and between NEW WORLD RESTAURANT GROUP, INC., a Delaware corporation ("Corporation"), and ANTHONY WEDO ("Executive"). 

RECITALS

	A.
	Executive
and Corporation previously entered into an employment agreement (the "Prior Agreement") effective July 16, 2001.

	B.
	Executive
and Corporation desire to amend and restate the Prior Agreement.

	C.
	Upon
the Signing Date, effective as of January 1, 2002, Executive and Corporation hereby agree that the terms of this Agreement shall supercede, in their entirety, the terms of
the Prior Agreement.

	D.
	Executive
and Corporation further agree that this Agreement shall govern, in all respects, the terms of the employment of Executive by Corporation.

	E.
	Executive
is currently the Chairman and Chief Executive Officer of Corporation.

	F.
	Corporation
agrees to continue to employ Executive and Executive agrees to continue in the employ of Corporation, on the terms and subject to the conditions set forth in this
Agreement. 

AGREEMENT

        1.    Duties.    During the Term of this Agreement, Executive agrees to be employed by Corporation as its Chairman of
its Board of Directors and its Chief Executive Officer, and Corporation agrees to employ Executive in such capacity. Executive shall devote substantially all of his business time, energy, and skill to
the affairs of Corporation. Executive shall have such duties, authority and responsibilities generally commensurate with the duties, authority and responsibilities of a Chairman of the Board of
Directors and Chief Executive Officer of a public company. Executive shall report to the Board of Directors. Executive shall be based in Corporation's principal East Coast office and shall engage in
all business travel related to his duties as required by the Board of Directors, including travel to Golden, Colorado. The Corporation shall pay all reasonable business expenses incurred by Executive
including, without limitation, all travel, lodging and automobile expenses in connection with duties performed by Executive in Golden, Colorado. 

        2.    Term of Employment.    

        2.1    Definitions.    For purposes of this Agreement the following terms shall have the following meanings: 

        (a)   "Change
in Control" shall mean any of the following events: 

        (i)    Any
person or group (as such terms are defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) has become the holder of more than
40 percent of the outstanding shares of Corporation entitled to vote for the election of directors (calculated on a fully diluted basis, including, without limitation, all options, warrants and
convertible securities), other than persons ("Excluded Persons") excluded by the Board of Directors from the provisions of Corporation's Rights Agreement, such as the holders of Corporation's
Series F Preferred Stock and related warrants; 

        (ii)   as
a result of or in connection with any cash tender offer, merger or other business combination, sale of assets or contested election, restructuring or combination of
the foregoing, the persons who are directors of Corporation as of the date of this Agreement shall cease to constitute a majority of the Board; 

 

        (iii)  the
stockholders of Corporation approve a definitive agreement (i) to merge or consolidate Corporation with or into another corporation in which the holders of
Corporation's Common Stock and warrants to purchase Common Stock immediately before such merger or reorganization will not, immediately following such merger or reorganization, hold as a group on a
fully diluted basis both the ability to elect at least a majority of the board of directors of the surviving corporation and at least a majority in value of the surviving corporation's outstanding
equity securities, or (ii) to sell or otherwise dispose of all or substantially all of the assets of Corporation; 

        (iv)  the
closing of a transaction or series of transactions in which more than 50% of the voting power of Corporation, including for such purpose warrants to purchase Common
Stock, is transferred to persons other than Excluded Persons; 

        (v)   an
Offer is consummated; 

        (vi)  a
resolution of the Board is passed authorizing the filing or acquiescence to the filing of a petition for or against the Corporation under Title 11 of the United
States Code; or 

        (vii) the
stockholders of the Corporation approve a plan of liquidation or dissolution of the Company. 

        (b)   "Offer"
shall mean a tender offer or exchange offer for shares of Corporation's Common Stock where the offeror acquires more than 40 percent of the outstanding
shares of Corporation's Common Stock and warrants to purchase Common Stock of Corporation. 

        (c)   "Termination
For Cause" shall mean termination by Corporation of Executive's employment by Corporation by reason of Executive's willful dishonesty towards or fraud upon
the Corporation or by reason of Executive's willful material breach of this Agreement. 

        (d)   "Termination
Other Than for Cause" shall mean termination by Corporation of Executive's employment by Corporation (other than a Termination For Cause) and shall include
constructive termination of Executive's employment by reason of (i) material breach of this Agreement by Corporation or (ii) material diminution of Executive's duties, authority or
responsibilities as Chairman and Chief Executive Officer or (iii) Executive's resignation within 30 days following a Change in Control or (iv) notice by Corporation of
non-renewal under Section 2.2. 

        (e)   "Voluntary
Termination" shall mean termination by Executive of Executive's employment by Corporation other than (i) a constructive termination described in
subsection 2.1(d), and (ii) termination by reason of Executive's death or disability as described in Sections 2.5 and 2.6. 

        (f)    "Voluntary
Termination With Notice" shall mean a Voluntary Termination that has been preceded by written notice delivered by Executive to Corporation no later than
60 days (or such shorter period as the parties may agree) prior to such Voluntary Termination. 

        2.2    Term.    The term of employment of Executive by Corporation shall be from January 1, 2002 through
December 31, 2004 (the "Initial Term"), unless terminated earlier pursuant to this Section 2; and thereafter, the term shall automatically renew for successive one-year
periods, unless terminated earlier pursuant to this Section 2, commencing each January 1, unless Corporation or Executive, as the case may be, gives written notice to the other of its or
his desire not to renew such term, which notice must be given no later than 90 days prior to the end of the initial Term or any such renewal period (the Initial Term and such renewal periods,
the "Term"). 

        2.3    Termination For Cause.    Termination For Cause may be effected by Corporation at any time during the Term of
this Agreement and shall be effected by written notification to Executive. Termination For Cause shall be effective immediately upon such written notification; provided, 

2

 

however,
that if the basis for the Termination For Cause is a willful material breach of this Agreement, Executive shall have a period of sixty (60) days from receipt of such written
notification to cure the breach, unless the breach is of a type that cannot be cured. Upon Termination For Cause, Executive immediately shall be paid all accrued salary, bonus compensation to the
extent earned, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of
Corporation in which Executive is a participant to the full extent of Executive's rights under such plans, accrued vacation pay and any appropriate business expenses incurred by Executive in
connection with his duties hereunder, all to the date of termination, but Executive shall not be paid any other compensation or reimbursement of any kind, including, without limitation, severance
compensation. 

        2.4    Termination Other Than For Cause.    Notwithstanding anything else in this Agreement, Corporation may effect a
Termination Other Than For Cause at any time upon giving notice to Executive of such termination. Upon any Termination Other Than For Cause, Executive shall immediately be paid all accrued salary,
bonus compensation to the extent earned (it being understood that for the purpose of this Section 2.4, a bonus equal to $187,500 shall be deemed earned for the first 12 months of
Executive's employment by Corporation under the Prior Agreement and this Agreement), vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in
accordance with the applicable plan), any benefits under any plans of Corporation in which Executive is a participant to the full extent of Executive's rights under such plans, accrued vacation pay
and any appropriate business expenses incurred by Executive in connection with his duties hereunder, all to the date of termination, and the severance compensation provided in Section 4.1, but
no other compensation or reimbursement of any kind. In addition, vesting of the Option (as defined in Section 3.4 below) will be recomputed based on 16.67% vesting after each six
(6) months of the Term ("Accelerated Vesting"). 

        2.5    Termination by Reason of Disability.    If, during the Term of this Agreement, Executive, in the reasonable
judgment of the Board of Directors of Corporation, has failed to perform his duties under this Agreement on account of illness or physical or mental incapacity, and such illness or incapacity
continues for a period of six (6) months or more, Corporation shall have the right to terminate Executive's employment hereunder by written notification to Executive and payment to Executive of
all accrued salary, bonus compensation to the extent earned, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Corporation in which Executive is a participant to the full extent of Executive's rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by Executive in connection with his duties hereunder, all to the date of termination. In such event, Corporation shall pay Executive fifty (50%) percent of his Base Salary for the
first six months after such termination (less any amounts received by Executive under insurance policies carried by Corporation). Executive shall be entitled to continued participation in all of
Corporation's benefit plans (to the extent permitted by law or under the terms of such plans) during such six-month period. In addition, Executive's stock options will be entitled to
Accelerated Vesting. 

        2.6    Death.    In the event of Executive's death during the Term of this Agreement, Executive's employment shall be
deemed to have terminated as of the last day of the month during which his death occurs and Corporation shall pay to his estate all accrued salary, bonus compensation to the extent earned, vested
deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable plan), any benefits under any plans of Corporation in which
Executive is a participant to the full extent of Executive's rights under such plans, accrued vacation pay and any appropriate business expenses incurred by Executive in connection with his duties
hereunder, all to the date of termination. In addition, Executive's stock options will be entitled to Accelerated Vesting. 

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        2.7    Voluntary Termination.    In the event of a Voluntary Termination, Corporation shall immediately pay all
accrued salary, bonus compensation to the extent earned, vested deferred compensation (other than pension plan or profit sharing plan benefits which will be paid in accordance with the applicable
plan), any benefits under any plans of Corporation in which Executive is a participant to the full extent of Executive's rights under such plans, accrued vacation pay and any appropriate business
expenses incurred by Executive in connection with his duties hereunder, all to the date of termination, but no other compensation or reimbursement of any kind, including, without limitation, severance
compensation. 

        2.8    Voluntary Termination With Notice.    In the event of a Voluntary Termination With Notice, Corporation shall
pay to Executive all amounts to which Executive is entitled under Section 2.7, and shall continue to pay Executive his Base Salary until the earlier of (i) 60 days following such
Voluntary Termination With Notice or (ii) the end of the then-current Term. 

        2.9    Resignation.    Upon a termination of Executive's employment hereunder for any reason, Executive, with no
further action on his part, shall be deemed to have resigned from all of his offices with Corporation, his seat on the Board of Directors and any such positions with any subsidiaries of Corporation,
and he shall return all property of Corporation in his possession. 

        3.    Salary, Benefits and Bonus Compensation.    

        3.1    Base Salary.    As payment for the services to be rendered by Executive as provided in Section 1 and
subject to the terms and conditions of Section 2, Corporation agrees to pay to Executive a Base Salary payable in equal bi-weekly installments at the rate of Five Hundred Sixty Five
Thousand Dollars ($565,000) per annum. The Base Salary is retroactive to January 1, 2002 and any incremental salary due from January 1, 2002 through the Signing Date shall be paid in a
lump sum to Executive upon signing. At the beginning of each calendar year during the Term, commencing January 1, 2003, the Base Salary shall be subject to annual review by the Board of
Directors, at the recommendation of the Compensation Committee, and may be increased, but shall in no event be decreased. 

        3.2    Bonuses.    (a) Executive shall receive a bonus (a "Bonus") of up to One Hundred (100%) percent of the
Base Salary for each calendar year during the Term of this Agreement. The amount of the Bonus shall be determined in the manner set forth on Schedule 3.2. Notwithstanding the foregoing,
Executive shall receive a guaranteed bonus (a "Guaranteed Bonus") of $187,500 for the period July 16, 2001 to July 31, 2002, payable $46,875 on October 31, 2001,
January 31, 2002, April 30, 2002 and July 31, 2002. The Guaranteed Bonus shall be deemed a prepayment of the Bonus described in the preceding portion of this Section 3.2
and shall be credited as follows: (i) the guaranteed bonus payment due on July 31, 2002 and the guaranteed bonus payment previously made on April 30, 2002 shall be credited
against the 2002 Bonus, and (ii) the guaranteed bonus payments made on October 31, 2001 and January 31, 2002 shall be credited against the bonus earned by Executive in 2001.
(b) In addition, Executive shall be entitled to a one-time bonus of Two Hundred Fifty Thousand Dollars ($250,000) upon the consummation by Corporation, during the Term, of an equity
offering generating at least Twenty Five Million Dollars ($25,000,000) of net proceeds to Corporation; provided, however, that if the equity offering generates at least Fifty Million Dollars
($50,000,000) of net proceeds, Executive shall be entitled to a one-time bonus of Five Hundred Thousand Dollars ($500,000). 

        3.3    Benefits.    During the term of this Agreement, Executive shall be eligible to participate in such of
Corporation's benefit and deferred compensation plans as are now generally available or later made generally available to executives of Corporation, including, without limitation, profit sharing,
medical, dental, health, annual physical examination, life, disability insurance, financial planning plans, supplemental retirement programs and vacation (but excluding stock options, except as set
forth in Section 3.4). In addition, Executive shall be entitled to receive an automobile allowance of $18,000 per year payable in equal monthly installments (but no mileage reimbursement), for
a leased automobile which is maintained in or near Golden, Colorado during the time period in which Executive performs 

4

 

his
duties in Golden, Colorado, and reimbursement for business and travel expenses upon reasonable accounting therefor. Without limiting the foregoing, Executive shall be entitled to four
(4) weeks paid vacation per year (Executive may elect to receive payment for up to two (2) weeks per year not taken). In addition, Executive shall be entitled to term life insurance
equal to two (2) times his Base Salary and the Corporation shall maintain the existing (or substantially equivalent) directors and officers liability insurance policy during the Term.
Corporation will pay for (a) an apartment for Executive in Golden, Colorado, and (b) reasonable travel expenses, including cell phone expenses, to Golden, Colorado, during the Term of
this Agreement. 

        3.4    Options.    The parties acknowledge and agree that any options granted or to be granted to Executive under the
Prior Agreement shall be cancelled and of no further force or effect. Options shall be granted to Executive under Corporation's option plan, to be set forth in a separate Option Agreement, exercisable
at the closing price of the common stock on May 10, 2002 ($.26 per share, the "Exercise Price"), for a number of shares of common stock equal to six (6%) percent (the "Option") of the
outstanding common stock (including the common stock issuable under outstanding options and warrants with an exercise price of $3.00 per share or less ("Fully Diluted Common Stock") as of
May 10, 2002, subject to approval by Corporation's stockholders of any necessary increase in the number of shares reserved for issuance pursuant to Corporation's option plan. The option will
vest in
one-third increments on each of December 31, 2002, December 31, 2003 and December 31, 2004. 

        4.    Severance Compensation and Death Benefits    

        4.1    Severance Compensation.    In the event Executive's employment is terminated in a Termination Other Than For
Cause, (i) Executive shall be paid as severance compensation an amount equal to one (1) times his annual Base Salary (at the rate payable at the time of such termination) on a
bi-weekly basis and (ii) Corporation shall continue to provide at Corporation's expense for a period of twelve months from the date of termination the benefits then being provided
to Executive at the time of such termination. The amount of any payment or benefit provided for in this Section 4.1 shall not be reduced by any compensation earned by Executive as the result of
employment or engagement by another person, by retirement benefits, by offset against any amount claimed to be owed by Executive to Corporation or otherwise. 

        4.2    No Severance Compensation Upon Other Termination.    In the event of a Voluntary Termination or Termination For
Cause, neither Executive nor his estate shall be paid any severance compensation. 

        5.    Covenant Not to Compete or Solicit    

        5.1    Non-Competition.    From the date hereof and until the first (1st) anniversary of a Termination for
Cause or a Voluntary Termination (including a Voluntary Termination With Notice), Executive shall not directly or indirectly, without the prior written consent of Corporation, engage anywhere in the
United States in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in (except for ownership of ten percent (10%) or less of any
outstanding entity whose securities are listed on a national securities exchange), or participate in the financing, operation, management or control of, any firm, corporation or business (other than
Corporation) that engages in the marketing or sale of bagels and/or fast casual sandwiches as one of its principal businesses. The provision of this Section 5.1 shall not apply to a termination
under Sections 2.4, 2.5 or 2.6 hereof. 

        5.2    Separate Covenants.    The covenants contained in Section 5.1 above shall be construed as a series of
separate covenants, one for each county, city and state of the United States. Except for geographic coverage, each such separate covenant shall be identical in terms to the covenant contained in
Section 5.1. If in any judicial proceeding, a court refuses to enforce any of such separate covenants (or any part thereof), then such unenforceable covenant (or such part) shall be eliminated
from this 

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Agreement
to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced. In the event that the provisions of this Section 5 are deemed to exceed the
time, geographic or scope limitations permitted by applicable law, then such provisions shall be reformed to the maximum time, geographic or scope limitations, as the case may be, permitted by
applicable laws. 

        5.3    Non-Disclosure and Non-Solicitation.    Executive agrees that all confidential and
proprietary information relating to the business or operations of Corporation shall be kept and treated as confidential both during and after the Term of this Agreement, except as may be permitted in
writing by Corporation's Board of Directors or as such information is within the public domain or comes within the public domain without any breach of this Agreement or if the disclosure of which is
required by court order or applicable law (provided Executive gives Corporation reasonable notice thereof and a right to oppose the same at Corporation's expense). In addition, from the date hereof
and for two years after the termination of Executive's employment for any reason, Executive shall not directly or indirectly, without the prior written consent of Corporation, solicit the services, or
cause to be employed, any person who was an employee of Corporation at the date of such termination, or within six (6) months prior to such time. 

        5.4    Corporation.    For the purpose of this Section 5, the term "Corporation" includes each corporation or
other entity of which Corporation owns, directly or through another entity, at least 50% of the equity, or which is controlled by Corporation. 

        6.    Miscellaneous.    

        6.1    Waiver.    The waiver of the breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach of the same or other provision hereof. 

        6.2    Entire Agreement; Modifications.    Except as otherwise provided herein, this Agreement represents the entire
understanding among the parties with respect to the subject matter hereof, and this Agreement supersedes any and all prior understandings, agreements, plans and negotiations, whether written or oral,
with respect to the subject matter hereof, including, without limitation, any understandings, agreements or obligations respecting any past or future compensation, bonuses, reimbursements or other
payments to Executive from Corporation. All modifications to the Agreement must be in writing and signed by the party against whom enforcement of such modification is sought. 

        6.3    Notices.    All notices and other communications under this Agreement shall be in writing and shall be given by
first-class mail, certified or registered with return receipt requested, or by recognized overnight courier to the respective persons named below: 

If
to Corporation: 

New
World Restaurant Group, Inc.

246 Industrial Way West

Eatontown, NJ 07724

Attention: Board of Directors 

With
copies to: 

New
World Restaurant Group, Inc.

246 Industrial Way West

Eatontown, NJ 07724

Attention: General Counsel 

Proskauer
Rose LLP

1585 Broadway

New York, New York 10036

Attention: Julie M. Allen 

6

 

If
to Executive: 

Anthony
Wedo

112 Montana Drive

Chadds Ford, PA 19317 

With
a copy to: 

Pelino &
Lentz, P.C.

Thirty-Second Floor

One Liberty Place

1650 Market Street

Philadelphia, Pennsylvania 19103

Attention: Salvatore M. DeBunda 

Any
party may change such party's address for notices by notice duly given pursuant to this Section 6.4. 

        6.4    Headings.    The Section headings herein are intended for reference and shall not by themselves determine the
construction or interpretation of this Agreement. 

        6.5    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts entered into and wholly to be performed within the State of New York by New York residents. All claims, disputes and other matters in question between Corporation and
Executive arising out of, or relating to this Agreement or the breach thereof, shall be subject to binding arbitration in New York, New York under the rules of the American Arbitration Association
then obtaining. Notwithstanding the foregoing, Corporation may seek an order of a court of competent jurisdiction to obtain an injunction for a breach or threatened breach of Section 5 hereof
by Executive. 

        6.6    Severability.    Should a court or other body of competent jurisdiction determine that any provision of this
Agreement is excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and
all other provisions of this Agreement shall be deemed valid and enforceable to the extent possible. 

        6.7    Survival of Corporation's Obligations.    Corporation's obligations hereunder shall not be terminated by reason
of any liquidation, dissolution, bankruptcy, cessation of business or similar event relating to Corporation. This Agreement shall not be terminated by any merger or consolidation or other
reorganization of Corporation. In the event any such merger, consolidation or reorganization shall be accomplished by transfer of stock or by transfer of assets or otherwise, the provisions of this
Agreement shall be binding upon the surviving or resulting corporation or person. This Agreement shall be binding upon and inure to the benefit of the executors, administrators, heirs, successors and
assigns of the parties; provided, however, that except as herein expressly provided, this Agreement shall not be assignable either by Corporation (except to an affiliate of Corporation or upon the
sale of all or substantially all of its assets) or by Executive. 

        6.8    Counterparts.    This Agreement may be executed in one or more counterparts, all of which taken together shall
constitute one and the same Agreement. 

        6.9    Withholdings.    All compensation and benefits to Executive hereunder shall be reduced by all federal, state,
local and other withholdings and similar taxes and payments required by applicable law. 

        6.10    Expenses.    Corporation will pay directly or reimburse Executive for up to Ten Thousand Dollars ($10,000)
Dollars for professional fees incurred by Executive in connection with the review and negotiation on behalf of Executive of the Prior Agreement and this Agreement. 

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        6.11    Indemnification.    In addition to any rights to indemnification to which Executive is entitled to under
Corporation's Certificate of Incorporation and Bylaws, Corporation shall indemnify Executive at all times during and after the term of this Agreement to the maximum extent permitted under
Section 145 of the Delaware General Corporation Law or any successor provision thereof and any other applicable state law, and shall pay Executive's expenses in defending any civil or criminal
action, suit or proceeding, to the maximum extent permitted under such applicable state law. This provision shall survive the termination of this Agreement. 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. 

	 	 	NEW WORLD RESTAURANT GROUP, INC.
	

 	
 	

By:	

 
	 	 	 	
 Name/Title:
	

 	
 	

EXECUTIVE
	

 	
 	

By:	

 
	 	 	 	
 Anthony Wedo, Individually

8

 
 
 

Schedule 3.2    
    

The
amount of the Bonus for each year shall be determined as follows: 

	1.
	Target =
100% of Base Salary; 50% for achieving Corporation performance targets and 50% for achieving individual KPIs.

	2.
	Executive's
individual KPIs shall be agreed upon by Executive and the Compensation Committee, subject to approval by the Board of Directors.

	3.
	The
Corporation performance targets shall be developed by management through the annual operating plan process, subject to approval by the Board of Directors; provided, however, that
for 2002, the Corporation performance target shall be reported EBIDTA for fiscal 2002 of at least $49 million, provided that EBIDTA shall be calculated for this purpose to exclude any expenses
booked in 2002 related to the payment of any unauthorized bonuses.

	4.
	In
recognition of performance above Executive's individual KPIs or Company performance targets or other outstanding performance, the Board of Directors may, in its sole discretion,
award Executive a bonus above the target bonus up to a maximum Bonus in any year of 150% of Base Salary. 

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AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Schedule 3.2Exhibit 10.38

 

EXECUTIVE SALARY CONTINUATION AGREEMENT

 

 

THIS EXECUTIVE SALARY CONTINUATION AGREEMENT (“Agreement”) is effective
May 16, 2002 (“Effective Date”), by and between FEATHER RIVER STATE BANK, a
California banking corporation (“Bank”), and JOHN I JELAVICH (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive is employed by the Bank as its President and
Chief Executive Officer.

 

WHEREAS, the experience of the Executive, his knowledge of the affairs
of the Bank, and his reputation and contacts in the banking industry are so
valuable that assurance of his continued service is essential for the future
growth and profitability of the Bank and it is in the best interests of the
Bank to arrange terms of continued employment for the Executive; and

 

WHEREAS, it is the desire of the Bank that the Executive’s services be
retained as herein provided; and

 

WHEREAS, the Executive is willing to continue in the employ of the Bank
provided the Bank agrees to pay the Executive or his beneficiaries certain benefits
in accordance with the terms and conditions hereinafter set forth; and

 

NOW, THEREFORE, in consideration of the services to be performed in the
future as well as the mutual promises and covenants herein contained, it is
hereby agreed as follows:

 

ARTICLE 1

 

1.1           Beneficiary.  The term Beneficiary shall mean the person
or persons whom the Executive shall designate in writing to receive the
benefits provided hereunder.

 

1.2.          Disability.
The term Disability means the Executive suffers a sickness, accident or injury
that is determined by the carrier of any individual or group disability
insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled. At the Bank’s request, the Executive must submit to the
Bank proof of the carrier’s or Social Security Administration’s determination.

 

1.3.          Named Fiduciary
and Plan Administrator.  The Bank
Fiduciary and Plan Administrator of this plan shall be the Bank.

 

1.4.                              Change of
Control.  A “Change of Control” shall
be deemed to have occurred if

 

(a)           there shall be consummated any consolidation or merger of
the California Independent Bancorp (the “Company”) in which the Company is not
the continuing or surviving 

 

 

corporation
or pursuant to which shares of the Company’s capital stock are converted into
cash, securities or other property (other than a consolidation or merger of the
Company in which the holders of the Company’s voting stock immediately prior to
the consolidation or merger shall, upon consummation of the consolidation or
merger, own at least 50% of the voting stock) or any sale, lease, exchange or
other transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company; or

 

(b)           the Company shall have issued shares of its voting
securities in connection with an acquisition in an amount such that the holders
of the Company’s voting stock immediately prior to the acquisition, upon
consummation of the acquisition, own less than 50% of the voting stock; or

 

(c)           individuals who as of the Effective Date constitute the
entire Board and any new directors whose election by the Company’s
shareholders, or whose nomination for election by the Company’s Board, shall
have been approved by a vote of at least a majority of the directors then in
office who either were directors at the Effective Date or whose election or
nomination for election shall have been so approved (the “Continuing
Directors”) shall cease for any reason to constitute a majority of the members
of the Board.

 

Section 1.5.

 

(a)           Termination for
Cause.  The Bank may terminate the
Executive’s employment hereunder for cause. 
For purposes of this Agreement and subject to the Executive’s
opportunity to cure as provided in Section 1.5(c) hereof, the Bank shall have
“cause” to terminate the Executive’s employment hereunder if Executive shall
commit any of the following:

 

(i)            the
willful, intentional and material breach of duty by the Executive in the course
of his employment;

 

(ii)           the
habitual and continued neglect by the Executive of his employment duties and
obligations under this Agreement;

 

(iii)          the
Executive’s willful and intentional violation of any State of California or
federal banking laws, or of the Bylaws, rules, policies or resolutions of Bank
or its respective subsidiary, or of the rules or regulations of the Board of
Governors of the Federal Reserve System, California Department of Financial
Institutions or the Federal Deposit Insurance Corporation, or other regulatory
agency or governmental authority having jurisdiction over Bank or its
subsidiary;

 

(iv)          the
determination by a state or federal banking agency or governmental authority
having jurisdiction over the Bank that the Executive is not suitable to act in
the capacity for which he is employed by Bank;

 

 

(v)           the
Executive is convicted of any felony or a crime involving moral turpitude or
commits a fraudulent or dishonest act;

 

(vi)          the
Executive discloses without authority any secret or confidential information
concerning Bank or its respective subsidiary or takes any action which the
Bank’s Board of Directors determines, in its sole discretion and subject to
good faith, fair dealing and reasonableness, constitutes unfair competition
with or induces any customer to breach any contract with Bank or its respective
subsidiary; or

 

(vii)         the
Executive beaches the terms or provisions of this Agreement.

 

                (b)           Termination for Good Reason.  The Executive shall have the right at any
time to terminate his employment with the Bank for any reason.  For purposes of this Agreement and subject
to the Bank’s opportunity to cure as provided in Section 1.5(c) hereof, the
Executive shall have “good reason” to terminate his employment if such
termination shall be the result of:

 

                (i)            a diminution of the Executive’s
title, duties or responsibilities as set forth in Section 2.1 hereof;

 

                (ii)           a breach by the Company of the
compensation and benefits due to Executive;

 

                (iii)          a material breach by the Company of
any material terms of this Agreement; or

 

                (iv)          a Change of Control (as defined);
provided, however, it shall only constitute “good reason” if the Executive
terminates this Agreement within 12 months of the Change in Control; or

 

                (v)           the relocation of the Executive’s
principal place of employment to any location more than 50 miles from the
Company’s present principal place of business.

 

                (c)           Notice and Opportunity to Cure.  Notwithstanding the foregoing, it shall be a
condition precedent to the Bank’s right to terminate the Executive’s employment
for “cause” and the Executive’s right to terminate his employment for “good
reason” that (1) the party seeking the termination shall first have given the
other party written notice stating with specificity the reason for the
termination (“breach”) and (2) if such breach is susceptible of cure or remedy,
a period of 30 days from and after the giving of such notice shall have elapsed
without the breaching party having effectively cured or remedied such breach
during such 30 day period, unless such breach cannot be cured or remedied
within 30 days, in which case the period for remedy or cure shall be extended
for a reasonable time (not to exceed 30 days) provided the breaching party has
made and continues to make a diligent effort to effect such remedy or cure.

 

 

ARTICLE 2

 

2.1.          Employment.  The Bank agrees to employ the Executive as
President of the Bank with such duties and responsibilities as may be assigned
to him, and with such compensation as may be determined from time to time by
the Board of Directors of the Bank.

 

2.2.          Fringe Benefits.  The salary continuation benefits provided by
this Agreement are granted by the Bank as a fringe benefit to the Executive and
are in addition to any compensation or benefit granted to Executive by the
Bank.

 

ARTICLE 3

 

3.1.                              Retirement.

 

(a)           Retirement After
May 15, 2007.  If the Executive
shall continue in the employment of the Bank until May 15, 2007 (“Retirement
Date”), he may retire from active daily employment as of such date or upon such
later date as may be mutually agreed upon by the Executive and the Bank.  After May 15, 2007, the Bank will pay to the
Executive the annual sum of fifty thousand dollars ($50,000) for a period of
fifteen (15) years, subject to the conditions and limitations set forth in this
Agreement.  The annual fifty
thousand-dollar ($50,000) payment shall be pro rated on a monthly basis and
will be payable beginning on May 16, 2007.

 

(b)           Retirement After
May 15, 2004 and Prior to May 15, 2007. 
If the Executive shall continue in the employment of the Bank at least
until May 15, 2004, but retires prior to May 15, 2007, Executive shall be
entitled to receive the product of the “Benefit Liability Balance” amount for
the period ending May 15 immediately prior to the date of retirement times the
corresponding Vesting Percentage as set forth in Schedule A attached
hereto.  Beginning on May 16, 2007,
Executive shall be entitled to receive such product of the Benefit Liability Balance
times the Vesting Percentage payable in 180 monthly installments.

 

(c)           Retirement Prior
to May 15, 2004.  If Executive
retires on or before May 15, 2004, he shall be entitled to no retirement
benefits under this Agreement.

 

(d)           Death After
Retirement.  Provided that Executive
retires on or after May 15, 2004, the Bank agrees that if the Executive dies
before receiving the full amount of monthly payments to which he is entitled
under this Agreement, the Executive’s designated Beneficiary shall be entitled
to receive the “Split Dollar Death Benefit” in the amount set forth in Schedule
A for the period ending May 15 in which death occurred.  If a valid Beneficiary Designation is not in
effect, the payment shall be made to the Executive’s surviving spouse or, if
none, said payments shall be made to the duly qualified personal
representative, executor or administrator of Executive’s estate.  Upon payment of such Split Dollar Death
Benefit, the Bank shall not be obligate to make any further payments hereunder.  No death benefit shall be payable hereunder
if it is determined that the Executive’s death was caused by suicide.

 

 

ARTICLE 4

 

4.1.          Death Prior to
Retirement.  In the event the
Executive should die while employed by the Bank at any time after the date of
this Agreement but prior to his Retirement Date, the Bank shall pay the
Executive’s designated Beneficiary the “Split Dollar Death Benefit” in the
amount set for in Schedule A for the period ending May 15 in which death
occurred.  Upon payment of such Split
Dollar Death Benefit, the Bank shall not be obligate to make any further
payment hereunder.  If a valid
Beneficiary Designation is not in effect, the payment shall be made to the
Executive’s surviving spouse or, if none, said payments shall be made to the
duly qualified personal representative, executor or administrator of
Executive’s estate.  No death benefit
shall be payable hereunder if it is determined that the Executive’s death was
caused by suicide.

 

4.2.          Disability Prior
to Retirement.  In the event the
Executive should become disabled while actively employed by the Bank but prior
to his Retirement Date, the Executive shall entitled to receive  the “Benefit Liability Balance” amount for
the period ending May 15 in which Executive is deemed Disabled  as set forth in Schedule A attached
hereto.  Upon reaching age 65,  Executive shall be entitled to receive such  Benefit Liability Balance  payable in 180 monthly installments.

 

4.3           Death After
Disability.  In the event Executive
should die after being deemed Disabled, the Executive’s designated Beneficiary
shall be entitled to the benefits as if he died after retirement as set forth
in Section 3.1(d).

 

ARTICLE 5

 

5.1.          Termination of
Employment.  The Bank reserves the
right to terminate the employment of the Executive at any time prior to
retirement.  In the event that
Executive’s employment shall terminate prior to his Retirement Date, then
Executive shall be entitled to the benefits described below.

 

(a)           If Executive continues to be employed by the Bank until
his Retirement Date, upon retirement, Executive will receive the payments in
accordance with Article 3.1.(a);

 

(b)           If the Company terminates Executive pursuant to Section
1.5(a) Termination for Cause, or if Executive terminates his employment for
reasons other than Section 1.5(b) Termination for Good Reason, on or prior to
May 15, 2004, Executive shall not be entitled to any benefits under this
Agreement;

 

(c)           If Executive is terminated without
cause, or Executive terminates this Agreement for Good Reason pursuant to
Section 1.5(b), on or prior to May 15, 2004, Executive will be entitled to the
product of the Benefit Liability Balance times the Vesting Percentage as of May
15, 2004 and as set forth in Schedule A. 
Beginning on May 16, 2007, Executive shall be entitled to such product
of the Benefit Liability Balance time Vesting Percentage, payable in 180
monthly installments; and

 

 

(d)           If either the Company terminates Executive or if Executive
terminates employment after May 15, 2004, but prior to May 15, 2007, Executive
shall be entitled to the product of the Benefit Liability Balance times the
Vesting Percentage for the period ending May 15 immediately prior to the date
of termination as set forth in Schedule A. 
Beginning on May 16, 2007, Executive shall be entitled to receive such
product of Benefit Liability Balance time the Vesting Percentage, payable in
180 monthly installments.

 

Notwithstanding the foregoing, Executive shall be entitled to receive
the annual payments set forth in Section 3.1(a) as if he retired after May 15,
2007, with such benefits beginning on May 16, 2007, if the Employment is
terminated within twelve (12) months of a Change of Control.  Such annual payments will be paid in monthly
installments.

 

ARTICLE 6

 

6.1.          Nonassignable.  Neither the Executive, his spouse, nor any
other beneficiary under this Agreement shall have any power or right to
transfer, assign, hypothecate, mortgage, modify, or otherwise encumber in
advance any of the benefits payable hereunder. 
Further, no benefits hereunder shall be subject to seizure for the
payment of any debts, judgments, or alimony, owed by the Executive or his
beneficiary or any of them, or be transferable by operation of law in the event
of bankruptcy, insolvency or otherwise.

 

ARTICLE 7

 

7.1.          Claims Procedure.  The Bank shall make all determinations as to
rights to benefits under this Agreement. 
Any decision by the Bank denying a claim by the Executive or his
beneficiary for benefits under this Agreement shall be stated in writing and
delivered or mailed to the Executive or such beneficiary.  Such decision shall set forth the specific
reasons for the denial, written to the best of the Bank’s ability in a manner
calculated to be understood without legal or actuarial counsel.  In addition, the Bank shall provide a
reasonable opportunity to the Executive or such beneficiary for full and fair
review of the decision denying such claim.

 

ARTICLE 8

 

8.l.           Unsecured
General Creditor.  The Executive’s
rights are limited to the right to receive payments as provided in this
Agreement and the Executive’s position with respect thereto is that of a
general unsecured creditor of the Bank.

 

ARTICLE 9

 

9.1.          Not a Contract of
Employment.  This Agreement shall
not be deemed to constitute a contract of employment between the parties
hereto, nor shall any provision hereof restrict the right of the Bank to
discharge the Executive, or restrict the right of the Executive to terminate
his employment.

 

 

ARTICLE 10

 

10.1.        Successors and
Assigns; Assignment.  The rights and
obligations of this Agreement shall be binding upon and inure to the benefit of
the successors, assigns, heirs and personal representatives of the parties
hereto.  Executive may not assign this
Agreement or any of Executive’s rights hereunder except with the prior written
consent of the Bank.

 

10.2.        Severability.  If any provision of this Agreement, as
applied to either party or to any circumstances, is judged by a court to be
void or unenforceable, in whole or in part, the same shall in no way affect any
other provision of this Agreement, the application of such provision in any
other circumstances, or the validity or enforceability of this Agreement.

 

10.3.        Arbitration.  Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration
in accordance with the rules of the American Arbitration Association then in
effect.  Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.  The parties agree to be subject to the jurisdiction of the County
of Sacramento.

 

10.4.        Governing
Law.  This Agreement shall be
construed, interpreted and enforced in accordance with the laws of the State of
California, without giving effect to the choice of law principles thereof.

 

10.5.        Waiver.  A waiver by either party of any of the terms
or conditions of this Agreement in any one instance shall not be deemed or
construed to be a waiver of such terms or conditions for the future, or of any
subsequent breach thereof.  All
remedies, rights, undertakings, obligations and agreements contained in this
Agreement shall be cumulative, and none of them shall be in limitation of any
other remedy, right, undertaking, obligation or agreement of either party.

 

10.6.        Attorneys’ Fees.  If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged
dispute, breach, default, or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled.

 

10.7.        Headings.  The headings in this Agreement are for
convenience only and shall not in any manner affect the interpretation or
construction of the Agreement or any of its provisions.

 

10.8.        Notice.  For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified or registered mail,
return receipt requested, postage prepaid, addressed as follows:

 

 

If to the Bank, to:

 

Feather River State Bank

1227 Bridge Street, Suite C

Yuba City, CA  
95991

Attn: Chairman of the Board of Directors of

Feather River State Bank

 

If to the Executive, to:

 

John I. Jelavich

1809 Lorraine Way

Yuba City, CA 
95993

 

or
to such other respective addresses as the parties hereto shall designate to the
other by like notice, provided that notice of a change of address shall be
effective only upon receipt thereof.

 

10.9  Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.

 

IN WITNESS WHEREOF, the Bank has caused this Agreement to be duly
executed by its proper officer and the Executive has hereunto set his hand at
Yuba City, California, the day and year first set forth below.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  FEATHER
  RIVER STATE BANK

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:  

  	
  February
  21, 2003

  	
   

  	
  /s/
  Al Montna

  
	
   

  	
   

  	
   

  	
  Al
  Montna, Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:  

  	
  February
  21, 2003

  	
   

  	
  /s/
  John I. Jelavich

  
	
   

  	
   

  	
   

  	
  John I. Jelavich

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