Document:

Form of Indemnity Letter Agreement

 EXHIBIT 10.12 
  
 INDEMNITY AGREEMENT 
  
 THIS INDEMNITY AGREEMENT (“Agreement”) is made and
entered into this               day of              20     by and between EXAR
CORPORATION, a Delaware corporation (“Corporation”), and              (“Agent”). 
  
 RECITALS 
  
 WHEREAS, Agent performs a
valuable service to the Corporation in h     capacity as              of the Corporation; 
  
 WHEREAS, the stockholders of the Corporation have adopted bylaws (the “Bylaws”) providing for the indemnification of the directors, officers, employees and other
agents of the Corporation, including persons serving at the request of the Corporation in such capacities with other corporations or enterprises, as authorized by the Delaware General Corporation Law, as amended (“Delaware Law”);

  
 WHEREAS, the Bylaws and Delaware Law by their non-exclusive nature, permit contracts between the Corporation and
its directors, officers, employees and other agents with respect to indemnification of such persons; and 
  
 WHEREAS,
in order to induce Agent to serve as                           of the Corporation, the Corporation has determined and
agreed to enter into this Agreement with Agent; 
  
 NOW, THEREFORE, in consideration of Agent’s continued
service as                           after the date hereof, and in any other capacity in which Agent may serve the
Corporation after the date hereof, the parties hereto agree as follows: 
  
 AGREEMENT 
  
 1.    Services to the Corporation.    Agent will serve, at the will of the Corporation or
under separate contract, if any such contract exists, as a director, officer or other fiduciary of the Corporation or as a director, officer or other fiduciary of an affiliate of the Corporation (including any employee benefit plan of the
Corporation) faithfully and to the best of h     ability so long as              is duly elected and qualified in accordance with the provisions of the
Bylaws or other applicable charter documents of the Corporation or such affiliate; provided, however, that Agent may at any time and for any reason resign from such position (subject to any contractual obligation that Agent may have assumed apart
from this Agreement) and that the Corporation or any affiliate shall have no obligation under this Agreement to continue Agent in any such position. 
  
 2.    Indemnity of Agent.    The Corporation hereby agrees to hold harmless and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and Delaware Law, as the same may be amended from time to time (but, only to the extent that such amendment permits the Corporation to provide broader 

 
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 indemnification rights than the Bylaws or Delaware Law permitted prior to adoption of such amendment). 
  
 3.    Additional Indemnity.    In addition to and not in limitation of the indemnification
otherwise provided for herein, and subject only to the exclusions set forth in Section 5 hereof, the Corporation hereby further agrees to hold harmless and indemnify Agent: 
  
 (a)  against any and all Expenses (as defined in Section 16(b) hereof) that Agent becomes legally obligated to pay because of any claim or claims made against or
by h     in connection with any Proceeding (as defined in Section 16(a) hereof), (including an action by or in the name of the Corporation) by reason of the fact that Agent is, was or at any time becomes a director,
officer, employee or other agent of Corporation, or is or was serving or at any time serves at the request of the Corporation as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise; and 
  
 (b)  otherwise to the fullest extent as may be provided to Agent by the
Corporation under the non-exclusivity provisions of Delaware Law and Section 42 of the Bylaws. 
  
 4.    Reviewing Party.    Notwithstanding the foregoing, the obligations of the Corporation under Sections 2 and 3 shall be subject to the condition that the Reviewing Party (as
defined in Section 16(f) hereof) shall not have determined that Agent would not be permitted to be indemnified under applicable law. 
  
 5.    Limitations on Additional Indemnity.    No indemnity pursuant to Section 3 hereof shall be paid by the Corporation: 
  

(a)  on account of any claim against Agent for an accounting of profits made from the purchase or sale by Agent of securities of the Corporation pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law; 
  
 (b)  on account of Agent’s conduct that was knowingly fraudulent or deliberately dishonest or that constituted willful misconduct; 
  

(c)  on account of Agent’s conduct that constituted a breach of Agent’s duty of loyalty to the Corporation or resulted in any personal profit or
advantage to which Agent was not legally entitled; 
  
 (d)  for which payment is actually made to Agent
under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, bylaw or agreement, except in respect of any excess beyond payment under such insurance, clause, bylaw or agreement; 
  
 (e)  if indemnification is not lawful (and, in this respect, both the Corporation and Agent have been advised that the
Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public 

 
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 policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication); or

  
 (f)  in connection with any Proceeding (or part thereof) initiated by Agent, or any Proceeding by Agent
against the Corporation or its directors, officers, employees or other agents, unless (i) such indemnification is expressly required to be made by law, (ii) the Proceeding was authorized by the Board of Directors of the Corporation, (iii) such
indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers vested in the Corporation under Delaware Law, or (iv) the Proceeding is initiated pursuant to Section 12 hereof. 
  
 6.    Continuation of Indemnity.    All agreements and obligations of the Corporation
contained herein shall continue during the period Agent is a director, officer, employee or other agent of the Corporation (or is or was serving at the request of the Corporation as a director, officer, employee or other agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) and shall continue thereafter so long as Agent shall be subject to any possible claim or Proceeding by reason of the fact that Agent was serving in the
capacity referred to herein. 
  
 7.    Partial
Indemnification.    Agent shall be entitled under this Agreement to indemnification by the Corporation for a portion of the Expenses that Agent becomes legally obligated to pay in connection with any Proceeding referred to in
Sections 2 and 3 hereof even if not entitled hereunder to indemnification for the total amount thereof, and the Corporation shall indemnify Agent for the portion thereof to which Agent is entitled. 
  
 8.    Notification and Defense of Claim.    Not later than thirty (30) days after receipt
by Agent of notice of the commencement of any Proceeding, Agent will, if a claim in respect thereof is to be made against the Corporation under this Agreement, provide written notification to the Corporation of the commencement thereof, including
such documentation and information as is reasonably available to Agent and is reasonably necessary to determine whether and to what extent Agent is entitled to indemnification; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement. With respect to any Proceeding as to which Agent notifies the Corporation of the commencement thereof: 
  

	 	(a)
	 
	the Corporation will be entitled to participate therein at its own expense; 
 

  

	 	(b)
	 
	Agent shall give the Corporation such information and cooperation as it may reasonably require and as shall be within Agent’s power; 

  

	 	(c)
	 
	except as otherwise provided below, the Corporation may, at its option and jointly with any other indemnifying party similarly notified and electing to assume
such defense, assume the defense thereof, with counsel reasonably satisfactory to Agent upon the delivery to Agent of written notice of its election to do so. After notice from the Corporation to Agent of its election to assume the defense thereof,
the Corporation will not be liable to Agent under this Agreement for any Expenses subsequently incurred by Agent in connection with the defense thereof except for reasonable costs of investigation or otherwise as provided 

 
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	below. Agent shall have the right to employ separate counsel in such Proceeding but the fees and expenses of such counsel incurred after notice from the
Corporation of its assumption of the defense thereof shall be at the expense of Agent unless (i) the employment of counsel by Agent has been authorized by the Corporation, (ii) Agent shall have reasonably concluded that there may be a
conflict of interest between the Corporation and Agent in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each case the fees and expenses of
Agent’s separate counsel shall be at the expense of the Corporation. The Corporation shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Corporation or as to which Agent shall have made the conclusion
provided for in clause (ii) above; and 
 

  

	 	(d)
	 
	the Corporation shall not be liable to indemnify Agent under this Agreement for any amounts paid in settlement of any action or claim effected without its
written consent, which shall not be unreasonably withheld. The Corporation shall be permitted to settle any action except that it shall not settle any action or claim in any manner which would impose any penalty or limitation on Agent without
Agent’s written consent, which may be given or withheld in Agent’s sole discretion. 
 

  
 9.    Expenses.    The Corporation shall advance, prior to the final disposition of any Proceeding, promptly and, in any event, within 20 days following request therefor, all Expenses
incurred by Agent in connection with such Proceeding upon receipt of an undertaking by or on behalf of Agent to repay said amounts if it shall be determined ultimately that Agent is not entitled to be indemnified under the provisions of this
Agreement, the Bylaws, Delaware Law or otherwise. If Agent has commenced a legal proceeding in a court of competent jurisdiction to secure a determination that Agent should be indemnified under applicable law, any determination made by the Reviewing
Party that Agent would not be permitted to be indemnified under applicable law shall not be binding and Agent shall not be required to reimburse the Corporation until a final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). Agent’s obligation to reimburse the Corporation shall be unsecured and no interest shall be charged thereon. 
  
 10.    Notice to Insurers.    If, at the time of the receipt of the Corporation of notice of any Proceeding, pursuant to
Section 8 hereof, the Corporation has liability insurance in effect which may cover such Proceeding, the Corporation shall give prompt notice of the commencement of such Proceeding in accordance with the procedures set forth in the respective
policies. The Corporation shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Agent, all Expenses payable as a result of such Proceeding in accordance with the terms of such policies. 

 
 11.    Contribution.    If the indemnification provided for in Sections 2 and 3
above for any reason is held by a court of competent jurisdiction to be unavailable to Agent in respect of any Expenses that Agent becomes legally obligated to pay, then the Corporation, in lieu of indemnifying Agent thereunder, shall contribute to
the amount 

 
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 paid or payable by Agent (i) in such proportion as is appropriate to reflect the relative benefits received by the Corporation and Agent, or
(ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Corporation and
Agent in connection with the action or inaction which resulted in such Expenses, as well as any other relevant equitable considerations. 
  
 12.    Enforcement.    Any right to indemnification or advances granted by this Agreement to Agent shall be enforceable by or on behalf of Agent in any court of competent
jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. Agent, in such enforcement action, if successful in whole or in
part, shall also be entitled to be paid the Expenses of prosecuting h     claim. It shall be a defense to any action for which a claim for indemnification is made under Section 8 hereof (other than an action brought to
enforce a claim for Expenses pursuant to Section 9 hereof, provided that the required undertaking has been tendered to the Corporation) that Agent is not entitled to indemnification because of the limitations set forth in Section 5 hereof, but the
burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such
enforcement action that indemnification of Agent is proper in the circumstances, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that such indemnification is improper
shall be a defense to the action or create a presumption that Agent is not entitled to indemnification under this Agreement or otherwise. If a determination shall have been made pursuant to this Agreement that the claimant is entitled to
indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 12. 
  
 13.    Subrogation.    In the event of payment under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Agent,
who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Corporation effectively to bring suit to enforce such rights. 
  
 14.    Liability Insurance.    To the extent the Corporation maintains liability insurance applicable to directors, officers,
employees, agents or fiduciaries, Agent shall be covered by such policies in such a manner as to provide Agent the same rights and benefits as are accorded to the most favorably insured of the Corporation’s directors, if Agent is a director; or
of the Corporation’s officers, if Agent is not a director of the Corporation but is an officer; or of the Corporation’s key employees, agents or fiduciaries, if Agent is not an officer or director but is a key employee, agent or fiduciary.

  
 15.    Non-Exclusivity of Rights.    The rights conferred on Agent
by this Agreement shall not be exclusive of any other right which Agent may have or hereafter acquire under any statute, provision of the Corporation’s Certificate of Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in h     official capacity and as to action in anothercapacity while holding office. 

 
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 16.    Definitions.    For
purposes of this Agreement, the following definitions shall apply: 
  
 (a)  The term “Proceeding”
shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, the giving of testimony in and participating in any threatened, pending or completed
action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, arbitrational, administrative or investigative. 
  
 (b)  The term “Expenses” shall be broadly construed and shall include, without limitation, court costs, attorneys’ fees, witness fees, fines, penalties, amounts paid in
settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any Proceeding. 
  
 (c)  The term the “Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have the power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Agreement
with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. 
  
 (d)  References to a “director,” “ officer,” “employee,” or “agent” of the Corporation shall include, without limitation, situations where such person
is serving at the request of the Corporation as a director, officer, employee, trustee or agent or another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. 
  
 (e)  References to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit
plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee
or agent with respect to an employee benefit plan, its participants, or beneficiaries. 
  
 (f)  The
“Reviewing Party” shall be that party as determined pursuant to Section 42(d)(ii) of the Corporation’s Bylaws. 
  
 17.    Survival of Rights. 
  
 (a)  The rights conferred on
Agent by this Agreement shall continue after Agent has ceased to be a director, officer, employee or other agent of the Corporation or to serve at the request of the Corporation as a director, officer, employee or other agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise and shall inure to the benefit of Agent’s heirs, executors and administrators. 

 
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 (b)  The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Corporation, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform if no such succession had taken place. 
  
 18.    Severability.    Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be
invalid for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof. Furthermore, if this Agreement shall be invalidated in its entirety on any ground, then the Corporation shall
nevertheless indemnify Agent to the fullest extent provided by the Bylaws, Delaware Law or any other applicable law. 
  
 19.    Governing Law.    This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents,
entered into and to be performed entirely within the State of Delaware, without regard to the conflict of law principles thereof. 
  
 20.    Amendment and Termination.    No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 
  
 21.    Identical Counterparts.    This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute but one and the same Agreement. Only one such counterpart need be produced to evidence the existence of this Agreement.

  
 22.    Headings.    The headings of the sections of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof. 
  
 23.    Notices.    All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (i) upon delivery if
delivered by hand to the party to whom such communication was directed or (ii) upon the third business day after the date on which such communication was mailed if mailed by certified or registered mail with postage prepaid: 
  
 (a)  If to Agent, at the address indicated on the signature page hereof. 
  

(b)  If to the Corporation, to 
  
 Exar Corporation 
 48720 Kato Road 
 Fremont, California 94538 
 Attention: Legal
Department 

 
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 or to such other address as may have been furnished to Agent by the Corporation. 
  
 [Remainder of page intentionally left blank] 

 
 8 

  
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of
the day and year first above written. 
  
 
	 EXAR CORPORATION
 
	 
	  
 By
 
	 
	 Title:
 

 
  
  
 
	 AGENT
 
	 
	 
(name, title)
 

 
  
  
 
	 Agent Print Name and Address:
 
	 
	 

	 
	 

	 
	 

 

 
 9Employment Agreement, Garland Koch

	 Mr. Garland Koch
 24 Flossmoor
 Trabuco Canyon, CA  92679
 	 Exhibit 10.110
 

                Re:     Employment Agreement
 Dear Mr. Koch:

This letter agreement and attachments hereto, (collectively the “Agreement”) set forth the terms and conditions of your employment with Pan American Bank, FSB (“Employer”) and
its subsidiary United Auto Credit Corporation (“UACC”), both of which may be referred to interchangeably hereinafter as “Employer”.  By signing this Agreement, you will be agreeing to these terms.  It is
important that you understand clearly both what your benefits are and what is expected of you by Employer.  The effective date of this Agreement (the “Effective Date”) shall be as of March 1, 2002 and will replace your previous
agreement.

	 1.
 	 Term.  This Agreement shall have a term of three (3) years, commencing as of the Effective Date (the “Term”).  Where used herein,
“Term” shall refer to the entire period of your employment by Employer from and after the Effective Date, whether for the period provided above or as extended or terminated earlier as hereinafter provided.
 
	  
 	  
 	  
 
	 2.
 	 Duties.  You shall hold the office of Sr. Vice President – Chief Financial Officer. You shall perform the duties customarily performed by individuals
holding a similar title with other financial institutions or as otherwise may be agreed upon by Employer and you from time to time. During the Term hereof, you shall perform the services herein contemplated faithfully, diligently and to the best of
your ability in compliance with instructions and policies of the Bank’s senior management, the Bank’s Board of Directors the Bank’s Federal Charter and Bylaws and with all applicable laws and regulations.
 
	  
 
	 3.
 	 Compensation.
 
	  
 	  
 
	  
 	 a)
 	 Base Salary.  For your service rendered to the Bank or any subsidiary corporation hereunder, during the Term hereof, the Bank shall pay or cause to be paid a
base salary to you at the rate of $150,000 per annum from March 1, 2002 to February 28, 2003 $150,000 per annum from March 1, 2003 to February 28, 2004 and $150,000 per annum from March 1, 2004 to February 28, 2005, payable in conformity with
Bank’s normal payroll periods and procedures.
 
	  
 	  
 	  
 
	  
 	 b)
 	 Bonus.  In addition to the base salary provided for under Section 3(a) above, you shall be entitled to annual bonus compensation in accordance with the
incentive compensation formula set forth in Exhibit A to this Agreement.  Among other things, the incentive compensation formula establishes certain performance criteria and sales objectives by which the amount of your bonus compensation, if
any, is to be determined.
 
	  
 	  
 	  
 
	  
 	 c)
 	 Automobile Allowance.  You shall receive during the Term of this Agreement an automobile allowance of Two Hundred Dollars ($200) per month.
 
	  
 	  
 	  
 
	  
 	 d)
 	 Options. Options will vest according to separate option agreements.
 
					

  

	 4.
 	 Other Benefits.  During the Term hereof and unless otherwise agreed to by the Bank and you:
 
	  
 	  
 
	  
 	 a)
 	 Vacation.  You shall be entitled to a total of three (3) weeks paid vacation, the amount and term of which shall be determined in accordance with the policies of
Employer as in effect from time to time.
 
	  
 	  
 	  
 
	  
 	 b)
 	 Group Medical, Life Insurance and Other Benefits.  You will be eligible for the medical, dental, vision, life insurance and long-term disability plans that are generally
applicable to your employment classification.
 
	  
 	  
 	  
 
	 5.
 	 Business Expenses.  You shall be entitled to reimbursement by Employer for any and all ordinary and necessary business expenses reasonably incurred by you in
the performance of your duties and in acting for Employer during the Term of this Agreement, provided that you furnish to Employer adequate records and other documentation as may be required for the substantiation of such expenditures as a business
expense of the Bank.
 
	  
 	  
 
	 6.
 	 Termination.
 
	  
 	  
 	  
 
	  
 	 a)
 	 Termination for Cause.  The Bank’s Board may for cause terminate your employment at any time during the Term of this Agreement.  In such event, all of your
rights under this Agreement shall terminate and you shall have no right to receive compensation, and other benefits shall cease for any period after the effective date of such termination for cause.  Any bonus compensation otherwise accrued
shall be forfeited.  Termination for “cause” shall be defined as your personal dishonesty, willful misconduct, breach of fiduciary or duty of loyalty, continuing intentional or habitual failure to perform stated duties,
violation of any law (other than minor traffic violations or similar misdemeanor offenses), rule or regulation adopted by the Office of Thrift Supervision, Federal Deposit Insurance Corporation or other regulatory agency with jurisdiction over
Employer, any judgment, ruling or decree by any court of competent jurisdiction or administrative body that precludes or impairs your ability to perform the services contemplated by this Agreement or any material breach by you of any provision of
this Agreement.
 
	  
 	  
 	  
 
	  
 	 b)
 	 Termination Without Cause.  Employer may terminate your employment without cause at any time during the Term of this Agreement.  In the event that Employer
terminates your employment without cause, you shall be entitled to receive as severance compensation an amount as provided in Exhibit B.  The severance payment under this Section 6(b) shall be provided in a lump sum or, at your election, in
equal monthly installments for a period not to exceed six (6) months from the date of termination.  This payment shall be in lieu of any and all other compensation due under the agreement unless previously vested or earned, except the amount of
any bonus compensation payable to you under Section 3(b) hereof, shall be prorated through the date of termination.
 
	  
 	  
 	  
 
	  
 	 c)
 	 Compliance with Law and Regulation.  You and Employer expressly acknowledge and agree that any payments made to you pursuant to this Agreement or otherwise are subject to
and conditioned upon compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
 
	  
 	  
 	  
 
	  
 	 d)
 	 Suspension and Removal Orders.  If you are suspended and/or temporarily prohibited from participating in the conduct of Employer’s affairs by notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. Section 1818 (e)(3) and (g)(1)), the Bank’s obligations under this Agreement shall be suspended as of the
 

  

  

	  
 	  
 	 date of service, unless stayed by appropriate proceeding.  If the charges in the notice are dismissed, the Bank may in its discretion: (I) pay you all or part of the
compensation withheld while its obligations under this Agreement were suspended; and (ii) reinstate (in whole or in part) any of its obligations which were suspended.  If you are removed and/or permanently prohibited from participating in the
conduct of Employer’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (12 U.S.C. Section 1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement shall terminate as of the
effective date of the order, but vested rights of the parties shall not be affected.
 
	  
 	  
 	  
 
	  
 	 e)
 	 Termination by Default.  If Employer is in default (as defined in Section 3(x)(1) of the Federal Deposit Insurance Action (12 U.S.C. Section 1813(x)(1)), all obligations
under this Agreement shall terminate as of the date of default, but vested rights of the parties shall not be affected.
 
	  
 	  
 	  
 
	  
 	 f)
 	 Supervisory Assistance or Merger.  All obligations under this Agreement shall be terminated, except to the extent that it is determined that continuation of the Agreement
is necessary for the continued operation of Employer: (I) by the Director of the Office of Thrift Supervision (the “Director”) or his or her designee, at the time that the Federal Deposit Insurance Corporation enters into an
agreement to provide assistance to or on behalf of Employer under the authority contained in Section 13(c) of the Federal Deposit Insurance Act (12 U.S.C. Section 1823(c)); or (ii) by the Director or his or her designee, at the time that the
Director or his or her designee approves a supervisory merger to resolve problems related to the operation of Employer or when Employer is in an unsafe or unsound condition.  All rights of the parties that have already vested, however, shall
not be affected by such action.
 
	  
 	  
 	  
 
	  
 	 g)
 	 Disability.  In the event that you shall fail, because of illness, incapacity or injury, to render the services contemplated by this Agreement for three (3) consecutive
calendar months, or for shorter periods aggregating four (4) months in any twelve (12) month period, your employment hereunder may be terminated by written notice from Employer to you.  In the event that your employment is terminated under this
Section 6(g), you shall receive the difference between any disability payments provided through insurance plans offered by Employer, if any, provided you have enrolled in such plans and paid the cost thereof, and your base salary as set forth in
Section 3(a) hereof, for six months after notice from Employer, plus the amount of any bonus compensation payable to you under Section 3(b) hereof, prorated through the date of termination.  Such termination shall not affect any rights, which
you may have pursuant to any insurance or other death benefit, or any stock option plans, or options thereunder, which rights shall continue to be governed by the provisions of such plans and arrangements.
 
	  
 	  
 	  
 
	  
 	 h)
 	 Death.  If your employment is terminated by reason of your death, this Agreement shall terminate without further obligations of Employer to you (or your heirs or legal
representatives) under this Agreement, other than for payment of: (i) your base salary (as set forth in Section 3(a) hereof) through the date of termination; (ii) the amount of any bonus compensation payable to you under Section 3(b) above, prorated
through the date of termination; (iii) any compensation previously deferred by you; (iv) any accrued vacation and/.or sick leave pay; and (v) any amounts due pursuant to the terms of any applicable welfare benefit plan.  All of the foregoing
amounts shall be paid to
 

  

  

	  
 	  
 	 your estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days after the date of termination or earlier as required by applicable law.
 
	  
 	  
 
	 7.
 	 Disclosure or Use of Employer’s Trade Secrets.  During the Term hereof, you will have access to and become acquainted with what you and Employer
acknowledge are trade secrets or confidential or proprietary information of Employer (including but not limited to products, employees, practices, policies or process).  You shall not use or disclose any trade secrets, confidential or
proprietary information, directly or indirectly, or cause them to be used or disclosed in any manner, except as may be required or requested by Employer, by court order or under applicable law or regulation.  This paragraph shall survive the
termination of this agreement.
 
	  
 	  
 
	 8.
 	 Return of Documents.  You expressly agree that all manuals, documents, files, reports, studies or other materials used and/or developed by you for Employer
during the Term of this Agreement or prior thereto while you were employed by Employer are solely the property of Employer, and that you have no right, title or interest therein.  Upon termination of this Agreement, you or your representative
shall promptly deliver possession of all such materials (including any copies thereof) to Employer.
 
	  
 	  
 
	 9.
 	 Notices.  All notices, demands or other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered in person, or
sent by United States mail, certified or registered, with return receipt requested, if to you, addressed to you at your last residence address as shown in the records of Employer, and if to Employer, addressed to the President of Employer at
Employer’s principal office.
 
	  
 	  
 
	 10.
 	 Governing Law and Jurisdiction.  This Agreement, the legal relations between the parties and any action instituted by any party arising under or in connection
with this Agreement, shall be governed by and interpreted in accordance with the laws of the State of California.
 
	  
 	  
 
	 11.
 	 Arbitration.  Any dispute, controversy or claim arising out of or in respect of this Agreement (or its validity, interpretation or enforcement), the
employment relationship or the subject matter hereof shall at the request of either party be submitted to and settled by arbitration conducted at a mutually convenient office of the Judicial Arbitration & Mediation Services, Inc.
(“JAMS”).  Employer and Employee may agree on a retired judge from the JAMS panel.  If we are unable to agree upon a retired judge, JAMS will provide a list of three available judges and each party may strike one.  If
two of the three judges are stricken, the remaining judge will serve as arbitrator.  If two arbitrators remain, the first judge listed shall serve as arbitrator.  Employer and you agree that arbitration must be initiated within two years
after the claim breach occurred and that the failure to initiate arbitration within the two-year period constitutes an absolute bar to the institution of any new proceedings related to such alleged breach.  The aggrieved party can initiate
arbitration by sending written notice of any intention to arbitrate by registered or certified mail to all parties and to JAMS.  The notice must contain a description of the dispute, the amount involved and the remedy sought.  The
prevailing party in such proceeding will be entitled to the reasonable attorneys’ fees and expenses of counsel and costs incurred by reason of such arbitration.
 
	  
 	  
 
	 12.
 	 Benefit of Agreement.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns;
provided, however, that you may not assign any interest in this Agreement without the prior written consent of Employer.
 
	  
 	  
 
	 13.
 	 Captions.  Captions and paragraph heading used in this Agreement are for convenience only and shall not be used in interpreting this Agreement.

  

  

	 14.
 	 Entire Agreement.  This Agreement contains the entire agreement of the parties with respect to your employment by Employer, and it expressly supersedes any and all other
agreements, either oral or written, relating thereto.
 
	  
 	  
 
	 15.
 	 Severability.  Should any provision of this Agreement for any reason be declared invalid, void or unenforceable by a court of competent jurisdiction, the validity and
binding effect of any remaining portions of this Agreement shall remain in full force and effect as if this Agreement had been executed with such invalid, void or unenforceable provisions eliminated; provided, however, that the remaining provisions
still reflect the intent of the parties to this Agreement.
 
	  
 	  
 
	 16.
 	 Amendments.  This Agreement may not be amended or modified except by a written agreement signed by you and the President of the Bank.  This Agreement and any
amendment thereof may be executed in counterparts.
 
	  
 	  
 
	 17.
 	 Non-Solicitation.  You agree that for a period of one year after the termination of employment you will not, except in the case of termination pursuant to Section 6(b)
hereof, on behalf of the Employee or on behalf of any other individual, association or entity, call on any of the customers of Employer for the purpose of soliciting or inducing any of such customers to acquire (or providing to any of such
customers) any product or service provided by Employer, nor will Employee in any way, directly or indirectly, as agent or otherwise, in any other manner solicit, influence or encourage such customers to take away or to divert or direct their
business to Employee or any other person or entity by or with which Employee is employed, associated, affiliated or otherwise related.
 
	  
 	  
 
	 18.
 	 Employees.  Employee agrees that for a period of two years after the termination of Employee’s employment, except in the case of termination pursuant to Section 6(b)
hereof, Employee will not, directly or indirectly, disrupt, damage, impair, or interfere with Employer’s business by soliciting, influencing, encouraging or recruiting any employee of Employer to work for Employee or any Employee Related
Entity.
 
	  
 	  
 
	              We look forward to your continued successful association with the Bank.  In order to
confirm your agreement with and acceptance of the terms and conditions set forth above, please sign and date one copy of this Agreement where indicated below and return it to the Bank’s Human Resources Department.  The other copy is for
your records.
 

 

	 Very truly yours,
 	  
 
	  
 	  
 
	  
 	  
 
	 /s/ RAY THOUSAND
 	  
 
	 
 	  
 
	 Ray Thousand
 President and CEO
 	   
 

  

  
 I agree to the terms of employment set forth in this Agreement subject to approval of the Board of Directors of Pan American Bank.

	 /s/ GARLAND KOCH
 	  
 	 July 18, 2002
 
	 
 	  
 	  
 
	 Employee
 	  
 	 Date
 

  

  
 EXHIBIT B
 Severance Compensation
 Upon Termination Without Cause
 Pursuant to 6(b)
 If
termination occurs during the first two years of the Term, the payment shall be equal to twelve (12) months salary at the then current base salary, plus prorated bonus through the date of termination.
 If termination occurs in the third year, the amount paid shall be the actual amount of base salary remaining to be paid to the end of the Term, plus prorated bonus through the date of termination.
  

  
 EXHIBIT A
 Bonus Calculations
 GOALS for 2002

	   
 	   
 	   
 	 Bonus Level
 	   
 	   
 	 % of Plan
 	   
 
	   
 	   
 	   
 	 
 	   
 	   
 	 
 	   
 
	 UPFC Pretax Net Income
 	  
 	  
 	 50% of base salary
 	  
 	 $
 	 15.6 MM Pretax NI
 	  
 	  
 	 100
 	 %
 
	  
 	  
 	  
 	 37.5% of base salary
 	  
 	 $
 	 14.0 MM Pretax NI
 	  
 	  
 	 90
 	 %
 
	  
 	  
 	  
 	 25% of base salary
 	  
 	 $
 	 12.7 MM Pretax NI
 	  
 	  
 	 81
 	 %
 
	 UACC Pretax Net Income
 	  
 	  
 	 50% of base salary
 	  
 	 $
 	 13.0 MM Pretax NI
 	  
 	  
 	 100
 	 %
 
	  
 	  
 	  
 	 37.5% of base salary
 	  
 	 $
 	 12.0 MM Pretax NI
 	  
 	  
 	 95.5
 	 %
 
	  
 	  
 	  
 	 25% of base salary
 	  
 	 $
 	 11.0 MM Pretax NI
 	  
 	  
 	 85
 	 %
 
	 UACC Volume
 	  
 	  
 	 Minimum $22MM Avg/mo for one (1) quarter
 	  
 	  
 	  
 	  
 
	 UACC Delinquency
 	  
 	  
 	 Max 2% Average 30+ (incl. Repos)
 	  
 	  
 	  
 	  
 
	 UACC Charge offs
 	  
 	  
 	 Max 6.75% Average charge off
 	  
 	  
 	  
 	  
 

 The bonus calculation, including the amounts to be used for the goals as set forth
above, shall be mutually agreed upon in years 2 and 3 based on the approved budget.
 “Pre-tax profit” for UACC shall be based upon the amount reflected in the Bank’s internal financial
statements for UACC without any allocation for Bank Corporate overhead, but including Cost of Funds charged by the Bank at 7% and assuming 6 to 1 leverage. 
 Attainment of goals/bonus assumes that
there are no material changes in policy by the Bank that might materially affect or limit the Auto Finance Division Business Plan.  If any material changes in policy are made by the Bank, and not concurred in by you, then goals and bonus
calculation will be adjusted accordingly upon mutual agreement of the parties.
 Employee must be on the payroll at the end of the calendar year to be eligible for payment of a bonus regardless of
length of service or reason for termination or resignation unless provided for specifically in the Employment Agreement.  If Employee is discharged by the Company for “Willful Misconduct” or any other reason set forth in Paragraph
6(a) of the Employment Agreement, any right of the Employee to a bonus shall be forfeited even if you are on the payroll at the end of the calendar year.
 Bonus payments will be made within 60 days
after the end of the calendar year allowing for the review of the results of operations.

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