AMENDMENT NO. 1
TO EMPLOYMENT AGREEMENT
THIS AMENDMENT to the Employment Agreement (the "Agreement") entered into as of
March 27, 1996 by and between SJNB Financial Corp. and San Xxxx National Bank, a
national banking association ("Employer"), and Xxxxxx X. Xxxxxxxxx ("Employee")
is made and entered into effective October 6, 2000.
RECITALS
WHEREAS, Employer and Employee have entered into the Agreement governing the
employment of Employee and now wish to amend the Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Employer and Employee hereby agree as follows:
1. Subparagraph (c) of Paragraph 13 shall be added to read as follows:
"(c) "Personal Insurance. Employer shall provide during the term of
this Agreement, at Employer's sole cost, group health (including
medical, dental and hospitalization) insurance coverage for Employee
and his dependents either through a policy or policies of standard
coverage provided by an insurer or insurers selected by Employer in
its sole discretion. In the event of a termination of Employee's
employment pursuant to paragraph 16(b) or 16(e), or automatic
termination based upon paragraph 16(a)(1), (4), (7), or (12)(to the
extent of Employer's breach), Employer shall continue to provide for a
period of twenty-four (24) months, at Employer's sole cost, the
above-described policy or policies of group health insurance coverage
for Employee and his dependents, to the extent such insurance coverage
is available at a cost to Employer comparable to the cost to provide
such coverage to an active employee. If such insurance coverage is not
available at a comparable cost to Employer, then Employer shall pay to
Employee a lump-sum amount in cash equal to two times the total annual
premiums paid by Employer to provide such insurance coverage to
Employee in the final year of Employee's employment by Employer."
2. Subparagraph (d) of Paragraph 13 shall be added to read as follows:
"(d) Outplacement Services. In the event of a termination of
Employee's employment pursuant to paragraph 16(b) or 16(e), or
automatic termination based upon paragraph 16(a)(1), (4), (7), or
(12)(to the extent of Employer's breach), Employer shall provide for a
period of twenty-four (24) months, at Employer's sole cost,
outplacement services to the Employee to the extent reasonably
required for the Employee to obtain substantially comparable
employment; provided, however, that such outplacement services shall
not involve an expenditure by Employer in excess of $5,000 per annum;
and provided, further, however, that after the date of his
termination, Employee shall use his best efforts to obtain
substantially comparable employment."
3. The first sentence of subparagraph 16(d) shall be amended in its
entirety to read as follows:
"In the event of termination by Employer pursuant to paragraph 16(b)
or automatic termination based upon paragraph 16(a)(1), (4), (7) or
(12)(to the extent of Employer's breach) of this Agreement, Employee
or his designated beneficiary shall be entitled to receive severance
pay at Employee's rate of salary immediately preceding such
termination equal to (i) twelve (12) months' salary, plus (ii) the
average annual bonus paid to Employee for the three (3) years prior to
the date of such termination (in addition to incentive compensation or
bonus payments due Employee, if any), payable in lump sum."
4. The first two paragraphs of Paragraph 16(e) shall be amended in their
entirety to read as follows:
"In the event of a "change in control" as defined herein and within a
period of two (2) years following consummation of such a change in
control (i) Employee's employment is terminated; or (ii) without
Employee's consent there occurs (A) any adverse change in the nature
and scope of Employee's position, responsibilities, duties, salary or
benefits, or (B) any change in Employee's location of employment from
within Santa Xxxxx County, California, or (C) any event which
reasonably constitutes a demotion, significant diminution or
constructive termination (by resignation or otherwise) of Employee's
employment, then Employee shall be entitled to the following (in
addition to any bonus or incentive compensation payments due Employee
or any benefits which Employee is otherwise entitled to hereunder):
(x) Severance pay in an amount equal to (I) two (2) times
Employee's annual salary immediately preceding such
change in control, plus (II) two (2) times the
average annual bonus paid to Employee for the three
(3) years prior to the date of such termination as a
result of a change in control, such amount payable in
a lump sum in cash;
(y) An amount equal to the product of (I) a fraction, the
numerator of which is the number of days in the
fiscal year in which the date of termination occurs
through such date of termination, and the denominator
of which is 365, and (II) the targeted amount of the
Employee's annual bonus for the year in which the
termination as a result of a change in control occurs
(or, if such target bonus has not been established,
Employee's bonus for the prior year), such amount
payable in a lump sum in cash; and
(z) All unvested and unexercised stock options granted to
Employee pursuant to Employer's stock option plan(s)
shall immediately vest and become exercisable.
Notwithstanding anything in this Agreement to the contrary, and in
particular this Section 16(e) hereof, if any payment made under this
Agreement is a "golden parachute payment" as defined in Section 28(k)
of the Federal Deposit Insurance Act (12 U.S.C. section 1828(k)) and
Part 359 of the Rules and Regulations of the Federal Deposit Insurance
Corporation (collectively, the "FDIC Rules") or is otherwise
prohibited, restricted or subject to the prior approval of the Board
of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency, or any other
regulatory agency or governmental authority having jurisdiction over
the Employer, no payment shall be made hereunder without complying
with said FDIC Rules."
5. A new Paragraph 27 shall be added to read as follows:
"27. Certain Additional Payments by Employer.
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(a) In the event it shall be determined that any payment or
distribution by Employer to or for the benefit of Employee
(whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under this
Section 27) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") or any interest or penalties are incurred by
Employee with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Employee
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by Employee of all
taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, Employee retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.
(b) Subject to the provisions of Section 27(c), all
determinations required to be made under this Section 27,
including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by KPMG
LLP, or such other certified public accounting firm reasonably
acceptable to Employer as may be designated by Employee (the
"Accounting Firm") which shall provide detailed supporting
calculations both to Employer and Employee within 15 business
days of the receipt of notice from Employee that there has been a
Payment, or such earlier time as is requested by Employer. All
fees and expenses of the Accounting Firm shall be borne solely by
Employer. Any Gross-Up Payment, as determined pursuant to this
Section 27, shall be paid by Employer to Employee within five
days of the later of (i) the due date for the payment of any
Excise Tax, and (ii) the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall be
binding upon Employer and Employee. As a result of the
uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not
have been made by Employer should have been made
("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that Employer exhausts its remedies
pursuant to Section 27(c) and Employee thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by Employer to or
for the benefit of Employee.
(c) Employee shall notify Employer in writing of any claim by the
Internal Revenue Service ("IRS") that, if successful, would
require the payment by Employer of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later
than ten business days after Employee is informed in writing of
such claim and shall apprise Employer of the nature of such claim
and the date on which such claim is requested to be paid.
Employee shall not pay such claim prior to the expiration of the
30-day period following the date on which it gives such notice to
Employer (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If Employer
notifies Employee in writing prior to the expiration of such
period that it desires to contest such claim, Employee shall: (i)
give Employer any information reasonably requested by Employer
relating to such claim, (ii) take such action in connection with
contesting such claim as Employer shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an
attorney reasonably selected by Employer, (iii) cooperate with
Employer in good faith in order effectively to contest such
claim, and (iv) permit Employer to participate in any proceedings
relating to such claim; provided, however, that Employer shall
bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with
such contest and shall indemnify and hold Employee harmless, on
an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 27(c),
Employer shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at
its sole option, either direct Employee to pay the tax claimed
and xxx for a refund or contest the claim in any permissible
manner, and Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as
Employer shall determine; provided, however, that if Employer
directs Employee to pay such claim and xxx for a refund, Employer
shall advance the amount of such payment to Employee, on an
interest-free basis and shall indemnify and hold Employee
harmless, on an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to
payment of taxes for the taxable year of Employee with respect to
which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, Employer's control
of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and Employee shall be
entitled to settle or contest, as the case may be, any other
issue raised by the IRS or any other taxing authority.
(d) If, after the receipt by Employee of an amount advanced by
Employer pursuant to Section 27(c), Employee becomes entitled to
receive any refund with respect to such claim, Employee shall
(subject to Employer's complying with the requirements of Section
27(c)) promptly pay to Employer the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Employee of an
amount advanced by Employer pursuant to Section 27(c), a
determination is made that Employee shall not be entitled to any
refund with respect to such claim and Employer does not notify
Employee in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid."
6. Except as set forth herein, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date set
forth above.
EMPLOYER EMPLOYEE
SAN XXXX NATIONAL BANK
By s/Xxxxxx X. Xxxxxx By s/Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
