EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter referred to as
"Agreement") is made effective as of August 26, 1997, by and
between PACIFIC CAPITAL BANCORP (hereinafter referred to as
"Employer") and XXXXXXX X. XXXXXX (hereinafter referred to
as "Employee").
Employer desires to employ, as its President and as an
executive officer of its subsidiary banks, a person of high
executive caliber with significant prior experience in
banking services which Employer and its subsidiary banks
provide.
Employee being willing to be employed by Employer as
indicated herein, and Employer being willing to employ
Employee on the terms, covenants and conditions hereinafter
set forth, it is agreed as follows:
1. Position. Employee is hereby employed as
President of
Employer and in such additional executive positions with
Employer and Employer's subsidiary banks as Employer may
designate from time to time.
2. Employment Term. The term of this Agreement shall
commence effective August 26, 1997, and continue for three
(3) years thereafter through August 25, 2000, unless earlier
terminated pursuant to Paragraph 6 below, either such period
being the term of this Agreement.
3. Employee Duties. Employee shall hold and perform
the
customary responsibilities and duties of his positions as
designated by the Bylaws of Employer and the subsidiary
banks and as directed by Employer and the subsidiary banks
through their Boards of Directors (hereinafter collectively
referred to as the "Board").
4. Extent of Services. Employee shall devote his
full
time, attention and energies to the business of Employer and
the subsidiary banks, and shall not, during the term of this
Agreement, engage directly or indirectly, in any other
business activity, except personal investments, without the
prior written consent of Employer.
5. Compensation and Benefits. Employee's salary
shall be
at the rate of $190,571.00 per year, prorated for any
partial year in which this Agreement is in effect (as such
salary may be adjusted during the term of this Agreement,
the "Base Salary"). Said salary shall be payable in equal
semi-monthly installments from which Employer will withhold
and deduct all applicable federal and state income, social
security and disability taxes as required by applicable law.
Any salary increase shall be at the sole discretion of the
Board. Employer agrees to review and evaluate Employee's
performance at the end of each fiscal year to determine
whether Employee should be paid a cash bonus (the "Bonus").
The amount of the Bonus, if any, will be determined in the
sole discretion of the Board. In addition, Employee shall
receive the following benefits:
(a) Automobile. Employer shall provide Employee
with a full-size automobile, the make, model and equipment
of which shall be determined by Employer, solely for his use
alone during the term of this Agreement. Employer shall pay
or reimburse Employee for all auto expenses incurred in the
use of said automobile by Employee in the performance of his
duties under this Agreement. Employer shall maintain an
automobile liability insurance policy on said automobile,
with coverage to include
Employee's operation of said automobile and in such amounts
as Employer and Employee shall agree upon.
(b) Insurance. Upon meeting all eligibility
requirements, Employee shall be a participant in such group
life insurance, health and long-term disability plans as are
maintained by Employer, at Employer's sole cost and expense.
In addition, Employer shall, at its sole cost and expense,
provide Employee with a copy of standard term life insurance
in the face amount to be determined by Employer but which in
no event shall be less than $250,000. Employee shall have
the right, in Employee's sole discretion, to designate the
beneficiary or beneficiaries of any such insurance.
(c) Vacation. Employee shall accrue four (4)
weeks paid vacation per year, prorated for any partial
calendar year in which this Agreement is in effect, which
shall be taken at such time or times as mutually agreed upon
by Employee and the Board, provided that at least two (2)
weeks of such vacation shall be taken consecutively per
calendar year. Employee acknowledges that the requirement
of two (2) consecutive weeks of vacation is required by
sound banking practices.
(d) General Expenses. Employer shall, upon
submission and approval of written statements and bills in
accordance with the then-regular procedures of Employer, pay
or reimburse Employee for any and all necessary, customary
and usual expenses incurred by him while traveling for or on
behalf of Employer or its subsidiary banks and any and all
other necessary, customary or usual expenses (including
entertainment) incurred by employee for or on behalf of
Employer or its subsidiary banks in the normal course of
business as determined to be appropriate by Employer.
(e) Other Benefits. In the event that Employer
or its subsidiary banks in the future establish any other
benefit plan for senior executives generally, Employee shall
be eligible to participate in such plan on the terms and
conditions stated in the legal documents for such plan.
6. Termination. This Agreement may be terminated
prior to
August 25, 2000, with or without cause in accordance with
this Paragraph 6(a) through 6(g). In the event of such
termination, Employee shall be released from all obligations
under this Agreement, except that Employee shall remain
subject to Paragraphs 7, 8, 12 (c), 12 (i) and 12 (j), and
Employer shall be released from all obligations under this
Agreement, except as otherwise provided in this Paragraph
and Paragraphs 12(c), 12(e), 12(i) and 12 (j).
(a) Early Termination By Employer Without Cause.
This Agreement may be terminated without cause, for any
reason whatsoever, in the sole, absolute and unreviewable
discretion of Employer, upon thirty (30) days' written
notice by Employer to Employee. If this Agreement is
terminated pursuant to this Paragraph 6(a) or the term of
this Agreement is not extended upon expiration thereof,
Employee shall receive (i) three (3) times the annual Base
Salary and Bonus as defined in Paragraph 5 of this Agreement
for the average of the three years immediately preceding the
date of such termination which amount shall be due and
payable to Employee on the date of such termination together
with any Base Salary and Bonus earned to such date and (ii)
medical and life insurance coverage for one (1) year from
the date of such termination. The foregoing shall be in
full and complete satisfaction of any and all rights which
Employee may enjoy under this Agreement and shall be the
sole compensation
and/or damages payable to Employee as the result of
termination of this Agreement without cause.
(b) Early Termination By Employer For Cause.
This Agreement may be terminated for cause by Employer
immediately upon written notice to Employee, and Employee
shall not be entitled to receive compensation or other
benefits for any period after termination for cause.
Employer's total liability to Employee in the event of
termination of Employee's employment under this Paragraph
6(b) shall be limited to the payment of Employee's Base
Salary through the effective date of termination. Employee
understands and agrees that satisfactory performance of this
Agreement on his part requires conformance with the highest
standards of integrity, diligence, competence, skill,
judgment and efficiency in the banking industry and that
failure to conform to such standards is cause for
termination of the Agreement by Employer. Cause for
termination pursuant to this Paragraph 6(b) also includes:
(1) failure to qualify for a surety bond as provided in
Paragraph 11 of this Agreement; (2) violation of any law,
rule or regulation (other than a traffic violation or
similar offense); (3) acts causing termination of Employer's
Banker's Blanket Bond with respect to Employee; (4) repeated
insobriety or use of drugs without prescription, (5)
misappropriation of property of Employer or its subsidiary
banks; (6) any act of dishonesty; (7) neglect of duties or
negligence in carrying out duties; (8) repeated unexcused
absence; (9) breach of any material provision of this
Agreement; and (10) any act or omission that is seriously
detrimental to the interests of Employer or its subsidiary
banks.
(c) Early Termination By Employee. This
Agreement may be terminated by Employee upon thirty (30)
days' written notice to Employer. Employer's total
liability in such event shall be limited to payment of
Employee's Base Salary and benefits through the date of
termination.
(d) Early Termination Upon Disability. If
Employee becomes disabled due to a physical or mental
disability so that he is unable to perform the essential
functions of his position and the disability cannot be
reasonably accommodated without undue hardship, Employer may
at its option terminate this Agreement. Employee shall be
entitled to the salary provided for in Paragraph 5 of this
Agreement for a period of not to exceed six (6) months from
the date of Employee's first absence due to the condition or
illness causing or related to the disability, but not beyond
August 25, 2000, and to accrued but unused vacation leave.
Employee's Base Salary in the event of disability and
termination under this Paragraph 6(b) shall be offset by any
payments received by Employee as a result of a disability
insurance policy purchased by Employer or its subsidiary
banks for Employee. All other benefits provided for under
this Agreement shall cease as of the date of termination.
For purposes of this Agreement, physical or mental
disability shall mean the inability of Employee to fully
perform under this Agreement for a continuous period of
ninety (90) days, as determined by a physician in the case
of physical disability, or a psychiatrist in the case of
mental disability, licensed to practice medicine in
California and selected jointly by Employer and Employee.
Upon demand by Employer, Employee shall act promptly to
select such physician or psychiatrist jointly with Employer,
shall consent to undergo any reasonable examination or test
and shall authorize release of all pertinent medical records
to Employer. Recurrent disabilities will be treated as
separate disabilities if they result from unrelated causes
or if they result from the same or related cause or causes
and are separated by a continuous period of at least six (6)
full months during
which Employee was able to perform his duties hereunder
equal to at least eighty percent (80%) of his capacity prior
to disability. Otherwise, recurrent disabilities will be
treated as a continuation of previous disabilities for the
purpose of determining the limitations established in this
paragraph.
(e) Death During Employment. This Agreement
shall terminate immediately upon the death of Employee.
Employer's total liability in such events shall be limited
to payment of Employee's Base Salary and benefits through
the date of Employee's death.
(f) Change in Control. In the event of a Change
in Control (as defined in Paragraph 13 below), Employee
shall receive (i) three (3) times the annual Base Salary and
Bonus as defined in Paragraph 5 of this Agreement for the
average of the three years immediately preceding the
effective time of such Change in Control, which amount shall
be due and payable to Employee at the effective time of such
Change in Control together with any Base Salary and Bonus
earned to such date, (ii) medical and life insurance
coverage for two (2) years from the date of such termination
and (iii) up to Fifteen Thousand Dollars ($15,000) in
outplacement services for Employee to be paid by Employer
directly to any such outplacement service.
(g) Limitation of Termination Payments.
Notwithstanding any other provisions of this Agreement, in
the event that any payments or benefits received or to be
received by Employee in connection with a termination
pursuant to Paragraph 6 hereof, (all such payments and
benefits being hereinafter called "Total Payments") would
not be deductible (in whole or part), by Employer, as a
result of Section 280G of the Code (as defined in Paragraph
14 below), then, to the extent necessary to make such
portion of the Total Payments deductible (and after taking
into account any other reduction in the Total Payments
provided by reason of Section 280G of the Code), (i) the
cash payments shall first be reduced (if necessary, to
zero), and (ii) all other noncash payments shall next be
reduced (if necessary, to zero). For purposes of this
limitation (i) no portion of the Total Payments, the receipt
or enjoyment of which Employee shall have effectively waived
in writing prior to the date of termination, shall be taken
into account, (ii) no portion of the Total Payments shall be
taken into account which in the opinion of tax counsel
selected by Employer's independent auditors and reasonably
acceptable to Employee, does not constitute a "parachute
payment" within the meaning of Section 280G(b)(2) of the
Code, including by reason of Section 280G(b)(4)(A) of the
Code, (iii) the payments shall be reduced only to the extent
necessary so that the Total Payments (other than those
referred to in clauses (i) or (ii) of this sentence) in
their entirety constitute reasonable compensation for
services actually rendered within the meaning of Section
280G(b)(4)(B) of the Code and proposed Reg. Section 1280G-1,
Q&A-42(b)(5), or are otherwise not subject to disallowance
as deductions, in the opinion of the tax counsel referred to
in clause (ii); and (iv) the value of any non-cash benefit
or any deferred payment or benefit included in the Total
Payments shall be determined by Employer's independent
auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
7. Printed Material. All written or printed
materials
used by Employee in performing duties for Employer are and
shall remain the property of Employer. Upon termination of
employment, Employee shall promptly return such written or
printed materials to Employer.
8. Disclosure of Information. Employee recognizes and
acknowledges that Employer and its subsidiary banks possess
information concerning their business affairs and methods of
operation which constitute valuable, special and unique
assets of their businesses. Employee shall not, at any time
before or after termination of this Agreement, disclose to
anyone any confidential information relating to Employer,
its subsidiary banks or any affiliate thereof. For purpose
of this paragraph, confidential information includes all
information regarding products, services, processes, know-
how, customers, suppliers, product and/or service
development, business plans, research, finances, marketing,
pricing, costs and any other proprietary matters relating to
Employer, its subsidiary banks or any affiliate thereof.
Employee recognizes and acknowledges that all financial
information concerning any of the customers of Employer's
subsidiary banks is strictly confidential, and Employee
shall not at any time before or after termination of this
Agreement disclose to anyone any such financial information
or any part thereof, for any reason or purpose whatsoever.
9. Noncompetition by Employee. During the term of this
Agreement, Employee shall not, directly or indirectly,
either as an employee, employer, consultant, agent,
principal, partner, stockholder, corporate officer,
director, or in any other individual or representative
capacity, engage or participate in any competing banking
business; provided, however, Employee shall not be
restricted by this paragraph from owning securities of
corporations listed on a national securities exchange or
regularly traded by national securities dealers, so long as
such investment does not exceed one percent (1%) of the
market value of the outstanding securities of such
corporation.
10. Moral Conduct. Employee agrees to conduct himself
at all times with due regard to public conventions and
morals. Employee further agrees not to do or commit any act
that will reasonably tend to degrade him or to bring him
into public hatred, contempt or ridicule or that will
reasonably tend to shock or offend the community or to
prejudice Employer, its subsidiary banks or the banking
industry in general.
11. Surety Bond. Employee agrees that he will furnish
all information and take any steps necessary to enable
Employer or its subsidiary banks to obtain or maintain a
fidelity bond, satisfactory to Employer, conditional on the
rendering of a true account by Employee of all monies, goods
or other property which may come into the custody, charge or
possession of Employee during the term of this employment.
Employer or its subsidiary banks shall pay all premiums on
the bond. If Employee cannot qualify for a surety bond at
any time during the term of this Agreement, Employer shall
have the option to terminate this Agreement immediately.
12. General Provisions. This Agreement is further
governed by the following provisions:
(a) Entire Agreement. This Agreement supersedes
any and all other agreements, either oral or in writing,
among the parties hereto with respect to the employment of
Employee by Employer and contains all of the covenants and
agreements among the parties with respect to such
employment. Each party acknowledges that no
representations, inducements, promises or agreements, oral
or otherwise, have been made by any party or anyone acting
on behalf of a party which are not embodied herein, and that
no other agreement, statement, representation, inducement or
promise not contained in this Agreement shall be valid or
binding. Any modification, waiver or amendment of this
Agreement will be effective only if it is in writing and
signed by the party to be charged.
(b) Waiver. Any waiver by any party of a breach
of any provision of this Agreement shall not operate as or
be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more
occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement.
(c) Choice of Law and Forum. This Agreement
shall be governed by and construed in accordance with the
laws of the State of California, except to the extent
preempted by the laws of the United States, including, but
not limited to, the National Bank Act. Any action or
proceeding brought upon or arising out of this Agreement or
its termination or the termination of Employee's employment
shall be brought in a forum located within the State of
California.
(d) Binding Effect of Agreement. This Agreement
shall inure to the benefit of and be binding upon Employer,
its successors and assigns, including without limitation,
any person, partnership or corporation which may acquire all
or substantially all of Employer's assets and business or
with or into which Employer or its subsidiary banks may be
consolidated, merged or otherwise reorganized, and this
provision shall apply in the event of any subsequent merger,
consolidation reorganization or transfer. The provisions of
this Agreement shall be binding upon and inure to the
benefit of Employee and his heirs and personal
representatives. The rights and obligations of Employee
under this Agreement shall not be transferable by Employee
by assignment or otherwise and such rights shall not be
subject to commutation, encumbrance or the claims of
Employee's creditors, and any attempt to do any of the
foregoing shall be void.
(e) Indemnification. Employer and its subsidiary
banks shall indemnify Employee to the maximum extent
permitted under their articles of association, bylaws and
applicable law for any liability or loss arising out of
Employee's actual or asserted misfeasance or nonfeasance in
the good faith performance of his duties or out of any
actual or asserted wrongful act against or by Employer,
including, but not limited to, judgments, fines, settlements
and expenses incurred in the defense of actions, proceedings
and appeals therefrom. If available at reasonable rates,
which shall be determined by the Employer in its sole
discretion, Employer shall endeavor to apply for and obtain
directors' and officers' liability insurance to indemnify
and insure Employer and Employee from such liability or
loss.
(f) Severability. In the event that any term or
condition contained in this Agreement shall, for any reason
be held by a court of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other
term or condition of this Agreement, but this Agreement
shall be construed as if such invalid or illegal or
unenforceable term or condition had never been contained
herein.
(g) Headings. The headings in this Agreement are
solely for convenience of reference and shall be given no
effect in the construction or interpretation of this
Agreement.
(h) Notices. Any notices to be given hereunder
by any
party to another party may be effected either by personal
delivery, in writing or by mail, registered or certified,
postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses
indicated at the end of this Agreement, but each party may
change his or her address by written notice in accordance
with this paragraph. Notices delivered personally shall be
deemed communicated as of actual receipt; mailed notices
shall be deemed communicated as of five (5) days after
mailing.
(i) Arbitration. Any controversy or claim
arising out of or relating to this Agreement or alleged
breach of this Agreement or in any way arising out of the
termination of Employee's employment shall be settled by
arbitration in accordance with the then current Employment
Dispute Resolution Rules of the American Arbitration
Association, and judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction.
Each party shall pay the fees of the arbitrator he/it
selects and of his/its own attorneys, and the expenses of
his/its witnesses and all other expenses connected with
presenting his/its case. Except as otherwise required by
law, other costs of the arbitration, including the cost of
any record or transcripts of the arbitration, administrative
fees and all other fees and costs shall be borne equally by
the parties. Full discovery shall be permitted to the
parties to any such arbitration, including depositions of
all relevant witnesses.
(j) Attorneys' Fees and Costs. If any action at
law or in equity is brought by a party upon or arising out
of this Agreement, its termination or the termination of
Employee's employment, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary
disbursements incurred in the action, in addition to any
other relief to which it may be entitled.
13. Change in Control. A "Change in Control" shall be
deemed to have occurred if the conditions set forth in any
one of the following paragraphs shall have been satisfied:
(a) after the date of this Agreement, any Person
(as defined below) becomes the Beneficial Owner (as defined
below), directly or indirectly, of securities of Employer
representing 25% or more of the combined voting power of
Employer's then outstanding securities; or
(b) during any period of two consecutive years
(not including any period prior to the date of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a
director designated by a Person who has entered into an
agreement with Employer to effect a transaction described in
this Paragraph 13) whose election by the Board or nomination
for election by Employer's shareholders was approved by a
vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning
of the period or whose election or nomination for election
was previously so approved, cease for any reason to
constitute a majority thereof; or
(c) the shareholders of Employer approve a merger
or consolidation of Employer with any other corporation,
other than (i) a merger or consolidation which would result
in the voting securities of Employer outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of
any trustee or other fiduciary holding securities under an
employee benefit plan of Employer, at least 51% of the
combined voting power of the voting
securities of Employer or such surviving entity outstanding
immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a
recapitalization of Employer (or similar transaction) in
which no Person acquires more than 49% of the combined
voting power of Employer's then outstanding securities; or
(d) the shareholders of Employer approve a plan
of complete liquidation of Employer or an agreement for the
sale or disposition by Employer of all or substantially all
of Employer's assets.
For the purposes of this Paragraph 13, "Person" shall
have the meaning given in Section 3(a)(9) of the Securities
Exchange Act of 1934 as amended (the "Exchange Act"), as
modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include (i) Employer or any of
its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the company or
any of its subsidiaries, or (iii) an underwriter temporarily
holding securities pursuant to an offering of such
securities. "Beneficial Owner" shall have the meaning
defined in Rule 13d-3 under the Exchange Act.
14. Code. "Code" means the Internal Revenue Code of
1986, as amended from time to time, and any regulations
relating thereto.
The parties hereto have executed this Agreement as of the
date first written above, in the City of Xxxxxxx, County of
Monterey, State of California.
EMPLOYER: PACIFIC CAPITAL BANCORP
By: /s/ Xxxxxx X. Xxxxxxxx
Its: Chairman, Human Resources
Committee
EMPLOYEE: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
0 Xx Xxxxxxx
Xxxxxx, XX
00000
