EMPLOYMENT AGREEMENT--XXXXXX X. XXXXXX
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AGREEMENT, dated as of October 1, 1998, by and between Grossmont Bank
("Grossmont") (the "Employer"), a subsidiary of Zions Bancorporation ("Zions"),
and Xxxxxx X. Xxxxxx (the "Employee").
IN CONSIDERATION OF the mutual covenants herein contained, and other
good and valuable consideration, the parties hereto agree as follows:
1. EMPLOYMENT.
(a) Employer hereby agrees to employ Employee, and Employee agrees to
serve as an employee of Grossmont during the Period of Employment, as defined in
Section 2, in such capacity as is set forth herein and initially as President
and Chief Executive Officer of Grossmont with the duties and responsibilities as
shall be specified in the ByLaws of Grossmont.
(b) If at any time during the Period of Employment, the Employer fails,
without Employee's consent, to cause Employee to be elected or re-elected as
President and Chief Executive Officer of Grossmont, or removes Employee from
such offices, or if at any time during the Period of Employment, Employee shall
fail to be vested by the Board of Directors of Grossmont with the power and
authority of President and Chief Executive Officer of Grossmont or Employee
shall lose any significant duties or responsibilities attending such offices,
Employee shall have the right by written notice to Employer to terminate his
services hereunder, effective as of the last day of the third month after the
month of receipt by Employer of the written notice (or such earlier day as shall
be mutually agreed), in which event the Period of Employment, as hereinafter
defined, shall so terminate on the last day of such month; termination under
these circumstances shall be deemed pursuant to paragraph (a) of Section 6
hereof as a termination by Employer other than for "material breach" or "just
cause" with all the consequences which flow from such termination.
(c) If Zions proposes to be acquired in a merger or other business
combination, or Zions proposes to sell all of its shares of common stock in
Grossmont, both as
permitted by Section 10.5 of the Shareholder Agreement, dated as of October 1,
1998, among Zions, Employee in his capacity as Trustee of the Xxxxxx X. Xxxxxx
Separate Property Trust dated September 29, 1997 and the Partnership named
therein, Employee shall have the right by written notice to Employer to
terminate his services hereunder, effective as of the last day of the third
month after the month of receipt by Employer of the written notice (or such
earlier date as shall be mutually agreed), in which event the Period of
Employment, as hereinafter defined, shall so terminate on the last day of such
month; termination under these circumstances shall be deemed pursuant to
paragraph (a) of Section 6 hereof as termination by Employer other than for
"material breach" or "just cause" with all the consequences which flow from such
termination.
(d) If Employee exercises Employee's right of termination under either
paragraphs (b) or (c), Employee shall resign voluntarily as an employee of
Employer and any of its affiliates on the date Employee's termination of
employment becomes effective as provided for in the preceding paragraph.
2. PERIOD OF EMPLOYMENT.
The "Period of Employment" shall be the period commencing on the
Effective Time (as such term is defined in the Agreement and Plan of Merger,
dated as of March 25, 1998, by and among Zions, The Sumitomo Bank of California
and SBC Acquisition Corp., a merger vehicle subsidiary of Employer) and ending
on December 31, 2002.
3. DUTIES DURING THE PERIOD OF EMPLOYMENT.
Employee shall devote a majority of Employee's business time, attention
and best efforts to the affairs of Employer and the parent company and
subsidiaries of Employer during the Period of Employment, PROVIDED, HOWEVER,
that Employee may engage in other activities, such as activities involving
professional, charitable, educational, religious and similar types of
organizations, speaking engagements, membership on the board of directors of
other organizations (as Employer may from time to time agree to), and personal
investments and similar type activities to the extent that such other activities
do not inhibit or prohibit the performance of Employee's duties under this
Agreement or
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conflict in any material way with the business of Employer
and its subsidiaries.
4. CURRENT CASH COMPENSATION.
(a) BASE ANNUAL SALARY.
Employer will pay (or cause to be paid) to Employee during the Period
of Employment a base annual salary of $400,000 per annum, payable in monthly
installments during each fiscal year, or portion thereof, of the Period of
Employment. It is agreed between the parties that Employer shall review the base
annual salary as of January 1, 2000 and annually thereafter and in light of such
review may, in the discretion of the Board of Directors of Employer (but shall
not be obligated to), increase such base annual salary taking into account any
change in Employee's then responsibilities, increases in the cost of living
(including effective tax-rate increases), increases in compensation of other
executives of Employer and its subsidiaries, increases in salaries of executives
of other corporations, performance by Employee, and other pertinent factors.
(b) DISCRETIONARY BONUS.
During the Period of Employment, Employee shall be considered annually
by the Executive Compensation Committee of the Board of Directors of Zions for a
discretionary bonus payment by Grossmont made in accordance with the
compensation policies of Zions as presently in effect or as they may be modified
by Zions from time to time, taking into account the performance of Grossmont and
bonuses awarded to other individuals holding similar positions in Zions or in
subsidiaries of Zions.
5. OTHER EMPLOYEE BENEFITS.
(a) VACATION AND SICK LEAVE.
Employee shall be entitled to paid annual vacation periods and to sick
leave in accordance with the policies of Zions as in effect as of the date
hereof or as may be modified by Zions from time to time as may be applicable to
officers of Employee's rank employed by Zions or its subsidiaries.
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(b) VALUE-SHARING PLAN AND INCENTIVE STOCK PLAN.
Employee shall be entitled to receive units of participation under the
Value-Sharing Plan of Grossmont and stock options under the Incentive Stock
Option Plan of Zions, as each is in effect as of the date hereof or as may be
modified by Grossmont or Zions, as the case may be, from time to time, in such
amounts and upon such terms as may be prescribed by the Executive Compensation
Committee of the Board of Directors of Grossmont with respect to the
Value-Sharing Plan and the Executive Compensation Committee of the Board of
Directors of Zions with respect to the Incentive Stock Option Plan, in the sole
discretion of each Committee and, in the case of the Incentive Stock Option
Plan, as is comparable to options granted to other individuals holding similar
positions in Zions or in subsidiaries of Zions.
(c) EMPLOYEE BENEFIT PLANS OR ARRANGEMENTS.
Employee shall be entitled to participate in all employee benefit plans
of Zions, as presently in effect or as they may be modified by Zions from time
to time, under such terms as may be applicable to officers of Employee's rank
employed by Zions or its subsidiaries, including, without limitation, plans
providing retirement benefits, medical insurance, life insurance, disability
insurance, and accidental death or dismemberment insurance.
(d) EXPENSES.
Employee shall be reimbursed for reasonable travel and other expenses
incurred or paid by Employee in connection with the performance of his services
under this Agreement, upon presentation of expense statements or vouchers or
such other supporting information as may from time to time be requested, in
accordance with such policies of Zions as are in effect as of the date hereof
and as may be modified by Zions from time to time, under such terms as may be
applicable to officers of Employee's rank employed by Zions or its subsidiaries.
6. TERMINATION.
(a) TERMINATION BY EMPLOYER OTHER THAN FOR
MATERIAL BREACH OR JUST CAUSE.
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If Employer should terminate the Period of Employment for other than
material breach or just cause, as herein defined, or if Employee should
terminate the Period of Employment pursuant to paragraphs (b) or (c) of Section
1, in addition to all other benefits, if any, payable as provided for hereunder,
Employer shall forthwith cause to be paid to Employee an amount equal to the sum
of (a) the result of multiplying (i) the base annual salary payable to Employee
pursuant to paragraph (a) of Section 4 as of the date of termination of the
Period of Employment by (ii) the number of years (and fractions thereof) then
remaining in the Period of Employment and (b) the result of multiplying (i) the
average of the bonuses payable to Employee pursuant to paragraph (b) of Section
4 or otherwise during the three fiscal years immediately preceding the date of
termination of the Period of Employment by (ii) the number of years (and
fractions thereof) then remaining in the Period of Employment.
"Material breach" and "just cause" shall mean the continual failure by
Employee to perform substantially his duties with Employer (other than any such
failure resulting from incapacity due to physical or mental illness) after a
demand for substantial performance is delivered to Employee by the Secretary of
the Board of Directors of Employer or the Chief Executive Officer of Zions;
conviction of a felony; habitual drunkenness; excessive absenteeism not related
to illness, sick leave or vacations, but only after notice from the Board of
Directors followed by a repetition of such excessive absenteeism; dishonesty; or
continuous conflicts of interest after notice in writing from the Board of
Directors. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for material breach or just cause unless and until there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire incumbent membership
of the Board of Directors of Employer at a meeting of the Board of Directors
called and held (after reasonable notice to Employee and an opportunity for
Employee, together with Employee's counsel, to be heard before the Board of
Directors) for the purpose of determining whether in the good faith opinion of
the Board of Directors Employer has just cause to terminate Employee's
employment.
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(b) TERMINATION BY EMPLOYER FOR MATERIAL BREACH OR JUST CAUSE.
If Employer should terminate the Period of Employment for material
breach or just cause, as herein defined, Employee will be entitled to be paid
the base annual salary otherwise payable to Employee under paragraph (a) of
Section 4 through the end of the month in which the Period of Employment is
terminated.
(c) TERMINATION BY EMPLOYEE OTHER THAN PURSUANT TO EMPLOYEE'S RIGHT
OF TERMINATION PURSUANT TO SECTIONS 1(B) OR (C) HEREOF.
If Employee should terminate the Period of Employment other than
pursuant to Sections 1(b) or (c), Employee will be entitled to be paid the base
annual salary otherwise payable to Employee under paragraph (a) of Section 4 to
the end of the month in which the Period of Employment is terminated.
If upon 90 days' written notice to Employer Employee should terminate
the Period of Employment other than pursuant to Employee's right of termination
pursuant to Sections 1(b) or (c) hereof, then from the date of termination until
the earlier of the second anniversary of the date of termination or the end of
the Non-Competition Period (as defined herein), Employee will be entitled to be
paid $50,000 on an annual basis payable in monthly installments during each
fiscal year, or portion thereof, in such time period.
7. NON-DISCLOSURE.
Employee shall not, at any time during or following the Period of
Employment, disclose, use, transfer or sell, except in the course of employment
with Employer, any confidential information or proprietary data of Employer and
its subsidiaries so long as such information or proprietary data remains
confidential and has not been disclosed or is not otherwise in the public
domain, except as required by law or pursuant to legal process.
8. NONCOMPETITION AGREEMENT.
(a) Employee hereby agrees that from the Effective Date until (i) the
fifth anniversary of the
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Effective Date or (ii) in the event that the Period of Employment is terminated
pursuant to Section 6 hereof the earlier of the fifth anniversary of the
Effective Date or the second anniversary of the date of such termination (the
"Non-Competition Period"), Employee will not (i) engage in the banking business
other than on behalf of Employer or its affiliates within the Designated Area
(as hereinafter defined), (ii) directly or indirectly own, manage, operate,
control, be employed by, or provide management or consulting services in any
capacity to any firm, corporation, or other entity (other than Employer or its
affiliates) engaged in the banking business in the Designated Area, or (iii)
directly or indirectly solicit or otherwise intentionally cause any employee,
officer, or member of the respective Boards of Directors of Employer or Zions or
any of their affiliates to engage in any action prohibited under (i) or (ii) of
this Section 8(a); provided that the ownership by Employee as an investor of not
more than five percent of the outstanding shares of stock of any corporation
whose stock is listed for trading on any securities exchange or is quoted on The
Nasdaq Stock Market, or the shares of any investment company as defined in
section 3 of the Investment Company Act of 1940, as amended, shall not in itself
constitute a violation of Employee's obligations under this Section 8(a).
(b) Employee acknowledges and agrees that irreparable injury will
result to Employer and Zions in the event of a breach of any of the provisions
of this Section 8 (the "Designated Provisions") and that Employer and Zions will
have no adequate remedy at law with respect thereto. Accordingly, in the event
of a material breach of any Designated Provision, and in addition to any other
legal or equitable remedy Employer or Zions may have, Employer and Zions shall
be entitled to the entry of a preliminary and permanent injunction (including,
without limitation, specific performance) by a court of competent jurisdiction
in San Diego, California, to restrain the violation or breach thereof by
Employee or any affiliates, agents, or any other persons acting for or with
Employee in any capacity whatsoever, and Employee submits to the jurisdiction of
such court in any such action.
(c) It is the desire and intent of the parties that the provisions of
this Section 8 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement
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is sought. Accordingly, if any particular provision of this Section 8 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this Section 8 shall
be unenforceable with respect to scope, duration, or geographic area, such court
shall be empowered to substitute, to the extent enforceable, provisions similar
hereto or other provisions so as to provide to Employer and Zions, to the
fullest extent permitted by applicable law, the benefits intended by this
Section 8.
(d) As used herein, "Designated Area" shall mean each of the counties
in the State of California.
9. LIFE INSURANCE.
In light of the unusual abilities and experience of Employee, Employer
and Zions in their discretion may apply for and procure as owner and for its own
benefit insurance on the life of Employee, in such amount in such form as
Employer and Zions may choose. Employer or Zions shall make all payments for
such insurance and shall receive all benefits from it. Employee shall have no
interest whatsoever in any such policy or policies but, at the request of
Employer or Zions shall submit to medical examinations and supply such
information and execute such documents as may reasonably be required by the
insurance company or companies to which Employer or Zions has applied for
insurance.
10. REPRESENTATIONS AND WARRANTIES.
(a) Employee represents and warrants to Employer that his execution,
delivery, and performance of this Agreement will not result in or constitute a
breach of or conflict with any term, covenant, condition, or provision of any
commitment, contract, or other agreement or instrument, including, without
limitation, any other employment agreement, to which Employee is or has been a
party.
(b) Employee shall indemnify, defend, and hold harmless Employer and
Zions for, from and against any and all losses, claims, suits, damages,
expenses, or
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liabilities, including court costs and counsel fees, which Employer or Zions has
incurred or to which Employer or Zions may become subject, insofar as such
losses, claims, suits, damages, expenses, liabilities, costs, or fees arise out
of or are based upon any failure of any representation or warranty of Employee
in section 10(a) hereof to be true and correct when made.
11. INDEMNIFICATION. At all times during the Period of Employment,
Employer's Articles of Incorporation and Bylaws shall provide for the
indemnification of Employee against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
relating to Employee's actions as a director and/or officer of Employer, and to
the advancement of expenses as incurred in connection therewith, to the fullest
extent permissible under California law and the Federal Deposit Insurance Act.
To the extent commercially available at a cost appropriate for the anticipated
benefits, either Zions or Employer shall maintain in effect policies of
directors' and officers' liability insurance comparable to the policies
maintained by GB Bancorporation, the former owner of all the outstanding voting
common stock of the Employer, prior to the acquisition of GB Bancorporation by
Zions, at all times during the Period of Employment.
12. GOVERNING LAW.
(a) This Agreement is governed by and is to be construed and enforced
in accordance with the laws of the State of California. If under such law, any
portion of this Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation or ordinance, such portion shall be deemed
to be modified or altered to conform thereto or, if that is not possible, to be
omitted from this Agreement; the invalidity of any such portion shall not affect
the force, effect and validity of the remaining portion hereof.
(b) Subject to the right of each party to seek specific performance
(which right shall not be subject to arbitration), if a dispute arises out of or
related to this Agreement, or the breach thereof, such dispute shall be
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referred to arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association ("AAA"). A dispute subject to the
provisions of this section will exist if either party notifies the other party
in writing that a dispute subject to arbitration exists and states, with
reasonable specificity, the issue subject to arbitration (the "Arbitration
Notice"). The parties agree that, after the issuance of the Arbitration Notice,
the parties will try in good faith to resolve the dispute by mediation in
accordance with the Commercial Rules of Arbitration of AAA between the date of
the issuance of the Arbitration Notice and the date the dispute is set for
arbitration. If the dispute is not settled by the date set for arbitration, then
any controversy or claim arising out of this Agreement or the breach hereof
shall be resolved by binding arbitration and judgment upon any award rendered by
arbitrator(s) may be entered in a court having jurisdiction. Any person serving
as a mediator or arbitrator must have at least ten years' experience in
resolving commercial disputes through arbitration. In the event any claim or
dispute involves an amount in excess of $100,000, either party may request that
the matter be heard by a panel of three arbitrators; otherwise all matters
subject to arbitration shall be heard and resolved by a single arbitrator. The
arbitrator shall have the same power to compel the attendance of witnesses and
to order the production of documents or other materials and to enforce discovery
as could be exercised by a United States District Court judge sitting in San
Diego, California. In the event of any arbitration, each party shall have a
reasonable right to conduct discovery to the same extent permitted by the
Federal Rules of Civil Procedure, provided that such discovery shall be
concluded within ninety days after the date the matter is set for arbitration.
Any provision in this Agreement to the contrary notwithstanding, this section
shall be governed by the Federal Arbitration Act and the parties have entered
into this Agreement pursuant to such Act.
13. NOTICES.
All notices under this Agreement shall be in writing and shall be
deemed effective when delivered in person, or forty-eight (48) hours after
deposit thereof in the U.S. mails, postage prepaid, for delivery as registered
or certified mail, addressed, in the case of:
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(a) Employee, to:
Xxxxxx X. Xxxxxx
Southwest Value Partners
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
(b) Employer, to:
Grossmont Bank
0000 Xx Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopy: (000) 000-0000
In lieu of personal notice or notice by deposit in the U.S. mail, a
party may give notice by confirmed fax (with telephone confirmation of receipt).
14. MISCELLANEOUS.
(a) ENTIRE AGREEMENT.
This Agreement constitutes the entire understanding between Employer
and Employee relating to employment of Employee by Employer and supersedes and
cancels all prior written and oral agreements and understandings with respect to
the subject matter of this Agreement. This Agreement may be amended but only by
a subsequent written agreement of the parties. This Agreement shall be binding
upon and shall inure to the benefit of Employee, Employee's heirs, executors,
administrators and beneficiaries, and Employer and its successors.
(b) WITHHOLDING TAXES.
All amounts payable to Employee under this Agreement shall be subject
to applicable withholding of income, wage and other taxes.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the year and day first above written.
GROSSMONT BANK
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: President
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Agreed as to the obligations
of Zions Bancorporation
hereinabove
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
and Chief Financial Officer
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