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 Xxxxx X. Xxxxx ("Employee") is
made and entered into effective July __, 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. Paragraph 13(c) shall be amended in its entirety to read as follows:
"Personal Insurance. Employer shall provide during the term of this
Agreement, at Employer's sole cost, a policy or policies of term life
insurance coverage in the amount of Two Hundred Fifty Thousand Dollars
($250,000) and group life, health (including medical, dental and
hospitalization), accident and disability 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 thirty-six (36) months, at
Employer's sole cost, the above-described policy or policies of term life
insurance coverage and group life, health, accident and disability
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 three 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 thirty-six (36)
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 $_____ 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) thirty-six (36) 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) three (3) times Employee's
annual salary immediately preceding such change in control, plus (II)
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.
(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 ______________________ ______________________________
Xxxxx X. Xxxxx
