EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter referred to as "Agreement") is
made effective as of May 22, 1996, by and between FIRST NATIONAL BANK OF CENTRAL
CALIFORNIA (hereinafter referred to as "Employer") and CLAYTON C. LARSON
(hereinafter referred to as "Employee").
Employer desires to employ, as President, a person of high executive
caliber with significant prior experience in banking services which Employer
provides.
Employee being willing to be employed by Employer as President, 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.
2. Employment Term. The term of this Agreement shall commence effective
May 22, 1996, and continue for three (3) years thereafter through May 21, 1999,
unless earlier terminated pursuant to Paragraph 6 below, such period being the
term of this Agreement.
3. Employee Duties. Employee shall hold and perform the customary
responsibilities and duties of the position of President, as designated by the
Bylaws of Employer and as directed by Employer through its Board of Directors
(hereinafter referred to as "Board").
4. Extent of Services. Employee shall devote his full time, attention
and energies to the business of Employer, 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
$165,672 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.
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 such 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
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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. Employer 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 of $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 receive 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 and any and all other necessary, customary or usual expenses (including
entertainment) incurred by employee for or on behalf of Employer in the normal
course of business as determined to be appropriate by Employer.
(e) Other Benefits. In the event that Employer in the future
establishes any other benefit plan for its 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 May 21, 1999,
with or without cause in accordance with this Paragraph 6(a) through 6(f). 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) the salary and insurance benefits
as provided under the terms of this Agreement for a period of six (6) months
from the date of such termination provided Employee shall, at his discretion, be
entitled to receive such salary payment in a lump sum in lieu of receiving such
salary payments over a period of six (6) months following termination; and (ii)
a bonus for the year in which the termination occurs, prorated based upon the
fraction of the calendar year Employee was employed, if, and only if, a bonus
program for that year has been established prior to such termination and
such-plan provides for calculable bonuses not based on the discretion of
Employer. Such salary and insurance benefits
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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. 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 usage of drugs without
prescription, (5) misappropriation of Employer's property; (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
Employer's interests.
(c) Early Termination By Employee. This Agreement may be
terminated by Employee upon thirty (30) days' written notice to Employer.
(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 disability, but not beyond May 21, 1999, and
to accrued but unused vacation leave. Employee's salary in the event of
disability and termination therefor shall be offset by any payments received by
Employee as a result of a disability insurance policy purchased by Employer 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
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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.
(f) Change of Control. In the event of a change in control by
merger of Employer and/or Pacific Capital Bancorp, the parent company of
Employer (hereinafter referred to as "Pacific"), into another bank and/or
holding company or other entity or by purchase of Employer and/or Pacific or the
purchase of all or substantially all of the assets of Employer and/or Pacific by
another bank and/or holding company or other person or entity, not resulting
from financial difficulties or insolvency of Employer and/or Pacific, then
Employee shall be paid two and one-half times his annual Base Salary plus Bonus
as defined in Section 5 of this Agreement for the average of the three years
immediately preceding the effective time of such change of 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.
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 Pacific 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, Pacific or any affiliate of Pacific. 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, Pacific or any affiliate of Pacific.
Employee recognizes and acknowledges that all financial information concerning
any of Employer's customers 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
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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 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 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 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. Any action or
proceeding brought upon or arising out of this Agreement or its termination
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 Pacific 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
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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 shall indemnify Employee to the
maximum extent permitted under the Bylaws of Employer and the governing laws 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, shall be settled
by arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, and judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction. There shall be
three (3) arbitrators, one (1) to be chosen directly by each party and the third
(3rd) arbitrator to be selected by the two (2) arbitrators so chosen. 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. Other costs of the arbitration, including the cost of
any record or transcripts of the arbitration, administrative fees, the fee of
the third (3rd) arbitrator, and all other fees and costs shall be borne equally
by the parties.
(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 or its
termination, 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 he may be entitled.
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IN WITNESS WHEREOF, the parties hereto have set their hands this 22nd
day of May, 1996, in the City of Salinas, County of Monterey, State of
California.
EMPLOYER: FIRST NATIONAL BANK OF CENTRAL CALIFORNIA
By: /s/ William H. Pope
-----------------------------------
Its: Executive Committee Chairman
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EMPLOYEE: /s/ Clayton C. Larson
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Clayton C. Larson
2 La Pradera
Carmel, CA 93923
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