EMPLOYMENT AGREEMENT THIS AGREEMENT is between the CITY OF SAN LEANDRO ("City") and JOHN J. JERMANIS and is dated for convenience this 1st day of July 2007. Recitals City desires to employ John J. Jermanis as City Manager of the City of San Leandro. John J. Jermanis desires to serve as City Manager of the City of San Leandro. The City Council, as the appointing authority, and John J. Jermanis desire to agree in writing to the terms and conditions of John J. Jermanis' employment as City Manager. AGREEMENT 1. DUTIES (a) City agrees to employ John J. Jermanis ("Employee") as City Manager of the City of San Leandro to perform the functions and duties specified in the charter, ordinances, and resolutions of City. Employee shall also perform other legally permissible and proper duties and functions as the City Council may from time to time assign. (b) Employee shall perform his duties to the best of his ability in accordance with the highest possible and ethical standards of the profession and shall comply with all general rules and regulations established by the City. (c) Employee shall not engage in any activity that is or may become a conflict of interest, prohibited contract, or which may create an incompatibility of office as defined under California law. Prior to performing any services under this Agreement, and annually thereafter, the Employee must complete disclosure forms required by law. 2. TERM (a) The term of this Agreement shall be for a period of one (1) year, commencing July 1, 2007. This agreement may be terminated by either party in accordance with the provisions set forth in Paragraph 3 or terminated by the event of the death or permanent disability of Employee. (b) Employee agrees to remain in the exclusive employ of the City during the term of the Agreement. 3. RESIGNATION AND TERMINATION (a) Employee may resign at any time with or without cause and agrees to give City at least ninety (90) days advance written notice of the effective date of his resignation. Upon notice of resignation, or sooner, Employee, in consultation with the City Council, will develop a "transition plan" and Employee will, if requested, assist the City Council in the recruitment and hiring process for the position of City Manager on a permanent or interim basis. (b) Subject to the provisions of the Charter, City may at any time terminate Employee upon thirty (30) days advance written notice. (c) The parties recognize and affirm that: 1) Employee is an "at will" employee whose employment may be terminated by the City without cause, and 2) there is no express or implied promise made to Employee for any form of continued employment. This Agreement is the sole and exclusive basis for an employment relationship between Employee and City. 4. SEVERANCE PAY If Employee is terminated by the City Council while still willing and able to perform the duties of City Manager, City agrees to pay Employee a cash payment equal to six (6) months salary and benefits. At the option of the Employee, the cash payment may be paid in (1) a lump sum upon date of termination; or (2) a lump sum on January 1 of the calendar year following termination. Such payment will release City from any further obligations under this Agreement. Provided however, if Employee is terminated because of conviction of any criminal offense, then City shall have no obligation to continue the employment of Employee or to pay the severance set forth in this paragraph. 5. SALARY For the term of this Agreement, City agrees to pay Employee a salary 20% above step five of the salary range of the highest paid City management employee as shown in the City Council adopted Pay Plan (hereafter referred to as "the Baseline Salary"). Employee's compensation shall be adjusted whenever the Baseline Salary is adjusted so that Employee's salary shall not be less than 20% above the Baseline Salary at any time during the term of the Agreement. 6. AUTOMOBILE Employee's duties require that he shall have the use of an automobile at all times during his employment with City. At the option of Employee, City shall either provide Employee with an automobile or reimburse Employee $475.00 per month for the expense of owning, maintaining, and insuring a personal automobile. 7. OTHER SUPPLEMENTAL BENEFITS The City shall provide the Employee the same benefits as provided to management employees and as they may be amended from time to time. All actions taken by the City relating to benefits for management employees shall be considered actions granting the same benefits to Employee. As used herein and without limitation of the foregoing, benefits for Employee include but are not limited to twenty-five (25) days of annual vacation leave, twelve (12) days of annual sick leave, fifteen (15) days of annual administrative leave, holidays, retirement benefits and payments, health insurance, dental insurance, life insurance, and management development allowance. 8. PERFORMANCE EVALUATION The City Council shall evaluate Employee's performance at least annually. In addition, every year, the City Council and Employee will set goals and objectives for the ensuing year (Exhibit A hereof). 9. OTHER TERMS AND CONDITIONS OF EMPLOYMENT The City Council, by resolution, shall fix any other terms and conditions of employment, as it may determine from time to time, relating to the performance of Employee, provided such terms and conditions are not inconsistent with provisions of this Agreement or law. 10. NOTICES Any notices required by this Agreement shall be in writing and either given in person or by first-class mail with postage prepaid and addressed as follows: TO CITY: City Council c/o Mayor Tony Santos City of San Leandro 835 East 14th Street San Leandro, CA 94577 TO EMPLOYEE: John J. Jermanis City Manager City of San Leandro 835 East 14th Street San Leandro, CA 94577 11. ARBITRATION Any controversy or claim arising out of or pertaining to this Agreement, or breach thereof, shall be settled by arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be enforced as provided by California law. 12. ENTIRE AGREEMENT This Agreement is the final expression of the complete agreement of the parties with respect to the matters specified herein and supersedes all prior oral or written understandings. Except as prescribed herein, this Agreement cannot be modified except by written mutual agreement signed by the parties. 13. ASSIGNMENT This Agreement is not assignable by either City or Employee. 14. SEVERABILITY In the event that any provision of this Agreement is finally held or determined to be illegal or void by a court having jurisdiction over the parties, the remainder of the Agreement shall remain in full force and effect unless the parts found to be void are wholly inseparable from the remaining portion of the Agreement. 15. COUNTERPARTS This Agreement shall be executed simultaneously in three counterparts, which shall be identified by number, and each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, The City has caused this Agreement to be signed and executed on its behalf by its Mayor and duly attested by the City Clerk. It has also been executed by the Employee. _______________________________________________ John J. Jermanis, Employee _______________________________________________ Tony Santos , Mayor City of San Leandro ATTEST: _______________________________________________ City Clerk, Marian Handa APPROVED AS TO FORM: _______________________________________________ City Attorney, Jayne W. Williams 5 EXHIBIT A CITY COUNCIL PRIORITIES FOR FISCAL YEAR 2007-08 City Goals The five City Council initiatives that will be used as City Manager performance indicators during Fiscal Year 2007-08 are shown below. The City Manager will develop identifiable indicators and milestones for achieving the City's goals; periodic progress reports will be presented to the City Council. * Develop additional resources to support the cost of maintaining the streets and infrastructure. * Develop larger revenue stream to fund services and programs. * Continue progress to development strategy for the Shoreline Recreation Area. * Continue progress to increase the number of Police Officers for a safe community. * Continue progress to complete the Senior Community Center facility.