EXHIBIT 10.8
Form of Executive Salary Continuation Agreement (Xxxxx)
between
TBOH and ________
dated March 22, 1995, as amended
EXECUTIVE SALARY CONTINUATION AGREEMENT
This Agreement is made and entered into this 22nd day of March, 1995, by and
between The Bank of Hemet, a banking corporation organized under the laws of the
State of California (the "Employer"), and __________________, an individual
residing in the State of California (hereinafter referred to as the
"Executive").
RECITALS
WHEREAS, the Executive is an employee of the Employer and is serving as its
President and Chief Executive Officer;
WHEREAS, the Executive's experience and knowledge of the affairs of the Employer
and the banking industry are extensive and valuable;
WHEREAS, it is deemed to be in the best interests of the Employer to provide the
Executive with certain salary continuation benefits, on the terms and conditions
set forth herein, in order to reasonably induce the Executive to remain in the
Employer's employment; and
WHEREAS, the Executive and the Employer wish to specify in writing the terms and
conditions upon which this additional compensatory incentive will be provided to
the Executive, or to the Executive's spouse or the Executive's designated
beneficiaries, as the case may be;
NOW, THEREFORE, in consideration of the services to be performed in the future,
as well as the mutual promises and covenants contained herein, the Executive and
the Employer agree as follows:
AGREEMENT
1. TERMS AND DEFINITIONS.
1.1. ADMINISTRATOR. The Employer shall be the "Administrator" and,
solely for the purposes of ERISA, the "fiduciary" of this Agreement where a
fiduciary is required by ERISA.
1.2. ANNUAL BENEFIT. The term "Annual Benefit" shall mean an annual
sum of __________________ ($_______) multiplied by the Applicable
Percentage (defined below) and then reduced to the extent required: (i) under
the other provisions of this Agreement; (ii) by reason of the lawful order of
any regulatory agency or body having jurisdiction over the Employer; and (iii)
in order for the Employer to properly comply with any and all applicable state
and federal laws, including, but not limited to, income, employment and
disability income tax laws (e.g., FICA, FUTA, SDI).
1.3. APPLICABLE PERCENTAGE. The term "Applicable Percentage" shall
mean that percentage listed on Schedule "A" attached hereto which is adjacent to
the number of complete years (with a "year" being the performance of personal
services for or on behalf of the Employer as an employee for a period of 365
days) which have elapsed starting from the Effective Date of this Agreement and
ending on the date the Executive's employment with the Employer terminates for
purposes of this Agreement. In the event the Executive's employment with the
Employer is terminated other than by reason of death, disability, termination
for cause or Retirement on the part of the Executive, the Executive shall be
deemed for purposes of determining the number of complete years to have
completed a year of service in its entirety for any partial year of service
after the last anniversary date of the Effective Date during which the
Executive's employment is terminated, provided that in no event shall the
Executive be deemed to have completed a year of service for any partial year if
the partial year occurs prior to the anniversary date of this Agreement.
1.4. BENEFICIARY. The term "beneficiary" or "designated beneficiary"
shall mean the person or persons whom the Executive shall designate in a valid
Beneficiary Designation, a copy of which is attached hereto as Exhibit "B", to
receive the benefits provided hereunder. A Beneficiary Designation shall be
valid only if it is in the form attached hereto and made a part hereof and is
received by the Administrator prior to the Executive's death.
1.5. THE CODE. The "Code" shall mean the Internal Revenue Code of
1986, as amended (the "Code").
1.6. DISABILITY/DISABLED. The term "Disability" or "Disabled" shall
have the same meaning given such term in the principal disability insurance
policy covering the Executive, which is incorporated herein by reference. In the
event the Executive is not covered by a disability policy containing a
definition of "Disability" or "Disabled," these terms shall mean an illness or
incapacity which, having continued for a period of one hundred and eighty (180)
consecutive days, prevents the Executive from adequately performing the
Executive's regular employment duties. The determination of whether the
Executive is Disabled shall be made by an independent physician selected by
mutual agreement of the parties.
1.7. EFFECTIVE DATE. The term "Effective Date" shall mean the date
upon which this Agreement was entered into by the parties, as first written
above.
1.8. ERISA. The term "ERISA" shall mean the Employee.
Retirement Income Security Act of 1974, as amended.
1.9. PLAN YEAR. The term "Plan Year" shall mean the Employer's
calendar year.
1.10. RETIREMENT. The term "Retirement" or "Retires" shall refer to the
date which Executive attains the age of at least 65 and which the Executive
acknowledges in writing to the Employer to
be the last day he will provide any significant personal services, whether as an
employee, director or independent consultant or contractor, to the Employer. For
purposes of this Agreement, the phrase "significant personal services" shall
mean more than ten (10) hours of personal services rendered to one or more
individuals or entities in any thirty (30) day period.
1.11 SALE OF BUSINESS. The term "Sale of Business" shall mean any (i)
merger, consolidation or reorganization of the Employer in which (A) the
Employer does not survive or (B) the Employer survives with a resulting change
in beneficial ownership of the Employer of more than 50% of the voting shares of
the Employer, (ii) sale of more than 50% of the beneficial ownership of the
voting shares of the Employer to any person or group of persons acting in
concert, or (iii) transfer or sale of more than 50% of the total market value of
the assets of Employer as reflected in the most recent published balance sheet
of the Employer.
1.12. SURVIVING SPOUSE. The term "Surviving Spouse" shall mean the
person, if any, who shall be legally married to the Executive on the date of the
Executive's death.
2. SCOPE, PURPOSE AND EFFECT.
2.1. CONTRACT OF EMPLOYMENT. Although this Agreement is intended to
provide the Executive with an additional incentive to remain in the employ of
the Employer, this Agreement shall not be deemed to constitute a contract of
employment between the Executive and the Employer nor shall any provision of
this Agreement restrict or expand the right of the Employer to terminate the
Executive's employment. This Agreement shall have no impact or effect upon any
separate written employment agreement which the Executive may have with the
Employer, it being the parties' intention and agreement that unless this
Agreement is specifically referenced in said employment agreement (or any
modification thereto), this Agreement (and the Employer's obligations hereunder)
shall stand separate and apart and shall have no effect upon, nor be affected
by, the terms and provisions of said employment agreement.
2.2. FRINGE BENEFIT. The benefits provided by this Agreement are
granted by the Employer as a fringe benefit to the Executive and are not a part
of any salary reduction plan or any arrangement deferring a bonus or a salary
increase. The Executive has no option to take any current payments or bonus in
lieu of the benefits provided by this Agreement.
3. PAYMENTS UPON OR AFTER RETIREMENT.
3.1. PAYMENTS UPON RETIREMENT. If the Executive shall remain in the
continuous employment of the Employer until Retirement, the Executive shall be
entitled to be paid the Annual Benefit with the Applicable Percentage at 100%,
for a period of fifteen (15) years, in One Hundred Eighty (180) equal monthly
installments, with each installment to be paid on the first day of each month,
beginning with the month following the month in which the Executive Retires
or upon such later date as may be mutually agreed upon by the
Executive and the Employer in advance of said Retirement date. At the Employer's
sole and absolute discretion, the Employer may increase the Annual Benefit as
and when the Employer determines the same to be appropriate in order to reflect
a substantial change in the cost of living. Notwithstanding anything contained
herein to the contrary, the Employer shall have no obligation hereunder to make
any such cost-of-living adjustment.
3.2. PAYMENTS IN THE EVENT OF DEATH AFTER RETIREMENT. The Employer
agrees that if the Executive Retires, but shall die before receiving all of the
One Hundred Eighty (180) monthly payments described in paragraph 3.1 above, the
Employer will make the remaining monthly payments, undiminished and on the same
schedule as if the Executive had not died, to the Executive's designated
beneficiary. If a valid Beneficiary Designation is not in effect, then the
remaining amounts due to the Executive under the term of this Agreement shall be
paid to the Executive's Surviving Spouse. If the Executive leaves no Surviving
Spouse, the remaining amounts due to the Executive under the terms of this
Agreement shall be paid to the duly qualified personal representative, executor
or administrator of the Executive's estate.
4. PAYMENTS IN THE EVENT DEATH OR
DISABILITY OCCURS PRIOR TO RETIREMENT.
4.1. PAYMENTS IN THE EVENT OF DEATH PRIOR TO RETIREMENT. In the
event the Executive should die while actively employed by the Employer at any
time after the Effective Date of this Agreement, the Employer agrees to pay
the Annual Benefit with the Applicable Percentage at 100% for a period of
fifteen (15) years in One Hundred Eighty (180) equal monthly installments,
with each installment to be paid on the first of each month beginning with
the month following the Executive's death, to the Executive's designated
beneficiary.
If a valid Beneficiary Designation is not in effect, then the amounts due to
the Executive under the terms of this Agreement shall be paid to the
Executive's Surviving Spouse. If the Executive leaves no Surviving Spouse,
the amounts due to the Executive under the terms of this Agreement shall be
paid to the duly qualified personal representative, executor or administrator
of the Executive's estate.
4.2. PAYMENTS IN THE EVENT OF DISABILITY PRIOR TO RETIREMENT. In
the event the Executive becomes Disabled while actively employed by the
Employer at any time after the date of this Agreement but prior to
Retirement, the Executive shall: (i) continue to be treated during such
period of Disability as being gainfully employed by the Employer but shall
not add applicable years of service for the purpose of determining the Annual
Benefit; and (ii) be entitled to be paid the Annual Benefit, as set forth on
Schedule "A", for fifteen (15) years, as determined by the applicable years
of service at the time of disability, as defined above, in One Hundred Eighty
(180) equal monthly installments, with each installment to be paid on the
first day of each month, beginning with the month following the earlier of
(1) the month in
which the Executive attains sixty-five (65) years of age; or (2) the date upon
which the Executive is no longer entitled to receive Disability benefits under
the Executive's principal Disability insurance policy and does not, at such
time, return to and thereafter fulfill the responsibilities associated with the
employment position held with the Employer prior to becoming Disabled by reason
of such Disability continuing. Notwithstanding the foregoing, in the event the
Executive should die while actively or gainfully employed by the Employer at any
time after the Effective Date of this Agreement and prior to attaining the age
of sixty-five (65) years of age, the payments provided in Paragraph 4.1 shall be
paid in lieu of the payments provided in this Paragraph 4.2, provided that the
Executive or his legal representative shall have not elected to take the
benefits provided by Paragraph 5 and payments provided for in this Paragraph 4.2
have not commenced.
5. PAYMENTS IN THE EVENT EMPLOYMENT IS TERMINATED FOR
CAUSE OR EXECUTIVE VOLUNTARILY TERMINATES EMPLOYMENT.
As indicated in Paragraph 2 above, the Employer reserves the right to terminate
the Executive's employment, with or without cause but subject to any written
employment agreement which may then exist, at any time prior to the Executive's
Retirement. In the event that the employment of the Executive shall be
terminated prior to Executive attaining age 65 and either (i) for cause as
defined in Executive's current employment agreement (or most current employment
agreement if there is no current employment agreement), but in no event shall
cause include death or disability or (ii) voluntarily on the part of Executive,
Executive shall not be entitled to any benefits pursuant to this agreement.
5.1 TERMINATION OF EXECUTIVE WITHOUT CAUSE. In the event the
employment of Executive with Employer is (i) terminated without cause, (ii)
terminated for cause after Executive attains age 65, or (iii) terminated
voluntarily by Executive after Executive attains age 65, the Executive or his
legal representative shall be entitled to be paid the Annual Benefit, as set
forth in Schedule "A" for a period of fifteen (15) years, as determined by
the applicable years of service at the time of the Executive's termination of
employment with the Employer, in One Hundred Eighty (180) equal monthly
installments, with each installment to be paid on the first day of each
month, beginning with the month following the month in which the Executive
terminates employment and attains sixty-five (65) years of age or the month
following the Executive's death, whichever occurs first.
5.2 TERMINATION IN A SALE OF BUSINESS. In the event there is a Sale
of Business, the Executive shall be entitled to be paid in a lump sum the
present value (using the annual discount rate equal to the annual interest rate
of a ten year treasury bond) of the Annual Benefit for a period of fifteen (15)
years with the Applicable Percentage being 100% to be paid on the first day of
each month, beginning with the month following the month in which the Executive
for any reason terminates employment with Employer or a successor of Employer
after a Sale of Business.
6. RIGHT OF THE EMPLOYER TO PAY A LUMP SUM.
The Employer shall at its sole and absolute discretion have the right to pay in
a lump sum the then present value using a discount rate that is to be mutually
agreed upon between the Employer and the Executive or the Executive's
beneficiary of all payments vested and due the Executive or the Executive's
beneficiary pursuant to this Agreement.
7. NO OWNERSHIP RIGHTS TO THE EMPLOYER'S ASSETS.
The Employer reserves the right to determine, in its sole and absolute
discretion, whether, to what extent and by what method, if any, to provide for
the payment of the amounts which may be payable to the Executive, the
Executive's spouse or the Executive's beneficiaries under the terms of this
Agreement ("Benefits"). The rights of the Executive or any beneficiary of the
Executive under this Agreement shall be solely those of an unsecured creditor of
the Employer.
In the event that the Employer, in its sole and absolute discretion, elects
to acquire an insurance policy, an annuity or any other asset to recoup the
costs or any portion thereof of the Benefits, then such insurance policy,
annuity or other asset shall not be deemed to be held under any trust for the
benefit of the Executive or his beneficiaries or to be security for the
performance of the obligations of the Employer under this Agreement, but
shall be, and remain, a general unpledged, unrestricted asset of the
Employer. The Executive and his beneficiaries shall have no rights whatsoever
with respect to, or any claim against, any such insurance policy, annuity or
other asset. In connection with the Employer electing to
acquire any such insurance policy or annuity, the Executive agrees to
cooperate to facilitate such acquisition, and pursuant thereto shall execute
such documents and undergo such medical examinations or tests as the Employer
may reasonably request.
8. CLAIMS PROCEDURE.
The Employer shall, but only to the extent necessary to comply with ERISA, be
designated as the named fiduciary under this Agreement and shall have
authority to control and manage the operation and administration of this
Agreement. Consistent therewith, the Employer shall make all determinations
as to the rights to benefits under this Agreement. Any decision by the
Employer denying a claim by the Executive, the Executive's spouse, or the
Executive's beneficiary for Benefits under this Agreement shall be stated in
writing and delivered or mailed, via registered or certified mail, to the
Executive, the Executive's spouse or the Executive's beneficiary, as the case
may be. Such decision shall set forth the specific reasons for the denial of
a claim. In addition, the Employer shall provide the Executive, the
Executive's spouse or the Executive's beneficiary with a reasonable
opportunity for a full and fair review of the decision denying such claim.
9. STATUS OF AN UNSECURED GENERAL CREDITOR.
Notwithstanding anything contained herein to the contrary: (i) neither the
Executive, the Executive's spouse or the Executive's beneficiary shall have any
legal or equitable rights, interests or claims in or to any specific property or
assets of the Employer; (ii) none of the Employer's assets shall be held in or
under any trust for the benefit of the Executive, the Executive's spouse or the
Executive's beneficiary or held in any way as security for the fulfillment of
the obligations of the Employer under this Agreement; (iii) all of the
Employer's assets shall be and remain the general unpledged and unrestricted
assets of the Employer; (iv) the Employer's obligation under this Agreement
shall be that of an unfunded and unsecured promise by the Employer to pay money
in the future; and (v) the Executive, the Executive's spouse and the Executive's
beneficiary shall be unsecured general creditors with respect to any benefits
which may be payable under the terms of this Agreement.
10. COVENANT NOT TO INTERFERE.
The Executive agrees not to take any action which prevents the Employer from
collecting the proceeds of any life insurance policy which the Employer may
happen to own at the time of the Executive's death and of which the Employer is
the designated beneficiary.
11. MISCELLANEOUS.
11.1. OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL. The Executive
acknowledges that he has been afforded the opportunity to consult with
independent counsel of his choosing regarding both the benefits granted to him
under the terms of this Agreement and the terms and conditions which may affect
the Executive's right to these benefits. The Executive further acknowledges that
he has read, understands and consents to all of the terms and conditions of this
Agreement, and that he enters into this Agreement with a full understanding of
its terms and conditions.
11.2. ARBITRATION OF DISPUTES. All claims, disputes and other matters
in question arising out of or relating to this Agreement or the breach or
interpretation thereof, other than those matters which are to be determined by
the Employer in its sole and absolute discretion, shall be resolved by binding
arbitration before a representative member, selected by the mutual agreement of
the parties, of the Judicial Arbitration and Mediation Services, Inc. ("JAMS"),
presently located at 000 Xxxxx Xxxxx Xxxxxxx Xxxxxxxxx, in Orange, California.
In the event JAMS is unable or unwilling to conduct the arbitration provided for
under the terms of this Paragraph, or has discontinued its business, the parties
agree that a representative member, selected by the mutual agreement of the
parties, of the American Arbitration Association ("AAA"), presently located at
0000 Xxxx Xxxxxx, in Irvine, California, shall conduct the binding arbitration
referred to in this Paragraph. Notice of the demand for arbitration shall be
filed in writing with the other party to this Agreement and with JAMS (or AAA,
if necessary). In no event shall the demand for
arbitration be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations. The arbitration shall be
subject to such rules of procedure used or established by JAMS, or if there are
none, the rules of procedure used or established by AAA. Any award rendered by
JAMS or AAA shall be final and binding upon the parties, and as applicable,
their respective heirs, beneficiaries, legal representatives, agents, successors
and assigns, and may be entered in any court having jurisdiction thereof. The
obligation of the parties to arbitrate pursuant to this clause shall be
specifically enforceable in accordance with, and shall be conducted consistently
with, the provisions of Title 9 of Part 3 of the California Code of Civil
Procedure. Any arbitration hereunder shall be conducted in Hemet, California,
unless otherwise agreed to by the parties.
11.3. ATTORNEYS' FEES. In the event of any arbitration or litigation
concerning any controversy, claim or dispute between the parties hereto, arising
out of or relating to this Agreement or the breach hereof, or the interpretation
hereof, the prevailing party shall be entitled to recover from the losing party
reasonable expenses, attorneys' fees and costs incurred in connection therewith
or in the enforcement or collection of any judgment or award rendered therein.
The "prevailing party" means the party determined by the arbitrator(s) or court,
as the case may be, to have most nearly prevailed, even if such party did not
prevail in all matters, not necessarily the one in whose favor a judgment is
rendered.
11.4. NOTICE. Any notice required or permitted of either the Executive
or the Employer under this Agreement shall be deemed to have been duly given, if
by personal delivery, upon the date received by the party or its authorized
representative; if by facsimile, upon transmission to a telephone number
previously provided by the party to whom the facsimile is transmitted as
reflected in the records of the party transmitting the facsimile and upon
reasonable confirmation of such transmission; and if by mail, on the third day
after mailing via U.S. first class mail, registered or certified, postage
prepaid and return receipt requested, and addressed to the party at the address
given below for the receipt of notices, or such changed address as may be
requested in writing by a party.
IF TO THE EMPLOYER:
THE BANK OF HEMET
0000 XXXX XXXXXXX XXXXXX
XXXXX, XXXXXXXXXX 00000
ATTENTION: XXXX X. XxXXXXXXX
CHAIRMAN OF THE BOARD
IF TO THE EXECUTIVE:
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11.5. ASSIGNMENT. Neither the Executive, the Executive's spouse, nor
any other beneficiary under this Agreement shall have any power or right to
transfer, assign, hypothecate, modify or otherwise encumber any part or all of
the amounts payable hereunder, nor, prior to payment in accordance with the
terms of this Agreement, shall any portion of such amounts be: (i) subject to
seizure by any creditor of any such beneficiary, by a proceeding at law or in
equity, for the payment of any debts, judgments, alimony or separate maintenance
obligations which may be owed by the Executive, the Executive's spouse, or any
designated beneficiary; or (ii) transferable by operation of law in the event of
bankruptcy, insolvency or otherwise. Any such attempted assignment or transfer
shall be void and shall terminate this Agreement, and the Employer shall
thereupon have no further liability hereunder.
11.6. BINDING EFFECT/MERGER OR REORGANIZATION. This Agreement shall be
binding upon and inure to the benefit of the Executive and the Employer and, as
applicable, their respective heirs, beneficiaries, legal representatives,
agents, successors and assigns. Accordingly, the Employer shall not merge or
consolidate into or with another corporation, or reorganize or sell
substantially all of its assets to another corporation, firm or person, unless
and until such succeeding or continuing corporation, firm or person agrees to
assume and discharge the obligations of the Employer under this Agreement. Upon
the occurrence of such event, the term "Employer" as used in this Agreement
shall be deemed to refer to such surviving or successor firm, person, entity or
corporation.
11.7. NONWAIVER. The failure of either party to enforce at any time or
for any period of time any one or more of the terms or conditions of this
Agreement shall not be a waiver of such term(s) or condition(s) or of that
party's right thereafter to enforce each and every term and condition of this
Agreement.
11.8. PARTIAL INVALIDITY. If any term, provision, covenant or condition
of this Agreement is determined by an arbitrator or a court, as the case may be,
to be invalid, void or unenforceable, such determination shall not render any
other term, provision, covenant or condition invalid, void or unenforceable, and
the Agreement shall remain in full force and effect notwithstanding such partial
invalidity.
11.9. ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties with respect to the
subject matter of this Agreement and contains all of the covenants and
agreements between the parties with respect thereto. Each party to this
Agreement acknowledges that no other representations, inducements, promises or
agreements, oral or otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not set forth herein, and that no other
agreement, statement or promise not contained in this Agreement shall be valid
or binding on either party.
11.10. MODIFICATIONS. Any modification of this Agreement shall be
effective only if it is in writing and signed by each party or such party's
authorized representative.
11.11. PARAGRAPH HEADINGS. The paragraph headings used in this Agreement
are included solely for the convenience of the parties and shall not affect or
be used in connection with the interpretation of this Agreement.
11.12. NO STRICT CONSTRUCTION. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
11.13. GOVERNING LAW. The laws of the State of California, other than
those laws denominated choice of law rules, and, where applicable, the rules and
regulations of: (i) the California Superintendent of Banks; (ii) the Federal
Deposit Insurance Corporation; (iii) the Board of Governors of Federal Reserve
System; or (iv) any other regulatory agency or governmental authority having
jurisdiction over the Employer, shall govern the validity, interpretation,
construction and effect of this Agreement.
12. ADDITIONAL LIMITATIONS ON THE AMOUNT OF THE ANNUAL BENEFIT.
The Executive acknowledges and agrees that the parties have entered into this
Agreement based upon certain financial and tax accounting assumptions.
Accordingly, with full knowledge of the potential consequences, the Executive
agrees that, notwithstanding anything contained herein to the contrary: (i) the
amount of the Annual Benefit shall be limited to that amount of the Annual
Benefit (as determined without regard to this Paragraph) which will be
deductible by the Employer under the Code in the year in which payment is to be
made to the Executive; (ii) the Annual Benefit amount shall be deemed to be the
last payment made to the Executive and the first for which an income tax
deduction, if any, has been disallowed; and (iii) any compensatory amounts for
which a deduction is denied to the Employer shall, at the Employer's election,
serve to first reduce the Employer's obligation to make the Annual Benefit
payments otherwise due and payable to the Executive under the terms of this
Agreement. The Executive recognizes that, in this regard, limitations on
deductibility may be imposed under, but not limited to, Code Section 280G.
Consistent with the foregoing, and in the event that any payment or benefit
received or to be received by the Executive, whether payable pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with the
Employer (together with the Annual Benefit, the "Total Payments"), will not be
deductible (in whole or in part) as a result of Code Section 280G, the Annual
Benefit shall be reduced until no portion of the Total Payments is nondeductible
as a result of Section 28OG of the Code (or the Annual Benefit is reduced to
zero (0)). For purposes of this limitation:
(a) No portion of the Total payments, the receipt or enjoyment of
which the Executive shall have effectively waived in writing prior to the date
of payment of any future Annual Benefit payments, shall be taken into account;
(b) No portion of the Total Payments shall be taken into account,
which in the opinion of the tax counsel selected by the Employer and acceptable
to the Executive, does not constitute a "parachute payment" with the meaning of
Section 28OG of the Code;
(c) Future Annual Benefit payments shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in clauses
(a) or (b) above in their entirety) constitute reasonable compensation for
services actually rendered within the meaning of Section 280G of the Code, in
the opinion of tax counsel referred to in clause (b) above; and
(d) The value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the Employer's
independent auditors in accordance with the principles of Section 280G of the
Code.
IN WITNESS WHEREOF, the Employer and the Executive have executed this Agreement
on the date first above-written in the City of Hemet, Riverside County,
California.
THE BANK OF HEMET __________________________
"Employer" "Executive"
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Xxxx X. XxXxxxxxx
Chairman of the Board
SCHEDULE A
NUMBER OF COMPLETE
YEARS OF SERVICE APPLICABLE
WHICH HAVE ELAPSED PERCENTAGE
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1 or more years 100%
SCHEDULE B
BENEFICIARY DESIGNATION
TO: THE ADMINISTRATOR OF
THE BANK OF HEMET
EXECUTIVE SALARY CONTINUATION AGREEMENT
Pursuant to the provisions of my Executive Salary Continuation Agreement with
The Bank of Hemet permitting the designation of a beneficiary or beneficiaries
by a participant, I hereby designate the following persons and entities as
primary and secondary beneficiaries of any benefit under said Agreement payable
by reason of my death:
NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE
AND THE EXACT DATE OF THE TRUST AGREEMENT.
IN THE EVENT THE PRIMARY BENEFICIARY IS NOT THE SPOUSE OF THE EXECUTIVE, THE
SPOUSE OF THE EXECUTIVE WILL NEED TO SIGN THE SPOUSAL CONSENT BELOW AND SUCH
SIGNATURE MUST BE NOTARIZED.
PRIMARY BENEFICIARY:
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Name Address Relationship
SECONDARY (CONTINGENT) BENEFICIARY:
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Name Address Relationship
THE RIGHT TO REVOKE OR CHANGE ANY BENEFICIARY DESIGNATION IS HEREBY RESERVED.
ANY PRIOR DESIGNATION OF PRIMARY BENEFICIARIES AND SECONDARY BENEFICIARIES IS
HEREBY REVOKED.
The Administrator shall pay all sums payable under the Agreement by reason of my
death to the Primary Beneficiary, if he or she survives me, and if no Primary
Beneficiary shall survive me, then to the Secondary Beneficiary, and if no named
beneficiary survives me, then the Administrator shall pay all amounts in
accordance with the terms of my Executive Salary Continuation Agreement. In the
event that a named beneficiary survives me and dies prior to receiving the
entire benefit payable under said Agreement then and in that event, the
remaining unpaid benefit payable according to the terms of my Executive Salary
Continuation Agreement shall be payable to the personal representatives of the
estate of said beneficiary who survived me but died prior to receiving the total
benefit provided by my Executive Salary Continuation Agreement.
________________
"Executive"
Dated: 3/22/95
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SCHEDULE B
BENEFICIARY DESIGNATION
TO: THE ADMINISTRATOR OF
THE BANK OF HEMET
EXECUTIVE SALARY CONTINUATION AGREEMENT
Pursuant to the provisions of my Executive Salary Continuation Agreement with
The Bank of Hemet permitting the designation of a beneficiary or beneficiaries
by a participant, I hereby designate the following persons and entities as
primary and secondary beneficiaries of any benefit under said Agreement payable
by reason of my death:
NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE
AND THE EXACT DATE OF THE TRUST AGREEMENT.
IN THE EVENT THE PRIMARY BENEFICIARY IS NOT THE SPOUSE OF THE EXECUTIVE, THE
SPOUSE OF THE EXECUTIVE WILL NEED TO SIGN THE SPOUSAL CONSENT BELOW AND SUCH
SIGNATURE MUST BE NOTARIZED.
PRIMARY BENEFICIARY:
------------------- ---------------- --------------
Name Address Relationship
SECONDARY (CONTINGENT) BENEFICIARY:
-----------------------------------
------------------- ---------------- --------------
Name Address Relationship
THE RIGHT TO REVOKE OR CHANGE ANY BENEFICIARY DESIGNATION IS HEREBY RESERVED.
ANY PRIOR DESIGNATION OF PRIMARY BENEFICIARIES AND SECONDARY BENEFICIARIES IS
HEREBY REVOKED.
The Administrator shall pay all sums payable under the Agreement by reason of my
death to the Primary Beneficiary, if he or she survives me, and if no Primary
Beneficiary shall survive me, then to the Secondary Beneficiary, and if no named
beneficiary survives me, then the Administrator shall pay all amounts in
accordance with the terms of my Executive Salary Continuation Agreement. In the
event that a named beneficiary survives me and dies prior to receiving the
entire benefit payable under said Agreement then and in that event, the
remaining unpaid benefit payable according to the terms of my Executive Salary
Continuation Agreement shall be payable to the personal representatives of the
estate of said beneficiary who survived me but died prior to receiving the total
benefit provided by my Executive Salary Continuation Agreement.
_______________
"EXECUTIVE"
Dated: 3/22/95
-------------- -------------------------
FORM OF AMENDMENT NO. 1
TO
EXECUTIVE SALARY CONTINUATION AGREEMENT (XXXXX)
This Amendment No. 1 to the Executive Salary Continuation Agreement
("Amended Agreement") is made and entered into as of this 16th day of July, 1998
by and between The Bank of Hemet, a California banking corporation (the
"Employer") and ______________, an individual residing in the State of
California (hereinafter referred to as "Executive").
RECITALS AND UNDERTAKINGS
A. WHEREAS, the Executive is an employee of the Employer and is serving
as its President and Chief Executive Officer;
B. WHEREAS, the Executive's experience and knowledge of the affairs of
the Employer and the banking industry are extensive and valuable;
C. WHEREAS, the Employer has provided Executive with certain salary
continuation benefits as set forth in the Salary Continuation Agreement
("Original Agreement") between Employer and Executive dated March 21, 1998; and
D. WHEREAS, Executive has further shown his value to the Employer since
the date of the Original Agreement, it is deemed to be in the best interests of
the Employer to amend this agreement to provide that no "golden parachute"
payments will be made.
NOW, THEREFORE, the parties hereto agree to amend the Original Agreement as
follows:
1. A new Section 12A is added to the Original Agreement and shall
read in the entirety as follows:
12A. NO PAYMENT OF BENEFITS RESULTING IN GOLDEN
PARACHUTE TAXES UNDER SECTION 280G OF THE CODE. No payment
shall be made to Executive pursuant to this Agreement to the
extent that such payment when aggregated with all other
payments considered for purposes of calculating a parachute
payment results in an excess parachute payment as defined
under Section 280G of the Code. Furthermore to the extent
that the Internal Revenue Service or other applicable
governmental taxing authority determines that there has been
an "excess parachute payment" and a notice of deficiency or
similar notice has been issued, then the Employer or its
successor agrees to pay all expenses associated with
professional fees (legal and tax accounting) in connection with the
protest, challenge, and defense of any such notice and the appeal of
any decision on such matter. The Employer or its successor agrees not
to settle the matter short of the appellate level without the written
consent of the Executive. In the event that the Internal Revenue
Service or other applicable governmental taxing authority ultimately
determines that, in fact, there has been an "excess parachute payment"
by the Employer, then the amount necessary to reduce the total
payments such that there would be no "excess parachute payment" would
be immediately and retroactively characterized as a loan from the
Employer or its successor to Executive with interest at a rate equal
to the ten year Treasury Bond (or if the Employer or its successor is
a bank subject to Regulation O then the loan shall be at substantially
the same terms as credit underwriting procedures that are not less
stringent than, those prevailing at the time the loan would have been
made for comparable transactions of the Employer or its successor and
shall be subject to the other conditions of Regulation O). The loan
shall be subject to repayment at the demand of the Employer or its
successor.
2. Except as amended hereby, the provisions of the Original
Agreement remain in full force and effect and the enforceability thereof is
not affected by this Amended Agreement.
IN WITNESS WHEREOF, the parties to this Amended Agreement have duly
executed this Amended Agreement as of the day and year first above written.
THE BANK OF HEMET
By:
---------------------------------
Xxxx X. XxXxxxxxx, Chairman
----------------------------
By:
---------------------------------
FORM OF AMENDMENT NO. 2
TO
EXECUTIVE SALARY CONTINUATION AGREEMENT (XXXXX)
This Amendment No. 2 to the Executive Salary Continuation Agreement
("Amended Agreement") is made and entered into as of this 29th day of July, 1998
by and between The Bank of Hemet, a California banking corporation (the
"Employer") and _______________, an individual residing in the State of
California (hereinafter referred to as "Executive").
RECITALS AND UNDERTAKINGS
A. WHEREAS, the Executive is an employee of the Employer and is serving
as its President and Chief Executive Officer;
B. WHEREAS, the Executive's experience and knowledge of the affairs of
the Employer and the banking industry are extensive and valuable;
C. WHEREAS, the Employer has provided Executive with certain salary
continuation benefits as set forth in the Salary Continuation Agreement
("Original Agreement") between Employer and Executive dated March 21, 1995; and
amended on July 16, 1998; and
D. WHEREAS, Employer and Executive desire to adopt a specific procedure
to determine the present value of the Annual Benefit for a fifteen (15) year
period in the event Executive terminates employment with Employer after a sale
of Business.
NOW, THEREFORE, the parties hereto agree to amend the Original Agreement as
follows:
1. Section 5-2 is amended to the Original Agreement and shall read
in the entirety as follows:
5.2 TERMINATION IN A SALE OF BUSINESS. In the event
there is a Sale of Business, the Executive shall be entitled
to be paid in a lump sum the present value (using the annual
discount rate equal to the annual interest rate of a ten
year treasury bond) of the Annual Benefit for a period of
fifteen (15) years with the Applicable Percentage being 100%
to be paid on the first day of each month, beginning with
the month following the month in which the Executive for any
reason terminates employment with Employer or a successor of
Employer after a Sale of Business.
The annual interest rate of a ten year treasury bond will be the
yield on the 10 Year Treasury Note as shown in the "Morning
Economic Notes" provided daily to Employer by Xxxxx Xxxxxx on the
date of the Sale of Business. In the event this source is no
longer available on the date of the Sale of Business, then the
source of the rate will be selected by mutual agreement of the
Employer and Executive.
The payment of the lump sum will be made to the Executive by the
Employer via wire transfer to the Executive's choice of bank
account as soon as practicable after the earlier of a) the Sale
of Business (assuming the Executive's termination date has been
contractually or officially established by the Employer), or b)
the effective date of the Executive's termination by Employer or
a successor of Employer after a Sale of Business.
2. Except as amended hereby, the provisions of the Original
Agreement remain in full force and effect and the enforceability thereof is
not affected by this Amended Agreement.
IN WITNESS WHEREOF, the parties to this Amended Agreement have duly
executed this Amended Agreement as of the day and year first above written.
THE BANK OF HEMET
By: /s/ Xxxx X. XxXxxxxxx
--------------------------------
Xxxx X. XxXxxxxxx, Chairman
--------------------------
--------------------------------
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