EXHIBIT 10.5
AMENDMENT NO. 1
TO
EXECUTIVE SALARY CONTINUATION AGREEMENT
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 Xxxxx X. Xxxxx, 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 22, 1995; 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,
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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: /s/ Xxxx X. XxXxxxxxx, Chairman
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XXXXX X. XXXXX
By: /s/ Xxxxx X. Xxxxx, President and Chief Executive Officer
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