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EXHIBIT 10.6
Director Deferred Fee Agreement between Xxxxx de Oro Bank, N.A. and Xxxxxx
Xxxxxx dated April 15, 1998
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XXXXX DE ORO BANK, N.A.
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is made this 15th day of April, 1998, by and between Xxxxx
De Oro Bank, N.A., a national banking association located in Spring Valley,
California (the "Company"), and Xxxxxx Xxxxxx (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the Director's benefits for the Company's
general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meaning specified:
1.1.1 "Anniversary Date" means December 31 of each year.
1.1.2 "Change of Control" means the transfer of shares of the
Company's voting common stock such that one entity or one person acquires (or is
deemed to acquire when applying Section 318 of the Code) more than 50 percent of
the Company's outstanding voting common stock followed within twelve (12) months
by the termination of the Director's status as a member of the Company's Board
of Directors.
1.1.3 "Deferral Account" means the Company's accounting of the
Director's accumulated Deferrals plus accrued interest.
1.1.4 "Deferrals" means the amount of the Director's Fees which
the Director elects to defer according to this Agreement.
1.1.5 "Disability" means the Director's inability to perform
substantially all normal duties of a Director, as determined by the Company's
Board of Directors in its sole discretion. As a condition to any benefits, the
Company may require the Director to submit to such physical or mental
evaluations and tests as the Board of Directors deems appropriate.
1.1.6 "Effective Date" means April 15, 1998.
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1.1.7 "Election Form" means the form attached as Exhibit 1.
1.1.8 "Fees" means the total Director's Fees payable to the Director.
1.1.9 "Normal Retirement Age" means the Director's 73rd birthday.
1.1.10 "Normal Retirement Date" means the later of the Normal
Retirement Age or the Director's Termination of Service.
1.1.11 "Plan Year" means the calendar year.
1.1.12 "Projected Benefit" means the balance that would have
accumulated in the Director's Deferral Account at Normal Retirement Age if it is
assumed that the Director: (1) continued to defer Fees at the same rate that the
Director has been deferring Fees on the date of the Director's death, and (2)
survived to Normal Retirement Age.
1.1.13 "Termination of Service" means the Director ceasing to be a
member of the Company's Board of Directors for any reason whatsoever.
ARTICLE 2
Deferral Election
2.1 Initial Election. The Director shall make an initial deferral
election under this Agreement by filing with the Company a signed Election Form
within thirty (30) days after the Effective Date of this Agreement. The
Election Form shall set forth the amount of Fees to be deferred. The Election
Form shall be effective to defer only Fees earned after the date the Election
Form is received by the Company.
2.2 Election Changes
2.2.1 Generally. The Director may modify the amount of Fees to be
deferred annually by filing a new Election Form with the Company prior to the
beginning of the Plan Year in which the Fees are to be deferred. The modified
deferral election shall not be effective until the calendar year following the
year in which the subsequent Election Form is received and approved by the
Company.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Director occurs, the Director, by written
instructions to the Company, may reduce future Deferrals under this Agreement.
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ARTICLE 3
Deferral Account
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Director and shall credit to the Deferral Account
the following amounts:
3.11 Deferrals. The Fees deferred by the Director as of the time
of the Fees would have otherwise been paid to the Director.
3.12 Interest. On each Anniversary Date and immediately prior to
the payment of any benefits, but only until commencement of the benefit
payments under this Agreement, interest is to be accrued on the account balance
and compounded at an annual rate equal to the Prime Rate as published in the
West Coast Edition of the Wall Street Journal on the Anniversary Date or the
first publication date thereafter. For any interest accruals prior to December
31, 1998, the applicable annual rate shall be eight and one-half percent (8.5%).
3.2 Statement of Accounts. The Company shall provide to the Director,
within one hundred twenty (120) days after each Anniversary Date, a statement
setting forth the Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not
a trust fund of any kind. The Director is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject to any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment or garnishment by the Director's creditors.
ARTICLE 4
Lifetime Benefits
4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the
Company shall pay to the Director the benefit described in this Section 4.1 in
lieu of any other benefit under this Agreement.
4.1.1 Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Director's Normal Retirement Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 equal monthly installments commencing on the first day of the
month following the Director's Normal Retirement Date. The Company shall
continue to credit interest under the Section 3.1.2 on the remaining account
balance during any applicable installment period.
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4.2 Early Retirement Benefit. Upon Termination of Service prior to the
Normal Retirement Age for reasons other than death, Change of Control or
Disability, the Company shall pay to the Director the benefit described in this
Section 4.2 in lieu of any other benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Director's Termination of Service.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 equal monthly installments commencing on the first day of the
month following the Director's Normal Retirement Age. The Company shall continue
to credit interest under Section 3.1.2 on the remaining account balance during
any applicable installment period.
4.3 Disability Benefit. If the Director terminates service as a Director
for Disability prior to Normal Retirement Age, the Company shall pay to the
director the benefit described in this Section 4.3 in lieu of any other benefit
under this Agreement.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the
Deferral Account balance at the Director's Termination of Service.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Director in 120 equal monthly installments commencing on the first day of the
month following the Director's Termination of Service. The Company shall
continue to credit interest under Section 3.1.2 on the remaining account balance
during any applicable installment period.
4.4 Change of Control Benefit. Upon a Change of Control, the Company shall
pay to the Director the benefit described in this Section 4.4 in lieu of any
other benefit under this Agreement.
4.4.1 Amount of Benefit. The Agreement under this Section 4.4
shall be the Deferral Account balance on Termination of Service.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within 60 days after the Director's Termination of
Service.
4.5 Hardship Distribution. Upon the Board of Director's determination
(following petition by the Director) that the Director has suffered an
unforeseeable financial emergency as described in Section 2.2.2, the Company
shall distribute the Director all or a portion of the Deferral Account balance
as determined by the Company, but in no event shall the distribution be greater
than is necessary to relieve the financial hardship.
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ARTICLE 5
Death Benefits
5.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1 in lieu of any other benefit under this
Agreement.
5.1.1 Amount of Benefit. The benefit under Section 5.1 is the
greater of the Deferral Account balance at the date of the Director's death or
the Projected Benefit; however, the Projected Benefit shall not exceed $180,000
for this calculation.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
beneficiary in 120 equal monthly installments commencing on the first day of the
month following the Director's death. The Company shall continue to credit
interest under section 3.1.2 on the remaining account balance during any
applicable installment period.
5.2 Death During Benefit Period. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.
5.3 Death After Termination of Employment But Before Benefit Payments
Commence. If the director is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Company shall
pay the benefit payments to the Director's beneficiary that the Director was
entitled to prior to death except that the benefit payment shall commence on
the first day of the month following the date of the Director's death.
ARTICLE 6
Beneficiaries
6.1 Beneficiary Designations. The Director shall designate a beneficiary by
filing a written designation with the Company. The Director may revoke or modify
the designation at any time by filing a new designation. However, designations
will only be effective is signed by the Director and accepted by the Company
during the Director's lifetime. The Director's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director, or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary designation, all
payment shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of
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incompetence, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Company from all liability with respect to such benefit.
ARTICLE 7
General Limitations
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement that is either:
(1)attributable to the interest earned on the Deferral Account or (2)in the
even of the triggering of Section 7.3, the excess of any death or benefit over
the Deferral Account; if any such payment would constitute: (x)an Excess
Parachute Payment, (y)payment following a Termination for Cause, or (z)payment
following a Suicide or Misstatement.
7.1 Excess Parachute Payment. An Excess Parachute Payment is an excess
parachute payment as defined in Section 280G of the Internal Revenue Code.
7.2 Termination for Cause. Termination for Cause shall have occurred if
the Company terminates the Director's service as a Director for:
72.1 Gross negligence or gross neglect of duties;
72.2 Commission of a felony or of a gross misdemeanor involving
moral turpitude; or
72.3 Fraud, disloyalty, dishonesty or willful violation of any law
or significant Company policy committed in connection with the Director's
service and resulting in an adverse financial effect on the Company.
7.3 Suicide or Misstatement. Suicide or Misstatement shall have occurred
if the Director commits suicide within two years after the date of this
Agreement, or if the Director had made any material misstatement of fact on any
application for life insurance purchased by the Company.
ARTICLE 8
Claims and Review Procedures
8.1 Claims Procedure. The Company shall notify any person or entity that
makes a claim against the Agreement (the "Clamant") in writing, within ninety
(90) days of his or her written application for benefits, of his or her
eligibility or non-eligibility for benefits under the Agreement. If the Company
determines that the Claimant is not eligible for benefits or full benefits, the
notice shall set forth (1) the specific reasons for such denial, (2) a specific
reference to the provisions of the Agreement on which the denial is based, (3) a
description of any additional information or material necessary for the Claimant
to perfect his or her claim, and a description of why is it needed, and (4) an
explanation of the Agreement's claim review procedure and other appropriate
information as to
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the steps to be taken if the Claimant wishes to have the claim reviewed. If the
Company determines that there are special circumstances requiring additional
time to make a decision, the Company shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety-day period.
8.2 Review Procedure. If the Claimant is determined by the Company not
to be eligible for benefits, or if the Claimant believes that he or she is
entitled to greater or different benefits, the Claimant shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons which the
Claimant believes entitle him or her to benefits or to greater or different
benefits. Within sixty (60) days after receipt by the Company of the petition,
the company shall afford the Claimant (and counsel, if any) an opportunity to
present his or her position to the Company orally or in writing, and the
Claimant (or counsel) shall have the right to review the pertinent documents.
The Company shall notify the Claimant of its decision in writing within the
sixty-day period, stating specifically the basis of its decision, written in a
manner calculated to be understood by the Claimant and the specific provisions
of the Agreement on which the decision is based. If, because of the need for a
hearing, the sixty-day period is not sufficient, the decision may be deferred
for up to another sixty-day period at the election of the Company, but notice
of this deferral shall be given to the Claimant.
ARTICLE 9
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
ARTICLE 10
Miscellaneous
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guarantee of Service. This Agreement is not a contract for
services. It does not give the Director the right to remain a Director of the
Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain a Director nor
interfere with the Director's right to terminate services at any time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
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10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of California, except to the extent preempted
by the laws of the United States of America.
10.6 Unfunded Arrangement. The Director and the Director's
beneficiary are general unsecured creditors of the Company for the payment of
benefits under this Agreement. The benefits represent the mere promise by the
Company to pay such benefits. The rights to benefits are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors. Any insurance on the
Director's life is a general asset of the Company to which the Director and the
Director's beneficiary have no preferred or secured claim.
10.7 Reorganization. The Company shall not merge or consolidate into
or with another company, or reorganize, or sell substantially all of its assets
to another company, firm, or person unless such succeeding or continuing
company, firm, or person agrees to assume and discharge the obligations of the
Company under this Agreement.
10.8 Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Director as to the subject matter hereof.
No rights are granted to the Director by virtue of this Agreement other than
those specifically set forth herein.
10.9 Administration. The Company shall have powers which are
necessary to administer this Agreement, including but not limited to:
10.9.1 Interpreting the provisions of the Agreement;
10.9.2 Establishing and revising the method of accounting
for the Agreement;
10.9.3 Maintaining a record of benefit payments; and
10.9.4 Establishing rules and prescribing any forms
necessary or desirable to administer the Agreement.
10.10 Designated Fiduciary. The Company shall be the named fiduciary
and plan administrator under the Agreement. The named fiduciary may delegate to
others certain aspects of the management and operation responsibilities of the
plan including the employment of advisors and delegation of ministerial duties
to qualified individuals.
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IN WITNESS WHEREOF, the Director and a duly authorized Company officer
have signed this Agreement.
Dated: April 15, 1998
COMPANY: DIRECTOR:
Xxxxx de Oro Bank, N.A.
By: /s/ XXXXXXX X. XXXXX /s/ XXXXXX XXXXXX
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Xxxxxxx X. Xxxxx Xxxxxx Xxxxxx
Title: President and
Chief Executive Officer
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EXHIBIT 1
TO
DIRECTOR DEFERRED FEE AGREEMENT
Deferral Election
I elect to defer my Fees received under the Director Deferred Fee Agreement
with the Company, as follows:
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Amount of Deferral Duration
--------------------------------------------------------
[Initial and Complete One] [Initial One]
[X] I elect to defer 100% of __ One year only
my Fees paid to me
[ ] I elect to defer $500 per /s/ [SIG] For 10 years
month of all Fees paid me ---------
[ ] I elect not to defer any __ Until termination
of my Fees paid to me. of service
__ Until ___________
(date)
--------------------------------------------------------
I understand that I may change the amount and duration of my deferrals by
filing a new election form with the Company; provided, however, that any
subsequent election will not be effective until the calendar year following the
year in which the new election is received by the Company.
Signature /s/ XXXXXX XXXXXX, MD
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Date 4/17/98
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Accepted by the Company this 17th day of April, 1998.
By: /s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx
Title: President and
Chief Executive Officer
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