PLUMAS BANK SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT PLUMAS bank SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
Exhibit 10.3
PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
PLUMAS bank
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This supplemental executive retirement AGREEMENT (“Agreement”) is made and entered into this 1st day of April, 2016, between Plumas Bank (“Bank”), a bank located in Quincy, CA, and Xxxxx Xxxxxx (“Executive”).
Article 1
The following tables describe the benefits available to the Executive, or the Executive’s Beneficiary, upon the occurrence of certain events. Capitalized terms have the meanings given them in Article 3. Except for death, each benefit described is in lieu of any other benefit herein.
Table A: Retirement Benefit
Normal Retirement Date (“NRD”) = April 1, 2026
Distribution Event |
Amount of Benefit |
Form of Benefit |
Timing of Benefit Distribution |
Executive’s Separation from Service following the Normal Retirement Date. |
Annual benefit equal to $48,000 per year (“Annual Benefit”). |
Annual Benefit shall be distributed through equal monthly installments representing 1/12th of the Annual Benefit. |
Payments shall commence on the first day of the month immediately following the month of Executive’s Separation from Service and shall continue for ten (10) years. |
Table B: Benefit Available Prior to Retirement
Distribution Event |
Amount of Benefit |
Form of Benefit |
Timing of Benefit Distribution |
Separation from Service prior to the Normal Retirement Date for reasons other than Separation from Service within twenty-four (24) months following a Change in Control or Separation from Service for Cause. |
Accrued Liability Balance, as of the last day of the month immediately prior to Executive’s Separation from Service. The Accrued Liability Balance shall continue to accrue earnings at the Discount Rate until all monthly installments are completely distributed. |
Accrued Liability Balance shall be distributed in equal monthly installments. |
Payments shall commence on the first day of the month immediately following the Executive’s attainment of their Normal Retirement Date and shall continue for ten (10) years. |
Change in Control followed within twenty-four (24) months by Executive’s Separation from Service. |
Annual Benefit as provided in Table A, hereinabove. |
Annual Benefit shall be distributed through equal monthly installments representing 1/12th of the Annual Benefit. |
Payments shall commence on the first day of the month immediately following the month of Executive’s Separation from Service and shall continue for ten (10) years. |
PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
Table C: Death Benefit
Distribution Event |
Amount of Benefit |
Form of Benefit |
Timing of Benefit Distribution |
Executive’s death while actively employed with the Bank. |
Accrued Liability Balance, as of the last day of the month immediately prior to Executive’s death. The Accrued Liability Balance shall continue to accrue earnings at the Discount Rate until all monthly installments are completely distributed. |
Accrued Liability Balance shall be distributed in equal monthly installments. |
Payments to the Beneficiary (ies) shall commence on the first day of the month immediately following the Executive’s death and shall continue for ten (10) years. |
Death prior to commencement of payments under Table A or Table B. |
The same benefit to which the Executive was entitled to prior to the Executive’s death. |
Benefit shall be distributed in equally monthly installments. |
Payments to the Beneficiary (ies) shall commence on the first day of the month immediately following the Executive’s death and shall continue for ten (10) years. |
Death during installment payout of benefit under Tables A or B. |
Remaining installment payments, if any, under Table A or B. |
In the same form of benefit distribution had the Executive lived. |
Payment(s) to the Beneficiary (ies) continue on same schedule as if Executive had lived. |
Article 2
The purpose of this Agreement is to further the growth and development of the Bank by providing Executive with supplemental retirement income, and thereby encourage Executive’s productive efforts on behalf of the Bank and the Bank’s depositors, and to align the interests of the Executive and those depositors. The Bank promises to make certain payments to the Executive, or the Executive’s Beneficiary, at retirement, death, or upon some other qualifying event pursuant to the terms of this Agreement.
Article 3
It is intended that this Agreement comply and be construed in accordance with Section 409A of the Internal Revenue Code (the “Code”). It is also intended that the Agreement be “unfunded” and maintained for a select group of management or highly compensated employees of the Bank, for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and not be construed to provide income to the Executive or Beneficiary under the Code prior to actual receipt of benefits.
Where the following words and phrases appear in the Agreement, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary:
3.1 |
“Accrued Liability Balance” shall mean the amount accrued by the Bank to fund the future benefit expense associated with this Agreement. The Bank shall account for this benefit using Generally Accepted Accounting Principles, regulatory accounting guidance of the Bank’s primary federal regulator, and other applicable accounting guidance, including APB 12 and FAS 106. Accordingly, the Bank shall establish a liability retirement account for the Executive into which appropriate accruals shall be made using a reasonable discount rate, which may be adjusted from time to time. |
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PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
3.2 |
“Beneficiary” shall mean the person(s) designated by the Executive, including the estate of the Executive, entitled to a benefit under this Agreement. |
3.3 |
“Board” shall mean the Board of Directors of the Bank. |
3.4 |
“Change in Control” shall mean a change in ownership or control of the Bank as defined in Treasury Regulation §1.409A-3(i)(5) or any subsequently applicable published authority or guidance. |
3.5 |
“Code” shall mean the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder. |
3.6 |
“Discount Rate” shall mean the rate used by the Bank for determining the Accrued Liability Balance. |
3.7 |
“Effective Date” shall mean April 1, 2016. |
3.8 |
”Plan Year” shall mean each a twelve (12) month period commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date of the Agreement and end on the following December 31. |
3.9 |
“Separation from Service” shall mean that the Executive has retired or otherwise has a termination of employment with the Bank. For purposes of this Agreement, whether a termination of employment or service has occurred is determined based on whether the facts and circumstances indicate that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date, or that the level of bona fide services the Executive would perform after such date (whether as an Executive or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an Executive or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services to the Bank less than 36 months). Facts and circumstances to be considered in making this determination include, but are not limited to, whether the Executive continues to be treated as an Executive for other purposes (such as continuation of salary and participation in Executive benefit programs), whether similarly situated service providers have been treated consistently, and whether the Executive is permitted, and realistically available, to perform services for other service recipients in the same line of business. An Executive will be presumed not to have had a Separation from Service where the level of bona fide services performed continues at a level that is fifty percent (50%) or more of the average level of service performed by the Executive during the immediately preceding thirty-six (36) month period. A Separation from Service will not be deemed to have occurred while the Executive is on military leave, sick leave, or other bona fide leave of absence, provided Executive has the right to reemployment under an applicable statute or by contract. |
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PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
3.10 |
“Termination for Cause” shall mean a termination of employment for: |
(a) |
Gross negligence or gross neglect of duties to the Bank; or |
(b) |
Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or |
(c) |
Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Executive’s employment and resulting in a material adverse effect on the Bank. |
3.11 |
”Unforeseeable Emergency” shall mean a severe financial hardship to the Executive resulting from an illness or accident of the Executive, the Executive’s spouse, the Executive’s dependent, or the Executive’s Beneficiary, loss of the Executive’s property due to casualty, other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Executive. The imminent foreclosure of or eviction from the service provider’s primary residence may constitute an Unforeseeable Emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication, may constitute an Unforeseeable Emergency. Finally, the need to pay for the funeral expenses of a spouse, a beneficiary, or a dependent may also constitute an Unforeseeable Emergency. At all times this definition shall be construed in accordance with the definition under Section 409A. If the Executive seeks to terminate any current deferral elections or re-start the deferral election, it must be done in accordance with Section 409A. |
Article 4
4.1 |
4.2 |
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PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
4.3 |
4.4 |
Change in Form or Timing of Distributions. Any change to the form or timing of distributions hereunder shall be considered made only when it becomes irrevocable under the terms of the Agreement. Any change will be considered irrevocable not later than thirty (30) days following acceptance of the change by the Plan Administrator and must comply with the following rules: |
(1) |
The change may not accelerate the time or schedule of any distribution, except as provided in Code Section 1.409A-3(j)(4); |
(2) |
The subsequent deferral election may not take effect until at least twelve (12) months after the date on which the election is made; |
(3) |
The payment (except in the case of death, Disability, or Unforeseeable Emergency) upon which the subsequent deferral election is made is deferred for a period of not less than five (5) years from the date such payment would otherwise have been paid; and |
(4) |
In the case of a payment made at a specified time, the election must be made not less than twelve (12) months before the date the payment is scheduled to be paid. |
Article 5
5.1 |
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PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
5.2 |
5.3 |
Article 6
6.1 |
6.2 |
6.3 |
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PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
Article 7
7.1 |
7.2 |
7.3 |
7.4 |
7.5 |
7.6 |
7.7 |
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PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
7.8 |
Article 8
8.1 |
8.1.1 |
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(a) |
the specific reason or reasons for denial of the claim; |
(b) |
a specific reference to the Agreement provisions on which the denial is based; |
|
(c) |
a description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why such material or information is necessary; and |
|
(d) |
an explanation of the provisions of this Article. |
Under no circumstances shall any failure by the Plan Administrator to comply with the provisions of this Section 8.1.1 be considered to constitute an allowance of the Claimant’s claim. |
8.2 |
8.2.1 | Upon receipt of an appeal the Plan Administrator shall promptly take action to give due consideration to the appeal. Such consideration may include a hearing of the parties involved, if the Plan Administrator feels such a hearing is necessary. In preparing for this appeal the Claimant shall be given the right to review pertinent documents and the right to submit in writing a statement of issues and comments. After consideration of the merits of the appeal the Plan Administrator shall issue a written decision which shall be binding on all parties. The decision shall specifically state its reasons and pertinent Agreement provisions on which it relies. The Plan Administrator’s decision shall be issued within sixty (60) days after the appeal is filed, except that the Plan Administrator may extend the period of time for making a determination with respect to any claim for a period of up one-hundred and twenty (120) days, provided that the Plan Administrator determines that such an extension is necessary because of special circumstances and notifies the Claimant, prior to the expiration of the initial sixty (60) day period, of the circumstances requiring the extension of time and the date by which the Plan Administrator expects to render a decision. Under no circumstances shall any failure by the Plan Administrator to comply with the provisions of this Section 8.2.1 be considered to constitute an allowance of the Claimant’s claim. For issues involving medical judgment, the employee must consult with an independent health care professional who may not be the health care professional who rendered the initial claim. |
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PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
8.3 |
Article 9
9.1 |
9.2 |
9.3 |
(a) |
Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of the Agreement and further provided that all the Bank’s arrangements which are substantially similar to the Agreement are terminated so the Trustee and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of such terminations; |
(b) |
Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Trustee’s gross income in the latest of (i) the calendar year in which the Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or |
(c) |
Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Treasury Regulations Section 1.409A-1(c) if the Trustee participated in such arrangements (“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangements that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Agreement; |
the Bank may distribute the appropriate benefit as provided for within this Agreement and determined as of the date of the termination of the Agreement, to the Trustee in a lump sum subject to the above terms.
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PLUMAS BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
Article 10
10.1 |
10.2 |
10.3 |
10.4 |
10.5 | |
10.6 |
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10.7 |
10.8 |
10.9 |
10.10 |
10.11 |
10.12 |
10.13 |
Plumas Bank |
00 X. Xxxxxx Xxx. |
Xxxxxx, XX 00000 Attn: Xxxxxxx Xxxxxxxx |
Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Executive.
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10.14 |
10.15 |
10.16 |
10.17 |
10.18 |
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EXECUTIVE: |
BANK: |
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Plumas Bank |
/s/ Xxxxx X. Xxxxxx |
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By /s/ Xxxxxx X. Xxxxxx |
[Executive] |
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Title President and CEO |
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