EXHIBIT 10.5.1
Southwest Community Bank
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AMENDMENT TO
EXECUTIVE SUPPLEMENTAL COMPENSATION AGREEMENT
This Amendment dated April 19, 2006 amends the Executive Supplemental
Compensation Agreement between Southwest Community Bank (the "Bank") and Xxxxx
X. Xxxxxxxxxxx (the "Executive") dated October 17, 2001 (the "Agreement").
The parties desire to amend the Agreement so that it complies with
Internal Revenue Code Section 409A, which was promulgated pursuant to the
American Jobs Creation Act of 2004. Accordingly, the parties agree that the
Agreement shall be amended as follows:
1. Subparagraph 1.2 shall be amended in its entirety to read:
"1.2 Applicable Percentage. The term "Applicable Percentage"
shall mean that percentage listed on Schedule A attached hereto which
is adjacent to the date range which includes the date on which payments
are to commence under the terms of this Agreement. Notwithstanding the
foregoing or the percentages set forth on Schedule A, for purposes of
calculating the Executive Benefit under subparagraph 5.4, the
Applicable Percentage shall be one hundred percent (100%). In the event
the Executive becomes Disabled, as defined in subparagraph 1.6 below,
the Applicable Percentage shall be calculated as of the end of three
years following the year in which the Executive becomes Disabled."
2. Subparagraph 1.5 shall be amended in its entirety to read:
"1.5 Constructive Termination of Employment. The term
"Constructive Termination of Employment" shall mean termination of
Employment by Executive because the working conditions are so
intolerable or aggravated that a reasonable person in the Executive's
position would be compelled to resign, provided that the Executive
advised the Bank of the conditions and the Bank failed to take timely
reasonable action to remedy the conditions. Following a Change in
Control, a material adverse change in the Executive's position,
responsibilities, duties, salary, benefits or location of employment
are per se intolerable working conditions."
3. Subparagraph 1.6 shall be amended in its entirety to read:
"1.6 Disability/Disabled. The term "Disability" or "Disabled"
shall mean the Executive (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12)
months, or (ii) is, by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be
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expected to last for a continuous period of not less than twelve (12)
months, receiving income replacement benefits for a period of not less
than three (3) months under an accident and health plan covering
employees of the Bank."
4. Subparagraph 3.1 shall be amended in its entirety to read:
"3.1 Payments Commence Upon Early Retirement Date. In the
event the Executive elects to Retire on a date which constitutes an
Early Retirement Date, the Executive shall be entitled to be paid the
Applicable Percentage of the Executive Benefits, as described in
Schedule B, in substantially equal monthly installments on the first
day of each month, beginning with the month following the month in
which the Early Retirement Date occurs, payable until the Executive's
death. The commencement date for payments is subject to Paragraph 10
below."
5. Subparagraph 3.2 shall be amended in its entirety to read:
"3.2 Payments After Normal Retirement Age. If the Executive
remains in the continuous employment of the Bank until attaining
sixty-two (62) years of age, the Executive shall be entitled to be paid
the Applicable Percentage of the Executive Benefits, as described in
Schedule B, in substantially equal monthly installments on the first
day of each month, beginning with the month following the month in
which the Executive Retires or is terminated by the Bank without cause,
payable until the Executive's death. The commencement date for payments
is subject to Paragraph 10 below."
6. Subparagraph 5.1 shall be amended in its entirety to read:
"5.1 Termination Without Cause. If the Executive's employment
is terminated by the Bank without cause or by the Executive due to a
Constructive Termination of Employment, and such termination is not
subject to the provisions of subparagraph 5.4 below, the Executive
shall be entitled to be paid the Applicable Percentage of the Executive
Benefits calculated as of the end of the year following the year in
which the Executive is terminated, as if the employment had continued
to such date, in substantially equal monthly installments on the first
day of each month, beginning with the month following the month in
which the Executive attains sixty-two (62) years of age. The
commencement date for payments is subject to Paragraph 10 below."
7. Subparagraph 5.2(a) shall be amended in its entirety to read:
"5.2 Voluntary Termination by the Executive.
(a) If the Applicable Percentage is one hundred percent
(100%), the Executive shall be entitled to be paid the Applicable
Percentage of the Executive Benefits, as defined in Schedule B, in
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substantially equal monthly installments on the first day of each
month, beginning with the month following the month in which the
Executive attains sixty-two (62) years of age. The commencement date
for payments is subject to Paragraph 10 below."
8. Subparagraph 5.4 shall be amended in its entirety to read:
"5.4 Termination on Account of or After a Change in Control.
In the event: (1) the Executive's employment with the Bank is
terminated by the Bank in conjunction with, or by reason of, a Change
in Control; or (ii) after a Change in Control, there is a Constructive
Termination of Employment, then the Executive shall be entitled to be
paid the Applicable Percentage of the Executive Benefits, as described
on Schedule B, in substantially equal monthly installments on the first
day of each month, beginning the month following termination of
employment by the Bank or the Constructive Termination of Employment.
The commencement date for payments is subject to Paragraph 10 below."
9. Paragraph 6 shall be amended to add the following sentence and shall
otherwise remain in its entirety:
"All efforts by the Bank and the Executive to minimize the amount of
excise tax imposed by Section 4999 of the Code shall be in accordance with
Section 409A of the Code."
10. Paragraph 10 shall be amended in its entirety to read:
"10 Delay of Payment if Specified Employee. Other than with
respect to benefits paid in the event of Disability under Paragraph 4,
if at the time the Executive's employment terminates the Executive is a
"specified employee," as defined in Section 409A of Code, the Executive
Benefits shall not commence until the later of (a) the commencement
date otherwise set forth in the applicable paragraph of this Agreement
or (b) a date which is six months after the date of Executive's
termination of employment with the Bank. Furthermore, for any Executive
affected by this six (6) month delay in payment imposed by Section 409A
of the Code, and when applicable, the aggregate amount of the first
seven (7) months of installments shall be paid at the beginning of the
seventh month following the date of termination of employment. Monthly
installment payments shall continue thereafter as specified. If any
provision of this Employment Agreement does not satisfy the
requirements of Section 409A of the Code, such provision shall be
applied in a manner consistent with those requirements."
11. Subparagraph 11.10 shall be amended in its entirety to read:
"11.10 Amendments and Changes in Timing of Distributions. Any
amendments or modifications of this Agreement shall be effective only
if it is in writing and signed by each party or such party's authorized
representative. Notwithstanding the foregoing, this Agreement may not
be amended to accelerate the timing of distributions of the Executive
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Benefits unless such acceleration is permissible under Section 409A of
the Code. With the consent of the Bank, the Executive may elect a delay
in the payment or a change in the form of payment, subject to the
following limitations:
(a) the election may not take effect until at least
twelve (12) months after the date on which the election is made;
(b) other than in the event of death or Disability, the
first payment with respect to such election must be deferred for a
period of at least five (5) years from the date such payment otherwise
would have been made; and
(c) an election related to a payment to made at a
specified time may not be made less than twelve (12) months prior to
the date of the first scheduled payment."
12. Subparagraph 11.14 shall be added and read:
"11.1 IRC 409A Compliance. Notwithstanding any other provision
of Agreement, it is intended that any payment or benefit which is
provided pursuant to or in connection with this Agreement shall be
provided and paid in a manner, and at such time and in such form, as
complies with the applicable requirements of Section 409A of the Code
to avoid the unfavorable tax consequences provided therein for
non-compliance. Any provision in this Agreement that is determined to
violate the requirements of Section 409A shall be void and without
effect. To the extent permitted under Section 409A, the parties shall
reform the provision, provided such reformation shall not subject the
Executive to additional tax or interest and the Bank shall not be
required to incur any additional compensation as a result of the
reformation. In addition, any provision that is required to appear in
this Agreement that is not expressly set forth shall be deemed to be
set forth herein, and this Agreement shall be administered in all
respects as if such provision were expressly set forth. References in
this Agreement to Section 409A of the Code include rules, regulations,
and guidance of general application issued by the Department of the
Treasury under Internal Revenue Code Section 409A."
13. Except as specifically amended herein, the Agreement shall remain in
full force and effect.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first written above.
BANK:
Southwest Community Bank
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
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Its: Chairman
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THE EXECUTIVE:
/s/ Xxxxx X. Xxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxx
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