EXHIBIT 10.5
AGREEMENT
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THIS AGREEMENT made as of the 19th day of June, 1986, (hereinafter the
"Effective Date") by and between HIGHLAND FEDERAL SAVINGS AND LOAN ASSOCIATION,
a corporation organized and existing under and by virtue of the laws of the
State of California (hereinafter the "Company") and XXX XXXXXXXXX (hereinafter
the "Employee"), amends, restates and supersedes a prior Agreement between the
parties, which shall be of no further force and effect.
W I T N E S S E T H:
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WHEREAS, it is the desire of the Company to provide benefits for the Employee
or his survivors upon his retirement or death in order to provide incentives to
the Employee for his continued employment with the Company; and
WHEREAS, the Company by action of its Board of Directors the 19th day of
June, 1986, has duly authorized the adoption and execution of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the continued
employment of the Employee with the Company, it is mutually agreed as follows:
ARTICLE I
DEFINITIONS
1.1 The words "Anniversary Date" shall mean the anniversary of the Effective
Date of this Agreement in each and every year subsequent thereto.
1.2 The word "Beneficiary" shall mean any person who receives or is
designated to receive payment of any benefit under the terms of this Agreement
on the death of the Employee.
1.3 The word "Company" shall mean HIGHLAND FEDERAL SAVINGS AND LOAN
ASSOCIATION or any successor corporation or business organization.
1.4 The Employee is "Disabled" when he has been unable to perform his normal
duties of employment with the Company for a period of six (6) continuous months
(as defined in the Company's disability insurance policy covering the Employee,
as from time to time in effect, or as defined in the policy last maintained if
there is not one then in effect, or if none, as determined under the Chubb
United Insurance Company policy most commonly purchased as of the date of the
commencement of the purported disability).
1.5 Any Beneficiary designation heretofore filed by the Employee with the
Company under the superseded Agreement shall govern the payment of any benefits
hereunder unless and until a subsequent designation is filed with the Company.
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ARTICLE II
DEFERRED INCOME CREDITS
2.1 For each full year, to a maximum of four (4), subsequent to the Effective
Date, during which the Employee remains in the employ of the Company, the
Employee will be credited with "deferred income" in an amount equal to the sum
of the following:
(1) The Employee's salary deferral of $12,272.00 per annum out of the
otherwise payable annual compensation, if any, due to the Employee (hereinafter
"deferred salary"); and
(2) An additional amount on each Anniversary Date in an amount equal to
a percentage of the total amount of the deferred income credited to the Employee
as of the previous Anniversary Date equal to interest at the rate of seven
percent (7%) per annum (hereinafter "deferred interest").
2.2 For purposes of this Article II, the Employee shall be considered to be
in the employ of the Company during:
(a) Any period in which the Employee is absent with the consent of the
Company; or
(b) Any period during which the Employee is employed by any subsidiary
of the Company.
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ARTICLE III
RETIREMENT BENEFITS
3.1 The annual benefit payable to the Employee under this Agreement shall be
Ninety-Two Thousand Forty Dollars ($92,040) per annum, payable in like amounts
for fifteen (15) years, in monthly or other convenient installments of one-
twelfths (1/12ths) or proper portions of the annual amount, without interest.
3.2 In the event of the retirement of the Employee from the employ of the
Company on or after ten (10) years from the Effective Date (or such earlier date
as shall be specified by the Board of Directors of the Company) (hereinafter
"retirement date") the annual amount of retirement benefits shall be payable to
the Employee commencing thirty (30) days from his retirement date.
3.3 In the event of the termination of employment with the Company by the
Employee prior to his Retirement Date (other than reason of the Employee
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becoming disabled or dying), the Employee shall receive the greater of (a) his
deferred income as of the date of his termination, or (b) the product of twenty-
five percent (25%) times the number of full years (not exceeding four (4)) that
the Employee is credited with deferred compensation times his annual retirement
benefit (hereinafter "adjusted retirement benefit"). If his deferred income is
greater as of such date, it shall be paid to him in six (6) equal monthly
installments without interest commencing the first day of the
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month following his termination. If the adjusted retirement benefit is greater,
his annual retirement benefit shall be paid to him commencing on the date that
would have been his retirement date, over fifteen (15) years in monthly or other
convenient installments of one-twelfth (1/12) the retirement benefit, or proper
portions thereof, without interest.
Notwithstanding the foregoing, in the event a Change of Ownership occurs
prior to the Employee's termination of service, any benefit payable to the
Employee's termination of service, any benefit payable to the Employee under (b)
above shall be computed, if more favorable to the Employee, by substituting for
"twenty-five percent (25%) times the number of full years (not exceeding four
(4)) that the Employee is credited with deferred salary" the words "one hundred
percent (100%) times". A Change of Ownership shall have occurred on the date
when:
a. More than 50% of the then outstanding shares of the Company are held by
a person or group of persons (whether or not acting in concert) not the
holder of more than 50% of the shares on the Effective Date;
b. Any person or group of persons (whether or not acting in concert) holds
more than 50% of the shares of the Company then outstanding;
c. The Company is declared bankrupt or insolvent or makes an assignment
for the benefit of its creditors;
d. The Company is in material breach of any contract, agreement, law or
regulation;
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e. The Company merges with or becomes a subsidiary of another company and
is not the surviving entity or issues more than 50% of its then
outstanding shares in connection with such a transaction and is the
surviving entity.
Notwithstanding the foregoing, no payment shall be made to the Employee
which would subject the Company or Employee to any tax under IRS Section 280G.
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ARTICLE IV
DEATH BENEFITS
4.1 In the event of the death of the Employee prior to his termination of
employment, retirement date, or disability, his beneficiary shall be entitled to
receive (a) a single cash payment of Five Thousand Dollars ($5,000), plus (b)
the greater in present value of (i) the benefit described at Paragraph 3.3
determined as if the Employee had terminated his employment on the day
immediately prior to his death; or (ii) the retirement benefits or adjusted
retirement benefits payable to the Employee under Paragraph 3.1 of this
Agreement, in monthly or other convenient installments, of one-twelfth (1/12th)
or the proper portion of the annual retirement benefits, without interest,
commencing thirty (30) days after the date of the Employee's death and
continuing for fifteen (15) years, but reduced by ten percent (10%) for each
year less than ten (10) from the Effective Date to the date of death; or (iii)
the benefit described at Paragraph 5.1 determined as if the Employee had become
disabled on the day immediately prior to his death, payable as described
therein.
4.2 In the event of the death of the Employee after the commencement of
retirement benefit payments under any provision of Article III or V, his
beneficiary shall be entitled to continue to receive the remainder of the
installments of retirement benefits or adjusted retirement benefits otherwise
payable to the Employee, and no more; provided, however, that his
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beneficiary shall receive a single additional payment of the amount described at
Paragraph 4.1(a).
4.3 Beneficiaries shall be designated by the Employee from time to time in
such manner as the Company shall require. The Employee shall have the right to
change the beneficiary of any death benefits from time to time by filing notice
and any necessary forms indicating such change with the Company. Any beneficiary
entitled to receive payment of benefits shall have a like right to designate
beneficiaries unless successor beneficiaries were designated by the Employee, in
which case they may only designate further successors. No designation of
beneficiary shall be valid unless in writing signed by the Employee, dated, and
filed with and acknowledged by the Company. Beneficiaries may be changed without
the consent of any prior beneficiaries; provided that the consent of the
Employee's spouse must be obtained to the naming of any primary beneficiary
other than the spouse. If the Employee fails to designate a beneficiary or
successor beneficiary or if there is no beneficiary or successor beneficiary
surviving at his death or the death of the last properly designated beneficiary
or successor, benefits payable shall be paid to the following, in the order
named:
(a) Surviving spouse of the Employee;
(b) Descendents per stirpes of the Employee;
(c) Executor or administrator of the Employee; or
(d) Next of kin of the Employee as provided by the intestacy
laws of the State of California in effect at the time of the event requiring
determination in the order named in such laws.
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The Employee's spouse shall be deemed to have designated him as the
beneficiary of any community property interest she may have in all benefits
hereunder if she shall predecease the Employee, unless a different beneficiary
designation is signed by the spouse and Employee, dated, and filed with and
accepted by the Company in writing.
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ARTICLE V
DISABILITY BENEFITS
5.1 In the event of the disability of the Employee prior to the
termination of his employment or retirement date, he shall be entitled to
receive his annual retirement benefit for fifteen (15) years (payable in monthly
or other convenient installments, without interest) commencing on the date that
would have been his retirement date had he remained with the Company until such
date; provided, however, that such amount shall be reduced by ten percent (10%)
for each year less than ten (10) from the Effective Date to the date of
commencement of disability; but in no event shall he receive less than the
benefit described at Paragraph 3.3 determined as if the Employee had terminated
his employment on the day immediately prior to his disability commencement.
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ARTICLE VI
NONASSIGNABILITY
6.1 This Agreement may not be assigned by the Employee or by the Company
without the consent of the Employee, provided that in the event that
substantially all the assets of the Company are sold or transferred to a
successor corporation or business organization and such successor shall assume
the obligations of the Company hereunder, then the Company may assign this
Agreement without the consent of the Employee.
6.2 No benefits under this Agreement shall be subject in any manner to be
anticipated, alienated, sold, transferred, assigned, pledged, encumbered or
charged by the Employee or any beneficiary, and any attempt by the Employee to
so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the
same shall be void; nor shall any such benefits in any manner be liable for or
subject to the debts, contracts, liabilities, engagements or torts of the
Employee.
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ARTICLE VII
MISCELLANEOUS
7.1 Nothing herein contained shall be construed as giving the Employee the
right to be retained in the service of the Company or shall in any way affect
the right of the Company to control the Employee and to terminate the
employment of the Employee at any time. In the event, but only in the event,
that the Employee is requested by the Board of Directors and agrees in writing
to continue in the employ of the Company after his retirement date, the
retirement benefits otherwise payable to him or his beneficiary shall be
increased by an amount determined by the Company to be sufficient to provide the
Employee at his actual retirement with benefits of an equal value, using rates
approved by the Board of Directors, and the retirement benefits otherwise
payable to the Employee shall be deferred until such actual retirement.
7.2 The Company may insure the life of the Employee as an officer or
employee for such amount as it may deem necessary or advisable to implement the
foregoing provisions and to provide financial reimbursement for the loss of the
Employee. The Company shall name itself as beneficiary of all policies of life
insurance, shall pay all premiums on such insurance, and shall be the sole owner
of such policies. The Employee agrees to submit to any examination which may be
requested by the Company for the purpose of obtaining such insurance. Neither
the Employee nor his beneficiaries shall have any right, title or interest in
any
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such policies or the proceeds thereof. Provided, however, if the Employee and
the Corporation agree, such policy may be "split-dollared" between the Company
and the Employee. If such an arrangement is made, then for so long as such
"split-dollared" insurance is in effect, there shall be no death benefits
payable as provided under Article IV hereof, and all obligations of the Company
hereunder shall cease as of the Employee's Death. If such a policy is issued,
there shall be no changes made with respect to such policy (such as ownership,
beneficiary, or discontinuance of premium payments) without the prior written
approval of the Employee. In its sole discretion, the Company may satisfy any
and all obligations hereunder to the Employee or his beneficiaries by purchasing
and assigning an annuity policy from an insurance company licensed to do
business in the State of California providing for the payment of the benefits
otherwise payable hereunder. Upon any such assignment, all rights to payment
hereunder shall cease and neither the Employee nor his beneficiaries shall have
any further rights hereunder.
7.3 If any provision of this Agreement is held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provisions, and
this Agreement shall be construed and enforced as if such provision had not been
included.
7.4 This Agreement shall be binding on the Company and its successors and
assigns and the Employee, his successors and beneficiaries.
7.5 This Agreement shall be construed in accordance with the laws of the
State of California.
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7.6 Nothing created herein shall be deemed to create a trust of any kind
or create any fiduciary relationship. Funds set aside or invested hereunder
shall continue for all purposes to be a part of the general funds of the Company
and no person other than the Company shall, by virtue of the provisions hereof,
have any interest in such funds. Title to and beneficial ownership of any
assets, whether insurance policies, cash or investments, which the Company may
set aside to meet its obligations hereunder, shall at all times remain in the
Company. To the extent that the Employee acquires a right to receive payments
from the Company hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company.
7.7 If the Company is unable, within seven (7) years after any benefit
becomes due to the Employee or his beneficiary, to authorize payment because the
identity or whereabouts of such person cannot, after the exercise of due
diligence, be ascertained, the Company may direct that such benefit be forfeited
and all liability for the payment thereof shall terminate.
7.8 In the event that the Company shall, prior to distribution to the
Employee or his beneficiary of all amounts due him, terminate the Employee's
employment by reason of the commission of any illegal act intended by him to be
detrimental to the Company, the Employee's participation hereunder shall
forthwith terminate, and any interest he shall have (other than his deferred
salary, to the extent a like amount has not already been paid) whether or not
otherwise vested and whether or not due him or his beneficiary, shall be
forfeited.
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7.9 All benefits forfeited by reason of termination prior to vesting,
misdeeds, disappearance, or otherwise, shall remain the property of the Company.
7.10 The books and records to be maintained for the purposes of this
program shall be maintained by the officers and employees of the Company at its
expense and subject to the supervision and control of the Board of Directors.
All expenses of administration, including the expenses of maintaining books and
records and general administrative expenses, shall be paid by the Company.
7.11 Any amounts payable hereunder shall not be deemed salary or other
compensation to the Employee for the purpose of computing benefits to which he
may be entitled under any vacation, health, welfare, profit sharing or pension
plan or other arrangement of the Company for the benefit of its general
employees.
7.12 The program described herein may be amended in whole or in part from
time to time by the Board of Directors of the Company. The Employee and any
persons claiming any interest hereunder shall be bound by such amendments;
provided that no amendment shall deprive the Employee, without his consent, of
the interest he would be entitled to hereunder were his employment terminated at
the time of amendment. Notice of every such amendment shall be given in writing
to the Employee or his designated beneficiary if he is deceased.
7.13 Before making any payment or distribution to the Employee or a
beneficiary, the Company may deduct such amounts
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as, in its sole discretion, it deems proper to satisfy obligations owed to it by
the Employee or to protect itself against liability for or on account of debt,
succession, inheritance, income, and other taxes or liabilities of similar
import, and out of money so deducted, discharge any such obligations or
liabilities.
IN WITNESS WHEREOF, HIGHLAND FEDERAL SAVINGS AND LOAN ASSOCIATION, by its
duly authorized officers, and XXX XXXXXXXXX have caused this Agreement to be
executed as of the date and year first above written.
"COMPANY"
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HIGHLAND FEDERAL SAVINGS AND
LOAN ASSOCIATION
By /s/ Xxxxx X. Xxxxxxxx
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Its Xxxxx X. Xxxxxxxx, Secretary
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By /s/ Xxxxx Xxxxxxx
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Its Xxxxx Xxxxxxx
Senior Vice President
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"EMPLOYEE"
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/s/ Xxx Xxxxxxxxx
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XXX XXXXXXXXX
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DESIGNATION OF BENEFICIARY
Employee's Name XXXXXXXXX XXX SR.
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(Last) (First) (Middle)
Beneficiary's Name XXXXXXXXX XXXXX A.
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(Last) (First) (Middle)
Beneficiary's Address 00 XX XXXXX XXXXX, XXXXXX XXXXX XXXXXX, XX 00000
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Contingent Beneficiary SONS: XXXX, XXX XX, XXXX, AND XXXXX XXXXXXXXX
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The undersigned hereby designates the first beneficiary named as his
beneficiary with respect to any interest the undersigned may have at his death
under all deferred compensation Agreements, as amended from time to time. The
undersigned understands that the beneficiary named herein may be changed at any
time by notifying the Company in writing. If the first beneficiary named is not
living at the time of the undersigned's death, the undersigned hereby designates
the contingent beneficiary hereinabove named as beneficiary of any interest of
the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this designation this 20
day of Nov., 1986.
/s/ Xxx Xxxxxxxxx
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Employee
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Employee's Spouse
*If the employee who signs this form is married and designates a person other
than his spouse as beneficiary, the employee's spouse must approve such
designation by also signing this designation.
Effective October 1, 1987
Xx. Xxx Xxxxxxxxx
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Re: Amendment to Deferred Compensation Agreement
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Dear Xx. Xxxxxxxxx:
Effective June 19, 1986, you and Highland Federal Savings & Loan
Association (the "Company") entered into an Agreement providing for certain
deferred compensation benefits to you. The purpose of this letter is to reflect
an amendment to that Agreement effective October 1, 1987 (the "Amendment Date"),
as follows:
1. Paragraph 2.1(1) of the Agreement is amended to reflect the fact that
as of the Amendment Date, your annual deferred salary shall be increased by
$6,764. per annum.
2. Paragraph 3.1 of the Agreement is amended to reflect the fact that as
of the Amendment Date, your annual benefit shall be increased by $38,040.
3. Retirement, Disability and Death Benefits payable under the Agreement
shall be adjusted to correspond with the foregoing, and prorated to reflect any
partial deferral of salary consistent with our intent to provide you with a new
Anniversary Date for the incremental benefits provided for under this Agreement.
If the above is a correct statement of our agreed Amendment, please sign
and return the enclosed copy of this letter.
Very truly yours,
HIGHLAND FEDERAL SAVINGS
& LOAN ASSOCIATION
By /s/ Xxxxx Xxxxxxx
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XXXXX XXXXXXX
ACCEPTED & AGREED Senior Vice President
/s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx
HIGHLAND FEDERAL SAVINGS & LOAN ASSOCIATION
OF LOS ANGELES
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
March 16, 1988
Xx. Xxx Xxxxxxxxx
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Re: Amendment to Agreement Dated June 19, 1986
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Dear Xx. Xxxxxxxxx:
Effective June 19, 1986, you and Highland Federal Savings & Loan
Association (the "Company") entered into an Agreement (the "Agreement")
providing for certain deferred compensation, retirement, disability and death
benefits. The purpose of this letter is to reflect an amendment to the Agreement
which became effective October 1, 1987 (the "Amendment Date"), as follows:
1. Section 2.1(1) of the Agreement provides for an annual salary
deferral of $12,272 per annum for each of the four years commencing June 19,
1986. The Agreement is amended to reflect that there will be an additional
annual salary deferral of $6,754 per annum (the "Additional Salary Deferral"),
for each of the four years commencing on the Amendment Date.
2. The current annual benefit payable to you under the Agreement is
$92,040 (the "Current Benefit"). The annual benefit payable to you under the
Agreement represented by the Additional Salary Deferral shall be $38,040 (the
"Additional Benefit"). The Additional Benefit shall be payable at the times and
on the terms the Current Benefit is payable to you, except that for the purpose
of determining the amount of the Additional Benefit payable from time to time,
the "Effective Date" shall be the Amendment Date, and all determinations of the
amount of the Additional Benefit payable to you (or your beneficiary) upon your
retirement, termination of employment, death or disability shall be separately
determined based on the amount of the Additional Salary Deferral and number of
years
Xx. Xxx Xxxxxxxxx
March 16, 1988
Page 2
elapsed since the Amendment Date as of the date of such event.
3. Section 3.3 of the Agreement is hereby amended to delete the words
"prior to his Vesting Date" from the first sentence of such section.
If the foregoing correctly states the terms of our amendment to the
Agreement, please execute and return the enclosed copy of this letter.
Very truly yours,
HIGHLAND FEDERAL SAVINGS & LOAN
ASSOCIATION OF LOS ANGELES
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx,
Executive Vice President
AGREED TO AND ACCEPTED THIS
18 DAY OF MARCH, 1988:
/s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx
Effective January 2, 1989
Xx. Xxx Xxxxxxxxx
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Re: Amendment to Deferred Compensation Agreement
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Dear Xx. Xxxxxxxxx:
Effective June 19, 1986, you and Highland Federal Savings & Loan
Association (the "Company") entered into an Agreement providing for certain
deferred compensation benefits to you. The purpose of this letter is to reflect
an amendment to that Agreement effective January 2, 1989 (the "Amendment Date"),
as follows:
1. Paragraph 2.1(1) of the Agreement is amended to reflect the fact that
as of the Amendment Date, your annual deferred salary shall be increased by
$1,533 per annum.
2. Paragraph 3.1 of the Agreement is amended to reflect the fact that as
of the Amendment Date, your annual benefit shall be increased by $8,620.
3. Retirement, Disability and Death Benefits payable under the Agreement
shall be adjusted to correspond with the foregoing, and prorated to reflect any
partial deferral of salary consistent with our intent to provide you with a new
Anniversary Date for the incremental benefits provided for under this Amendment.
If the above is a correct statement of our agreed Amendment, please sign
and return the enclosed copy of this letter.
Very truly yours,
HIGHLAND FEDERAL SAVINGS
& LOAN ASSOCIATION
By /s/ Xxxxx Xxxxxxx
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XXXXX XXXXXXX
ACCEPTED & AGREED Chief Financial Officer
/s/ Xxx Xxxxxxxxx
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Xxx Xxxxxxxxx
