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EXHIBIT 10.4
Salary Continuation Agreement between Xxxxx de Oro Bank, N.A. and Xxxxxxx X.
Xxxxx dated January 10, 1996
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SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this 10th day of January 1996 by and between
Xxxxx de Oro Bank, N.A. (the "Company"), and Xxxxxxx Xxxxx (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets.
AGREEMENT
The Executive 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 meanings specified:
1.1.1 "Change of Control" means
(i) A change in the composition of the Company's
Board, as a result of which fewer than two-thirds of the incumbent
directors are directors who either (A) had been directors of the Company
24 months prior to such change or (B) were elected, or nominated for
election, to the Board with the affirmative votes of at least a majority
of the directors who had been directors of the Company
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24 months prior to such change and who were still in office at the time
of the election or nomination;
(ii) Any "person" (as such term is used in sections
13(d) and 14(d) of the Exchange Act) through the acquisition or
aggregation of securities is or becomes the beneficial owner, directly
or indirectly, of securities of the Company representing 26 percent or
more of the combined voting power of the Company's then outstanding
securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors (the
"Base Capital Stock"); except that any change in the relative beneficial
ownership of the Company's securities by any person resulting solely
from a reduction in the aggregate number of outstanding shares of Base
Capital Stock, and any decrease thereafter in such person's ownership of
securities, shall be disregarded until such person increases in any
manner, directly or indirectly, such person's beneficial ownership of
any securities of the Company.
1.1.2 "Code" means the Internal Revenue Code of 1986, as
amended. References to a Code section shall be deemed to be to that
section as it now exists and to any successor provision.
1.1.3 "Disability" means, if the Executive is covered by a
Company-sponsored disability insurance policy, total disability as
defined in such policy without regard to any waiting period. If the
Executive is not covered by
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such a policy, Disability means the Executive suffering a sickness,
accident or injury which, in the judgment of a physician satisfactory to
the Company, prevents the Executive from performing substantially all of
the Executive's normal duties for the Company. As a condition to any
benefits, the Company may require the Executive to submit to such
physical or mental evaluations and tests as the Company's Board of
Directors deems appropriate.
1.1.4 "Normal Retirement Date" means the Executive attaining
age 62.
1.1.5 "Termination of Employment" means the Executive's
ceasing to be employed by the Company for any reason whatsoever,
voluntary or involuntary, other than by reason of an approved leave of
absence.
1.1.6 "Plan Year" means twelve months ending on December 31.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. If the Executive terminates
employment on or after the Normal Retirement Date for reasons other than death,
the Company shall pay to the Executive the benefit described in this Section
2.1.
2.1.1 Amount of Benefit. The benefit under this Section 2.1 is
$108,000 per year ($9,000 per month).
2.1.2 Payments of Benefit. The Company shall pay the benefit
in monthly installments to the Executive on the
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first day of each month commencing with the month following the
Retirement Date and continuing for 179 additional months.
2.2 Termination Benefit Before Age 62. If the Executive terminates
employment for any reason prior to attaining age 62, the Company shall pay to
the Executive the benefit described in this Section 2.2.
2.2.1 Amount of Benefit. The monthly benefit under this
Section 2.2 is the monthly benefit which is payable on an actuarial
basis from the lump sum amount set forth in Schedule A based on the date
of the Executive's Termination of Employment.
2.2.2 Payment of Benefit. The Company shall pay the benefit to
the Executive on the first day of each month commencing with the month
following the Executive's Normal Retirement Date and continuing for 179
additional months.
2.2.3 Present Value Calculation. In determining the monthly
benefit under Section 2.2.1 from Schedule A, the interest factor shall
be the yield for ten-year U.S. Treasury Notes, as reported by the
Federal Reserve Bank and published in the West Coast edition of the Wall
Street Journal, plus 250 basis points. If this index should cease to be
published, the index shall be comparable.
2.3 Termination by the Company on Account of or After a Change of
Control. Notwithstanding anything contained herein to the contrary, in the
event: (i) the Executive's employment with
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the Company is terminated by the Company within two years of or by reason of a
Change of Control or (ii) by reason of the Company's actions any adverse and
material change occurs in the scope of the Executive's position,
responsibilities, duties, salary, benefits, or location of employment after a
Change of Control occurs; or (iii) the Company causes an event to occur which
reasonably constitutes or results in a demotion, a significant diminution of
responsibilities or authority, or a constructive termination (by forcing a
resignation or otherwise) of the Executive's employment after a Change of
Control occurs, then the Company shall pay to the Executive the benefit
described in this Section 2.3, in lieu of any other benefit under this
Agreement.
2.3.1 Amount of Benefit. The annual benefit under this Section
2.3 shall be $108,000 ($9,000 per month). There shall be no actuarial
reduction for payment prior to Executive's Normal Retirement Date.
2.3.2 Payment of Benefit. The Company shall pay the benefit to
the Executive on the first day of each month commencing with the month
following the date of the event triggering this Section 2.3 benefit and
continuing for 179 additional months.
2.3.3 Requirement for Company Funding. In the event of a
termination pursuant to Section 2.3, the Company shall immediately pay
such amounts as are necessary to provide this benefit under policies
attached to this Plan.
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The Company shall also reflect such additional liability on its balance
sheet.
ARTICLE 3
DEATH BENEFITS
3.1 Death During Active Service. If the Executive dies while in the
active service of the Company, the Company shall pay to the Executive's
beneficiary the benefit described in this Section 3.1.
3.1.1 Amount of Benefit. The benefit under Section 3.1 is the
lifetime benefit that would have been paid to the Executive under
Section 2.1 calculated as if the date of the Executive's death were the
Normal Retirement Date.
3.1.2 Payment of Benefit. The Company shall pay the benefit to
the Beneficiary on the first day of each month commencing with the month
following the Executive's death and continuing for 179 additional
months.
3.2 Death During Benefit Period. If the Executive dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Executive's
beneficiary at the same time and in the same amounts they would have been paid
to the Executive had the Executive survived.
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ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations. The Executive shall designate a
beneficiary by filing a written designation with the Company. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and, if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, of 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
incompetency, 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.
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ARTICLE 5
GENERAL LIMITATIONS
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement.
5.1 Excess Parachute Payment. To the extent the benefit would be an
excess parachute payment under Section 280G of the Code.
5.2 Termination for Cause. If the Company terminates the Executive's
employment for:
5.2.1 Gross negligence or gross neglect of duties;
5.2.2 Commission of a felony or of a gross misdemeanor
involving moral turpitude; or
5.2.3 Fraud, disloyalty, dishonesty or willful violation of
any law or significant Company policy committed in connection with the
Executive's employment and resulting in an adverse effect on the
Company.
5.3 Suicide. No benefits shall be payable if the Executive commits
suicide within two years after the date of this Agreement, of if the Executive
has made any material misstatement of fact on any application for life insurance
purchased by the Company.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 Claims Procedure. The Company shall notify the Executive's
beneficiary in writing, within ninety (90) days of
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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 beneficiary 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 it is needed, and (4) an explanation
of the Agreement's claims review procedure and other appropriate information as
to the steps to be taken if the beneficiary 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 beneficiary 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 addition al ninety-day period.
6.2 Review Procedure. If the beneficiary is determined by the
Company not to be eligible for benefits, or if the beneficiary believes that he
or she is entitled to greater or different benefits, the beneficiary 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
beneficiary 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,
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the Company shall afford the beneficiary (and counsel, if any) an opportunity to
present his or her position to the Company orally or in writing, and the
beneficiary (or counsel) shall have the right to review the pertinent documents.
The Company shall notify the beneficiary 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 beneficiary 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 beneficiary.
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
ARTICLE 8
MISCELLANEOUS
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
8.2 No Guaranty of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Company, nor does it
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interfere with the Company's right to discharge the Executive. It also does not
require the Executive to remain an employee nor interfere with the Executive's
right to terminate employment at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be
sold, transferred, assigned, pledged, attached or encumbered in any manner.
8.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
8.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of California, except to the extent preempted by the laws
of the United States of America.
8.6 Unfunded Arrangement. The Executive and 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 Executive's life is a general
asset of the Company to which the Executive and beneficiary have no preferred or
secured claim.
8.7 Determination of Golden Parachute Payments. The determination as
to whether a provision of this Agreement must be limited by the application of
the "golden parachute" provisions of Section 280G of the Internal Revenue Code
shall be made
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by a "Big 6" accounting firm acceptable to the Company and the Executive. The
determination shall be made within 90 days of notice of termination by the
Executive, and the accountant's fees shall be paid by the Company.
8.8 Mediation of Dispute. In the event of a dispute between the
Company and the Executive, the dispute shall be submitted to an independent,
private mediator agreeable to both the Company and the Executive. The mediator's
fees shall be paid by the Company. The results of the mediation shall be
non-binding unless the parties agree otherwise.
8.9 Attorney Fees. In the event of a dispute between the Company and
the Executive, the attorney fees of each party shall be borne by the
non-prevailing party.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
XXXXX DE ORO BANK, N.A.
/s/ XXXXXXX XXXXX
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Xxxxxxx Xxxxx By: /s/ [SIG]
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Title: CHAIRMAN
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SCHEDULE A
PARTICIPANT BALANCE SHEET AND POLICY DATA
SALARY CONTINUATION PLAN
XXXXX DE ORO BANK, N.A.
XXXXXXX XXXXX
AGE 49, RETIRES AT AGE 62 WITH
$108,000 ANNUAL BENEFIT,
FOR 13 YEARS
ACCRUED ACCRUED
SALARY SALARY
PLAN CONTINUATION PLAN CONTINUATION
YEAR LIABILITY YEAR LIABILITY
---- ------------ ---- ------------
1 37,699 23 433,559
2 78,935 24 361,662
3 124,039 25 283,020
4 173,374 26 197,001
5 227,337 27 102,913
6 286,362 28 0
7 350,924
8 421,543 --post life expectancy--
9 498,786
10 583,275 29 0
11 675,690 30 0
12 776,774 31 0
13 887,340 32 0
33 0
--post retirement-- 34 0
35 0
14 858,010 36 0
15 825,929 37 0
16 790,839 38 0
17 752,457 39 0
18 710,474
19 664,553
20 614,324
21 559,384
22 499,290
