EXHIBIT 99.5
BANK OF XXXXXX
SALARY CONTINUATION AGREEMENT
THIS SALARY CONTINUATION AGREEMENT (this "Agreement") is entered into
as of this 1st day of April, 2004, by and between Bank of Xxxxxx, a
California-chartered bank with its main office in Jackson, California (the
"Bank"), and Xxxxx X. Standing, President and Chief Executive Officer of the
Bank (the "Executive").
WHEREAS, the Executive has contributed substantially to the success of
the Bank, and the Bank desires that the Executive continue in its employ,
WHEREAS, to encourage the Executive to remain an employee of the Bank,
the Bank is willing to provide salary continuation benefits to the Executive,
payable out of the Bank's general assets,
WHEREAS, none of the conditions or events included in the definition of
the term "golden parachute payment" that is set forth in section 18(k)(4)(A)(ii)
of the Federal Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in
Federal Deposit Insurance Corporation Rule 359.1(f)(1)(ii) [12 CFR 359.1(f)
(1)(ii)] exists or, to the best knowledge of the Bank, is contemplated insofar
as the Bank is concerned, and
WHEREAS, the parties hereto intend that this Agreement shall be
considered an unfunded arrangement maintained primarily to provide supplemental
retirement benefits for the Executive, and to be considered a non-qualified
benefit plan for purposes of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The Executive is fully advised of the Bank's
financial status.
NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which art hereby
acknowledged, the parties hereto agree as follows.
ARTICLE 1
DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
meanings specified.
1.1 "Accrual Balance " means the liability that should be accrued
by the Bank under generally accepted accounting principles ("GAAP") for the
Bank's obligation to the Executive under this Agreement, by applying Accounting
Principles Board Opinion No. 12, as amended by Statement of Financial Accounting
Standards No. 106, and the calculation method and discount rate specified
hereinafter. The Accrual Balance shall be calculated assuming a level principal
amount and interest as the discount rate is accrued each period. The principal
accrual is determined such that when it is credited with interest each month,
the Accrual Balance at Normal Retirement Age equals the present value of the
normal retirement benefits. The discount rate means the rate used by the Plan
Administrator for determining the Accrual Balance. The rate in based on the
yield on a 20-year corporate bond rated Aa by Moody's, rounded to the nearest
3%. The initial discount rate is 6.00%. To its sole discretion, the Plan
Administrator may adjust the discount rate to maintain the rate within
reasonable standards according to GAAP.
1.2 "Beneficiary" means each designated person, or the estate of
the deceased Executive, entitled to benefits, if any, upon the death of the
Executive, determined according to Article 4.
1.3 "Beneficiary Designation Form" means the form established
from time to time by the Plan Administrator that the Executive completes, signs,
and returns to the Plan Administrator to designate one or more Beneficiaries.
1.4 "Change in Control" shall have the same meaning specified in
any employment or severance agreement existing on the date hereof or entered
into after the date of this Agreement by the Executive and the Bank. If the term
"Change in Control" is not defined in an employment agreement or severance
agreement, it means any of the following events occur:
(a) consummation of a reorganization, merger,
consolidation, sale of all or substantially all of the assets of the
Bank, or similar transaction or series of transactions, in which the
stockholders of the Bank who were stockholders of the Bank immediately
prior to the transaction hold less than fifty percent (50%) of the
combined voting power of the Bank immediately after consummation of the
transaction or series of transactions, or
(b) the filing of a report on Schedule 13D or another
form or schedule (other than Schedule 13G) that is required to be filed
under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934,
as amended, if the schedule discloses that the filing person or persons
acting in concert has or have become the beneficial owner of fifty
percent (50%) or more of a class of the Bank's voting securities.
However, this definition shall not apply to beneficial ownership of
voting securities of the Bank held in a fiduciary capacity by an entity
in which the Bank directly or indirectly beneficially owns fifty
percent (50%) or more of the outstanding voting securities, or
beneficial ownership of voting securities held by an employee benefit
plan maintained for the benefit of the Bank's employees.
1.5 "Disability" means the Executive suffers a sickness, accident
or injury that is determined by the carrier of any individual or group
disability insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled. At the Bank's request, the Executive must submit to the
Bank proof of the carrier's or Social Security Administration's determination.
1.6 "Effective Date" means April 1, 2004.
1.7 "Good Reason" shall have the same meaning specified in any
employment or severance agreement existing on the date hereof or catered into
after the date of this Agreement by the Executive and the Bank. If the term
"Good Reason" is not defined in an employment agreement or severance agreement,
it means:
(a) a material reduction in Executive's title or
responsibilities,
(b) a reduction in base salary as in effect on the date
of a Change in Control.
(c) relocation of the Bank's principal executive offices,
or requiring the Executive to change his principal work location, to
any location that is more than 15 miles from the location of the Bank's
principal executive offices on the date of this Agreement,
(d) the failure by the Bank to continue to provide the
Executive with compensation and benefits substantially similar to those
provided to him under any of the employee benefit plans in which the
Executive becomes a participant, or the taking of any action by the
Bank that would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit
enjoyed by him at the time of the Change in Control, or
(e) the failure of the Bank to obtain a satisfactory
agreement from any successor or assign of the Bank to assume and agree
to perform this Agreement, as contemplated in Section 7.5 hereof.
1.8 "Normal Retirement Age" means age 65.
1.9 "Normal Retirement Date" means the later of the Normal
Retirement Age and Termination of Employment with the Bank.
1.10 "Person" means an individual, corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or other entity.
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1.11 "Plan Administrator" means the plan administrator described in
Article 8.
1.12 "Plan Year" means the calendar year ending on December 31.
1.13 "Termination for Cause" means the definition of termination
for cause specified in any severance or employment agreement existing on the
date hereof or hereafter entered into between the Executive and the Bank. If the
Executive is not a party to a severance or employment agreement containing a
definition of termination for cause, Termination for Cause means the Bank has
terminated the Executive's employment for any of the following reasons:
(a) gross negligence or gross neglect of duties,
(b) fraud, disloyalty or willful violation of any law or
significant Bank policy committed in the course of the Executive's
employment and resulting in an adverse effect on the Bank. No act or
failure to act on the Executive's part shall be considered "willful"
unless the Executive acts without good faith, or without good faith
fails to act, and the Executive's action or inaction is without a
reaaonable belief that his action or inaction is in the Bank's best
interests.
1.14 "Termination of Employment" means the Executive ceases to be
employed by the Bank for any reason whatsoever, excepting a leave of absence
approved by the Bank. For purposes of this Agreement, if there is a dispute over
the employment status of the Executive or the date of termination of the
Executive's employment, the Bank shall have the sole and absolute right to
decide the dispute, unless a Change in Control shall have occurred within 12
months before termination of employment.
ARTICLE 2
LIFETIME BENEFITS
2.1 Normal Retirement Benefit. Upon the Executive's Termination of
Employment on or after the Normal Retirement Age for reasons other than death,
the Bank shall pay to the Executive the benefit described in this Section 2.1
instead of any other benefit under this Agreement.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1
is $32,000.
2.1.2 Payment of Benefits. Beginning with the month after the
Executive's Normal Retirement Date, the Bank shall pay the
annual benefit to the Executive in 12 equal monthly
installments on the first day of each month. The annual
benefit shall be paid to the Executive for 10 years.
2.2 Disability Benefit. If the Executive terminates employment
because of Disability before the Normal Retirement Age, the Bank shall pay to
the Executive the benefit described in this Section 2.2 instead of any other
benefit under this Agreement.
2.2.1 Amount of Benefit. The benefit under this Section 2.2 is the
Disability annual benefit amount set forth in Schedule A for
the Plan Year ending immediately before the date on which
termination of the Executive's employment occurs (except
during the first Plan Year, this benefit is the amount set
forth for Plan Year 1).
2.2.2 Payment of Benefit. Beginning with the month after the month
in which Termination of Employment becasuse of Disability
occurs, the Bank shall pay the Disability annual benefit
amount to the Executive in 12 equal monthly installments on
the first day of each month. The annual benefit shall be paid
to the Executive for 10 years.
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2.3 Change-in-Control Benefit. If the Executive's employment with
the Bank terminates involuntarily within 12 months after a Change in Control or
if the Executive terminates employment voluntarily for Good Reason within 12
months after a Change in Control, the Bank shall pay to the Executive the
benefit described in this Section 2.3 instead of any other benefit under this
Agreement. However, no benefits shall be payable under this Agreement if
termination occurs under Article 5 of this Agreement.
2.3.1 Amount of Benefit. The benefit under this Section 2.3 is the
lesser of (a) the Normal Retirement Age Accrual Balance
required by Section 2.1 and (b) the amount that is one dollar
less than the maximum amount that may be paid to the Executive
under this Agreement without causing the Executive's total
change-in-control benefits, whether payable under this
Agreement or otherwise, to exceed the Internal Revenue Code
parachute payment limitations under sections 280G and 4999 of
the Internal Revenue Code. The Executive understands and
agrees that, under this Section 2.3, the Executive's
change-in-control benefit may be reduced in part or in whole
as necessary to avoid denial of the Bank's compensation
deduction as a result of application of section 280G of the
Internal Revenue Code. All determinations made by the Bank of
the parachute payment limitations, the Executive's aggregate
change-in-control benefits, and the amount owing to the
Executive under this Section 2.3 shall be final and binding on
the Executive.
2.3.2 Payment of Benefit: The Bank shall pay the Change-in-Control
benefit under Section 2.3 of this Agreement to the Executive
in a single lump sum within 30 days after the Executive's
Termination of Employment.
2.4 Petition for Payment of Normal Retirement Benefit or
Disability Benefit. If the Executive is entitled to the Disability benefit
provided by Section 2.2, or if the Executive is entitled to the normal
retirement benefit provided by Section 2.1 and the Executive shall have reached
the Normal Retirement Date, the Executive may petition the board of directors to
have the Accrual Balance amount corresponding to that particular benefit paid to
the Executive in a single lump sum. The board of directors shall have sole and
absolute discretion about whether to pay the remaining Accrual Balance in a lump
sum. If payment of the remaining Accrual Balance is paid in a single lump sum,
the Bank shall have no further obligations under this Agreement.
2.5 Change-in-Control Payout of Normal Retirement Benefit or
Disability Benefit Being Paid to the Executive at the Time of a Change in
Control. If a Change in Control occurs at any time during the entire salary
continuation benefit payment period and if at the time of that Change in Control
the Executive is receiving the benefit provided by Section 2.1.2 or Section
2.2.2, the Bank shall pay the remaining salary continuation benefits to the
Executive in a single lump sum within 30 days after the Change in Control. The
lump-sum payment due to the Executive as a result of a Change in Control shall
be an amount equal to the Accrual Balance amount corresponding to that
particular benefit then being paid.
2.6 Contradiction in Terms of Agreement and Schedule A. If there
is a contradiction in the terms of this Agreement and the Schedule A attached
hereto with the actual amount of a particular benefit amount due the Executive
pursuant to Section 2.2 or 2.3 hereof, then the actual amount of said benefit
set forth in the Agreement shall control.
ARTICLE 3
DEATH BENEFITS
After the Executive's death, whether before or after Termination of
Employment, the Bank shall pay to the Executive's Beneficiary the benefit
described in the Endorsement Split Dollar Agreement attached to this Agreement
as Addendum A instead of any other benefit payable under this Agreement, in
accordance with the terms and conditions of the Endorsement Split Dollar
Agreement.
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ARTICLE 4
BENEFICIARIES
4.1 Beneficiary Designations, The Executive shall have the right
to designate at any time a Beneficiary to receive any benefits payable under
this Agreement upon the death of the Executive. The Beneficiary designated under
this Agreement may be the same as or different from the beneficiary designation
under any other benefit plan of the Bank in which the Executive participates.
4.2 Beneficiary Designation: Change. The Executive shall
designate a Beneficiary by completing and signing the Beneficiary Designation
Form and delivering it to the Plan Administrator or its designated agent. 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. The Executive shall have
the right to change a Beneficiary by completing, signing, and otherwise
complying with the terms of the Beneficiary Designation Form and the Plan
Administrator's rules and procedures, as in effect from firm to time. Upon the
acceptance by the Plan Administrator of a new Beneficiary Designation Form, all
Beneficiary designations previously filed shall be cancelled. The Plan
Administrator shall be entitled to rely on the last Beneficiary Designation Form
filed by the Executive and accepted by the Plan Administrator before the
Executive's death.
4.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted, and acknowledged in
writing by the Plan Administrator or its designated agent.
4.4 No Beneficiary Designation. If the Executive dies without a
valid beneficiary designation, or if all designated Beneficiaries predecease the
Executive, then the Executive's spouse shall be the designated Beneficiary. If
the Executive has no surviving spouse, the benefits shall be made to the
personal representative of the Executive's estate.
4.5 Facility of Payment. If a benefit is payable to a minor, to a
person declared incapacitated, or to a person incapable of handling the
disposition of his or her property, the Bank may pay such benefit to the
guardian, legal representative, or person having the care or custody of the
minor, incapacitated person, or incapable person. The Bank may require proof of
incapacity, minority, or guardianship as it may deem appropriate before
distribution of the benefit. Distribution shall completely discharge the Bank
from all liability for the benefit.
ARTICLE 5
GENERAL LIMITATIONS
5.1 Termination for Cause. Notwithstanding any provision of this
Agreement to the contrary, the Bank shall not pay any benefit under this
Agreement and this Agreement shall terminate if Termination of Employment (a) is
a result of Termination for Cause, or (b) occurs before Normal Retirement Age
(excepting Termination of Employment because of Disability or within 12 months
after a Change in Control). Likewise, the Bank shall not pay any benefits under
the Endorsement Split Dollar Agreement attached to this Agreement as Addendum A,
and the Endorsement Split Dollar Agreement also shall terminate, if Termination
of Employment (a) is a result of Termination for Cause, or (b) occurs before
Normal Retirement Age (excepting Termination of Employment because of Disability
or within 12 months after a Change in Control).
5.2 Suicide or Misstatement. The Bank shall not pay any benefit
under this Agreement if the Executive commits suicide within one year after the
date of this Agreement. In addition, the Bank shall not pay any benefit under
this Agreement if the Executive has made any material misstatement of fact on
any application or resume provided to the Bank, or on any application for any
benefits provided by the Bank to the Executive.
5.3 Removal. If the Executive is removed from office or
permanently prohibited from participating in the Bank's affairs by an order
issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, 12
U.S.C.
5
1818(e)(4) or (g)(1), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order.
5.4 Default. Notwithstanding any provision of this Agreement to
the contrary, if the Bank is in "default" or "in danger of default," as those
terms are defined in section 3(x) of the Federal Deposit Insurance Act, 12
U.S.C. 1813(x), all obligations under this Agreement shall terminate.
5.5 FDIC Open-Bank Assistance. All obligations under this
Agreement shall terminate, except to the extent determined that continuation of
the contract is necessary for the continued operation of the Bank, when the
Federal Deposit Insurance Corporation enters into an agreement to provide
assistance to or on behalf of the Bank under the authority contained in Federal
Deposit Insurance Act section 13(c). 12 U.S.C. 1823(c). Rights of the parties
that have already vested shall not be affected by such action, however.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 Claims Procedure. A person or beneficiary ("claimant") who has
not received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:
6.1.1 Initiation: Written Claim. The claimant initiates a claim by
submitting to the Bank a written claim for the benefits.
6.1.2 Timing of Bank Response. The Bank shall respond to such
claimant within 90 days after receiving the claim. If the Bank
determines that special circumstances require additional time
for processing the claim, the Bank can extend the response
period by an additional 90 days by notifying the claimant in
writing, prior to the end of the initial 90-day period, that
an additional period is required. The notice of extension must
set forth the special circumstances and the date by which the
Bank expects to render its decision.
6.1.3 Notice of Decision. If the Bank denies part or all of the
claim, the Bank shall notify the claimant or writing of such
denial. The Bank shall write the notification in a manner
calculated to be understood by the claimant. The notification
shall set forth:
6.1.3.1 The specific reasons for the denial,
6.1.3.2 A reference to the specific provisions of the
Agreement on which the denial is based,
6.1.3.3 A description of any additional information or
material necessary for the claimant to perfect the
claim and an explanation of why it is needed,
6.1.3.4 An explanation of the Agreement's review procedures
and the time limits applicable to such procedures,
and
6.1.3.5 A statement of the claimant's right to bring a civil
action under ERISA section 502(a) following an
adverse benefit determination on review.
6.2 Review Procedure. If the Bank denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the Bank
of the denial, as follows:
6.2.1 Initiation: Written Request. To initiate the review, the
claimant, within 60 days after receiving the Bank's notice of
denial, must file with the Bank a written request for review.
6
6.2.2 Additional Submissions: Information Access. The claimant shall
then have the opportunity to submit written comments,
documents, records and other information relating to the
claim. The Bank shall also provide the claimant, upon request
and free of charge, reasonable access to, and copies of, all
documents, records and other information relevant (as defined
in applicable ERISA regulations) to the claimant's claim for
benefits.
6.2.3 Considerations on Review. In considering the review, the Bank
shall take into account all materials and information the
claimant submits relating to the claim, without regard to
whether such information was submitted or considered in the
initial benefit determination.
6.2.4 Timing of Bank Response. The Bank shall respond in writing to
such claimant within 60 days after receiving the request for
review. If the Bank determines that special circumstances
require additional time for processing the claim, the Bank can
extend the response period by an additional 60 days by
notifying the claimant in writing, prior to the end of the
initial 60-day period, that an additional period is required.
The notice of extension must set forth the special
circumstances and the date by which the Bank expects to render
its decision.
6.2.5 Notice of Decision. The Bank shall notify the claimant in
writing of its decision on review. The Bank shall write the
notification in a manner calculated to be understood by the
claimant. The notification shall act forth:
6.2.5.1 The specific reason for the denial,
6.2.5.2 A reference to the specific provisions of the
Agreement on which the denial is based,
6.2.5.3 A statement that the claimant is entitled to receive,
upon request and free of charge, reasonable access
to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA
regulations) to the claimant's claim for benefits,
and
6.2.5.4 A statement of the claimant's right to bring a civil
action under ERISA section 502(a).
ARTICLE 7
MISCELLANEOUS
7.1 Amendments and Termination. Subject to Section 7.13 of this
Agreement (a) this Agreement may be amended solely by a written agreement signed
by the Bank and by the Executive, and (b) except for termination occurring under
Article 5, this Agreement may be terminated solely by a written agreement signed
by the Bank and by the Executive.
7.2 Binding Effect. This Agreement shall bind the Executive and
the Bank, and their beneficiaries, survivors, executors, successors,
administrators, and transferees.
7.3 No Guarantee 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 Bank, nor does it interfere with the Bank'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.
7.4 Non-Transferability. Benefits under this Agreement cannot be
mold, transferred, assigned, pledged, attached, or encumbered in any manner.
7
7.5 Successors; Binding Agreement. By an assumption agreement in
form and substance satisfactory to the Executive, the Bank shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Bank to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Bank would be required to perform this Agreement if no
such succession had occurred. The Bank's failure to obtain such an assumption
agreement before the succession becomes effective shall be considered a breach
of this Agreement and shall entitle the Executive to the Change-in-Control
benefit specified in Section 2.4
7.6 Tax Withholding. The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
7.7 Applicable Law. Except to the extent preempted by the laws of
the United States of America, the validity, interpretation, construction, and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of California, without giving effect to the
principles of conflict of laws of such state.
7.8 Unfunded Arrangement. The Executive and the Executive's
Beneficiary are general unsecured creditors of the Bank for the payment of
benefits under this Agreement. The benefits represent the mere promise by the
Bank 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 Bank to which the Executive and Beneficiary have no
preferred or secured claim.
7.9 Entire Agreement. This Agreement and the Endorsement Split
Dollar Agreement attached hereto as Addendum A constitute the entire agreement
between the Bank and the Executive as to the subject matter hereof. No rights
are granted to the Executive by this Agreement other than those specifically set
forth herein.
7.10 Severability. If for any reason any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not held invalid, and to the full extent consistent with law
each such other provision shall continue in full force and effect. If any
provision of this Agreement is held invalid in part, such invalidity shall not
affect the remainder of such provision not held invalid, and to the full extent
consistent with law the remainder of such provision, together with all other
provisions of this Agreement, shall continue in full force and effect.
7.11 Headings. The captions and headings of sections herein are
included solely for convenience of reference and shall not affect the meaning of
interpretation of any provision of this Agreement.
7.12 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed, certified or registered mail, return
receipt requested, with postage prepaid, to the following addresses or to such
other address as either party may designate by like notice.
(a) If to the Bank to:
Board of Directors
Bank of Xxxxxx
X.X. Xxx 000
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
If to the Executive, to:
Xxxxx X. Standing
X.X. Xxx 000
Xxxxxxx, Xxxxxxxxxx 00000
8
and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.
7.13 Termination or Modification of Agreement Because of Changes in
Law. Rules or Regulations. The Bank is entering into this Agreement on the
assumption that certain existing tax laws, rules, and regulations will continue
in effect in their current form. If that assumption materially changes and the
change has a material detrimental effect on this Agreement, then the Bank
reserves the right to terminate or modify this Agreement accordingly, subject to
the written consent of the Executive, which shall not be unreasonably withheld.
This Section 7.13 shall become null and void if a Change in Control occurs.
ARTICLE 8
ADMINISTRATION OF AGREEMENT
8.1 Plan Administrator Duties.This Agreement shall be administered
by a Plan Administrator consisting of the board or such committee or person(s)
as the board shall appoint. The Executive may be a member of the Plan
Administrator. The Plan Administrator shall also have the discretion and
authority to (a) make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Agreement and (b) decide or resolve
any and all questions, including interpretations of this Agreement, as may arise
in connection with the Agreement.
8.2 Agents. In the administration of this Agreement, the Plan
Administrator may employ agents and delegate to them such administrative duties
as it sees fit (including acting through a duly appointed representative) and
may from time to time consult with counsel, who may be counsel to the Bank.
8.3 Binding Effect of Decisions. The decision or action of the
Plan Administrator with respect to any question arising out of or in connection
with the administration, interpretation, and application of the Agreement and
the rules and regulations promulgated hereunder shall be final and conclusive
and binding upon all persons having any interest in the Agreement. No Executive
or Beneficiary shall be deemed to have any right vested or nonvested, regarding
the continued use of any previously adopted assumptions, including but not
limited to the discount rate and calculation method described in Section 1.1.
8.4 Indemnity of Plan Administrator. The Bank shall indemnify and
hold harmless the members of the Plan Administrator against any and all claims,
losses, damages, expenses, or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator or any of its members.
8.5 Bank Information. To enable the Plan Administrator to perform
its functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
retirement, Disability, death, or Termination of Employment of the Executive and
such other pertinent information as the Plan Administrator may reasonably
require.
IN WITNESS WHEREOF, the Executive and a duly authorized Bank director
have executed this Salary Continuation Agreement as of the date first written
above.
THE EXECUTIVE: THE BANK:
BANK OF XXXXXX
/s/ XXXXX X. STANDING By: /s/ XXXXX XXXXXX
---------------------------------- --------------------------------
Xxxxx X. Standing Its: Vice Chairman
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BENEFICIARY DESIGNATION
BANK OF XXXXXX
SALARY CONTINUATION AGREEMENT
I, Xxxxx X. Standing, designate the following as beneficiary of any
death benefits under this Salary Continuation Agreement:
Primary: Xxxxxx Xxxx Standing
Contingent: Xxxxxxxx Xxxx Standing, II
Xxxxxx Xxxx Standing, Trustees
UA DTD. Dec. 21, 1999 "The Standing 1999 Revocable Trust"
Note: To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.
I understand that I may change these beneficiary designations by filing
a new written designation with the Bank. I further understand that the
designations will be automatically revoked if the beneficiary predeceases me, or
if I have named my spouse as beneficiary and our marriage is subsequently
dissolved.
Signature: /s/ XXXXX X. STANDING
-------------------------------
Xxxxx X. Standing
Date: June 14, 2004
Accepted by the Bank this 15 day of June, 2004.
By: /s/ XXXXX XXXXXX
--------------------------
Title: Vice Chairman
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Schedule A
Bank Of Xxxxxx
Salary Continuation Agreement
Participant Name : Xxxxx Standing
Early
Early Termination Disability Benefit
Plan Year Executive's Termination Vested Annual Benefit Payable/year
Ending Age at Plan Accrual Vesting Accrual Payable @ Normal After Termination of
Plan Year December 31st Year End Balance @ 6%(1) Schedule(2) Balance Retirement Employment(3)
1 2004 61 41,794 0% 0 0 5,357
2 2005 62 100,176 0% 0 0 5,357
3 2006 63 162,061 0% 0 0 12,840
4 2007 64 227,660 0% 0 0 20,773
5 2008(4) 65 243,092 N/A 243,092 N/A 29,181
6 2009 66 210,136 N/A 210,136 N/A N/A
7 2010 67 189,709 N/A 189,709 N/A N/A
8 2011 68 168,056 N/A 168,056 N/A N/A
9 2012 69 145,105 N/A 145,105 N/A N/A
10 2013 70 120,776 N/A 120,776 N/A N/A
11 2014 71 94,988 N/A 94,988 N/A N/A
12 2015 72 67,652 N/A 67,652 N/A N/A
13 2016 73 38,676 N/A 38,676 N/A N/A
14 2017 74 7,962 N/A 7,962 N/A N/A
15 2018 75 0 N/A 0 N/A N/A
NOTES:
1 Accrual balance reflects payments at the beginning of each month after
retirement.
2 Participant is not vested till the normal retirement age.
3 Disability benefit is calculated as an annual payment stream of the accrual
balance that exists at the end of the year preceding the year in which
Termination of Employment because of Disability occurs, using a standard
discount rate (6.00%).
4 The projected retirement occurs on 03/23/2008, with the first normal
monthly retirement benefit commencing on 04/01/2008. The accrual balance at
the end of 03/23/2008 will be $243,092.
ADDENDUM A
BANK OF XXXXXX
ENDORSEMENT SPLIT DOLLAR AGREEMENT
This ENDORSEMENT SPLIT DOLLAR AGREEMENT (this "Split Dollar Agreement")
is entered into as of this 1st day of April, 2004, by and between Bank of
Xxxxxx, a California-chartered bank with its main office in Jackson, California
(the "Bank") and Xxxxx X. Standing, President and Chief Executive Officer of the
Bank (the "Executive").
To encourage the Executive to remain an employee of the Bank, the Bank
is willing to divide the death proceeds of a life insurance policy on the
Executive's life. The Bank will pay life insurance premium from its general
assets.
ARTICLE 1
GENERAL DEFINITIONS
Capitalized terms not otherwise defined in this Split Dollar Agreement
am used herein as defined in the Salary Continuation Agreement of even date
herewith. The following terms shall have the meanings specified.
1.1 "Administrator" means the administrator described in Article
8.
1.2 "Executive's Interest" means the benefit set forth in Section
2.2.
1.3 "Insured " means the Executive.
1.4 "Insurer" means each life insurance carrier in which there is
a Split Dollar Policy Endorsement attached to this Agreement.
1.5 "Net Death Proceeds" means the total death proceeds of the
Policy minus the cash surrender value.
1.6 "Policy" means the specific life insurance policy or policies
issued by the Insurer(s).
1.7 "Split Dollar Policy Endorsement" means the form required by
the Administrator or the Insurer to indicate the Executive's interest, if any,
in a Policy on such Executive's life.
ARTICLE 2
POLICY OWNERSHIP INTERESTS
2.1 Bank Ownership. The Bank is the sole owner of the Policy and
shall have the right to exercise all incidents of ownership. The Bank shall be
the beneficiary of any death proceeds remaining after the Executive's Interest
has been paid under Section 2.2 of this Split Dollar Agreement.
2.2 Executive's Interest. The Executive shall have the right to
designate the Beneficiary of death proceeds in an amount equal to the amount set
forth in Exhibit A that corresponds to the age of the Insured at the time of the
Insured's death, or one hundred percent (100%) of the Net Death Proceeds,
whichever amount is less. The Executive shall also have the right to elect and
change settlement options specified in the Policy that may be permitted.
2.3 Option to Purchase. The Bank shall not sell, surrender or
transfer ownership of the Policy while this Split Dollar Agreement is in effect
without first giving the Executive or the Executive's transferee a right of
first refusal to purchase the Policy for the Policy's interpolated terminal
reserve value (as determined by the Insurer). The right of first refusal to
purchase the Policy must be exercised within 60 days from the date the Bank
gives written notice of the Bank's intention to sell, surrender or transfer
ownership of the Policy. This provision shall not impair the right of the Bank
to terminate this Split Dollar Agreement.
2.4 Comparable Coverage. Upon execution of this Agreement, the
Bank shall maintain the Policy in full force and effect, and the Bank shall not
amend, terminate or otherwise abrogate the Executive's interest in the Policy
unless the Bank (a) replaces the Policy with a comparable insurance policy to
cover the benefit provided under this Split Dollar Agreement and (b) executes a
new Split Dollar Agreement and Endorsement for the comparable insurance policy.
The Policy or any comparable policy shall be subject to the claims of the Bank's
creditors.
ARTICLE 3
PREMIUMS
3.1 Premium Payment. The Bank shall pay any premiums due on the
Policy.
3.2 Imputed Income. The Bank shall impute income to the Executive
in an amount equal to (a) the current term rate for the Executive's age,
multiplied by (b) the net death benefit payable to the Executive's Beneficiary
under this Split Dollar Agreement. The "current term rate" is the minimum amount
required to be imputed under Revenue Rulings 64-328 and 66-110, or any
subsequent applicable authority.
ARTICLE 4
ASSIGNMENT
The Executive may assign without consideration all interests in the
Policy and in this Split Dollar Agreement to any person, entity or trust. If the
Executive transfers all of the Executive's interest in the Policy, then all of
the Executive's interest in the Policy and in the Split Dollar Agreement shall
be vested in the Executive's transferee, who shall be substituted as a party
hereunder, and the Executive shall have no further interest in the Policy or in
this Split Dollar Agreement.
ARTICLE 5
INSURER
The Insurer shall be bound only by the terms of the Policy. Any
payments the Insurer makes or actions it takes in accordance with the Policy
shall fully discharge it from all claims, suits and demands of all entities or
persons. The Insurer shall not be bound by or be deemed to have notice of the
provisions of this Split Dollar Agreement.
ARTICLE 6
CLAIMS PROCEDURE
6.1 Claims Procedure. A person or beneficiary ("claimant") who has
not received benefits under this Split Dollar Agreement that he or she believes
should be paid shall make a claim for such benefits as follows:
6.1.1 Initiation: Written Claim. The claimant initiates a claim by
submitting to the Bank a Written claim for the benefits.
6.1.2 Timing of Bank Response. The Bank shall respond to such
claimant within 90 days after receiving the claim. If the Bank
determines that special circumstances require additional time
for processing the claim, the Bank can extend the response
period by an additional 90 days by notifying the claimant in
writing, prior to the end of the initial 90-day period, that
an additional period is required. The notice of extension must
set forth the special circumstances and the date by which the
Bank expects to render its decision.
2
6.1.3 Notice of Decision. If the Bank denies part or all of the
claim, the Bank shall notify the claimant in writing of such
denial. The Bank shall write the notification in a manner
calculated to be understood by the claimant. The notification
shall set forth:
6.1.3.1 The specific reasons for the denial,
6.1.3.2 A reference to the specific provisions of the
agreement on which the denial is based,
6.1.3.3 A description of any additional information or
material necessary for the claimant to perfect the
claim and an explanation of why it is needed,
6.1.3.4 An explanation of the agreement's review procedures
and the time limits applicable to such procedures,
and
6.1.3.5 A statement of the claimant's right to bring a civil
action under ERISA section 502(a) following an
adverse benefit determination on review.
6.2 Review Procedure. If the Bank denies part or all of the claim,
the claimant shall have the opportunity for a full and fair
review by the Bank of the denial, as follows:
6.2.1 Initiation: Written Request. To initiate the review, the
claimant, within 60 days after receiving the Bank's notice of
denial, must file with the Bank a written request for review.
6.2.2 Additional Submissions. Information Access. The claimant shall
then have the opportunity to submit written comments,
documents, records and other information relating to the
claim. The Bank shall also provide the claimant, upon request
and free of charge, reasonable access to, and copies of, all
documents, records and other information relevant (as defined
in applicable ERISA regulations) to the claimant's claim for
benefits.
6.2.3 Considerations on Review. In considering the review, the Bank
shall take into account all materials and information the
claimant submits relating to the claim, without regard to
whether such information was submitted or considered in the
initial benefit determination.
6.2.4 Timing of Bank Response. The Bank shall respond in writing to
such claimant within 60 days after receiving the request for
review. If the Bank determines that special circumstances
require additional time for processing the claim, the Bank can
extend the response period by an additional 60 days by
notifying the claimant in writing, prior to the end of the
initial 60-day period, that an additional period is required.
The notice of extension must act forth the social
circumstances and the date by which the Bank expects to render
its decision.
6.2.5 Notice of Decision. The Bank shall notify the claimant in
writing of its decision on review. The Bank shall write the
notification in a manner calculated to be understood by the
claimant. The notification shall set forth:
6.2.5.1 The specific reason for the denial,
6.2.5.2 A reference to the specific provisions of the
agreement on which the denial is based,
6.2.5.3 A statement that the claimant is entitled to receive,
upon request and free of charge, reasonable access
to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA
regulations) to the claimant's claim for benefits,
and
3
6.2.5.4 A statement of the claimant's right to bring a civil
action under ERISA section 502(a).
ARTICLE 7
MISCELLANEOUS
7.1 Amendment. This Split Dollar Agreement may be amended solely
by a writing signed by the Bank and by the Insured.
7.2 Termination of Agreement. This Split Dollar Agreement shall
terminate upon the occurrence of any one of the following:
(a) The Insured is discharged from employment as a result of a
Termination for Cause, or
(b) Surrender, lapse, or other termination of the Policy by the
Bank or
(c) Distribution of the death benefit proceeds in accordance with
Section 2.2 above, or
(d) Termination of Employment of the Insured before the Normal
Retirement Age, unless Termination of Employment is the result
of Disability or unless Termination of Employment occurs
involuntarily within 12 months after a Change in Control or
voluntarily but for Good Reason within 12 months after a
Change in Control.
7.3 Binding Effect. This Split Dollar Agreement shall bind the
Executive and the Bank and their beneficiaries, survivors, executors,
administrations and transferees, and any Policy beneficiary.
7.4 No Guarantee of Employment. This Split Dollar Agreement is not
an employment policy or contract. It does not give the Executive the right to
remain an employee of the Bank, nor does it interfere with the Bank'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.
7.5 Successors; Binding Agreement. By an assumption agreement in
form and substance satisfactory to the Executive, the Bank shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Bank to
expressly assume and agree to perform this Split Dollar Agreement in the same
manner and to the same extent that the Bank would be required to perform this
Split Dollar Agreement if no succession had occurred.
7.6 Applicable Law. The Split Dollar Agreement and all rights
hereunder shall be governed by and construed according to the laws of the State
of California.
7.7 Entire Agreement. This Split Dollar Agreement and the Salary
Continuation Agreement constitute the entire agreement between the Bank and the
Executive concerning the subject matter hereof. No rights are granted to the
Executive by this Split Dollar Agreement other than those specifically set forth
herein.
7.8 Severability. If for any reason any provision of this Split
Dollar Agreement is held invalid, such invalidity shall not affect any other
provision of this Split Dollar Agreement not held invalid, and each such other
provision shall continue in full force and effect to the full extent consistent
with law. If any provision of this Split Dollar Agreement is held invalid in
part, such invalidity shall not affect the remainder of such provision not held
invalid, and the remainder of such provision, together with all other provisions
of this Split Dollar Agreement, shall continue in full force and effect to the
full extent consistent with law.
4
7.9 Headings. The headings of Sections herein are included solely
for convenience of reference and shall not affect the meaning or interpretation
of any provision of this Split Dollar Agreement.
7.10 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed, certified or registered mail, return
receipt requested, with postage prepaid (a) to Bank of Xxxxxx at X.X. Xxx 000,
000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Board of Directors, (b)
to the Executive at Bank of Xxxxxx, X.X. Xxx 000, 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx 00000, or (c) or to such other address as either party may designate
by like notice.
ARTICLE 8
ADMINISTRATION OF AGREEMENT
8.1 Administrator Duties. This Split Dollar Agreement shall be
administered by an Administrator, which shall consist of the board or such
committee as the board shall appoint. The Executive may be a member of the
Administrator. The Administrator shall also have the discretion and authority to
(a) make, amend, interpret, and enforce all appropriate rules and regulations
for the administration of this Split Dollar Agreement and (b) decide or resolve
any and all questions, including interpretations of this Split Dollar Agreement,
as may arise in connection with this Split Dollar Agreement.
8.2 Agents. In the administration of this Split Dollar Agreement,
the Administrator may employ agents and delegate to them such administrative
duties as it sees fit (including acting through a duly appointed representative)
and may from time to time consult with counsel, who may be counsel to the Bank.
8.3 Binding Effect of Decisions. The decision or action of the
Administrator with respect to any question arising out of or in connection with
the administration, interpretation, and application of this Split Dollar
Agreement and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in this Split Dollar
Agreement.
8.4 Indemnity of Administrator. The Bank shall indemnify and hold
harmless the members of the Administrator against any and all claims, losses,
damages, expenses, or liabilities arising from any action or failure to act with
respect to this Split Dollar Agreement, except in the case of willful misconduct
by the Administrator or any of its members.
8.5 Information. To enable the Administrator to perform its
functions, the Bank shall supply full and timely information to the
Administrator on all matters relating to the date and circumstances of the
retirement, death, or Termination of Employment of the Executive and such other
pertinent information as the Administrator may reasonably require.
IN WITNESS WHEREOF, the Bank and the Executive have executed this
Endorsement Split Dollar Agreement as of the date first written above.
THE EXECUTIVE: THE BANK:
BANK OF XXXXXX
/s/ XXXXX X. STANDING By: /s/ XXXXX XXXXXX
---------------------------------- --------------------------------
Xxxxx X. Standing Its: Vice Chairman
5
ENDORSEMENT
BANK OF XXXXXX
ENDORSEMENT SPLIT DOLLAR AGREEMENT
Insured: Xxxxx X. Standing Insurer:
Policy No.
Pursuant to the terms of the Bank of Xxxxxx Endorsement Split Dollar
Agreement dated as of April 1, 2004, the undersigned Owner requests that the
above-referenced policy issued by the Insurer provide for the following
beneficiary designation and limited contract ownership rights to the Insured:
1. Upon the death of the Insured, proceeds shall be paid in one
sum to the Owner, its successors or assigns, to the extent of its interest in
the policy. It is hereby provided that the Insurer may rely solely upon a
statement from the Owner as to the amount of proceeds it is entitled to receive
under this paragraph.
2. Any proceeds at the death of the Insured in excess of the
amount paid under the provisions of the preceding paragraph shall be paid in one
sum to:
Xxxxxx Xxxx Standing ###-##-####
--------------------------------------------------------------------------------
PRIMARY BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
Xxxxxxxx Xxxx Standing, II
Xxxxxx Xxxx Standing, Trustees
UA DTD Dec. 21, 1999 "The Standing 1999 Revocable Trust"
--------------------------------------------------------------------------------
CONTIGENT BENEFICIARY, RELATIONSHIP/SOCIAL SECURITY NUMBER
The exclusive right to change the beneficiary for the proceeds payable under
this paragraph, to elect any optional method of settlement for the proceeds paid
under this paragraph which are available under the terms of the policy and to
assign all rights and interests granted under this paragraph are hereby granted
to the Insured. The sole signature of the Insured shall be sufficient to
exercise said rights. The Owner retains all contract rights not granted to the
Insured under this paragraph.
3. It is agreed by the undersigned that this designation and
limited assignment of rights shall be subject in all respects to the contractual
terms of the policy.
4. Any payment directed by the Owner under this endorsement shall
be a full discharge of the Insurer, and such discharge shall be binding on a11
parties claiming any interest under the policy.
The undersigned for the Owner is signing in a representative capacity
and warrants that he or she has the authority to bind the entity on whose behalf
this document is being executed.
Signed at Jackson, California, this 14th day of June 2004.
INSURED: OWNER:
Bank of Xxxxxx
/s/ XXXXX X. STANDING By: /s/ XXXXX XXXXXX
---------------------------------- --------------------------------
Xxxxx X. Standing Its: Vice Chairman
6
EXHIBIT A
BANK OF XXXXXX
ENDORSEMENT SPLIT DOLLAR AGREEMENT
Xxxxx Standing
Age of Insured at the Amount of Death
End of Year time of death Benefits
----------- --------------------- ---------------
2004 61 $ 243,092
2005 62 $ 243,092
2006 63 $ 243,092
2007 64 $ 243,092
2008 65 $ 243,092
2009 66 $ 210,136
2010 67 $ 189,709
2011 68 $ 168,036
2012 69 $ 145,105
2013 70 $ 120,776
2014 71 $ 94,988
2015 72 $ 67,652
2016 73 $ 38,676
2017 74 $ 7,962
2018 75 $ 0
