DEFERRED COMPENSATION AGREEMENT
This Agreement is made and entered into this 17th day of May, 1993, by
and between Humboldt Bank, a state bank organized under the laws of the State of
California ("Employer"), and Xxxxxx X. Xxxxxxx, a full-time employee and
officer, being the Senior Loan Officer and S.V.P. of the Bank ("Executive").
RECITALS
WHEREAS, Employer has employed Executive in the capacity set forth
hereinabove, and Executive desires to provide for a retirement program through a
Deferred Compensation Agreement; and
WHEREAS, Employer and Executive desire to set forth their contractual
agreement as to deferring a portion of Executive's compensation as a Deferred
Compensation Plan and to provide Executive certain additional benefits as set
forth in this Agreement In the event of Executive's death.
NOW, THEREFORE, In consideration of the mutual agreements contained
herein, Employer and Executive agree as follows:
DEFINITIONS
ARTICLE 1
1.1 Definitions. Whenever used in this Agreement, the following words
and phrases shall have the meanings specified:
1.2 Beneficiary. The term "Beneficiary" shall mean the person or persons
whom the Executive shall designate in a valid Beneficiary Designation Notice to
receive the benefits provided hereunder. A Beneficiary Designation Notice shall
be valid only if it is in the form attached hereto and made a part hereof and is
received by the Administrator prior to the Executive's death.
1.3 Change in Control. The term "Change in Control" shall mean a change
in control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation l4A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or in response to any other form
or report to the regulatory agencies or governmental authorities having
jurisdiction over Employer or any stock exchange on which Employer's shares are
listed which requires the reporting of a change in control; or any merger,
consolidation or reorganization of Employer in which Employer does not survive;
or any sale, lease, exchange, mortgage, pledge, transfer or other disposition
(in one transaction or a series of transactions) of any assets of Employer
having an aggregate fair market value of fifty percent (50%) of the total value
of the assets of Employer, reflected in the most recent balance sheet of
Employer; or any "person" (as such term is used In the Exchange Act or any
individual, corporation, partnership, trust or any other entity) is or
becomes the beneficial owner, directly or indirectly, or securities of Employer
representing 25%? or more of the combined voting power of Employer's then
outstanding securities; or in any one-year period, individuals who at the
beginning of such period constitute the Board of Directors of Employer cease for
any reason to constitute at least a majority thereof, unless the election, or
the nomination for election by Employer's shareholders, or each new director is
approved by a vote of at least three-quarters of the directors then still in
office who were directors at the beginning of the period; or a majority of the
members of the Board of Directors of Employer in office prior to the happening
of any event determines it its sole discretion that as a result of such event
there has been a change In control.
1.4 Disability. The term "Disability" shall have the same meaning given
such term in the Employer's Group Long Term Disability Benefits portion of the
Group insurance Plan dated May 1, 1989, which is incorporated herein by
reference to the limited extent thereof.
1.5 Administrator. The Administrator and sole fiduciary of this
Agreement shall be the Employer.
1.6 Plan Year. The term "Plan Year" shall mean the Employer's fiscal
year.
1.7 Surviving Spouse. The term "Surviving Spouse" shall mean the person,
if any, who shall be legally married to the Executive on the date of the
Executive's death.
AGREEMENT
ARTICLE 2
2.1 Executive hereby agrees to a reduction of the current payment of
compensation otherwise payable to him due to his employment by Employer in the
amount set forth on the "Salary Reduction Authorization Form" attached hereby as
Exhibit "A". The amount of salary elected by Employee to be deferred pursuant to
the Salary Reduction Authorization Form may be changed annually by a newly
executed Salary Reduction Authorization Form delivered to Bank prior to January
1st of each year as to which an election for deferral of salary applies. The
election by Executive to defer salary shall be a binding election to defer
receipt of such amount until such time as the deferred compensation is payable
to him pursuant to the express terms and conditions of this Agreement.
Compensation reductions as elected by Executive under this Agreement shall cease
at the end of the year in which Executive attains the age of sixty-five (65)
years, even if Executive is still employed by Employer at that time.
2.2 If an unforeseeable financial emergency arising from lower than
forecasted earnings, the death of a family member, divorce, sickness, injury,
catastrophe or similar event outside the control of the Executive occurs, the
Executive, by written instructions to the Employer may reduce future deferrals
under this Agreement.
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2.3 Employer will record all amounts deferred pursuant to Article 2
hereof in a separate unfunded account maintained on the books of Employer
("Account"). The Account will be segregated from other assets owned by Bank,
only by way of Its identification on the books and records of Employer as a
liability of Employer to Executive. The Account will be subject to the claims of
general creditors of the Employer, and Executive, as to the Account, shall be a
general unsecured creditor of Employer.
2.4 Until such time as all amounts held In the Account for the benefit
of Executive are fully paid out pursuant to the provisions of this Agreement,
Employer will credit interest on deferred compensation amounts held in the
Account at a rate determined as follows: Interest on amounts of deferred
compensation held in the Account will be calculated on a simple interest basis,
using a 365-day year with interest earned on the daily balance. The rate of
interest shall be the Employer's ("Bank's") Reference Rate plus one (1) percent.
The rate will adjust whenever the Bank's Reference Rate changes.
ARTICLE 3
3.1 Upon the occurrence of an event described in this Article 3,
Employer will pay to Executive or his designated beneficiary, subject to the
election hereinafter set forth, amounts credited to the Account for the benefit
of Executive at the time of the payment of such amount as provided for in this
Agreement.
Amounts payable to Executive upon the occurrence of an event
described in Article 3 shall be paid to Executive or his beneficiary in
accordance with the method elected by Executive In a signed writing setting
forth the method of payment desired by Executive and delivered to Employer prior
to the occurrence of an event of payment. Methods which Executive may elect are:
(a) A lump sum payment;
(b) In substantially equal monthly, quarterly or annual
installments over a five (5) year period;
(c) In substantially equal monthly, quarterly or annual
Installments over a ten (10) year period;
(d) In substantially equal monthly, quarterly or annual
installments over a fifteen (15) year period.
NOTE: If the Executive elects to receive monthly payments,
interest will be credited monthly on the unpaid portion of
the accrued benefit at the rate of prime plus one percent
(1%).
3.2 Retirement. If the Executive shall continue in the employ of the
Employer at least until attaining the age of sixty-five (65) years, one (1)
month, the Executive may retire from active daily employment as of January 1,
2002, or upon such later date as may be mutually agreed upon by the Executive
and the Employer. In any event, however, the Executive may continue to work
after the age of sixty-five (65) years, one (1) month. The Employer agrees that
upon such retirement it will pay to the Executive, per election in paragraph
3.1, the vested amount as set forth in Schedule A, year nine (9), attached
hereto and made a part hereof.
3.3 Death After Retirement. The Employer agrees that if the Executive
shall so retire, but shall die before receiving the full amount of payments to
which he is entitled hereunder, it will continue to make such payments to the
Executive's designated beneficiary as provided for in this Agreement. If a valid
Beneficiary Designation is not in effect, then the payment shall be made to the
Executive's Surviving Spouse, or if none, said payment shall be made to the duly
qualified personal representative, executor or administrator of the Executive's
estate.
3.4 Death Prior to Retirement. In the event the Executive should die
while actively employed by the Employer at any time after the date of this
Agreement, but prior to January 1, 2002, or if the Executive chooses to work
after the age of sixty-five (65) years, one (1) month, but dies before
retirement, the Executive will be considered to be one hundred percent (100%)
vested in the amount set forth in Schedule A, year nine (9), attached hereto and
made a part hereof. Said amount will be paid to the Executive's designated
beneficary as outlined in this Agreement.
3.5. Disability Prior to Retirement. In the event the Executive becomes
disabled while actively employed by the Employer at any time after the date of
this Agreement, but prior to January 1, 2002, or if the Executive chooses to
work after the age of sixty-five (65) years, one (1) month, but becomes disabled
prior to retirement, the Executive will be considered to be one hundred percent
(100?) vested in the amount set forth for the year in which the onset of
disability occurs in Schedule A attached hereto and made a part hereof. Said
amount will be paid to Executive per his election as outlined in paragraph 3.1.
In the event the Executive dies within two (2) years as a result of the injuries
or illness that caused the original disability, the full benefit amount, as set
forth in Schedule A, year nine (9), attached hereto and made a part hereof, will
be paid to the Executive's designated beneficiary as outlined in the Agreement.
ARTICLE 4
4.1 Termination of Employment. In the event that the employment of the
Executive terminates prior to January 1, 2002, other than by reason of
disability or death, then this Agreement shall terminate upon the date of such
termination of employment; provided, however, that the Executive shall be
entitled to the vested benefit amount as set forth, in the year of termination,
in Schedule A attached hereto and made a part hereof.
ARTICLE 5
5.1 Termination of Agreement by Reason of Changes In Law. Employer is
entering into this Agreement upon the assumption that certain existing tax laws
will continue in effect In substantially their current form. In the event of any
changes in such federal laws, the Employer shall have the option to terminate or
modify this Agreement, provided, however, that the Executive shall be entitled
to at least the same amount as he would have been entitled to under Paragraph
3.5 of this Agreement relating to disability. The payment of said amount shall
be made upon such terms and conditions and at such time as the Employer shall
determine, but in no event commencing later than January 1, 2002, or the date of
termination of the Executive's employment with Employer.
ARTICLE 6
6.1 Statement. The Employer shall provide Executive, on an annual basis,
an account statement showing the status of the deferred compensation account,
including deferred compensation credited thereto, together with interest
credited thereon.
ARTICLE 7
7.1 Funding. The Employer reserves the right to determine in its sole
and absolute discretion, whether, to what extent and by what method, if any, to
fund this Agreement. In the event that the Employer elects to fund this
Agreement, in whole or in part, through the use of life insurance or annuities,
or both, the Employer shall determine the ownership and beneficial interest of
any such policy of life insurance or annuity. The Employer further reserves the
right, in its sole and absolute discretion, to terminate any such policy, and
any other funding of this Agreement, at any time, in whole or in part. The
Executive shall not have any right, title or interest in or to any funding
source or amount utilized by the Employer pursuant to this Agreement, and any
such funding source or amount shall not constitute security for the performance
or the Employer's obligations pursuant to this Agreement. The Executive agrees
to sign any documents and undergo any medical examination, or tests, which the
Employer may request and which may be reasonably necessary to facilitate 'any
funding for this Agreement including, without limitation, the acquisition of any
policy of insurance or annuity.
ARTICLE 8
8.1 Nonassignable. Neither the Executive nor the Executive's spouse nor
any other beneficiary under this Agreement shall have any power or right to
transfer, assign, anticipate, hypothecate, mortgage, modify or otherwise
encumber in advance any of the benefits payable hereunder. Nor shall any of said
benefits be subject to seizure for the payment of any debts, judgements, alimony
or separate maintenance owed by the Executive or the Executive's beneficiary or
any of them, or be transferrable by operation of law in the event of bankruptcy,
insolvency or otherwise.
ARTICLE 9
9.1 Claims Procedure. The Employer shall make all determinations as to
the rights to benefits under this Agreement. Any decision by the Employer
denying a claim by the Executive or the Executive's beneficiary for benefits
under this Agreement shall be stated in writing and delivered or mailed to the
Executive or said beneficiary. Such decision shall set forth the specific
reasons for the denial. in addition, the Employer shall provide a reasonable
opportunity to the Executive or said beneficiary for full and fair review of the
decision denying such claim.
ARTICLE 10
10.1 Unsecured General Creditor. The Executive and the Executive's
beneficiary shall have no legal or equitable rights, interests or claims in or
to any property or assets of the Employer. No assets of the Employer shall be
held under any trust for the benefit of the Executive or his beneficiaries or
held in any way as security for the fulfillment of the obligations of the
Employer under this Agreement. All of the Employer's assets shall be and remain
the general unpledged, unrestricted assets of the Employer. The Employer's
obligation under this Agreement shall be that of an unfunded and unsecured
promise by the Employer to pay money in the future. The Executive and its
beneficiaries shall be unsecured creditors with respect to any benefits
hereunder.
ARTICLE 11
11.1 Reorganization. The Employer shall not merge or consolidate into or
with another corporation, or reorganize or sell substantially all of its assets
to another corporation, firm or person, unless and until such succeeding or
continuing corporation, firm or person, agrees to assume and discharge the
obligations of the Employer under this Agreement. Upon the occurrence of such
event, the term "Employer" as used in this Agreement shall be deemed to refer to
such successor or survivor corporation.
ARTICLE 12
12.1 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Executive and the Employer and as applicable, their
respective heirs, beneficiaries, legal representatives, agents, successors and
assigns.
ARTICLE 13
13.1 Contract of Employment. This Agreement shall no be deemed to
constitute a contract of employment between the Executive and the Employer nor
shall any provision of this Agreement restrict the right of the Employer to
terminate the Executive's employment or restrict the right of the Executive to
terminate his employment. In the event that Executive has a separate Employment
Agreement with Employer and in the event of any discrepancy or different
treatment of any term or condition in this Agreement from said Employment
Agreement, or any renewal or extension thereof, the terms and provisions of the
Employment Agreement shall control.
ARTICLE 14
14.1 Notice. Any notice required or permitted of either the Executive or
the Employer under this Agreement shall be deemed to have been duly given, if by
personal delivery, upon the date received by the party or its authorized
representative; if by facsimile, upon transmission to a telephone number
previously provided by the party to whom the facsimile is transmitted as
reflected in the records of the party transmitting the facsimile and upon
reasonable confirmation of such transmission; and if by mail, on the third day
after mailing via U.S. first class mail, registered or certified, postage
prepaid and return receipt requested, and addressed to the party at the address
given below for the receipt of notices, or such changed address as may be
requested in writing by a party.
If to Employer: Humboldt Bank
Attention: Personnel Officer
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
If to Executive: Xxxxxx X. Xxxxxxx
000 Xxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
ARTICLE 15
15.1 Partial Invalidity. If any term, provision, covenant, or condition
of this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, such determination shall not render any other term,
provision, covenant or condition invalid, void or unenforceable, and the
Agreement shall remain in full force and effect notwithstanding such partial
invalidity.
ARTICLE 16
16.1 Arbitration. All claims, disputes and other matters in question
arising out or or relating to this Agreement or the breach of interpretation
thereof shall be resolved by arbitration before the Judicial Arbitration and
Mediation Services, Inc., ("JAMS"), 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxxxxxxx,
Xxxxxxxxxx, 00000. In the event JAMS is unable or unwilling to conduct the
arbitration pursuant to this provision, or has discontinued its business, the
parties agree that the American Arbitration Association ("AAA"), 000 Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, 00000, shall be selected as a substitute for
JAMS subject to the same terms set forth herein; provided, however, that the
rules of AAA shall apply to the conduct of the arbitration to the extent not
inconsistent with the intent of the parties as expressed herein. Any award
rendered by JAMS or AAA shall be final and binding upon the parties and as
applicable, their respective heirs, beneficiaries, legal representatives,
agents, successors and assigns, and the obligation of the parties to arbitrate
pursuant to this clause shall be specifically enforceable in accordance with
Title IX of the California Code of Civil Procedure. Any arbitration hereunder
shall be conducted within the city limits of Eureka, California.
ARTICLE 17
17.1 Governing Law and Jurisdiction. The laws of the United States of
America and the State of California, other than those laws denominated choice of
law rules, and the rules and regulations of the Board of Governors of the
Federal Reserve System shall govern the validity, construction and effect of
this Agreement.
ARTICLE 18
18.1 Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties with respect to the
subject matter of this Agreement and contains all of the covenants and
agreements between the parties with respect thereto. Each party to this
Agreement acknowledges that no other representations, inducements, promises, or
agreements, oral or otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not set forth herein, and that no other
agreement, statement, or promise not contained in this Agreement shall be valid
or binding on either party.
ARTICLE 19
19.1 Modifications. Any modification of this Agreement shall be
effective only if it is in writing and signed by a party or its authorized
representative.
IN WITNESS WHEREOF, the Employer and the Executive have executed this
Agreement in the city of Eureka, state of California on the date first
above-written.
EMPLOYER: EXECUTIVE:
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Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxx
Chairman of the Board
