SONOMA NATIONAL BANK AMENDED EXECUTIVE SALARY CONTINUATION AGREEMENT
Exhibit
10 (b)
SONOMA
NATIONAL BANK
This
Agreement is made and entered into as of February 14, 2006 (the “Effective
Date”) by and between Sonoma National Bank, a national banking association, (the
"Bank"), and Xxxxxxx X. Xxxxxxx, (the "Executive").
WITNESSETH:
WHEREAS,
the
Bank
employs the Executive to serve as its President and Chief Executive
Officer;
WHEREAS,
the Bank
and the Executive entered into an Executive Salary Continuation Agreement (“the
Agreement”), effective July 27, 1993, providing for certain benefits to the
Executive upon her death, disability or retirement;
WHEREAS,
as of
the Effective Date, the parties desire to make certain amendments and changes
to
the Agreement to clarify their original intent and to provide and set forth
in
one document, to be effective upon the date set forth below until termination
of
this Amended Agreement, those benefits herein specified to be provided to the
Executive upon her death, disability or retirement;
WHEREAS,
the
parties continue to agree that the Executive's experience, knowledge of the
affairs of the Bank, reputation and contacts in the industry are so valuable
that assurance of her continued service is essential for the future growth
and
profits of the Bank, and it is in the best interest of the Bank to arrange
terms
of continued employment for the Executive so as to reasonably assure her
remaining in the Bank’s employment during her lifetime or until the age of
retirement;
WHEREAS,
the
Bank
desires that the Executive's services be retained as herein provided,
and
WHEREAS,
the
Executive will continue in the employ of the Bank provided the Bank agrees
to
pay her or her beneficiary certain benefits in accordance with the terms and
conditions hereinafter set forth;
WHEREAS,
this
Amended Agreement is not part of any salary reduction plan or nonqualified
deferred compensation plan under Section 409A of the Code and the Executive
has
no option to elect to accelerate or defer the payment of any benefit provided
hereunder.
NOW,
THEREFORE, in
consideration of the services to be performed in the future as well as the
mutual promises and covenants herein contained, it is agreed as
follows:
ARTICLE
1
Definitions
1.1 “Bank”
shall mean Sonoma National Bank, a wholly owned subsidiary of Northern Empire
Bancshares (the “Company”), or any successors thereto.
1.2 “Beneficiary”
shall mean the person or persons designated in writing by Executive to receive
the benefits provided hereunder in the event of her death. Such designation
shall be valid only if made on a form provided by the Bank, and the Bank
receives the form prior to the Executive's death.
1.3 “Cause”
shall mean a failure by Executive to conform with high standards of diligence,
competence, skill, judgment, and efficiency in the execution of her duties
on
behalf of the Bank; provided, however, that Executive shall be entitled to
thirty (30) days written notice and opportunity to cure prior to any termination
for Cause. In addition, for purposes of this Amended Agreement, "Cause" shall
include dishonesty, fraud, conviction or plea of nolo contender to a felony
or
of a crime involving moral turpitude, willful destruction, or theft of Bank
property, willful malfeasance or gross negligence by the Executive in the
performance of her duties.
1.4 “Change
in Control” shall mean the occurrence of any of the following events:
(a) any
reorganization (as defined in Section 181 of the California Corporations Code),
merger or consolidation of the Bank in which the Bank is not the surviving
organization; (b) any
reorganization (as defined in Section 181 of the California Corporations Code),
merger or consolidation of the Company in which the Company is not the surviving
organization; (c) any
sale,
lease, exchange, mortgage, pledge, transfer or other disposition (in one
transaction or a series of transactions) of any assets of the Bank or of the
Company, having an aggregate fair market value of fifty percent (50%) of the
total value of the assets of the Bank or the Company and its consolidated
subsidiaries, reflected in the most recent balance sheet of the Bank or the
Company; or (d) any person (as such term used in Sections 13(d) and 14 (d)
(2)
of the Securities Exchange Act or 1934), other than the Company, becomes a
beneficial owner directly or indirectly of securities of the Bank representing
twenty-five percent (25%) of the combined voting power of the Bank's
then-outstanding securities.
1.5 “Code”
shall mean the Internal Revenue Code of 1986, as amended.
1.6 “Disability”
shall mean any disability that would meet the definition of a permissible
payment event pursuant to Section 409A(2)(C) of the Code.
1.7 “Retirement”
shall mean any termination of employment (other than for Cause) that occurs
after Executive has attained Retirement Age. “Retirement Age” shall be age
fifty-five (55).
ARTICLE
2
Conditions
to Receipt Benefits
2.1 Minimum
Service Requirement.
Executive shall be eligible to receive benefits under this Amended Agreement
after thirteen (13) years of service with the Bank, with such service credited
from January 1, 1993 (i.e.,
as of
January 1, 2006).
2.2 Distribution
Schedule.
Distributions under this Amended Agreement shall be in accordance with the
schedule described herein for the applicable distribution event. Executive
shall
have no discretion to accelerate or defer any of the scheduled payments other
than in accordance with Section 409A of the Code and its applicable
regulations.
2.3 Maximum
Benefit.
The
maximum benefit payable under this Amended Agreement shall be One Million Five
Hundred Thousand Dollars ($1,500,000).
2.4 Payment
Period.
Except
as otherwise indicated below, payments in accordance with this Amended Agreement
shall be made monthly for a period of fifteen (15) years (one hundred eighty
(180) months).
ARTICLE
3
Retirement
3.1 Retirement.
Beginning no later than March 15 of the year immediately following her
Retirement from the Bank, Executive shall be entitled to receive the annual
sum
of One Hundred Thousand Dollars ($100,000) for the duration of the Payment
Period, payable in equal monthly installments.
3.2 Early
Retirement.
In the
event Executive retires from employment with the Bank after achieving the
Minimum Service Requirement but prior to reaching Retirement Age, she shall
be
entitled to receive annual payments during the Payment Period as
follows:
|
13
years of service:
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$
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81,264
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||
|
14
|
$
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89,775
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||
|
15
and thereafter
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$
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100,000
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Notwithstanding
the date of early retirement, the Payment Period shall begin no later than
March
15 of the year immediately following the year in which Executive reaches
Retirement Age.
3.3 Death
After Retirement.
If the
Executive dies after Retirement but prior to receiving the full amount of
monthly payments to which she is entitled under this Article 3, the Bank will
continue to make such monthly payments to her Beneficiary.
ARTICLE
4
Death
or Disability
4.1 Death
Prior to Retirement.
In the
event that the Executive should die while actively employed by the Bank at
any
time after Effective Date, the Bank will pay the annual sum of One Hundred
Thousand dollars ($100,000) to the Beneficiary for the duration of the Payment
Period. The Payment Period shall commence no later than six (6) months after
the
date of death.
4.2 Disability.
In the
event that Executive employment is terminated as a result of Disability prior
to
attaining Retirement Age, her benefits shall be calculated in accordance with
Section 3.2 above; provided, however, that regardless of Executive’s age at the
time the disability, the Payment Period shall begin no later than March 15
of
the year immediately following her termination.
ARTICLE
5
Termination
other than for Retirement
5.1 Termination
for Cause.
If the
Executive is Terminated for Cause prior to Retirement, then she shall be
entitled to the benefits payable with respect to early retirement under Section
3.2 above; provided, however, that the Payment Period shall be for one year
(12
months) only.
5.2 Vesting
on a Change in Control.
Notwithstanding anything to the contrary contained herein, in the event of
a
Change in Control, the early benefits schedule described in 3.2 above shall
become fully vested and annual benefits payable as a result of any termination
hereunder (including for early retirement, Disability and Cause) shall be
$100,000, subject to the applicable Payment Period and timing conditions
described herein. If such vesting results in any payment that would be an
“Excess Parachute Payment” under Section 280G of the Code, the Bank shall take
whatever steps are necessary to ensure that Executive receives the full benefit
to which she is entitled hereunder, including (by way of example only),
extending the Payment Period and/or grossing up the payment to cover any
additional excise taxes.
ARTICLE
6
Miscellaneous
6.1 Funding
of Amended Agreement.
The
Bank may, but is not required to, voluntarily invest in a life insurance policy,
insuring the life of the Executive, to help fulfill its obligations to pay
benefits to the Beneficiary of Executive pursuant to this Amended Agreement.
The
specified benefits are payable to the Executive or her beneficiaries pursuant
to
the terms of this Amended Agreement, whether or not such life insurance is
purchased by or payable to the Bank. In the event the Bank purchases life
insurance, insuring the life of the Executive, the cash surrender value of
such
life insurance shall belong to and be a general asset of the Bank.
6.2 Termination
or Modification.
This
Amended Agreement is the entire agreement between the parties on this subject
matter and may not be modified or abrogated orally or by course of dealing,
but
only by another instrument in writing duly executed by the parties.
6.2 Prohibition
Against Assignment by Executive.
Neither
Executive nor her Beneficiary shall have the right to assign the benefits
payable under this Amended Agreement without the written permission of the
Bank.
6.3 Governing
Law.
This
Agreement shall be governed and construed in accordance with the laws of the
state of California, without regard to any applicable conflicts of law
rules.
6.4 Titles
and Headings.
The
titles, captions and headings of this Agreement are included for ease of
reference only and will be disregarded in interpreting or construing this
Agreement.
6.5 Counterparts.
This
Agreement may be executed in counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same
instrument.
6.6 Compliance
with Section 409A of the Code .
This
Agreement is intended to constitute an enforceable contract for the payment
of
certain retirement and death benefits. This
Amended Agreement is not intended to be a funded pension plan under the Employee
Retirement Income Security Act of 1974, nor is it intended to
constitute a "nonqualified deferred compensation plan" within the meaning of
Section 409A of the Code. Notwithstanding the foregoing, in the event this
Agreement and/or any benefit paid to the Employee hereunder is deemed to be
subject to Section 409A of the Code, this Agreement shall be amended as
reasonably necessary to bring this Agreement and/or any such benefit into
compliance with Section 409A of the Code, without reducing the amounts of any
benefits due to the Employee hereunder.
6.7 Participation
in Other Plans.
Nothing
contained in this Agreement shall be construed to alter, abridge or in any
manner affect the rights and privileges of the Executive to participate in
and
be covered by any pension, profit sharing, group insurance, bonus or similar
employee plans which the Bank may now or hereafter have.
6.8 Not
a
Contract of Employment.
This
Agreement shall not be deemed to constitute a contract of employment between
the
parties hereto, nor shall any provision hereof restrict the right of the Bank
to
discharge the Executive, or restrict the right of the Executive to terminate
her
employment.
IN
WITNESS WHEREOF, the
Bank
has caused this to be duly executed by its Chairman of the Board and its
corporate seal affixed, duly attested by its Secretary, and the Executive has
hereunto set her hand at Santa Rosa, California.
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EXECUTIVE:
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SONOMA
NATIONAL BANK
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/s/
Xxxxxxx X. Xxxxxxx
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/s/
Xxxxx X. Xxxxxx, Xx.
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XXXXXXX
X. XXXXXXX
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By:
Xxxxx X. Xxxxxx, Xx.
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Title:
Chairman of the Board
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