Exhibit 10.3 Cerritos Valley Bank Deferred Compensation Agreement for Xxxxx X.
Xxxxx
CERRITOS VALLEY BANK
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made and entered into this 24th day of December, 1993 by and
between Cerritos Valley Bank (the "Company"), and Xxxxx X. Xxxxx (the
"Executive").
INTRODUCTION
As encouragement for the Executive to remain an employee of the Company, the
Company is providing Executive a deferred compensation arrangement. The
benefits from the deferred compensation arrangement will be paid from the
Company's 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 the transfer of shares of the
Company's voting common stock such that one person (other than the Executive) or
any group of persons acting in concert (other than a group containing the
Executive) acquires (or is deemed to acquire under Section 318 of the Internal
Revenue Code of 1986, as amended) 51% or more of the Company's outstanding
voting common stock followed within twelve (12) months by the replacement of
fifty percent (50%) or more of the members of the Company's Board of Directors
that existed immediately prior to such person or group acquiring 51% of the
Company's outstanding voting common stock (for reasons other than death or
disability).
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 "Compensation" means the total annual base salary payable to
the Executive.
1.1.4 "Distribution Date" means January 1, 2001.
1.1.5 "Election Form" means the Form attached as Exhibit 1.
ARTICLE 2
DEFERRAL ELECTION
2.1 INITIAL ELECTION. The Executive shall make an initial deferral
election under this Agreement by filing with the Company a signed Election Form
within 30 days after the date of this
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Agreement. The Election Form shall set forth the amount of Compensation to be
deferred. The Election Form shall be effective to defer only Compensation
earned after the date the Election Form is received by the Company. No
Compensation shall be deferred after a Change in Control or the Distribution
Date.
2.2 ELECTION CHANGES.
2.2.1 GENERALLY. The Executive may modify the amount of Compensation
to be deferred by filing a subsequent signed Election Form with the Company.
The modified deferral shall not be effective until the calendar year following
the year in which the subsequent Election Form is received by the Company. The
Executive may not change the form of benefit payment initially elected under
Section 2.1.
2.2.2 HARDSHIP. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or similar
event outside the control of the Executive occurs, the Executive may, by written
instructions to the Company, reduce future deferrals under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 ESTABLISHING AND CREDITING. The Company shall establish a Deferral
Account on its books for the Executive, and shall credit to the Deferral Account
the following amounts:
3.1.1 DEFERRALS. The Compensation deferred by the Executive, as of
the time such amounts would have otherwise been paid to the Executive.
3.1.2 INTEREST. Interest on the account balance of the Deferred
Account since the preceding credit under this Section 3.1.2, if any, at an
annual rate, compounded monthly, that is equal to the Wall Street Journal Prime
Rate + 2.0% as of the end of the month (or business day closest to the end of
month) for the same period. Interest shall be calculated monthly and posted to
the Deferral Account on a monthly basis. Interest for any partial period should
be calculated based on the actual number of days in the month. Interest shall
accrue on the account balance of the Deferral Account until such time the
Deferral Account has been completely distributed.
3.2 STATEMENT OF ACCOUNTS. The Company shall provide to the Executive,
within one hundred twenty (120) days after each anniversary of this Agreement, a
statement setting forth the Deferral Account balance.
3.3 ACCOUNTING DEVICE ONLY. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not
a trust fund of any kind.
3.4 UNFUNDED ARRANGEMENT. The Executive is a general unsecured creditor
of the Company for the payment of benefits under this Agreement. The benefits
represent the Company's mere promise 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 any beneficiary have no preferred or secured
claim.
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ARTICLE 4
LIFETIME BENEFITS
4.1 DISTRIBUTION DATE. On the Distribution Date, the Company shall pay
the benefit equal to Deferral Account balance at the Distribution Date and
interest accruing on such after the Distribution Date to the Executive in 120
nearly equal monthly installments commencing on the first day of the month
following the Distribution Date as elected by Executive on the Election Form.
Interest on the account balance of the Deferral Account shall continue until the
Deferral Account has been completely distributed.
4.2 CHANGE OF CONTROL BENEFIT. Upon a Change of Control which is prior to
the Distribution Date the Company shall pay to the Executive the benefit equal
to the Deferral Account balance at the date of the Change of Control. The
Company shall pay the benefit equal to Deferral Account balance at the date of
the Change of Control and interest accruing on such after the date of the Change
of Control to the Executive in 60 nearly equal monthly installments commencing
on the first day of the month following the date of the Change of Control.
Interest on the account balance of the Deferral Account shall continue until the
Deferral Account has been completely distributed.
4.3 HARDSHIP DISTRIBUTION. Upon the Company's determination (following
petition by the Executive) that the Executive has suffered an unforeseeable
financial emergency as described in Section 2.2.2, the Company shall distribute
to the Executive all or a portion of the Deferral Account balance as determined
by the Company, but in no event shall the distribution be greater than is
necessary to relieve the financial hardship.
ARTICLE 5
DEATH BENEFITS
5.1 DEATH PRIOR TO THE DISTRIBUTION DATE. If the Executive dies prior to
the Distribution Date, the Company shall pay to the Executive's beneficiary the
benefit equal to $204,037 per year for a period of ten years in lieu of the
benefit equal to the Deferral Account balance at the date of the Executive's
death. The Company shall pay the benefit to the beneficiary in 120 nearly equal
monthly installments commencing on the first day of the month following the
Executive's death.
5.2 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 it would have paid to the
Executive had the Executive survived.
ARTICLE 6
BENEFICIARIES
6.1 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, a new
designation 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
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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.
6.2 FACILITY OF PAYMENT. If a benefit is payable to a minor, to a person
declared incompetent, or a 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.
ARTICLE 7
CLAIMS AND REVIEW PROCEDURES
7.1 CLAIMS PROCEDURE. The Company shall notify the Executive's
beneficiary in writing, within thirty (30) days of his or her written
application for benefits, of his or her eligibility or noneligibility 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 additional thirty (30) day period.
7.2 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 thirty (30) 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,
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 no later
than thirty (30) days after receipt of the presentation of the position of the
beneficiary or sixty (60) days after receipt by the Company of the petition of
the beneficiary, 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.
7.3 BENEFITS REQUIRED TO BE PAID. Section 7.1 and 7.2 of this Article 7
shall not be construed to relieve the Company of its obligation to pay Executive
or Executive's beneficiary the benefits provided by this Agreement.
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ARTICLE 8
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement signed
by the Company and the Executive. In no event shall this Agreement be
terminated without payment to the Executive of the Deferral Account balance
attributable to Executive's deferrals and interest credited on such amounts.
ARTICLE 9
MISCELLANEOUS
9.1 BINDING EFFECT. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
9.2 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 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.
9.3 NONTRANSFERABILITY. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
9.4 TAX WITHHOLDING. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
9.5 APPLICABLE LAW. The Agreement and all rights hereunder shall be
governed by the laws of California.
9.6 ATTORNEYS FEES. In the event that either party to this Agreement
brings an action or suit against the other party by reason of any breach of this
Agreement, the prevailing party in whose favor final judgment is entered shall
be entitled to have and recover from the losing party all reasonable costs and
expenses incurred or sustained by such prevailing party in connection with such
suit or action, including, without limitation, legal fees and court costs.
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IN WITNESS WHEREOF, the Executive and a duly authorized officer of the Company
have signed this Agreement.
EXECUTIVE CERRITOS VALLEY BANK
/s/ Xxxxx X. Xxxxx /s/ Xxx Xxxx
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Xxxxx X. Xxxxx Xx. Xxx Xxxx
Chairman of the Board
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Executive Vice President
Chief Financial Officer & Cashier
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