REDLANDS CENTENNIAL BANK
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this 17 day of March, 1998, by and between REDLANDS
CENTENNIAL BANK, a state commercial bank located at 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxx, XX (the "Company") and XXXXXXX X. XXXXXXX (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive.
The Company will pay the benefits from its general assets.
AGREEMENT
The Executive and the Company agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. Whenever used in this Agreement, the following words
and phrases shall have the meanings specified:
1.1.1 "CODE" means the Internal Revenue Code of 1986, as amended.
1.1.2 "DISABILITY" means, if the Executive is covered by a Company
sponsored disability policy, total disability as defined in such policy
without regard to any waiting period. If the Executive is not covered by
such a policy, Disability means the Executive suffering a sickness,
accident or injury which, in the judgment of a physician satisfactory to
the Company, prevents the Executive from performing substantially all of
the Executive's normal duties for the Company. As a condition to any
benefits, the Company may require the Executive to submit to such physical
or mental evaluations and tests as the Company's Board of Directors deems
appropriate.
1.1.3 "EARLY TERMINATION" means the Termination of Employment
before Normal Retirement Age for reasons other than death, Disability,
Termination for Cause or following a Change of Control.
1.1.4 "EARLY TERMINATION DATE" means the month, day and year in
which Early Termination occurs.
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1.1.5 "INVOLUNTARY TERMINATION OF EMPLOYMENT" means the Executive,
during active service and prior to attaining Normal Retirement Age, has
been notified by the Company, in writing, that he is being terminated as an
employee of the Company for reasons other than an approved leave of
absence, Termination for Cause, Voluntary Termination or Disability.
1.1.6 "NORMAL RETIREMENT AGE" means the Executive's 55th birthday.
1.1.7 "NORMAL RETIREMENT DATE" means the later of the Normal
Retirement Age or Termination of Employment.
1.1.8 "PLAN YEAR" means a twelve-month period commencing on March 17
and ending on March 17 of each year. The initial Plan Year shall commence
on the effective date of this Agreement.
1.1.9 "PROJECTED NORMAL RETIREMENT BENEFIT" means the Normal
Retirement Benefit under Section 2.1 of this Agreement determined as if
the Executive terminated his employment on his Normal Retirement Age.
1.1.10 "TERMINATION FOR CAUSE" See Section 5.2.
1.1.11 "TERMINATION OF EMPLOYMENT" means that the Executive ceases to
be employed by the Company for any reason whatsoever other than by reason
of a leave of absence which is approved by the Company. For purposes of
this Agreement, if there is a dispute over the employment status of the
Executive or the date of the Executive's Termination of Employment, the
Company shall have the sole and absolute right to decide the dispute.
1.1.12 "VOLUNTARY TERMINATION OF EMPLOYMENT" means the Executive,
during active service and prior to attaining Normal Retirement Age,
notifies the Company, in writing, that he is terminating his employment for
any reason except: (a) an approved leave of absence; (b) Disability; (c)
Termination for Cause; or (d) Involuntary Termination.
1.1.13 "CHANGE OF CONTROL" means on the date of (i) a merger,
where the Bank is not the surviving corporation; (ii) a consolidation,
where the Bank is not the surviving corporation; (iii) a transfer to
another entity of all or substantially all of the assets of the Bank;
(iv) an acquisition by a financial institution, company, individual or
individuals acting as a group, of more than fifty percent (50%) of the
then outstanding shares of the Bank are held by a person or group of
persons (whether or not acting in concert) not the holder of more than
fifty percent (50%) of the shares on the Commencement Date of this
Agreement; or (v) during any period of twenty-four consecutive months,
individuals who at the beginning of such period where members of the
Board of Directors of the Bank (the "Incumbent Board") shall cease to
constitute a majority of the Board of Directors of
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subsequent to the beginning of such period whose election or nomination for
election was approved by a vote of at least seventy-five percent (75%) of
all the directors compromising the Incumbent Board shall, for the purposes
hereof, considered as though such a person were a member of the Incumbent
Board.
1.1.14 DISPUTE. If there is a dispute over the employment status of
the Executive or Termination or any other aspect pertaining to this
Agreement, the dispute will be arbitrated by a third party satisfactory to
the Executive (or in case of death the beneficiary) and the Bank.
ARTICLE 2
LIFETIME BENEFITS
2.1 NORMAL RETIREMENT BENEFIT. Upon Termination of Employment on or
after the Normal Retirement Age for reasons other than death, the Company
shall pay to the Executive the benefit described in this Section 2.1 in
lieu of any other benefit under this Agreement.
2.1.1 AMOUNT OF BENEFIT. The annual benefit under this Section 2.3
is $120,000 increased by 3% each year between the date of this Agreement
and the Executive's Normal Retirement Date.
2.1.2 PAYMENT OF BENEFIT. The Company shall pay the annual benefit
to the Executive in 120 equal monthly installments payable on the first
day of each month commencing with the month following the Executive's
Normal Retirement Date.
2.1.3 BENEFIT INCREASES. Commencing on the first anniversary of
the first benefit payment, and continuing on each subsequent anniversary,
the benefit shall be increased by 3% each year.
2.2 VOLUNTARY TERMINATION OF EMPLOYMENT BENEFIT. Upon Voluntary
Termination of Employment for reasons other than Change of Control, the
Company shall pay to the Executive the benefit described in this Section
2.2. Termination for Cause shall result in the Executive receiving no
benefits under this Agreement (see Section 5.2).
2.2.1 AMOUNT OF BENEFIT. The benefit under this Section 2.2 is the
Voluntary Termination of Employment Annual Benefit amount set forth in
Schedule A for the Plan Year ending immediately prior to the Early
Termination Date. This amount shall be the Accrued Benefit Liability.
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2.2.2 PAYMENT OF BENEFIT. The Company shall pay the Accrued
Benefit Liability to the Executive in 120 equal monthly installments
payable on the first day of each month commencing with the month
following the Voluntary Termination.
2.3 INVOLUNTARY TERMINATION OF EMPLOYMENT BENEFIT. Upon Involuntary
Termination of Employment for reasons other than death or Change of
Control, the Company shall pay to the Executive the benefit described in
this Section 2.3. Termination for Cause shall result in the Executive
receiving no benefits under this Agreement (see Section 5.2).
2.3.1 AMOUNT OF BENEFIT. The benefit under this Section 2.3 is
the Involuntary Termination of Employment Annual Benefit amount set
forth in Schedule B for the Plan Year ending immediately prior to the
Early Termination Date. This amount shall be the Accrued Benefit
Liability.
2.3.2 PAYMENT OF BENEFIT. The Company shall pay the Accrued
Benefit Liability to the Executive in 120 equal monthly installments
payable on the first day of each month commencing with the month
following the Involuntary Termination.
2.4 DISABILITY BENEFIT. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, the Company shall pay to the
Executive the benefit described in this Section 2.4 in lieu of any other
benefit under this Agreement.
2.4.1 AMOUNT OF BENEFIT. The benefit under this Section 2.4 is
Projected Normal Retirement Benefit amount described in Section 2.1.1.
2.4.2 PAYMENT OF BENEFIT. The Company shall pay the annual
benefit amount to the Executive in 120 equal monthly installments
payable on the first day of each month commencing with the month
following the Executive's Normal Retirement Age.
2.4.3 BENEFIT INCREASES. Benefit payments may be increased as
provided in Section 2.1.3.
2.5 CHANGE OF CONTROL BENEFIT. If the Executive is in the active
service of the Company at the time of a Change of Control, the Company
shall pay to the Executive the benefit described in this Section 2.5 in
lieu of any other benefit under this Agreement.
2.5.1 AMOUNT OF BENEFIT. The annual benefit under this Section
2.5 is the Normal Retirement Benefit amount described in 2.1.1.
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2.5.2 PAYMENT OF BENEFIT. The Company shall pay the annual
benefit amount to the Executive in 12 equal monthly installments payable
on the first day of each month commencing with the month following the
Change of Control and continuing for 119 additional months.
2.5.3 BENEFIT INCREASES. Benefits payments may be increased as
provided in Section 2.1.3.
ARTICLE 3
DEATH BENEFITS
3.1 DEATH DURING ACTIVE SERVICE. If the Executive dies while in the
active service of the Company, the Company shall pay to the Executive's
beneficiary the benefit described in this Section 3.1. This benefit
shall be paid in lieu of the Lifetime Benefits of Article 2.
3.1.1 AMOUNT OF BENEFIT. The annual benefit under this Section
3.1 is the Projected Normal Retirement Benefit amount.
3.1.2 PAYMENT OF BENEFIT. The Company shall pay the annual
benefit to the beneficiary in 120 equal monthly installments payable on
the first day of each month commencing with the month following the
Executive's death.
3.2 DEATH DURING BENEFIT PERIOD. If the Executive dies after the
benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining
benefits to the Executive's beneficiary at the same time and in the same
amounts they would have been paid to the Executive had the Executive
survived.
3.3 DEATH FOLLOWING TERMINATION OF EMPLOYMENT BUT BEFORE BENEFITS
COMMENCE. If the Executive is entitled to benefits under this
Agreement, but dies prior to receiving said benefits, the Company shall
pay to the Executive's beneficiary the same benefits, in the same
manner, they would have been paid to the Executive had the Executive
survived, however, said benefit payments will commence upon the
Executive's death.
ARTICLE 4
BENEFICIARIES
4.1 BENEFICIARY DESIGNATIONS. The Executive shall designate a
beneficiary by filing a written designation with the Company. The
Executive may revoke or modify the designation at any time by filing a
new designation. However, designations will only be
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effective if signed by the Executive and accepted by the Company during
the Executive's lifetime. The Executive's beneficiary designation shall
be deemed automatically revoked if the beneficiary predeceases the
Executive, or if the Executive names a spouse as beneficiary and the
marriage is subsequently dissolved. If the Executive dies without a
valid beneficiary designation, all payments shall be made to the
Executive's estate.
4.2 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 Company may pay such benefit to
the guardian, legal representative or person having the care or custody
of such minor, incapacitated person or incapable person. The Company may
require proof of incapacity, 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 5
GENERAL LIMITATIONS
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement:
5.1 TERMINATION FOR CAUSE. If the Company terminates the Executive's
employment for:
5.1.1 Gross negligence or gross neglect of duties;
5.1.2 Commission of a felony or of a gross misdemeanor involving
moral turpitude; or
5.2 SUICIDE OR MISSTATEMENT. No benefits shall be payable if the
Executive commits suicide within two years after the date of this
Agreement, or if the Executive has made any material misstatement of
fact on any application for life insurance purchased by the Company.
ARTICLE 3
CLAIMS AND REVIEW PROCEDURES
6.1 CLAIMS PROCEDURE. The Company shall notify any person or entity
that makes a claim against the Agreement (the "Claimant") in writing,
within ninety (90) days of Claimant's written application for benefits,
of his or her eligibility or noneligibility for benefits under the
Agreement. If the Company determines that the Claimant 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
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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 Claimant 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 Claimant 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 ninety-day period.
6.2 REVIEW PROCEDURE. If the Claimant is determined by the Company not
to be eligible for benefits, or if the Claimant believes that he or she
is entitled to greater or different benefits, the Claimant shall have
the opportunity to have such claim reviewed by the Company by filing a
petition for review with the Company within sixty (60) days after
receipt of the notice issued by the Company. Said petition shall state
the specific reasons which the Claimant 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 Claimant (and counsel, if any) an opportunity to present his or her
position to the Company orally or in writing, and the Claimant (or
counsel) shall have the right to review the pertinent documents. The
Company shall notify the Claimant of its decision in writing within the
sixty-day period, stating specifically the basis of its decision,
written in a manner calculated to be understood by the Claimant and the
specific provisions of the Agreement on which the decision is based.
If, because of the need for a hearing, the sixty-day period is not
sufficient, the decision may be deferred for up to another sixty-day
period at the election of the Company, but notice of this deferral shall
be given to the Claimant.
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
7.1 Employment Agreement signed on February 26, 1998, but fulfills
paragraph 4 and becomes Exhibit A to such agreement.
ARTICLE 8
MISCELLANEOUS
8.1 BINDING EFFECT. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees.
8.2 NO GUARANTEE OF EMPLOYMENT. This Agreement is not an employment
policy or
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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.
8.3 NON-TRANSFERABILITY. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 DISABILITY POLICY. The Company shall purchase a disability-
insurance policy on the Executive and keep the policy in force until the
earlier of the Executive's Termination of Employment or the Executive's
Normal Retirement Age. The amount of the policy shall be the maximum
amount of coverage that the Company can obtain from a reputable
insurance company.
8.5 REORGANIZATION. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its
assets to another company, firm, or person unless such succeeding or
continuing company, firm, or person agrees to assume and discharge the
obligations of the Company under this Agreement. Upon the occurrence of
such event, the term "Company" as used in this Agreement shall be deemed
to refer to the successor or survivor company.
8.6 TAX WITHHOLDING. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
8.7 APPLICABLE LAW. The Agreement and all rights hereunder shall be
governed by the laws of the State of California, except to the extent
preempted by the laws of the United States of America.
8.8 UNFUNDED ARRANGEMENT. The Executive and beneficiary are general
unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company
to pay such benefits. The rights to benefits are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors. Any insurance on
the Executive's life is a general asset of the Company to which the
Executive and beneficiary have no preferred or secured claim.
8.9 RECOVERY OF ESTATE TAXES. If the Executive's gross estate for
federal estate tax purposes includes any amount determined by reference
to and on account of this Agreement, and if the beneficiary is other
than the Executive's estate, then the Executive's estate shall be
entitled to recover from the beneficiary receiving such benefit under
the terms of the Agreement, an amount by which the total estate tax due
by the Executive's estate, exceeds the total estate tax which would have
been payable if the
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value of such benefit had not been included in the Executive's gross
estate. If there is more than one person receiving such benefit, the
right of recovery shall be against each such person. In the event the
beneficiary has a liability hereunder, the beneficiary may petition the
Company for a lump sum payment in an amount not to exceed the
beneficiary's liability hereunder.
8.10 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof.
No rights are granted to the Executive by virtue of this Agreement other
than those specifically set forth herein.
8.11 ADMINISTRATION. The Company shall have powers which are necessary
to administer this Agreement, including but not limited to:
8.11.1 Interpreting the provisions of the Agreement;
8.11.2 Establishing and revising the method of accounting for the
Agreement;
8.11.3 Maintaining a record of benefit payments; and
8.11.4 Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
8.12 DESIGNATED FIDUCIARY. For purposes of the Employee Retirement
Income Security Act of 1974, if applicable, the Company shall be the
named fiduciary and plan administrator under the Agreement. The named
fiduciary may delegate to others certain aspects of the management and
operation responsibilities of the plan including the employment of
advisors and the delegation of ministerial duties to qualified
individuals.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
REDLANDS CENTENNIAL BANK
/s/ Xxxxxxx X. Xxxxxxx By /s/ Xxxxxxx X. Xxxxx
----------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxx Title CHAIRMAN OF THE BOARD
--------------------------------
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BENEFICIARY DESIGNATION
REDLANDS CENTENNIAL BANK
SALARY CONTINUATION AGREEMENT
XXXXXXX X. XXXXXXX
I designate the following as beneficiary of any death benefits under this
Redlands Centennial Bank Salary Continuation Agreement:
Primary: Xxxxxxx Family Trust, under Trust Agreement
----------------------------------------------------------------------
dated February 28, 1992
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Contingent:
-------------------------------------------------------------------
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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 Company. 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/ Xxxxxxx X. Xxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxx
Date March 17, 1998
----------------------------
Accepted by the Company this 17th day of March, 1998.
------ ------ --
By /s/ Xxxxxxx X. Xxxxx
------------------------------
Xxxxxxx X. Xxxxx
Title CHAIRMAN OF THE BOARD
----------------------------
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SCHEDULE A
INDIVIDUAL PLAN ACCOUNTING
SALARY CONTINUATION PLAN
REDLANDS CENTENNIAL BANK
Xxxx Xxxxxxx
---------------------------------------------------- ---------Annual--------
Birth date: 08/03/58 Current salary: 120,000 Years of benefit: 10
Retirement age: 55 1st Year benefit: 120,000 Benefit incr: 3.00%
Age/Ins. age: 39/40 Projected salary: 186,956 Discount rate: 8.50%
Years of accrual: 16 Proj 1st yr benefit: 186,956 Corp. tax rate: 43.00%
Non-Guar. COLA: 3.00%
-----------------------------------------------------------------------------------------------
Accrued Cumulative
Plan Annual Benefit ---Pre-Tax Plan Expense--- Cumulative After-Tax
Age Year Benefit Liability Annual Cumulative Tax Credit Expense
-----------------------------------------------------------------------------------------------
39 1 120,000 24,775 24,775 24,775 10,653 14,122
40 2 123,600 52,574 27,799 52,574 22,607 29,967
41 3 127,308 83,800 31,226 83,800 36,034 47,766
42 4 131,127 118,916 35,116 118,916 51,134 67,782
43 5 135,061 158,461 39,545 158,461 68,138 90,323
44 6 139,113 203,066 44,605 203,066 87,318 115,748
45 7 143,286 253,474 50,408 253,474 108,994 144,480
46 8 147,585 310,572 57,098 310,572 133,546 177,026
47 9 152,012 375,430 64,859 375,430 161,435 213,995
48 10 156,573 449,370 73,940 449,370 193,229 256,141
49 11 161,270 534,058 84,689 534,058 229,645 304,413
50 12 166,108 631,684 97,625 631,684 271,624 360,060
51 13 171,091 745,279 113,596 745,279 320,470 424,809
52 14 176,224 879,456 134,177 879,456 378,166 501,290
53 15 181,511 1,042,508 163,051 1,042,508 448,278 594,229
54 16 186,956 1,256,570 214,063 1,256,570 540,325 716,245
55 17 186,956 1,173,225 103,611 1,360,182 584,878 775,303
56 18 192,565 1,114,989 134,328 1,494,510 642,639 851,871
57 19 198,342 1,043,696 127,049 1,621,559 697,270 924,288
58 20 204,292 957,586 118,182 1,739,740 748,088 991,652
59 21 210,421 854,680 107,514 1,847,255 794,320 1,052,935
60 22 216,733 732,753 94,807 1,942,061 835,086 1,106,975
61 23 223,235 589,306 79,789 2,021,850 869,396 1,152,455
62 24 229,932 421,532 62,158 2,084,009 896,124 1,187,885
63 25 236,830 226,277 41,575 2,125,584 914,001 1,211,583
64 26 243,935 0 17,658 2,143,242 921,594 1,221,648
March 17, 1998
/s/ P.M.
/s/ D.C.S.
INDIVIDUAL PLAN ACCOUNTING
SALARY CONTINUATION PLAN
REDLANDS CENTENNIAL BANK
SCHEDULE "B"
Xxxx Xxxxxxx
---------------------------------------------------- ---------Annual--------
Birth date: 08/03/58 Current salary: 186,956 Years of benefit: 10
Retirement age: 50 Curr annl benefit: 186,956 Salary increase: 0.00%
Age/Ins. age: 43/44 Projected salary: 186,956 Discount rate: 8.50%
Years of accrual; 7 Proj annl benefit: 186,956 Corp. tax rate: 43.00%
-----------------------------------------------------------------------------------------------
Accrued Cumulative
Plan Annual Benefit ---Pre-Tax Plan Expense--- Cumulative After-Tax
Age Year Benefit Liability Annual Cumulative Tax Credit Expense
-----------------------------------------------------------------------------------------------
40 1 137,253 137,253 137,253 59,019 78,234
41 2 286,637 149,385 286,637 123,254 163,383
42 3 449,226 162,589 449,226 193,167 256,059
43 4 626,186 176,960 626,186 269,260 356,926
44 5 818,788 192,602 818,788 352,079 466,709
45 6 1,028,415 209,626 1,028,416 442,218 886,196
46 7 1,256,570 228,155 1,256,570 540,328 716,245
50 8 186,956 103,611 1,360,181 584,878 776,303
51 9 186,956 96,244 1,456,428 626,263 830,162
52 10 186,956 88,226 1,544,651 664,200 880,451
53 11 186,956 79,499 1,624,150 698,385 925,766
54 12 186,956 70,001 1,694,151 728,486 965,666
55 13 186,956 59,663 1,753,815 754,140 999,674
56 14 186,956 48,412 1,802,226 774,957 1,027,269
57 15 186,956 36,166 1,838,392 790,509 1,047,884
58 16 186,956 22,837 1,861,229 800,329 1,060,901
59 17 186,956 8,331 1,869,560 803,911 1,065,649
March 17, 1998
/s/ P.M.
/s/ D.C.S.
