EXHIBIT 10.18
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EXHIBIT 10.18
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NORTH COUNTY BANK
SALARY CONTINUATION AGREEMENT
This Salary Continuation Agreement (the "Agreement") is entered into
effective the LSAT day of December, 1996, by and between North County Bank, a
California banking corporation, and Xxx X. Xxxxx, a full-time salaried officer
thereof (the "Participant"). The term "Bank" as used in this Agreement, shall
mean and include North County Bank, any bank holding company affiliate thereof
and any consolidated subsidiary corporations and successors.
1. GRANT OF SALARY CONTINUATION BENEFITS. Pursuant to the action of the
Board of Directors, the Bank hereby grants to the Participant the salary
continuation benefits set forth in subsections 1 (a) through (e) hereof. For
purposes of this Section 1, the Participant will be deemed to have been
"continuously employed" by the Bank if he has performed his duties as an
employee of the Bank on a full-time basis without any material break in
employment. A "material break in employment" shall be defined as (I) voluntary
termination by the Participant of his employment or termination by the Bank
without cause of the Participants employment for a period in excess of ninety
(90) consecutive days during any calendar year, (ii) termination by the Bank
with cause, or (iii) any other period of time totaling ninety (90) days during
any calendar year, during which time the Participant has ceased to perform his
duties as an employee of the Bank on a full-time basis; provided, however, that
a material break in employment shall not include any military leave, sick leave
or other bona fide leave of absence (to be determined by the Board of Directors)
of the Participant and, solely for purposes of calculating benefits under
Section 2 herein, a material break in employment also shall not include any
termination of the Participant as a result of total disability as described in
subsection 1 (e) herein. For purposes of determining the amount of benefits to
be paid to the Participant under this Agreement, commencing upon the effective
date of the Agreement, each twelve-month period in which the Participant has
been continuously employed by the Bank shall be deemed a "Full Year of
Employment With the Bank Completed."
(a) BENEFITS UPON RETIREMENT. The Bank shall pay to the Participant
an annual retirement benefit of Seventy Thousand Dollars ($70,000) per year for
fifteen (15) consecutive years. Such payments shall be made in one hundred
eighty (180) equal monthly installments commencing on the first business day of
the month following the Participant's retirement date (as set forth below) and
continuing on the first business day of each month thereafter until the
specified number of installments have been paid in full. The Bank shall have no
obligation under this subsection 1 (a), except as provided- in subsection 1 -C-
or (d) herein, if the Participant was not continuously employed (as defined
above) by the Bank during the period from the date of execution of this
Agreement until the Participant's retirement date set forth below. For purposes
of this Agreement, the Participant's retirement date shall be the first day of
the calendar month following the Participant's sixty-fifth (65th) birthday.
(b) BENEFIT UPON DEATH PRIOR TO RETIREMENT. In the event the Participant
dies prior to retirement while still employed by the Bank, the Bank shall pay to
the beneficiary designated by the Participant, the Participant's surviving
spouse, if any, or to the Personal Representative of the Participant's estate,
as the case may be (as more fully described in Section 6 hereof), an annual
death benefit of Seventy Thousand Dollars ($70,000) per year for fifteen (15)
consecutive years. Such death benefit shall be payable for fifteen (15)
consecutive years in one hundred eighty (180) equal monthly installments
commencing on the first business day of the month following the Participant's
death and continuing on the first business day of each month thereafter until
all of the specified number of installments have been paid in full.
(c) BENEFITS UPON TERMINATION OF EMPLOYMENT FOLLOWING A REORGANIZATION. In
the event the Bank or any successor corporation terminates the Participant's
employment following any Reorganization (as defined in Section 5 herein), the
Bank or such successor corporation shall pay to the Participant the full
retirement benefits granted by the Bank in subsection 1 (a) of this Agreement.
Such retirement payments shall be payable for fifteen (15) consecutive years
in one hundred eighty (180) equal monthly installments commencing upon the first
business day of the month following the Participant's retirement date (as set
forth in subsection 1 (a) hereof) and continuing on the first business day of
each month thereafter until the specified number of installments have been paid
in full.
(d) BENEFITS UPON TERMINATION OF EMPLOYMENT BY THE BANK WITHOUT CAUSE. In
the event the Bank terminates the Participant's employment with the Bank without
cause, the Bank shall pay to the Participant a certain percentage of the
retirement benefits granted by the Bank in subsection 1 (a) of this Agreement.
Solely for the purpose of determining benefits to be paid hereunder, termination
"without cause" shall mean termination of the Participant's employment with the
Bank for any reason whatsoever; provided, however, that termination "without
cause" shall not include any termination of Participant's employment with the
Bank for "cause," or as a result of the Participant's voluntary termination of
his employment with the Bank, the Participant's death or total disability, or as
a result of any Reorganization (as defined in Section 5 herein). The annual
retirement benefit payable by the Bank to the Participant pursuant to this
subsection 1 (d) shall be equal to the amount which corresponds to the
percentage of such retirement benefits which have vested as determined by the
following vesting schedule:
FULL YEARS OF PERCENT OF AMOUNT OF
EMPLOYMENT RETIREMENT ANNUAL
WITH THE BANK BENEFITS RETIREMENT
COMPLETED VESTED BENEFIT
1 20.00% $14,000.00
2 40.00% $28,000.00
3 60.00% $42,000.00
4 80.00% $56,000.00
5 100.00% $70,000.00
Such retirement payments shall be payable by the Bank for fifteen (15)
consecutive years in one hundred eighty (180) equal monthly installments
commencing upon the first business day of the month following the Participant's
retirement date (as set forth in subsection 1 (a) hereof) and continuing on the
first business day of each month thereafter until the specified number of
installments have been paid in full.
(e) BENEFITS UPON TERMINATION OF EMPLOYMENT DUE TO TOTAL DISABILITY.
In the event the Participant's employment with the Bank is terminated due to
"total disability" (as defined herein), the Bank shall pay to the Participant an
annual retirement of $70,000 per year, minus any amounts payable to the
Participant under any other disability insurance or plan provided by the Bank.
Such retirement payments shall be payable by the Bank for fifteen (15)
consecutive years in one hundred eighty (180) equal monthly installments
commencing upon the first business day of the month following the Participant's
retirement date (as set forth in subsection 1 (a) hereof) with the Bank and
continuing on the first business day of each month thereafter until the
specified number of installments have been paid in full.
In the event the Participant has entered into a written employment
agreement with the Bank, then, solely for the purpose of determining benefits to
be paid under this Agreement, "total disability" shall have the same definition
as that set forth in such employment agreement. If the Participant has not
entered into a written employment agreement with the Bank (or if "total
disability" is not defined in such employment agreement), then, solely for the
purpose of determining benefits to be paid under this Agreement, "total
disability" shall be defined as the inability of the Participant to engage in
his regular duties as an employee of the Bank by reason of any medically
determined physical or mental impairment for a period of one hundred eighty
(180) consecutive days or more. If there should be a dispute between the Bank
and the Participant as to the Participant's physical or mental disability for
purposes of this Agreement, the question shall be settled by the opinion of an
impartial reputable physician or psychiatrist agreed upon by the parties or
their representatives, or if the parties cannot agree within ten (10) days after
a request for designation of such party,
then by a physician or psychiatrist designated by the San Diego County Medical
Association. The certification of such physician or psychiatrist as to the
question in dispute shall be final and binding upon the Bank and the
Participant.
2. DEATH SUBSEQUENT TO RETIREMENT, DISABILITY OR OTHER TERMINATION OF
EMPLOYMENT . In the event the Participant dies subsequent to the retirement date
set forth in subsection 1 (a), or as contemplated by Section 4, or subsequent to
the date of his termination of employment by the Bank as a result of any
Reorganization of the Bank as described in subsection 1 -C- or the date of his
termination of employment by the Bank without cause, or termination of
employment due to total disability, as described in subsections 1 (d) and (e),
all of the retirement benefits (or the remaining retirement benefits, as the
case may be) which are due the Participant pursuant to subsections 1 (a),
(C)-(e), or Section 4-, as applicable, shall be payable by the Bank to the
beneficiary designated by the Participant on Exhibit A hereto, to the
Participant's surviving spouse, or to the Participant's estate, as the case may
be (as more fully described in Section 6 herein), in such installments and on
such dates as were payable to the Participant prior to his death. Except as set
forth in this Section 2, no other benefits shall be payable hereunder to the
Participant's beneficiaries, surviving spouse or estate in the event the
Participant dies subsequent to either his retirement date or the date of any
termination of his employment with the Bank.
3. VOLUNTARY TERMINATION OF EMPLOYMENT BY PARTICIPANT OR TERMINATION OF
EMPLOYMENT FOR CAUSE . In the event the Participant voluntarily terminates his
employment with the Bank, or in the event the Bank terminates the Participant's
employment with the Bank for "cause," the Bank shall have no obligation to pay
any benefits under this Agreement to such Participant or any beneficiary
thereof. However, the Board of Directors reserves the right, in its sole
discretion, in the case of voluntary termination of employment by the
Participant, to allow the Participant to receive the same benefits as would
apply in the event of termination by the Bank without cause (see Section 1 (d)
hereinabove). If the Participant has entered into a written employment
agreement with the Bank, then, solely for the purpose of determining benefits to
be paid under this Agreement, "cause" shall have the same definition as that set
forth in such employment agreement. If the Participant has not entered into a
written employment agreement with the Bank, then, solely for the purpose of
determining benefits to be paid under this Agreement, "cause" shall be defined
as: (I) failure to perform or habitual neglect of the duties which the
Participant is required to perform as an employee of the Bank, (ii) the
Participant's suspension or removal from office by the Federal Deposit Insurance
Corporation, the Superintendent of Banks of the State of California or any
other regulatory agency having appropriate jurisdiction, (iii) engagement in
illegal activity which materially adversely affects the Bank's reputation in the
community or which evidences the lack of the Participant's fitness or ability
to perform his duties as an employee of the Bank as determined by the Board of
Directors in good faith, or (iv) the commission by the Participant of any act
which would cause termination of coverage under the Bank's Bankers' Blanket Bond
as to the Participant (as distinguished from termination of coverage as to the
Bank as a whole).
Notwithstanding any other provision of this Agreement, termination of the
Participant's employment with the Bank as a result of such Participant's death
or "total disability (as defined herein) will not be deemed to be termination
for "cause" for the purpose of determining benefits to be paid hereunder.
4. LATE RETIREMENT. The Participant may apply to the Board of Directors for
a late retirement. The decision whether to accept or reject such an application
shall be in the sole discretion of the Board of Directors, and the Board shall
have no obligation whatsoever to accept any such application. In the event the
Board of Directors accepts the Participant's application for late retirement,
this Agreement shall be amended to reflect the revised terms of such
Participant's retirement date and amount of such retirement benefits. Such
revised benefits shall be payable by the Bank pursuant to this Section 4 only to
the extent that the Participant was continuously employed by the Bank during the
period from the date of execution of this Agreement until the date of such
Participant's revised retirement date. Retirement benefits under this Section 4
shall be payable in equal monthly installments for a period of fifteen (15)
consecutive years commencing on the first business day of the month following
the Participant's revised retirement date and continuing on the first business
day of each month thereafter for one hundred eighty (180) consecutive months
until all of the specified installments have been paid in full.
5. REORGANIZATION. In the event of (I) a merger where the Bank is not the
surviving corporation, (ii) a consolidation, (iii) a transfer of all or
substantially all of the assets of the Bank, or (iv) any other transaction where
there is a change in ownership of at least fifty-one percent (51%) of all of the
outstanding voting stock of the Bank or its parent holding company (any of the
events described in subparagraphs (I) through (iv) above may be referred to in
this Agreement as a "Reorganization"), this Agreement shall not be terminated.
In the event of any Reorganization with the exception of a voluntary or
involuntary dissolution, the surviving or resulting corporation, or the
transferee of the Bank's assets or stock, whichever may apply, shall be bound by
and shall have the benefits of this Agreement. The Bank shall take all actions
necessary to ensure that such corporation or transferee is bound by the
provisions of this Agreement. In the event the employment of the Participant is
terminated at any time following a Reorganization, the Participant shall be
entitled to the full benefits hereunder as specified in subsection 1 (c) hereof.
6. BENEFICIARIES. The Participant may designate one or more ptimary or
contingent beneficiaries to receive all or any specified portion of any benefits
hereunder, at the time of the Participant's death remain payable by the Bank to
the Participant. The Participant may designate such beneficiaries on Exhibit A
attached hereto. The designation of any such beneficiaries may be changed or
revoked at any time prior to the Participant's death by giving the Bank three
(3) days written notice of such change or revocation in the manner provided in
Section 9 of this Agreement.
In the event the Participant shall fail to designate a beneficiary prior to
his death or designates a beneficiary and thereafter revokes such designation
without naming another beneficiary, or designates one or more beneficiaries and
all such beneficiaries so designated shall fail to survive the Participant, any
payments of benefits under this Agreement shall be made to the Participant's
surviving spouse, if any, or otherwise to the Personal Representative of the
Participant's estate.
Unless the Participant has otherwise specified in the beneficiary
designation, the beneficiary or beneficiaries designated by the Participant
shall become fixed as of the Participant's death so that, if a beneficiary
survives the Participant but dies prior to the receipt of all payments due such
beneficiary, such remaining payments shall be payable to the Personal
Representative of such beneficiary's estate.
The Participant and his beneficiaries shall not have any assignable
interest in the future payments due under this Agreement, nar any right to
anticipate, dispose of, pledge or enc|unber the same prior to actual receipt
thereof, nor shall the same be subject to attaclunent, garnislunent, or
execution following judgment or other legal process instituted by the
Participant's creditors or any such beneficiary; provided, however, that the
balance of the Participant's benefit payments shall at all times be subject to
offset for debts owed by the Participant to the Bank.
7. EFFECT ON EMPLOYMENT RIGHTS. Nothing in this Agreement shall be deemed
to give the Participant any right to remain in the employ of the Bank nor to
affect the right of the Bank to terminate the employment of the Participant at
any time, with or without cause, which right is hereby reserved. This Agreement
shall not be considered a supplement or amendment to any contract of employment,
either oral or written, between the Participant and the Bank.
8. LIMITATION ON THE BANK'S OBLIGATION TO FUND AGREEMENT. The Bank shall
have the right, but not an obligation, to earmark or segregate any funds or
other assets to be used for payment of any benefits hereunder, The Bank's
obligation to make payments hereunder is an unfunded and unsecured contractual
obligation only; and in the event any insurance company or other obligor issuing
a life insurance or annuity policy or other investment instrument purchased by
the Bank to fund this Agreement shall fail or be in imminent danger thereof, the
Bank shall have the right to take immediate action to recoup so much of its
investment as possible, and shall have no obligation to fund this Agreement or
portion thereof to the extent that this Agreement was intended to be funded by
the proceeds of such policy, annuity or other investment. Under no circumstances
shall the Participant or his beneficiaries have any beneficial or preferred
interest by way of trust, escrow, lien or otherwise, in any specific assets or
funds of the Bank, including any insurance or annuity contracts or the proceeds
therefrom, as described below. The Participant and his beneficiaries shall look
solely to the general credit of the Bank for satisfaction of any current or
future obligation due under this Agreement.
No life insurance or annuity policy or other investment instrument
purchased by the Bank in connection with this Agreement shall in any way be
considered to be security for the performance of the Bank's obligations
hereunder. The Bank shall be the owner and beneficiary of such policy(ies) and
any such policy shall be, and remain, a general unpledged, unrestricted asset of
the Bank.
9. NOTICES. All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given,
upon personal delivery (professional courier acceptable) or three (3) business
days following deposit with the United States Postal Service, by registered or
certified mail, postage prepaid, with return receipt requested, to the following
addresses: (a) if to the Bank, to its principal place of business, and (b) if to
the Participant, to his address set forth on the signature page hereof. Such
persons or addresses may change from time to time by notice given pursuant to
the provisions of this Section.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
11. TERMINATION OR MODIFICATION BY THE BANK. The Bank reserves the right to
terminate or modify this Agreement or the benefits payable hereunder in the
event of (I) any changes in federal tax laws which would limit the Bank's
available tax deductions in connection with the funding of this Agreement; or
(ii) any changes in applicable laws, regulations or regulatory policies which
would cause this Agreement to be legally impermissible or would subject the Bank
to criticism by a bank regulatory agency.
12. LEGAL AND TAX ADVICE. The Bank has not provided the Participant with
advice, warranties or representations regarding any of the legal or tax effects
to the Participant with respect to the grant of benefits herein. By accepting
this grant and by signing this Agreement, the Participant acknowledges that he
is familiar with the terms of this Agreement, that he has been encouraged by the
Bank to discuss this Agreement with his own legal and tax advisers, and that he
agrees to be bound by all of the terms and conditions of this Agreement.
NORTH COUNTY BANK, EMPLOYEE
A CALIFORNIA BANKING CORPORATION I
/s/ Xxxxx X. Xxxxx /s/ Xxx X. Xxxxx
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Xxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxxx President and Chief Operating Officer
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Participant's Address:
00000 Xxxxxxxxxx Xx.
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Xxxxxxxx, XX 00000
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