13
AMENDED AND RESTATED
EXECUTIVE SALARY CONTINUATION BENEFITS AGREEMENT
This Agreement was originally made and entered into on
August 22, 1989, by and between FIRST NATIONAL BANK OF
CENTRAL CALIFORNIA, a national banking association (the
"Bank") and D. VERNON HORTON (the "Executive"), as modified
on June 22, 1994. PACIFIC CAPITAL BANCORP, a California
corporation and the sole owner of the Bank (the
"Corporation"), and the Executive wish to amend and restate
the prior Agreement in its entirety as of September 23, 1997.
A. The Executive is employed by the Corporation as its
Chairman of the Board;
B. The Executive's experience and knowledge of the
affairs of the Corporation and reputation and contacts in the
banking industry are so valuable that the Executive's
continued service is essential for the future growth and
profits of the Corporation and its subsidiaries;
C. It is in the best interest of the Corporation to
arrange terms for continued employment of the Executive so as
to reasonably ensure that the Executive remains in the
Corporation's employment during the Executive's lifetime or
until the age of retirement;
D. The Corporation desires that the Executive's
services be retained as hereinafter provided;
E. The Executive is willing to continue in the employ
of the Corporation, provided that the Corporation agrees to
pay to the Executive or the Executive's Designated
Beneficiaries (as defined below), certain benefits in
accordance with the terms and conditions hereinafter set
forth; and
F. Both the Executive and the Corporation acknowledge
and agree that in order to retain the Executive and provide
him with appropriate benefits, the prior Agreement is amended
and restated in its entirety as follows.
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. Change of Control shall be deemed to have occurred
if the conditions set forth in any one of the following
paragraphs shall have been satisfied after the date of this
Agreement:
(a) any Person (as defined below) becomes the
Beneficial Owner (as defined below), directly
or indirectly, of securities of the
Corporation representing 25% or more of the
combined voting power of the Corporation's
then outstanding securities; or
(b) the majority of the Board of Directors of the
Corporation ceases to be comprised of the
members of the Board on the date hereof or the
nominees of such members; or
(c) the shareholders of the Corporation approve a
merger or consolidation of the Corporation
with any other corporation, other than (i) a
merger or consolidation which would result in
the voting securities of the Corporation
outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity), in
combination with the ownership of any trustee
or other fiduciary holding securities under an
employee benefit plan of the Corporation, at
least 51% of the combined voting power of the
voting securities of the Corporation or such
surviving entity outstanding immediately after
such merger or consolidation, or (ii) a merger
or consolidation effected to implement a
recapitalization of the Corporation (or
similar transaction) in which no Person
acquires more than 49% of the combined voting
power of the Corporation's then outstanding
securities; or
(d) the shareholders of the Corporation approve a
plan of complete liquidation of the
Corporation or an agreement for the sale or
disposition by the Corporation of all or
substantially all of the Corporation's assets.
For the purposes of this Paragraph 1.1, "Person" shall
have the meaning given in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as
modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include (i) the Corporation or
any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the
Corporation or any of its subsidiaries, or (iii) an
underwriter temporarily holding securities pursuant to an
offering of such securities. "Beneficial Owner" shall have
the meaning defined in Rule 13d-3 under the Exchange Act.
1.2. Designated 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:
(a) it is in the form attached hereto as Exhibit A
and made a part hereof; and
(b) it is received by the Named Fiduciary and Plan
Administrator prior to the Executive's death.
1.2. Disability shall mean an inability to substantially
perform the essential functions of the Executive's position
at the Corporation for a period of one hundred eighty (180)
days due to a physical or mental disability, as determined by
a physician in the case of physical disability, or
psychiatrist in the case of mental disability, licensed to
practice medicine in California and selected jointly by the
Corporation and the Executive.
1.3. Employment Agreement shall mean the written
employment agreement, if any, between the Executive and the
Corporation.
1.4. Named Fiduciary and Plan Administrator shall mean
the Corporation.
1.5. Surviving Spouse shall mean the person, if any, who
is legally married to the Executive on the date of the
Executive's death.
1.6. Termination for Cause shall mean termination of the
employment of the Executive by reason of any of the
following:
(a) willful material breach of duty in the course
of employment unless waived by the
Corporation;
(b) materially dishonest or illegal conduct; or
(c) habitual neglect of duties or habitual
negligence in carrying out duties.
ARTICLE 2
EMPLOYMENT
2.1. Employment. The Corporation agrees to employ the
Executive as Chairman of the Board or in such other capacity
as the Corporation may from time to time determine in
accordance with the Employment Agreement with the Executive.
The Executive shall continue in the employ of the Corporation
in such capacity and shall hold and perform the customary
responsibilities and duties of this position as designated by
the Bylaws of the Corporation and as directed by the
Corporation through its Boards of Directors in accordance
with the Employment Agreement. The Executive has a separate
Employment Agreement with the Corporation, and in the event
of any discrepancy or different treatment of any term or
condition in this Agreement from such Employment Agreement,
or any renewal or extension thereof, such Employment
Agreement shall control, except that such Employment
Agreement shall not limit in any way the timing or the amount
of benefits to be paid to the Executive under this Agreement.
2.2. Full Efforts. The Executive agrees to devote his
full time and attention exclusively to the business and
affairs of the Corporation and the subsidiary banks except
during vacation periods, and to use his best efforts to
furnish faithfully and satisfactorily services to the
Corporation.
2.3. Fringe Benefits. The salary continuation benefits
provided by this Agreement are granted by the Corporation as
an additional fringe benefit to the Executive and are not a
part of any salary reduction plan or any arrangement
deferring a bonus or a salary increase. The Executive has no
option to take any current payments or bonus in lieu of these
salary continuation benefits.
ARTICLE 3
BENEFITS PAYABLE UPON NORMAL RETIREMENT
3.1. Normal Retirement. If the Executive shall continue
in the employment of the Corporation at least until attaining
the age of sixty-five (65) years, the Executive may retire
from active daily employment as of the first day of the month
following attainment of the age of sixty-five (65), or upon
such later date as may be mutually agreed upon by the
Executive and the Corporation ("Normal Retirement").
Notwithstanding anything to the contrary, this Section 3.1
does not prohibit the Executive from continuing to work after
the age of sixty-five (65) years.
3.2. Normal Retirement Benefits. Upon Normal
Retirement, the Corporation shall pay to the Executive, One
Hundred Twenty-five Thousand Dollars ($125,000.00) per year,
payable in equal monthly installments commencing on the first
day of the first month following the date of Normal
Retirement, for a period of One Hundred Eighty (180) months,
subject to the conditions and limitations hereafter set forth
("Normal Retirement Benefits"). The One Hundred Twenty-five
Thousand Dollar ($125,000.00) annual payment shall be
adjusted in the first year in which it is to be paid to
reflect changes in the federally determined Cost of Living
Index issued by the Bureau of Labor Statistics 1988=100, then
currently in effect, and shall be adjusted annually for each
payment year thereafter to reflect further changes in said
federally determined Cost of Living Index, using the date of
retirement as a base line. The Normal Retirement Benefits
shall be in lieu of any other retirement, death, disability
or termination benefits under this Agreement.
3.3. Payment of Normal Retirement Benefits to Designated
Beneficiary or Surviving Spouse. In the event the Executive
dies before receiving the full amount of Normal Retirement
Benefits to which he is entitled under Section 3.2, the
Corporation will continue to make payments of the remaining
balance of the Normal Retirement Benefits to the Designated
Beneficiary. If there is no Designated Beneficiary prior to
the Executive's death, the Corporation will continue to make
payments of the remaining balance of the Normal Retirement
Benefits to the Executive's Surviving Spouse at the time of
death, or if there is no Surviving Spouse, to a duly
qualified personal representative, executor or administrator
of the Executive's estate.
ARTICLE 4
BENEFITS PAYABLE UPON DEATH OR DISABILITY
4.1. Death Benefits. In the event the Executive should
die while actively employed by the Corporation at any time
after the date of this Agreement, but prior to (a) Early
Retirement (as defined in Article 6.1), (b) Normal Retirement
or (c) retirement after the age of sixty-five (65), the
Corporation will pay to the benefits set forth in Section 3.2
commencing on the first day of the first month following the
Executive's death ("Death Benefits") in accordance with the
payment provisions set forth in Section 3.2 and 3.3. Death
Benefits shall be in lieu of any other retirement disability
or termination benefits under this Agreement.
4.2. Disability Benefits. In the event the Executive
incurs a Disability while actively employed by the
Corporation at any time after the date of the Agreement, but
prior to (a) Early Retirement (as defined in Article 6.1),
(b) Normal Retirement or (c) retirement after the age of
sixty-five (65), the Corporation will pay to the Executive
the benefits set forth in Section 3.2 commencing on the first
day of the first month following the Executive's Disability
("Disability Benefits"). Disability benefits shall be paid
in accordance with the payment provisions set forth in
Sections 3.2 and 3.3. The Disability Benefits shall be
payable to the Executive in equal monthly installments over a
period not to exceed One Hundred Eighty (180) months as
mutually agreed upon by the Corporation and the Executive
commencing on the first day of the first month following the
Disability Determination Date. The Disability Benefits shall
be in lieu of any other retirement, death or termination
benefits under this Agreement.
ARTICLE 5
BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT
BY THE CORPORATION AND CHANGE OF CONTROL
5.1. Termination of Employment. The Corporation
reserves the right to terminate employment of the Executive
at any time prior to retirement in accordance with the
Employment Agreement. In the event that the employment of
the Executive is terminated prior to (a) Early Retirement (as
defined in Article 6.1), (b) Normal Retirement or
(c) retirement after the age of sixty-five (65), the
Executive shall be entitled to the following benefits under
the following circumstances:
(a) Termination Without Cause. If the Executive's
termination of employment is not a Voluntary
Termination, nor a Termination For Cause, the
Corporation shall pay to the Executive benefits set
forth in Section 3.2 commencing on the first day of the
first month following such date of termination of
employment subject to the conditions and limitations
hereafter set forth ("Termination Benefits").
Termination Benefits shall be paid in accordance with
the payment provisions set forth in Sections 3.2 and
3.3. The Termination Benefits shall be in lieu of any
other retirement disability, death or termination
benefits under this Agreement. In the event the
Executive dies before receiving the full amount of
Termination Benefits to which he is entitled, the
Termination Benefits shall be payable pursuant to the
payment provisions set forth in Section 3.3.
(b) Termination for Cause. If the Executive's
termination of employment is Termination For Cause, then
the Executive shall not be entitled to any benefits or
payments under this Agreement.
(c) Voluntary Termination. It is understood and
acknowledged by the Executive that the purpose of this
Agreement is to ensure the Executive's continued
employment with the Corporation. In the event the
Executive voluntarily terminates his employment with the
Corporation for reason other than an Early Retirement
defined in Section 6.1 or Change of Control, then the
Executive shall not be entitled to any benefits or
payments under this Agreement.
5.2. Change of Control. In the event of a Change of
Control, the Executive shall be paid the benefits set forth
in Section 3.2 commencing on the first day of the first month
after the date of such Change of Control. Said full amount
is referred to in this Subsection 5.2 as the "Change of
Control Payment". The Change of Control Payment shall be
paid in accordance with the payment provisions of
Section 3.2. The Change of Control Payment shall be in lieu
of any other retirement, disability, death or termination
benefits under this Agreement, but shall be in addition to
any payment under the Executive's Employment Agreement. In
the event the Executive dies before receiving the full amount
of Change of Control Payment to which he is entitled, such
Change of Control Payment shall be payable pursuant to the
payment provisions set forth in Section 3.3. The Executive
acknowledges that the Change of Control Payment paid to the
Executive may be characterized as "excess parachute payment"
under Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code") and subject to an excise tax. The
Executive also acknowledges that the payment of such excise
tax is the sole responsibility of the Executive.
ARTICLE 6
EARLY RETIREMENT
6.1. Early Retirement. The Executive shall have the
right to retire before reaching Normal Retirement, provided
he shall have attained the age of fifty-five (55) years and
shall have completed ten (10) years of full time service with
the Corporation, including any period of service with any
predecessor of the Corporation ("Early Retirement").
6.2. Early Retirement Benefits. Upon the Executive's
election for Early Retirement, he shall be entitled to
receive retirement benefits determined by the following
formula:
Multiplying the Normal Retirement Benefits
determined under Section 3.2 by a fraction, the
numerator of which is the actual number of months
the Executive has been employed by the Corporation
(including any period of service with any
predecessor of the Corporation) until the Early
Retirement Date, and the denominator of which is
the total number of months the Executive would
have been employed by the Corporation (including
any period of service with any predecessor of the
Corporation) at the date the Executive would have
attained age 65 ("Early Retirement Benefits").
6.3. Payment. The Early Retirement Benefits shall be
payable in one hundred eighty (180) equal monthly
installments commencing on the first day of the first month
after the date of Early Retirement. The Early Retirement
Benefits shall be in lieu of any other retirement,
disability, death or termination benefits under this
Agreement.
6.4. Payment of Early Retirement Benefits to Designated
Beneficiary or Surviving Spouse. In the event the Executive
dies before receiving the full amount of Early Retirement
Benefits to which he is entitled under Section 6.2, the
Corporation will continue to make payments of the remaining
balance of the Early Retirement Benefits in accordance with
Article 3.3.
ARTICLE 7
RIGHTS AS UNSECURED GENERAL CREDITOR
7.1 Unsecured General Creditor. The Executive and the
Executive's Designated Beneficiary shall have no legal or
equitable rights, interest or claims in or to any property or
assets of the Corporation. All the Corporation's assets
shall be and remain the general unpledged, unrestricted
assets of the Corporation. The Corporation's obligation
under this Agreement shall be that of an unfunded and
unsecured promise by the Corporation to pay money in the
future. The Executive and his Designated Beneficiary shall
be unsecured creditors with respect to any benefits
hereunder.
ARTICLE 8
CLAIMS PROCEDURE
8.1. Filing of Claim. The Executive or his Designated
Beneficiary (the "Claimant") may file a claim for a benefit
pursuant to this Agreement. The claim shall be deemed filed
when a written, signed communication is delivered by the
Claimant or the Claimant's authorized representative to the
Company. The claim must state the name of the Claimant and
the basis on which the claim is made.
8.2. Action on Claim. Each claim must be acted upon and
approved or disapproved by the Company in writing within
thirty (30) days of the date on which the Company received
the claim, unless special circumstances require further time
for processing and the Claimant is advised of the extension.
In no event shall the Company fail to act for more than forty-
five (45) days after the Company received the claim. If the
Claimant does not receive such written notice within such 45-
day period, the claim shall be deemed to be denied. If the
claim is denied, in whole or in part, the written notice
shall set forth, in a manner calculated to be understood by
the Claimant, the following matters:
1. the specific reason or reasons for the denial;
2.specific reference to pertinent provisions of this
Agreement on which the denial is based;
3.a description of any additional material or
information necessary for the Claimant to perfect the
claim and an explanation of why such material or
information is necessary; and
4.an explanation of this Agreement's review
procedures.
8.3. Claim Review Procedure. If a claim is denied in
whole or in part, the Claimant or his authorized
representative may file a request for review of the decision
of denial within ten (10) days after receipt by the Claimant
of the written notice of denial. The request for review
shall be in writing and shall be delivered to the Company.
The request must specify issues or comments which the
Claimant deems pertinent to the Claim. A decision by the
Board of Directors on the request for review shall be made
promptly, but not later than ten (10) days after the Company
receives the Claimant's request for review. The Board's
decision on review will be in writing and will include
specific reasons for the Board's decision written in a manner
calculated to be understood by the Claimant.
ARTICLE 9
GENERAL PROVISIONS
9.1. Right to Terminate Employment. No provisions under
the Agreement shall restrict the right of the Corporation to
terminate the employment of the Executive.
9.2. Entire Agreement. This Agreement supersedes any
and all other agreements, either oral or in writing, among
the parties hereto with respect to the salary continuation
benefits of the Executive by the Corporation and contains all
of the covenants and agreements among the parties, subject to
the terms of the Employment Agreement. Each party
acknowledges that no representations, inducements, promises
or agreements, oral or otherwise, have been made by any party
or anyone acting on behalf of a party which are not embodied
herein, and that no other agreement, statement,
representation, inducement or promise regarding the subject
matter of this Agreement not contained in this Agreement
shall be valid or binding. Any modification, waiver or
amendment of this Agreement will be effective only if it is
in writing and signed by the party to be charged.
9.3. Waiver. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be
construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this
Agreement. Any failure of a party to assert his or its
rights under any provision of this Agreement at any time
(including his right to claim a Change of Control Payment),
shall not prevent such person from asserting and receiving
the full benefit of such rights at any subsequent time. The
failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or
any other term of this Agreement.
9.4. Choice of Law and Forum. This Agreement shall be
governed by and construed in accordance with the laws of the
State of California. Any action or proceeding brought upon
or arising out of this Agreement or its termination shall be
brought in a forum located within the State of California.
9.5. Binding Effect of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Corporation,
its successors and assigns, including without limitation, any
person, partnership or corporation which may acquire all or
substantially all of the Corporation's assets and business or
with or into which the Corporation or its subsidiary banks
may be consolidated, merged or otherwise reorganized, and
this provision shall apply in the event of any subsequent
merger, consolidation, reorganization or transfer. The
provisions of this Agreement shall be binding upon and inure
to the benefit of Executive and his heirs and personal
representatives. The benefits payable to the Executive under
this Agreement shall not be transferable by the Executive or
his Designated Beneficiary or Surviving Spouse by assignment
or otherwise and such rights shall not be subject to
commutation, encumbrance or the claims of the creditors the
Executive, his Designated Beneficiary or Surviving Spouse and
any attempt to do any of the foregoing shall be void.
9.6. Severability. In the event that any term or
condition contained in this Agreement shall for any reason be
held by a court of competent jurisdiction to be invalid,
illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other
term or condition of this Agreement, but this Agreement shall
be construed as if such invalid or illegal or unenforceable
term or condition had never been contained herein.
9.7. Headings. The headings in this Agreement are
solely for convenience of reference and shall be given no
effect in the construction or interpretation of this
Agreement.
9.8. Notices. Any notices to be given hereunder by any
party to another party may be effected either by personal
delivery, in writing or by mail, registered or certified,
postage prepaid with return receipt requested, or by
confirmed electronic mail. Mailed notices shall be addressed
to the parties at the addresses indicated at the end of this
Agreement, but each party may change his or her address by
written notice in accordance with this paragraph. Notices
delivered personally shall be deemed communicated as of
actual receipt; mailed notices shall be deemed communicated
as of five (5) days after mailing.
9.9. Arbitration. Any controversy or claim arising out
of or relating to this Agreement or alleged breach of this
Agreement not resolved through the Claims Procedure set forth
in Article 8.1 shall be settled by arbitration in accordance
with the then current rules of the American Arbitration
Association pertaining to employment disputes, and judgment
on the award rendered by the arbitrators may be entered in
any court having jurisdiction. Each party shall pay the fees
of the arbitrator he/it selects and of his/its own attorneys,
and the expenses of his/its witnesses and all other expenses
connected with presenting his/its case. Except as otherwise
required by law, other costs of the arbitration, including
the cost of any record or transcripts of the arbitration,
administrative fees and all other fees and costs, shall be
borne equally by the parties. Full discovery shall be
permitted to the parties to any such arbitration, including
depositions of all relevant witnesses.
9.10. Attorneys' Fees and Costs. If any action at
law or in equity is brought by a party upon or arising out of
this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements
incurred in the action, in addition to any other relief to
which it may be entitled.
IN WITNESS WHEREOF, the Corporation and the Executive
have executed this Agreement on the date and year first above
written.
PACIFIC CAPITAL BANCORP
"Corporation"
By: /s/ Robert B. Sheppard
Robert B. Sheppard
Chairman, Human Resources Committee
"Executive"
/s/ D. Vernon Horton
D. Vernon Horton
EXHIBIT A
BENEFICIARY DESIGNATION NOTICE
UNDER THE AMENDED AND RESTATED EXECUTIVE SALARY
CONTINUATION BENEFITS AGREEMENT (THE "AGREEMENT")
Name of Executive: D. Vernon Horton
If I shall die prior to the full receipt of benefits
under the Agreement, then all rights under this Agreement
that I hereby hold upon my death, to the extent not
previously terminated or forfeited, shall be transferred to
the D. Vernon Horton and Joyce Marie Horton Revocable Trust
UA Sep 09 94 in the manner provided for in the Agreement.
/s/ D. Vernon Horton_____________
D. Vernon Horton
Date: September 24, 1997
Receipt acknowledged on behalf of PACIFIC CAPITAL
BANCORP by:
/s/ Naomi Kinney_________________
Naomi Kinney, Director of Human Resources
Date: September 24, 1997