EXHIBIT 10.7
COUNTY BANK
DEFERRED COMPENSATION AGREEMENT
This Deferred Compensation Agreement ("Agreement") is made this
________ day of _____________, 1995, by and between Capital Corp of the West, a
California corporation and County Bank, a California banking corporation on the
one hand (Collectively the "Bank"), their successors or assigns, and
____________________________ (the "Director").
RECITAL
To encourage the Director to remain a member of the Bank's Board of
Directors, the Bank is willing to provide to the Director a deferred
compensation opportunity. The Bank will pay the benefits from its general
assets. The Bank will purchase a life insurance policy on the Director's
life, owned by the Bank and with the Bank as the sole beneficiary, in order
to provide the director or his or her beneficiary with certain benefits
payable upon the death of the Director, or upon the Director's normal
termination date.
AGREEMENT
The Director and the Bank 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 A "Change of Control" shall be deemed to have occurred
if (i) a tender offer shall be make and consummated for the ownership of
25% or more of the outstanding voting securities of the Bank; (ii) the Bank
shall be merged or consolidated with another bank or corporation and as a
result of such merger or consolidation less than 75% of the outstanding
voting securities or the surviving or resulting bank or corporation shall
be owned in the aggregate by the former shareholders of the Bank, other
than affiliates (within the meaning of the Securities Exchange Act of 1934)
of the party to such merger or consolidation, as the same shall have
existed immediately prior to such merger of consolidation; (iii) the Bank
shall sell substantially all of its assets to another bank or corporation
which is not a wholly owned subsidiary; or (iv) a person, within the
meaning or Section 3(a)(9) or of Section 13(d)(3) (as in effect on the
date hereof) of the Securities Exchange Act of 1934, shall acquire 25% or
more of the outstanding voting securities of the Bank (whether directly,
indirectly, beneficially or of record). For purposes hereof, ownership of
voting securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13d-3(d)(1)(i) (as in
effect on the date hereof) pursuant to the Securities Exchange Act of 1934.
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 "Disability" shall mean the inability of the Director to perform
the duties and responsibilities of his or her position with the
Bank in a normal and regular manner, due to mental or physical
illness of injury, for a period of ninety (90) consecutive days,
or for fifty percent (50%) of more of the normal working days
during a period of one hundred eighty (180) consecutive days.
Determination of the Director's Disability shall be made by the
Bank's Board of Director's, which determination shall not be
unreasonable or arbitrary and shall be supported by medical
opinion. The Director shall be ineligible to participate in such
disability determination. Director shall, if requested by the
Bank's board of Directors, submit to a mental or physical
examination to assist the Board of Directors in making its
determination of Disability hereunder. The psychiatrist or
physician performing such examination shall be selected by the
Bank and Director, or the Director's representative if the
Director is not able to participate in such selection.
1.1.4 "Election Form" means the Form attached as Exhibit 1.
1.1.5 "Fees" means the total director's fees payable to the Director.
1.1.6 "Normal Termination Date" means the Director attaining age
seventy (70) and completing ten (10) Years of Service beginning
on the date of this Agreement.
1.1.7 "Termination of Service" means the Director ceasing to be a
member of the Bank's Board of Directors for any reason whatsoever.
1.1.8 "Years of Service" means the total number of twelve-month periods
during which the Director serves as a member of the Bank's Board
of Directors.
ARTICLE 2
DEFERRAL ELECTION
2.1 INITIAL ELECTION. The Director shall make as initial deferral
election under this Agreement by filing with the Bank a signed
Election Form within 30 days after the date of this Agreement. The
Election Form shall set forth the amount of Fees to be deferred and
the form of benefit payment. The Election Form shall be effective to
defer only Fees earned after the date the Election Form is received by
the Bank.
2.2 ELECTION CHANGES.
2.2.1 GENERALLY. The Director may modify the amount of Fees
to be deferred by filing a subsequent signed Election Form
with the Bank. The modified deferral shall not be effective
until the calender year following the year in which the
subsequent Election form is received by the Bank. The Director
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 of similar event outside the control of
the Director occurs, the Director, by written instructions to
the Bank, may reduce future deferrals under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 ESTABLISHING AND CREDITING. The Bank shall establish a Deferral
Account on its books for the Director, and shall credit to the
Deferral Account the following amounts:
3.1.1 DEFERRALS. The Fees deferred by the Director as of the
time the fees would have otherwise been paid to the Director.
3.1.2 INTEREST. On the first day of each month and immediately
prior to the payment of any benefits, interest on the account
balance at an annual rate, equal to the prime interest rate as
published in the West Coast edition of THE WALL STREET JOURNAL.
The interest rate shall be adjusted annually on January 1 and
shall continue unchanged for the year until the next adjustment
date.
3.2 STATEMENT OF ACCOUNTS. The Bank shall provide to the Director,
prior to April 15 of each year, 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. The Director is a
general unsecured creditor of the Bank for the payment of benefits.
The benefits represent the mere promise by the Bank to pay such
benefits. The Director's rights are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Director's creditors.
ARTICLE 4
LIFETIME BENEFITS
4.1 NORMAL TERMINATION BENEFIT. Upon the Director's Termination of
Service on the normal termination date as described in Section 1.1.6,
the Bank shall pay to the Director the benefit described in this
Section 4.1.
4.1.1 AMOUNT OF BENEFIT. The benefit under this Section 4.1 is
$13,914 per year for ten (10) years commencing on the date
elected by the Director.
4.1.2 The benefit as described in 4.1.1 is in lieu of the
balance in the Deferral Account. Said balance reverts back to
the Bank.
4.2 EARLY TERMINATION BENEFIT. If the Director terminates service
as a director before the Normal Termination Date, and for reasons
other than death or Disability, the Bank shall pay to the Director the
benefit described in this Section 4.2.
4.2.1 AMOUNT OF BENEFIT. The benefit under this Section 4.2 is
the Deferral Account balance at the time of early termination.
4.2.2 PAYMENT OF BENEFIT. The Bank shall pay the benefit to the
Director in the form elected by the Director or on the Election
Form. The Bank shall continue to credit interest under Section
3.1.2.
4.3 DISABILITY BENEFIT. If the Director terminates service as a
director for Disability prior to the Normal Retirement Date, the Bank
shall pay to the Director the benefit described in this Section 4.3.
4.3.1 AMOUNT OF BENEFIT. The benefit under this Section 4.3 is
the Deferral Account balance at the Director's Termination of
Service.
4.3.2 PAYMENT OF BENEFIT. The Bank shall pay the benefit to the
Director in the form elected by the Director on the Election
Form. The Bank shall continue to credit interest under Section
3.1.2.
4.4 CHANGE OF CONTROL BENEFIT. Upon a Change of Control while
the Director is in the active service of the Bank, the Bank shall pay
to the Director the benefit described in this Section 4.4 in lieu of
any other benefit under this Agreement.
4.4.1 AMOUNT OF BENEFIT. The benefit under this Section 4.4 is
the Deferral Account balance at the date of the Director's
Termination of Service.
4.4.2 PAYMENT OF BENEFIT. The Bank shall pay the benefit to the
Director in a lump sum within ninety (90) days after the
Director's Termination of Service.
4.5 HARDSHIP DISTRIBUTION. Upon the Bank's determination
(following petition by the Director has suffered an unforeseeable
financial emergency as described in Section 2.2.2, the Bank shall
distribute to the Director all or a portion of the Deferral Account
balance as determined by the Bank, but in no event shall the
distribution be greater than is necessary to relieve the financial
hardship.
ARTICLE 5
DEATH BENEFITS
5.1 DEATH DURING ACTIVE SERVICE. If the Director dies while in the
active service of the Bank, the Bank shall pay to the Director's
beneficiary the benefit described in this Section 5.1.
5.1.1 AMOUNT OF BENEFIT. The benefit under Section 5.1 is an
annual amount of $13,914 for ten (10) years, commencing within
ninety (90) days following the day that the Bank receives
notification of the Director's death, and paid on that same
date annually thereafter until the tenth (10) year after the
Director's death.
5.1.2 The benefit as described in 5.1.1 is in lieu of the
balance in the Deferral Account. Said balance reverts back to
the Bank.
5.2 DEATH DURING BENEFIT PERIOD. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all
such payments, the Bank shall pay the remaining benefits to the
Director's beneficiary at the same time and in the same amounts they
would have been paid to the Director had the Director survived.
ARTICLE 6
BENEFICIARIES
6.1 BENEFICIARY DESIGNATIONS. The Director shall designate a
beneficiary by filing a written designation with Bank. The Director
may revoke or modify the designation at any time by filing a new
designation. However, designations will only be effective if signed by
the Director and accepted by the Bank during the Director's lifetime.
The Director's beneficiary designation shall be deemed automatically
revoked if the beneficiary predeceases the Director, or if the
Director names a spouse as beneficiary and the marriage is
subsequently dissolved. If the Director dies without a valid
beneficiary designation, all payments shall be made to the Director's
surviving spouse, if any, and if none, to the Director's surviving
children and the descendants of any deceased child by right of
representation, and if no children of descendants survive, to the
Director's estate.
6.2 FACILITY OF PAYMENT. If a benefit is payable to
a minor, to a person declared incompetent, or to a person
incapable of handling the disposition of his or her property, the
Bank 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 Bank 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 Bank from all liability with respect to
such benefit
ARTICLE 7
GENERAL LIMITATION
7.1 SUICIDE. If the Director commits suicide within two (2) years
after the date of this Agreement, or if the director has made any
material misstatement of fact on any application for life insurance
purchased by the Bank, the only benefits payable will be limited to
the balance of the Deferral Account.
7.1.1 PAYMENT OF BENEFIT. The Bank shall pay the benefit to the
Director's beneficiary in the form elected by the Director on
the Election Form. The Bank shall continue to credit interest
under Section 3.1.2.
ARTICLE 8
CLAIMS AND REVIEW PROCEDURES
8.1 CLAIMS PROCEDURE. The Bank shall notify the Director's
beneficiary in writing, within ninety (90) days of his or her
written application for benefits, of his or her eligibility or none
eligibility for benefits under this Agreement. If the Bank
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 this
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 this 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 Bank
determines that there are special circumstances requiring
additional time to make a decision, the Bank 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 ninety (90) day period.
8.2 REVIEW PROCEDURE. If the beneficiary is determined by the
Bank 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 Bank by filing a petition for review with the
Bank within sixty (60) days after receipt of the notice issued by
the Bank. 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
Bank of the petition, the Bank shall afford the beneficiary (and
counsel, if any) an opportunity to present his or her position to
the Bank orally or in writing, and the beneficiary (or counsel)
shall have the right to review the pertinent documents. The Bank
shall notify the beneficiary of its decision in writing within the
sixty (60) day period, 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. If, because of the need for a hearing, the
sixty (60) day period is not sufficient, the decision may be
deferred for up to another sixty (60) day period at the election of
the Bank, but notice of this deferral shall be given to the
beneficiary.
ARTICLE 9
AMENDMENTS AND TERMINATION
9.1 AMENDMENT. The Bank may amend or terminate this
Agreement at any time if, pursuant to legislative, judicial or
regulatory action, continuation of the Agreement would (i) cause
benefits to be taxable to the Director prior to actual receipt,
(ii) result in significant financial penalties or other
significantly detrimental ramifications to the Bank (other than
the financial impact of paying the benefits) or (iii) is
prohibited by law, regulation or order of a banking regulatory
agency. In no event shall this Agreement be terminated without
payment to the Director of the Deferral Account balance
attributable to the Director's deferrals and interest credited on
such amounts pursuant to Section 3.1.2.
ARTICLE 10
10.1 NON-ASSIGNABLE. Neither the Director, his or her
spouse, nor any other beneficiary under this Agreement shall have
any power or right to transfer, assign, anticipate, hypothecate,
mortgage, commute, modify, or otherwise encumber in advance any of
the benefits payable hereunder, nor shall any of said benefits be
subject to seizure for the payment of any debts, judgments,
alimony or separate maintenance, owed by the Director or his or
her beneficiary of any of them, or be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise.
10.2 UNSECURED GENERAL CREDITOR. The Director's rights
are limited to the right to receive payments as provided in this
Agreement and the Director's position with respect thereto is that
of a general unsecured creditor of the Bank.
10.3 REORGANIZATION. The Bank shall not voluntarily
engage in a Change of Control of the Bank unless and until such
succeeding or continuing corporation, bank, firm, entity or person
agrees to assume and discharge the obligations of the Bank under
this Agreement. Upon the occurrence of such event, the term"Bank"
as used in this Agreement shall be deemed to refer to such
successor or survivor corporation, bank, firm or person.
10.4 NOT A GUARANTEE OF ELECTION AS DIRECTOR. This
Agreement shall not be deemed to constitute a contract or
agreement that the Bank shall be required to propose the Director
as a nominee for election to the Board of Directors of the Bank or
to have the Bank's proxy holders vote in favor of the election of
the Director to the Bank's Board of Directors.
10.5 LIQUIDATED DAMAGES. The parties hereto, before
entering into this Agreement, have been concerned with the fact
that substantial damages will be suffered by Director in he event
that the Bank shall fail to perform according to this Agreement.
In the event of nonperformance by the Bank for a period of thirty
(30) days from the time any such payment was scheduled to be made
pursuant to this Agreement, Director shall immediately be entitled
to liquidated damages equal to one and one-half (1-1/2) times the
remaining payments due Director under this Agreement. This
provision shall not be applicable in the event that such
nonpayment is the result of prohibition of such payment by law,
regulation or order of a banking regulatory agency.
10.6 SUCCESSORS AND ASSIGNS; ASSIGNMENT. The rights
and obligations of this Agreement shall be binding upon and inure
to the benefit of the successors, assigns, heirs and personal
representatives of the parties hereto. Director may not assign
this Agreement of any of Director's rights hereunder except with
the prior written consent of the Bank.
10.7 SEVERABILITY. If any provision of this Agreement,
as applied to either party or to any circumstance, is judged by a
court to be void or unenforceable, in whole or in part, the same
shall in no way affect any other provision of this Agreement, the
application of such provision in any other circumstances, or the
validity or enforce ability of this Agreement.
10.8 APPLICABLE LAW; JURISDICTION AND VENUE. This
Agreement and all matters or issues collateral hereto shall be
governed by the laws of the State of California applicable to
contracts performed entirely therein. Director and Bank each
consent to the jurisdiction of, and any action concerning this
Agreement shall be brought and tried in, the United States
District Court for the Eastern District of California or the
Superior or Municipal court for the County of Merced.
10.9 WAIVER. A waiver by either party of any of the
terms or conditions of this Agreement in any one instance shall
not be deemed or construed to be a waiver of such terms or
conditions for the future, or of any subsequent breach thereof.
All remedies, rights, undertakings, obligations, and agreements
contained in this Agreement shall be cumulative, and none of them
shall be in limitation of any other remedy, right, undertaking,
obligation or agreement of either party.
10.10 ATTORNEY'S FEES. If any legal action or other
proceeding is brought for the enforcement of the Agreement, or
because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party or parties shall be
entitled to recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
10.11 HEADINGS. The headings in this Agreement are for convenience
only and shall not in any manner affect the interpretation or
construction of the Agreement or any of its provision.
10.12 NOTICE. Any notice or other communication to be given under
this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service if personally served, or if mailed,
upon deposit in the United Sates mail, first class postage prepaid,
express or certified, return receipt requested, and properly addressed
to the parties as follows: if to Director at his last address shown in
the Bank's records; if to Bank:
County Bank
505 West Main Street
Merced, California 95340
Attn: Chairman
Either party may designate a new address for purposes of this
Section 10.12 by giving the other notice of the new address as
provided herein.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be
duly executed by its proper officer and the Director has hereunto set
his hand at Merced, California, the day and year first above written.
COUNTY BANK:
By:______________________________
Its:______________________________
DIRECTOR:
--------------------------------
DIRECTOR NAME
EXHIBIT I
ELECTION FORM
This election form, when properly signed, shall become part of the Deferred
Compensation Agreement dated _________________________ by and between COUNTY
BANK and _________________________ (the "Director").
A. DEFERRAL ELECTION
The undersigned hereby elects to defer $_____________ (_______________)
per month from his/her Director's fees, receivable as a director of
County Bank. If the amount of fees receivable in any one month is less
than the amount to be deferred, the deferral shall be 100% of the fees
receivable.
B. BENEFIT PAYMENT ELECTION
1. In case of a normal termination or death of the undersigned or
a change of control, the benefits are payable as described in
the Deferred Compensation Agreement.
2. In case of early termination or disability as set forth in the
Deferred Compensation Agreement, the undersigned wishes the
distribution of benefits to be as follows:
/ / Lump sum distribution, provided that the total amount of
benefits does not exceed $25,000.00.
/ / $___________ per year (not to exceed $25,000.00 per year)
until all benefits are paid out.
/ / ________% of total benefits per year (not to exceed $25,000.00
per year) until all benefits are paid out.
SIGNED THIS ______________ DAY OF _____________________, 200____.
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THE "DIRECTOR"