Exhibit 10.22
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this 7th day of June, 2000 by and
between Clovis Community Bank, a Bank organized and existing under the laws of
the State of California, (hereinafter referred to as the, "Bank"), and Tom
Sommer an Executive of the Bank (hereinafter referred to as the, "Executive").
WITNESSETH:
WHEREAS, the Executive has been and continues to be a valued Executive
of the Bank, and is now serving the Bank; and
WHEREAS, it is the consensus of the Board of Directors (hereinafter
referred to as the, "Board") that the Executive's services to the Bank in the
past have been of exceptional merit and have constituted an invaluable
contribution to the general welfare of the Bank and in bringing it to its
present status of operating efficiency, and its present position in its field of
activity;
WHEREAS, the Executive's experience, knowledge of the affairs of the
Bank, reputation, and contacts in the industry are so valuable that assurance of
the Executive's continued services is essential for the future growth and
profits of the Bank and it is in the best interests of the Bank to arrange terms
of continued employment for the Executive so as to reasonably assure the
Executive's remaining in the Bank's employment during the Executive's lifetime
or until the age of retirement;
WHEREAS, it is the desire of the Bank that the Executive's services be
retained as herein provided;
WHEREAS, the Executive is willing to continue in the employ of the Bank
provided the Bank agrees to pay the Executive's or the Executive's
beneficiary(ies) certain benefits in accordance with the terms and conditions
hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Executive to enter
into this agreement under which the Bank will agree to make certain payments to
the Executive at retirement or the Executive's beneficiary(ies) in the event of
the Executive's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Executive
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Executive, and to be considered a
non-qualified benefit plan for purposes of the Employee Retirement Security Act
of 1974, as amended ("ERISA").
The Executive is fully advised of the Bank's financial status and has had
substantial input in the design and operation of this benefit plan; and
NOW, THEREFORE, in consideration of services performed in the past and
to be performed in the future as well as of the mutual promises and covenants
herein contained it is agreed as follows:
I. EMPLOYMENT
The Bank agrees to employ the Executive in such capacity as the Bank
may from time to time determine. The Executive will continue in the
employ of the Bank in such capacity and with such duties and
responsibilities as may be assigned to him, and with such compensation
as may be determined from time to time by the Board of Directors of the
Bank. At all times, unless modified in writing, employment shall be
deemed at-will.
II. FRINGE BENEFITS
The Salary continuation benefits provided by this agreement are granted
by the Bank as a fringe benefit to the Executive and are not part of
any Salary reduction plan or an arrangement deferring a bonus or a
Salary increase. The Executive has no option to take any current
payment or bonus in lieu of these Salary continuation benefits except
as set forth hereinafter.
III. RETIREMENT DATE AND NORMAL RETIREMENT AGE
A. RETIREMENT DATE:
If the Executive remains in the continuous employ of the Bank,
then in order to receive the benefits of this program, the
Executive shall retire from active employment with the Bank on
the December 31st nearest the Executive's sixty-fifth (65th)
birthday, unless by action of the Board of Directors this
period of active employment shall be shortened or extended.
B. NORMAL RETIREMENT AGE:
Normal Retirement Age shall mean the date on which the
Executive attains age sixty-five (65).
C. EARLY RETIREMENT DATE:
Early Retirement Date shall mean a retirement from service
which is effective prior to the Normal Retirement Age stated
herein, provided the Executive has attained age sixty (60).
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IV. RETIREMENT BENEFIT AND EARLY RETIREMENT BENEFIT
A. RETIREMENT BENEFIT:
Upon the Executive's Retirement Date [Subparagraph III (A)],
the Bank, commencing with the first day of the month following
the date of such retirement, shall pay the Executive an annual
benefit equal to Forty Thousand Dollars and No/00ths
($40,000.00) * in equal monthly installments (1/12 of the
annual benefit) for a period of one hundred and eighty (180)
months, subject to Paragraph V. Said benefit amount is set
forth in Column (C) of Exhibit A, attached hereto and fully
incorporated herein by reference.
*(i) COST OF LIVING INCREASE:
For each year that the Executive shall receive a
benefit, said benefit amount shall be increased by
three percent (3%) from the previous years benefit
amount.
B. EARLY RETIREMENT BENEFIT:
Upon the Executive's Early Retirement Date [Subparagraph
III(C)], the Bank, commencing with the first day of the month
following the date of such early retirement, shall pay the
Executive an annual benefit equal to the Executive's accrued
liability benefit at the time of said early retirement
multiplied by the Executive's vested percentage in said
benefits at the time of said early retirement (Paragraph VII)
and then taking into consideration the discount rate
[Subparagraph XI(L)].* Said amount shall be payable in equal
monthly installments (1/12 of the annual benefit) for a period
of one hundred and eighty months (180) months, subject to
Paragraph V. Said annual benefit amount is set forth in Column
(F) of Exhibit A, attached hereto and fully incorporated
herein by reference.
*(i) COST OF LIVING INCREASE:
For each year that the Executive shall receive a
benefit, said benefit amount shall be increased by
three percent (3%) from the previous years benefit
amount.
V. DEATH BENEFIT
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Notwithstanding anything herein to the contrary, in the event of the
Executive's death, no benefits shall be payable hereunder and this
agreement shall automatically terminate effective immediately upon said
death of the Executive.
VI. BENEFIT ACCOUNTING
The Bank shall account for this benefit using the regulatory accounting
principles of the Bank's primary federal regulator. The Bank shall
establish an accrued liability retirement account for the Executive
into which appropriate reserves shall be accrued.
VII. VESTING
Executive's interest in the benefits that are the subject of this
Agreement shall be subject to an annual vesting percentage of ten
percent (10%) for each full year of service with the Bank from the
second anniversary of the Effective Date of this Agreement
[Subparagraph XI (K)] (to a maximum of 100%). Said benefit amount is
set forth in Column (D) of Exhibit A, attached hereto and fully
incorporated herein by reference.
VIII. TERMINATION OF EMPLOYMENT AND DISABILITY
A. VOLUNTARY TERMINATION OF EMPLOYMENT:
Subject to Subparagraph VIII (i) hereinbelow, in the event
that the employment of the Executive shall terminate prior to
retirement from active employment, as provided in
Subparagraphs III (A) and (C), by the Executive's voluntary
action, then this agreement shall immediately terminate and
the Executive shall not be entitled to receive any benefits
under this agreement.
B. INVOLUNTARY TERMINATION OF EMPLOYMENT:
Subject to Subparagraph VIII (i) hereinbelow, in the event
that the employment of the Executive shall terminate prior to
retirement from active employment, as provided in
Subparagraphs III (A) and (C), by the Bank's discharge of the
Executive without cause, then the Executive shall be entitled
to receive the Executive's accrued liability balance at the
time of said termination multiplied by the Executive's vested
percentage in said benefits at the time of said termination
(Paragraph VIII) payable in a lump sum upon the Executive
attaining Normal Retirement Age [Subparagraph III(B)]. Said
benefit amount is set forth in Column (G) of Exhibit A,
attached hereto and fully incorporated herein by reference.
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(i) DISCHARGE FOR CAUSE: In the event the Executive
shall be discharged for cause at any time, all benefits
provided herein shall be forfeited. The term for "cause"
shall mean any of the following that result in an adverse
effect on the Bank: (i) gross negligence or gross neglect;
(ii) the commission of a felony or gross misdemeanor involving
moral turpitude, fraud, or dishonesty; (iii) the willful
violation of any law, rule, or regulation (other than a
traffic violation or similar offense); (iv) an intentional
failure to perform stated duties; or (v) a breach of fiduciary
duty involving personal profit. If a dispute arises as to
discharge for "cause", such dispute shall be resolved by
arbitration as set forth in this Executive Plan.
C. DISABILITY BENEFIT:
In the event the Executive becomes disabled prior to any
Termination of Service, and the Executive's employment is
terminated because of such disability, the Executive shall be
entitled to receive one hundred percent (100%) of the
Executive's accrued liability balance at the time of said
disability taking to consideration the discount rate
[Subparagraph XI(L)].* Said accrued liability balance shall be
divided into fifteen (15) annual payments payable for a period
of one hundred and eighty (180) months (1/12th of the annual
benefit) commencing with the first day of the month following
the date of such termination and continuing each month
thereafter until said payments have been completed. Said
benefit amount is set forth in Column (H) of Exhibit A
attached hereto and fully incorporated herein by reference.
*(i) COST OF LIVING INCREASE:
For each year that the Executive shall receive a
benefit, said benefit amount shall be increased by
three percent (3%) from the previous years benefit
amount.
Disability shall be defined in the Executive's Employment
Agreement in effect at the time of said termination or, if no
Employment Agreement is in effect, then as defined in the
Bank's long term termination policy in effect at the time of
said disability. If neither definition exists at the time of
termination and there is a dispute regarding whether the
Executive is disabled, such dispute shall be resolved by a
physician selected by the Bank, a physician selected by the
Executive, and a third physician selected by each of the other
two (2) physicians. Such resolution shall be binding upon all
parties to this Agreement.
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IX. CHANGE OF CONTROL
Change of Control shall be deemed to be the cumulative transfer of
more than fifty percent (50%) of the voting stock of the Bank from
the date of this Agreement. For the purposes of this Agreement,
transfers on account of deaths or gifts, transfers between family
members or transfers to a qualified retirement plan maintained by
the Bank shall not be considered in determining whether there has
been a change in control. Upon a Change of Control, if, within
twelve (12) months of said Change of Control the Executive
subsequently suffers a Termination of Service (voluntarily or
involuntarily) except for cause, or if the Executive's job
responsibilities substantially change or the Executive is relocated
subsequent to a Change of Control, the Executive shall receive one
hundred percent (100%) of the benefit that the Executive would have
received had the Executive been employed by the Bank until Normal
Retirement Age. Said amount shall be reduced to present value
[Subparagraph XI(L)] to the Executive's Normal Retirement Age and
paid to the Executive in a lump sum commencing with the first day of
the month following the date of such termination. Said benefit
amount is set forth in Column (I) of Exhibit A attached hereto and
fully incorporated herein by reference.
Notwithstanding the foregoing, the combined compensation from this
Change of Control benefit and any other benefit payable under this
Agreement, any other contract provision between the parties, or
otherwise on a Change of Control, shall not exceed three (3) times
Employee's annualized salary, nor be equal to or in excess of such
amount that would constitute a nondeductible or excess parachute
payment under Section 280G of the Code or trigger an excise tax under
the golden parachute provisions of Section 4999 of the Code.
X. RESTRICTIONS ON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust
any fund or money with which to pay its obligations under this
Executive Plan. The Executive, their beneficiary(ies), or any
successor in interest shall be and remain simply a general creditor
of the Bank in the same manner as any other creditor having a
general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to
either fund the obligations undertaken by this Executive Plan or to
refrain from funding the same and to determine the extent, nature
and method of such funding. Should the Bank elect to fund this
Executive Plan, in whole or in part, through the purchase of life
insurance, mutual funds, disability policies or annuities, the Bank
reserves the absolute right, in its sole discretion, to terminate
such funding at any time, in whole or in part. At no time shall any
Executive be deemed to have any lien nor
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right, title or interest in or to any specific funding investment or
to any assets of the Bank.
If the Bank elects to invest in a life insurance, disability or annuity
policy upon the life of the Executive, then the Executive shall assist
the Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or annuities.
XI. MISCELLANEOUS
A. ALIENABILITY AND ASSIGNMENT PROHIBITION:
Neither the Executive, nor the Executive's surviving spouse,
nor any other beneficiary(ies) under this Executive Plan 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
Executive or the Executive's beneficiary(ies), nor be
transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Executive or any
beneficiary attempts assignment, commutation, hypothecation,
transfer or disposal of the benefits hereunder, the Bank's
liabilities shall forthwith cease and terminate.
B. BINDING OBLIGATION OF THE BANK AND ANY SUCCESSOR IN INTEREST:
The Bank shall not merge or consolidate into or with another
bank or sell substantially all of its assets to another bank,
firm or person until such bank, firm or person expressly
agrees, in writing, to assume and discharge the duties and
obligations of the Bank under this Executive Plan. This
Executive Plan shall be binding upon the parties hereto, their
successors, beneficiaries, heirs and personal representatives.
C. AMENDMENT OR REVOCATION:
It is agreed by and between the parties hereto that, during
the lifetime of the Executive, this Executive Plan may be
amended or revoked at any time or times, in whole or in part,
by the mutual written consent of the Executive and the Bank.
D. GENDER:
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Whenever in this Executive Plan words are used in the
masculine or neuter gender, they shall be read and construed
as in the masculine, feminine or neuter gender, whenever they
should so apply.
E. EFFECT ON OTHER BANK BENEFIT PLANS:
Nothing contained in this Executive Plan shall affect the
right of the Executive to participate in or be covered by any
qualified or non-qualified pension, profit-sharing, group,
bonus or other supplemental compensation or fringe benefit
plan constituting a part of the Bank's existing or future
compensation structure.
F. HEADINGS:
Headings and subheadings in this Executive Plan are inserted
for reference and convenience only and shall not be deemed a
part of this Executive Plan.
G. APPLICABLE LAW:
The validity and interpretation of this Agreement shall be
governed by the laws of the State of California.
H. 12 U.S.C. Section 1828(K):
Any payments made to the Executive pursuant to this Executive
Plan, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. Section 1828(k) or any regulations
promulgated thereunder.
I. PARTIAL INVALIDITY:
If any term, provision, covenant, or condition of this
Executive Plan is determined by an arbitrator or a court, as
the case may be, to be invalid, void, or unenforceable, such
determination shall not render any other term, provision,
covenant, or condition invalid, void, or unenforceable, and
the Executive Plan shall remain in full force and effect
notwithstanding such partial invalidity.
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J. NOT A CONTRACT OF EMPLOYMENT:
This Agreement shall not be deemed to constitute a contract of
employment between the parties hereto, nor shall any provision
hereof restrict the right of the Bank to discharge the
Executive, or restrict the right of the Executive to terminate
employment. At all times, employment shall remain at-will and
either party may terminate the agreement with or without cause
and with or without notice.
K. EFFECTIVE DATE:
The Effective Date of the Plan shall be June 7, 2000.
L. PRESENT VALUE:
All present value calculations under this Agreement shall be
based on the following discount rate:
Discount Rate: The discount rate as used in the FASB 87
calculations for this Executive Plan.
M. CONTRADICTION IN TERMS OF AGREEMENT AND EXHIBITS:
If there is a contradiction in the terms of this agreement and
the exhibits attached hereto with the actual amount of said
benefit, then the actual amount of said benefit set forth in
the agreement shall control.
XII. ERISA PROVISION
A. NAMED FIDUCIARY AND PLAN ADMINISTRATOR:
The "Named Fiduciary and Plan Administrator" of this Executive
Plan shall be Clovis Community Bank until its resignation or
removal by the Board. As Named Fiduciary and Plan
Administrator, the Bank shall be responsible for the
management, control and administration of the Executive Plan.
The Named Fiduciary may delegate to others certain aspects of
the management and operation responsibilities of the Executive
Plan including the employment of advisors and the delegation
of ministerial duties to qualified individuals.
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B. CLAIMS PROCEDURE AND ARBITRATION:
In the event a dispute arises over benefits under this
Executive Plan and benefits are not paid to the Executive (or
to the Executive's beneficiary(ies) in the case of the
Executive's death) and such claimants feel they are entitled
to receive such benefits, then a written claim must be made to
the Named Fiduciary and Plan Administrator named above within
sixty (60) days from the date payments are refused. The Named
Fiduciary and Plan Administrator shall review the written
claim and if the claim is denied, in whole or in part, they
shall provide in writing within sixty (60) days of receipt of
such claim its specific reasons for such denial, reference to
the provisions of this Executive Plan upon which the denial is
based and any additional material or information necessary to
perfect the claim. Such written notice shall further indicate
the additional steps to be taken by claimants if a further
review of the claim denial is desired. A claim shall be deemed
denied if the Named Fiduciary and Plan Administrator fail to
take any action within the aforesaid sixty-day period.
If claimants desire a second review they shall notify the
Named Fiduciary and Plan Administrator in writing within sixty
(60) days of the first claim denial. Claimants may review this
Executive Plan or any documents relating thereto and submit
any written issues and comments it may feel appropriate. In
their sole discretion, the Named Fiduciary and Plan
Administrator shall then review the second claim and provide a
written decision within sixty (60) days of receipt of such
claim. This decision shall likewise state the specific reasons
for the decision and shall include reference to specific
provisions of the Plan Agreement upon which the decision is
based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Executive Plan or the meaning
and effect of the terms and conditions thereof, then claimants
may submit the dispute to an Arbitrator for final arbitration.
The Arbitrator shall be selected by mutual agreement of the
Bank and the claimants. The Arbitrator shall operate under any
generally recognized set of arbitration rules. The parties
hereto agree that they and their heirs, personal
representatives, successors and assigns shall be bound by the
decision of such Arbitrator with respect to any controversy
properly submitted to it for determination.
Where a dispute arises as to the Bank's discharge of the
Executive for "cause", such dispute shall likewise be
submitted to arbitration as above-described and the parties
hereto agree to be bound by the decision thereunder.
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XIII. TERMINATION OR MODIFICATION OF AGREEMENT BY REASON
OF CHANGES IN THE LAW, RULES OR REGULATIONS
The Bank is entering into this Agreement upon the assumption that
certain existing tax laws, rules and regulations will continue in
effect in their current form. If any said assumptions should change and
said change has a detrimental effect on this Executive Plan, then the
Bank reserves the right to terminate or modify this Agreement
accordingly. Upon a Change of Control (Paragraph IX), this paragraph
shall become null and void effective immediately upon said Change of
Control.
XIV. EXCESS PARACHUTE PAYMENTS
Notwithstanding any provision of this Agreement to the contrary, if any
benefit payment or portion of any benefit payment under this Agreement
shall be a non deductible expense to the Bank by reason of Section 280G
of the Code the Bank shall be entitled to, at its option, reduce the
benefits to be paid under this Agreement to the extent necessary to
avoid the application of 280G of the Code to such payment. This
provision can be applied to reduce the benefits under this Agreement to
zero, if necessary and so elected by the Bank.
XV. COMPETITION AFTER TERMINATION OF EMPLOYMENT
The Bank shall not pay any benefit under this Agreement if the
Executive, without the prior written consent of the Bank, engages in,
becomes interested in, directly or indirectly, as a sole proprietor, as
a partner in a partnership, or as a substantial shareholder in a
corporation, or becomes associated with, in the capacity of employee,
director, officer, principal, agent, trustee or in any other capacity
whatsoever, any enterprise conducted in the trading area (a 50 mile
radius) of the business of the Bank, which enterprise is, or may deemed
to be, competitive with any business carried on by the Bank as of the
date of termination of the Executive's employment or his retirement.
This section shall not apply following a Change of Control.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the 7th day
of June, 2000 and that, upon execution, each has received a conforming copy.
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CLOVIS COMMUNITY BANK
Clovis, California
/s/ Janice H. Neary By: /s/ Daniel J. Doyle
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Witness Daniel J. Doyle
President and Chief Executive Officer
/s/ Janice H. Neary /s/ Tom Sommer
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Witness Tom Sommer
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BENEFICIARY DESIGNATION FORM
FOR THE EXECUTIVE SALARY CONTINUATION
AGREEMENT
PRIMARY DESIGNATION:
NAME ADDRESS RELATIONSHIP
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SECONDARY (CONTINGENT) DESIGNATION:
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All sums payable under the Executive Salary Continuation Agreement by reason of
my death shall be paid to the Primary Beneficiary, if he or she survives me, and
if no Primary Beneficiary shall survive me, then to the Secondary (Contingent)
Beneficiary.
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Tom Sommer Date
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