EXHIBIT 10.12
Executive Salary Continuation Agreement
dated October 19, 1995,
amended October 30, 1997
between
N. Douglas Mills and VB
EXECUTIVE SALARY CONTINUATION AGREEMENT
AGREEMENT, made and entered into this ____ day of __________, by and
between VALLEY BANK, a corporation organized and existing under the
laws of the State of California hereinafter called the "Corporation"),
and ________________ (hereinafter called the "Executive").
WITNESSETH:
WHEREAS, the Executive is in the employ of the Corporation serving as its
________________________________; and
WHEREAS, the experience of the Executive, his knowledge of the affairs
of the Corporation, his reputation and contacts in the industry are so
valuable that assurance of his continued service is essential for the
future growth and profits of the Corporation and it is in the best interests
of the Corporation to arrange terms of continued employment for the
Executive so as to reasonably assure his remaining in the Corporation's
employment during his lifetime or until the age of retirement; and
WHEREAS, it is the desire of the Corporation that his services be retained
as herein provided; and
WHEREAS the Executive is willing to continue in the employ of the
Corporation provided the Corporation agrees to pay to him or his
beneficiaries certain benefits in accordance with the terms and conditions
hereinafter set forth;
NOW, THEREFORE, 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 I
1.1) Employment - The Corporation agrees to employ the Executive in such
capacity as the Corporation may from time to time determine. The Executive
will continue in the employ of the Corporation in such capacity and with such
duties and responsibilities as may be assigned to him, and such compensation
as may be determined from time to time by the Board of Directors of the
Corporation.
1.2) Full Efforts - The Executive agrees to devote his full time and
attention exclusively to the business and affairs of the Corporation, except
during vacation periods, and to use his best efforts to furnish faithful and
satisfactory services to the Corporation.
1.3) Fringe Benefit - The salary continuation benefits provided by this
Agreement are granted by the Corporation as a fringe benefit to the Executive
and are not part of any salary reduction plan or any arrangement deferring a
bonus or salary increase. The Executive has no option to take any current
payment or bonus in lieu of these salary continuation benefits.
ARTICLE 2
2.1) Retirement - If the Executive shall continue in the employment of the
Corporation until he attains the age of sixty-five (65), he may retire from
active daily employment as of the first day of the month next following
attainment of age sixty-five (65) or upon such later date as may be mutually
agreed upon by the Executive and the Corporation.
2.2) Payment - The Corporation agrees that upon such retirement it will
pay to the Executive the annual sum of seventy thousand dollars ($70,000.00),
payable monthly on the first day of each month following such retirement
until he attains the age of eighty (80); subject to the conditions and
limitations hereinafter set forth. The seventy thousand dollars ($70,000.00)
annual payment amount will be adjusted as of the first year in which it is to
be paid to reflect changes in the federally determined cost-of-living index
and will be adjusted annually for each payment year thereafter to reflect
further changes in said federally, determined cost-of-living index.
2.3) Death Benefit - The Corporation agrees that if the Executive shall so
retire, but shall die before receiving the full amount of monthly payments to
which he is entitled hereunder, it will continue to make such monthly payments
to the Executive's surviving spouse for the remaining period as defined in
Section 2.2 above. If the Executive is not survived by any spouse, said payments
shall be made to the duly qualified personal representative, executor or
administrator of his estate.
ARTICLE 3
3.1) Consulting - It is mutually agreed that during the fifteen (15) year
period following retirement from active daily employment upon attainment of age
sixty-five (65), or such later date as may be mutually agreed upon, the
Executive shall, at the request of the Corporation, be available at reasonable
times and places as may be mutually agreed upon, to render services to the
senior executives of the Corporation at its offices in an advisory or
consulting capacity.
3.2) Informed - The Executive will keep himself informed concerning the
affairs of the Corporation through reports which the Corporation will supply,
and such other means as may be agreed upon. The Executive shall not be required
to travel from whatever place he may be then living or staying for the purposes
of such consultation unless all expenses incurred by him shall be paid by the
Corporation.
3.3) Disability - Breach of this condition shall not be considered to have
occurred if the Executive is unable to consult because of his mental or
physical disability.
3.4) Not Employee - In furnishing such consultative services, the Executive
shall not be an employee of the Corporation, but shall act in the capacity of an
independent contractor,
3.5) No Competition - During the said fifteen (15) year period following
retirement from active daily employment, the Executive shall not become the
owner of, nor engage, directly or indirectly, in any business which is
substantially similar to or competes with the business of the Corporation,
either as proprietor, partner, stockholder, officer, director, or employee
within the County of Riverside, unless the Corporation has first consented in
writing thereto.
3.6) Forfeiture - The payments provided under Article 2 are conditioned
upon the Executive fulfilling the foregoing requirements of this Article 3 and,
in the event the Executive shall at any time materially breach the foregoing
requirements, the Board of Directors of the Corporation may, by a Resolution, at
any regular or special meeting, suspend or eliminate payment during the period
of such breach. What constitutes a material breach shall be within the sole
determination of the Board of Directors.
3.7) Termination of Payments - In the event the Board of Directors by such
Resolution terminates further payments to the Executive as provided in this
Article 3, all amounts then remaining unpaid under this Agreement shall be
forfeited and the Corporation shall have no further liability to the Executive
or any other persons hereunder.
ARTICLE 4
4.1) Death Prior to Retirement - 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 his attaining the age of sixty-five (65) years, the
Corporation will pay the annual sum of Seventy Thousand Dollars ($70,000.00) per
year, to the Executive's surviving spouse in equal monthly installments for a
period of one hundred eighty (180) months. If the Executive is not survived by
any spouse, said payment shall be made to the duly qualified personal
representative, executor or administrator of his estate. The said monthly
payments shall begin the first day of the month following the month of the
decease of the Executive. Notwithstanding any other provisions of this
Agreement, no benefits shall be payable hereunder to Executive, or his Spouse,
or estate, if his death occurs as a result of a suicide, while sane or insane,
within two years after (i) the date of this agreement and/or (ii) the date of
any Subsequent change in the benefits for said executive.
4.2) Disability Prior to Retirement - In the event the Executive should
become disabled while actively employed by the Corporation at any time after
the date of this Agreement but prior to his attaining the age of sixty-five
(65) years, the Corporation will pay the annual sum of Seventy Thousand
Dollars ($70,000.00) per year to the Executive, his spouse, or if no spouse,
said payment shall be made to the duly qualified representative. The said
monthly payments shall begin the first day of the month following the month of
disability of the Executive. For purposes of this paragraph, the definition of
the term "disability" shall be the same as required for eligibility or
disability payments under the Social Security Act.
ARTICLE 5
5.1) Voluntary Termination of Service or Discharge - In the event that the
employment of the Executive shall be terminated, either voluntarily or
involuntarily, as a result of any criminal, unlawful, fraudulent, or dishonest
action or any action determined to be detrimental to the interests of the
Corporation, which determination shall be made in the sole discretion of its
Board of Directors, prior to his attaining the age of sixty-five (65) years,
this Agreement shall terminate upon the date of such termination of employment
and no benefits or payments of any kind shall be made hereunder.
5.2) Other Termination of Service- The Corporation reserves the right to
terminate the employment of the Executive at any time prior to retirement. In
the event that the employment of the Executive shall terminate prior to his
attaining the age sixty-five (65), other than for reasons stated in Section 5.1
hereof, or by reason of his disability or his death, then this Agreement shall
terminate upon the date of such termination of employment. Provided, however,
that the Executive shall be entitled to the following benefits under the
following circumstances:
(a) If the Executive has been employed by the Corporation for a
period of three (3) years Subsequent to July 1, 1992, the executive will be
considered vested in sixty percent (60%) of the annual benefit amount and shall
become vested in an additional percent (20%) of said amount for each succeeding
year thereafter until he becomes one hundred percent (100%) vested. If the
Executive's employment is terminated under the provisions of this Section 5.2,
the Corporation will pay the Executive's vested amount upon such terms and
conditions and commencing within three (3) months after the date of termination.
(b) Anything hereinabove to the contrary notwithstanding, if the
Executive is not fully vested in the amount to which he is entitled under this
plan, he will become fully vested in the event of a transfer of the controlling
ownership or sale of the Corporation and shall be entitled to the full amount,
upon the terms and conditions hereof, if termination of employment thereafter
occurs under this Section 5.2.
ARTICLE 6
6.1) Termination of Agreement by Reason of Changes in Law - The
Corporation is entering into this Agreement upon the assumption that certain
existing tax laws will continue in effect in substantially their current form.
In the event of any changes in federal law relating to and allowing the
tax-free accumulation of earnings within a life insurance policy, the income
tax-free payment of proceeds from life insurance policies or the deduction from
income of interest payments on certificates of deposit issued by banking
institutions, or other change which in the sole discretion of the Board of
Directors has a material adverse tax impact on the Corporation, the
Corporation shall have an option to terminate or modify this Agreement.
Provided, however, that the Executive shall be entitled to the same amount and
under the same terms as he would have been entitled to under Sections 2.2,
4.1, 4.2 and 5.2. The payment of said amount shall be made under the same
terms and conditions set forth in Sections 2.2, 4.1, 4.2, and 5.2.
ARTICLE 7
7.1) Alienability - Neither the Executive, his 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 said 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 his beneficiary or any
of them, or 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 Corporation's obligations hereunder shall forthwith cease and
terminate.
ARTICLE 8
8.1) Participation in Other Plans - Nothing contained in this Agreement
shall be construed to alter, abridge, or in any manner affect the rights and
privileges of the Executive to participate in and be covered by any pension,
profit sharing, group insurance, bonus or similar employee plans which the
Corporation may now have or hereafter adopt.
ARTICLE 9
9.1) Funding - The Corporation reserves the absolute right, at its sole
and exclusive discretion, either to fund the obligations of the Corporation
undertaken by this Agreement or to refrain from funding the same, and to
determine the extent, nature, and method of such funding. Should the Corporation
elect to fund this Agreement, in whole or in part, through the medium of life
insurance or annuities, or both, the corporation shall be the owner and
beneficiary of the policy. The Corporation reserves the absolute right, in its
sole discretion, to terminate such life insurance or annuities, as well as any
other funding program, at any time, in whole or in part. At no time shall the
Executive be deemed to have any right, title, or interest in or to any specified
asset or assets of the Corporation, including but not by way of restriction,
any insurance or annuity contract or contracts or the proceeds therefrom.
9.2) Unsecured - Any such policy shall not in any way be considered to be
security for the performance of the obligations of this Agreement. It shall be,
and remain, a general, unpledged, unrestricted asset of the Corporation.
9.3) Cooperation - If the Corporation purchases a life insurance or
annuity policy on the life of the Executive, he agrees to sign any documents
that may be required for that purpose and to undergo any medical examination or
tests which may be necessary.
9.4) Right as Creditor - This Agreement shall not be construed as giving
the Executive or his beneficiary any greater rights than those of any other
unsecured creditor of the Corporation.
ARTICLE 10
10.1) Reorganization - The Corporation shall not merge or consolidate into
or with another corporation, or reorganize, or sell substantially all of its
assets to another corporation, firm, or person unless and until such succeeding
or continuing corporation, firm, or person agrees to assume and discharge the
obligations of the Corporation under this Agreement. Upon the occurrence of such
event, the term "Corporation" as used in this Agreement shall be deemed to refer
to such successor or survivor corporation.
ARTICLE 11
11.1) Benefits and Burdens - This Agreement shall be binding upon and inure
to the benefit of the Executive and his personal representatives, and the
Corporation and any, successor organization which shall succeed to substantially
all of its assets and business.
ARTICLE 12
12.1) 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 Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.
ARTICLE 13
13.1) The Fiduciary of the Plan and for purpose of the claims procedure
under the Agreement is the Chief Financial Officer of the Corporation. The
business address of the Fiduciary is 24010 Sunnymead Blvd., Moreno Valley, CA
92553. The Corporation shall have the right to change the Fiduciary of the Plan
created under this Agreement. The Corporation shall give the Executive written
notice of a change of the Fiduciary, or any change in the address or telephone
number of the Fiduciary.
13.2) Claims Procedure - Benefits shall be paid in accordance with the
provisions of this Agreement. The Executive, or a designated recipient or any
other person claiming through the Executive shall make a written request for
benefits under this Agreement, This written claim shall be mailed or delivered
to the Fiduciary. Such claim shall be reviewed by the Fiduciary.
If the claim is denied, in full or in part, the Fiduciary shall
provide a written notice within ninety (90) days setting forth the specific
reasons for denial, specific reference to the provisions of this Agreement
upon which the denial is based, and any additional material or information
necessary to perfect the claim, and an explanation of why such material or
information is necessary, and appropriate information and explanation of the
steps to be taken if a review of the denial is desired.
If the claim is denied and a review is desired, the Executive (or
beneficiary) shall notify the Fiduciary in writing within sixty (60) days [a
claim shall be deemed denied if the Fiduciary does not take any action within
the aforesaid ninety (90) day period] after receipt of the written notice of
denial. In requesting a review, the Executive or his beneficiary may request a
review of the Plan Document or other pertinent documents with regard to the
employee benefit plan created under this Agreement, may submit any written
issues and comments, may request an extension of time for such written
submission of issues and comments, and may request that a hearing be held, but
the decision to hold a hearing shall be within the sole discretion of the
Fiduciary.
The decision on the review of the denial claim shall be rendered by
the Fiduciary within sixty (60) days after the receipt of the request for review
(if a hearing is held) or within sixty (60) days after the hearing if one is
held. The decision shall be written stating the specific reasons for the
decision and shall include reference to specific provisions of this Agreement on
which the decision is based.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its Chairman of the Board of Directors and its Corporate
Secretary, and the Executive has hereunder set his hand at Moreno Valley, CA,
the day and year first above written.
EXECUTIVE: VALLEY BANK, by
/s/ N. Douglas Mills /s/ Marion V. Ashley
- ----------------------------------- ------------------------------------
N. Douglas Mills (###-##-####) Marion V. Ashley, Chairman
/s/ Dianna Williams
------------------------------------
Dianna Williams, Corporate Secretary
EXECUTIVE SALARY CONTINUATION AGREEMENT - Amendment
The Executive Salary Continuation Agreement made and entered into the 19th day
of October, 1995, by and between VALLEY BANK, a corporation organized and
existing under the laws of the State of California (hereinafter called the
"Corporation"), and N. Douglas Mills (hereinafter called the "Executive"), is
hereby amended pursuant to action taken by the Corporation's Board of Directors
on October 27, 1997, to wit:
BE IT RESOLVED THAT ARTICLE 10 is amended to read as follows:
10.1 REORGANIZATION - THE CORPORATION MAY ELECT TO MERGE, CONSOLIDATE INTO OR
WITH ANOTHER CORPORATION, REORGANIZE, OR SELL SUBSTANTIALLY ALL OF ITS ASSETS TO
ANOTHER CORPORATION, FIRM, OR PERSON. UPON THE OCCURRENCE, AND CONSUMMATION OF
SUCH REORGANIZATION EVENT, THE CORPORATION WILL TERMINATE THIS AGREEMENT, AND
THE EXECUTIVE SHALL BE ENTITLED TO THE FULL AMOUNT OF BENEFITS AS DESCRIBED IN
SECTION 2.2 AND SECTION 5.2 OF THIS AGREEMENT.
This amendment is the first, and only, amendment of the Agreement referenced
above.
IN WITNESS WHEREFOR, Corporation has caused this amendment to be duly executed
by its Chairman of the Board. The Chairman of the Board and Executive have
hereunder set their hand at Moreno Valley, CA this 30th day of October, 1997.
EXECUTIVE VALLEY BANK
/s/ N. Douglas Mills /s/ Marion V. Ashley
- ----------------------------------- ---------------------------------------
N. Douglas Mills (###-##-####) Marion V. Ashley, Chairman of the Board