UNFUNDED DEFERRED COMPENSATION AGREEMENT
This Agreement is made on August 21, 1992 between Scripps Bank, a California
banking corporation ("Scripps") and Ronald J. Carlson, a California resident
("Carlson"), as follows:
1. RECITAL . This Agreement is made with reference to the following essential
recitals of fact:
1.1. Carlson is the President of Scripps.
1.2. Scripps and Carlson wish to provide for certain deferred compensation
payments to Carlson, as set forth in this Agreement.
2. DEFINITIONS. As used in this Agreement, the following terms shall have the
meaning provided below:
2.1. "Annual Benefit" shall mean accrued portion of the sum of $20,000.00,
as adjusted from time to time in accordance with paragraph 3 below, payable in
equal monthly installments.
2.2. "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor statute.
2.3. "Disability" shall mean a physical or mental condition, other than
death, resulting from bodily injury, disease or mental disorder which, in the
written opinion of competent medical authority selected by Scripps, renders
Carlson incapable of performing any gainful employment.
2.4. "Year of Service" shall mean a 12 month period, beginning on February
6 of each year, and ending on February 5 of the following year, commencing as of
February 6, 1992, during all of which period Carlson is employed by Scripps.
3. AGREEMENT TO PROVIDE DEFERRED COMPENSATION. In consideration of the
continued services of Carlson, Scripps agrees to pay Carlson deferred
compensation as follows:
3.1. Scripps agrees to pay Carlson the accrued Annual Benefit, in equal
monthly installments, commencing as of the date specified in paragraph 4.2
below, and continuing thereafter from year to year for so long as Carlson is
alive.
3.2. If Carlson dies, is impaired by a Disability, or otherwise separates
from service, prior to attaining age 65, then the accrued Annual Benefit shall
be determined as provided in this paragraph. The Annual Benefit due to Carlson
shall be accrued each year in the ratio that the number of completed Years of
Service with Scripps bears to the total number of Years of Service Carlson would
have assuming that he remained in employment with Scripps until attaining age
65. Carlson shall not be entitled to any credit for any Year of Service prior to
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July 1, 1992 nor shall Carlson be entitled to any credit for any Year of Service
if he is not employed by Scripps on the last day of such Year or Service. There
shall be no credit for partial Years of Service. Upon Carlson's death,
impairment by a Disability or other separation from service with Scripps, prior
to attaining age 65, Carlson shall be entitled to such portion of the Annual
Benefit accrued to that date. The following is an example of the operation of
this paragraph:
EXAMPLE
Assume that Carlson separates from service with Scripps on December
31, 1998, and assume that his employment has been continuous from the
effective date of this Agreement until such date of separation.
Carlson would reach age 65 on February 6, 2000. As the date of
separation, Carlson would then have 6 full Years of Service and he
would have had 8 full Years of Service had he remained in employment
with Scripps until reaching 65. Thus, the Annual Benefit would be
$20,000.00 multiplied times 6/8ths to yield $15,000.00.
3.3. On February 6 of each year, beginning with the February 6 on which
Carlson attains age 66, the accrued Annual Benefit for the ensuing 12 months
shall be adjusted for any increases (not for any decreases) in the cost of
living as provided below. If Carlson shall separate from service due to his
impairment by a Disability, or if payments shall commence to Carlson's wife
following his death prior to reaching age 65, then no cost of living adjustments
shall be made to the accrued Annual Benefit until after February 6 of the year
in which he attains or would have attained age 65. If Carlson shall remain
employed by Scripps after reaching age 65, then the accrued Annual Benefit shall
be increased by an amount computed under this paragraph as if Carlson had
separated from service with Scripps upon attaining age 65. The method of
computing such adjustment shall be as follows:
3.3.1. On each applicable anniversary date, the accrued Annual Benefit
shall be multiplied times a traction, (a) the numerator of which is the Consumer
Price Index, All Urban Items, San Diego MSA (the "Index"), in effect on the
applicable anniversary date, and (b) the denominator of which is the Index which
is in effect as of February 6 of the year in which Carlson attains 65, or if
applicable, would have attained age 65. If the Index is revised or discontinued,
then the parties shall use such other index which is created as its replacement
(or if there is no replacement, then such other similar index) in order to
obtain substantially the same adjustment to the Annual Benefit as would be made
under the Index. In no event shall the Annual Benefit, as previously adjusted
for cost of living increases, be reduced as a result of the application of such
fraction.
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3.4. The calculation of any increases, decreases or other adjustments to
the Annual Benefit shall be made by enrolled actuarial company selected by
Scripps, whose determination shall be final and conclusive. Scripps reserves the
right, in its discretion, to increase the Annual Benefit from time to time and
in such amounts as its Board of Directors may designate in writing. Any such
optional increases to the Annual Benefit may be revoked by Scripps at any time
by written notice to Carlson or Carlson's wife, if applicable.
4. FORM OF PAYMENT. The accrued Annual Benefit, as computed under paragraph 3
above, shall be paid to Carlson as follows:
4.1. All payments shall be in the form of a direct deposit or a check
issued by Scripps to Carlson. Nothing contained in this Agreement shall be
construed to require Scripps to purchase an annuity or other similar investment
to provide benefits to Carlson. However, Scripps, in its discretion, may
purchase an annuity from a licensed life insurance company in order to provide
benefits to Carlson under this Agreement, and if Scripps elects to transfer
ownership of such annuity to Carlson, then Scripps shall be discharged from any
further obligations to Carlson under this Agreement, regardless of any
subsequent default or other financial insolvency of such insurance company.
4.2. Payments to Carlson shall begin as of the first day of the first
month after the later of (a) the date on which Carlson attains age 65, or (b)
the date when Carlson separates from service with Scripps. If Carlson shall be
impaired by a Disability which causes him to separate from service, then the
accrued Annual Benefit shall commence to be paid to Carlson as of the first day
of the first month after such Disability has been verified by Scripps in
accordance with this Agreement. If Carlson shall separate from service due to
his death, then payment of the accrued Annual Benefit to the wife of Carlson, if
any, shall commence as of the first day of the first month after notice of such
death has been delivered to Scripps. Subject to paragraph 4.3 below, if Carlson
shall die before attaining age 65, then payment of the accrued Annual Benefit to
the wife of Carlson, if any, shall commence as of the first day of the first
month after the date on which Carlson would have attained age 65 had he lived to
that date.
4.3. The accrued Annual Benefit payments shall be continued by Scripps,
without reduction other than a reduction provided in paragraph 3 above or
paragraph 6 below, to the wife of Carlson, as follows:
4.3.1. If Carlson shall die, then the accrued Annual Benefit shall be
paid to the wife of Carlson, as determined under this paragraph 4, for so long
as she may live.
4.3.2. If Carlson shall be impaired by a Disability, and if thereafter
he shall begin to receive payment of the
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accrued Annual Benefit, and if Carlson shall thereafter die, then the accrued
Annual Benefit shall be paid to Carlson's wife for so long as she may live, as
determined under this paragraph 4.
4.3.3. For the purposes of this Agreement, Carlson shall not be
considered to have a wife if at the time of his death or other separation from
service either Carlson or his wife have filed a petition for the dissolution of
their marriage. In the case of Disability, Carlson would not be considered to
have a wife if (a) prior to his death he was divorced after his separation from
service and subsequently remarried, or (b) if prior to his death either Carlson
or his wife (as of the time of separation from service) have filed a petition
for the dissolution of their marriage. In no event shall any wife of Carlson who
was not married to Carlson at the time of his separation from service, or any
heir of such wife, be entitled to any portion of the Annual Benefit.
4.4. If Carlson or his wife, if applicable, shall die during a month, then
the recipient shall be entitled to retain the entire payment of the portion of
the Annual Benefit due for such month. If at any time under this Agreement after
the death of Carlson it is determined that there is no wife of Carlson who is
entitled to the accrued Annual Benefit, then Scripps shall have no liability to
make any further payments of the Annual Benefit to any person.
4.5. Except as provided in paragraph 4.1 above, nothing contained in this
Agreement shall be construed to give either party the right to accelerate the
time for making payments to Carlson of the Annual Benefit or to pay Carlson a
lump sum amount in lieu thereof.
5. UNFUNDED BENEFIT. Carlson agrees that there shall be no trust or other
funding investment required to be used by Scripps in order to accumulate funds
with which to pay the accrued Annual Benefit. Carlson further acknowledges that
the payment of the accrued Annual Benefit shall be subject to the financial
ability of Scripps to make such payments, in accordance with applicable
insolvency, bankruptcy and banking laws. Nothing contained in this Agreement
shall be construed as any guarantee that Carlson will receive all or any portion
of the Annual Benefit. Scripps may, in its discretion, acquire investments to
provide for payment of the Annual Benefit, and all such investments shall be
sole and exclusive property of Scripps. Carlson shall have no interest in any
such investments and shall have no right to direct how Scripps acquires or
manages any such investments.
6. TAX WITHHOLDING AND OTHER DEDUCTIONS. Notwithstanding anything in this
Agreement to the contrary, Scripps shall have the right to reduce any payment
due to Carlson or his wife under this Agreement (a) by income tax withholding,
FICA, SDI, SUI, or other applicable payroll withholdings required by law, and
(b) any amounts owed by Carlson to Scripps for any reason, including
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without limitation, amounts due to Scripps due to Carlson's breach of his duties
as an employee of Scripps.
7. TERMINATION OF AGREEMENT. Scripps reserves the right to terminate this
Agreement at any time. In the event of such termination, the following shall
apply:
7.1. If such termination occurs prior to Carlson's separation from
service, then Carlson shall be deemed to have separated from service as of such
termination date and shall be entitled to his then accrued benefit, as computed
under paragraph 3 above.
7.2. If such termination occurs after Carlson's separation from service,
then Carlson shall continue to receive the accrued Annual Benefit as provided
in paragraph 4 above.
8. AMENDMENT. Scripps shall have the right to amend this Agreement from time
to time, provided, however, that any amendment which would reduce the accrued
Annual Benefit shall be considered to be a termination of this Agreement and
subject to the provisions of paragraph 7 above.
9. AFFILIATED EMPLOYERS. This Agreement may be adopted, in whole or in part,
by any other entity which is affiliated with Scripps by means of a written
instrument duly executed by such entity; provided, however, that such action
shall not be construed to relieve Scripps of its obligations under this
Agreement.
10. UNSECURED RIGHTS. The rights of Carlson and any wife of Carlson to receive
any benefit under this Agreement shall be unsecured and shall be subject to the
claims, if any, of the creditors of Scripps.
11. APPLICABLE LAW. This Agreement shall be construed in accordance with and
governed by the laws of the State of California.
12. RESTRICTIONS ON ALIENATION OF BENEFITS. None of the payments, benefits or
rights of Carlson or his wife shall be subject to any claim of any creditor,
and, in particular, to the fullest extent permitted by law, all such payments,
benefits and rights shall be free from attachment, garnishment, trustee's
process or any other legal or equitable process available to any creditor of
such Participant, spouse or beneficiary. Neither Carlson, nor his wife nor any
other person shall have the right to alienate, anticipate, commute, pledge,
encumber or assign any of the benefits or payments which he or she may expect to
receive, contingently or otherwise, under this Agreement.
13. NO CONTRACT OF EMPLOYMENT. Nothing contained in this Agreement shall be
construed as giving Carlson any right to be retained in the service of Scripps.
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14. ERISA EXEMPTION. The parties intend that this Agreement shall be exempt
from the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") as being an unfunded arrangement to pay deferred compensation
to a select group of management or highly compensated employees of Scripps, as
provided in section 201 of ERISA and Department of Labor Regulation section
2520.104-23. The provisions of this Agreement shall be construed in accordance
with this intent.
15. INTERPRETATION OF AGREEMENT. The Directors Of Scripps shall have full
authority to interpret, construe and administer the terms and provisions of this
Agreement, in their sole discretion, and their decisions shall be final and
conclusive. No director of Scripps shall be individually liable to Carlson with
respect to any action taken or omitted to be taken by such director with respect
to this Agreement unless attributable to the wilful misconduct of such director.
16. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Agreement shall be construed and
enforced as if such provisions had not been included.
17. HEIRS, ASSIGNS AND PERSONAL REPRESENTATIVES. Subject to the restrictions on
alienation in paragraph 12 above, this Agreement shall be binding upon the
heirs, executors, administrators, successors and assigns of the parties.
18. HEADINGS AND CAPTIONS. The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Agreement,
and shall not be employed in the construction of the Agreement.
19. GENDER AND NUMBER. Except where otherwise clearly indicated by context, the
masculine and the neuter shall include the feminine and the neuter, the singular
shall include the plural, and vice-versa.
20. PRIOR UNDERSTANDINGS. This Agreement contains the entire agreement between
the parties to this Agreement with respect to the subject matter of this
Agreement and supersedes all prior understandings, agreements, representations
and warranties, if any, with respect to such subject matter.
21. NOTICES. All notices or other communications required or permitted to be
given to a party to this Agreement shall be in writing and shall be personally
delivered, sent by registered or certified mail, postage prepaid, return receipt
requested, or sent by an overnight express courier service that provides written
confirmation of delivery, to such party at the following respective address:
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To Scripps: 7817 Ivanhoe Avenue
La Jolla, CA 92037
To Carlson: 6584 Avenida Manana
La Jolla, CA 92037
Each such notice or other communication shall be deemed given, delivered and
received upon its actual receipt, except that if it is mailed in accordance with
this Paragraph, then it shall be deemed given, delivered and received on the
delivery date or the date on which delivery is refused by the addressee, in
either case, in accordance with the United States Postal Service's return
receipt. Any party to this Agreement may give a notice of a change of its
address to the other party(ies) to this Agreement.
22. WAIVER. No delay or omission in the exercise of any right or remedy shall
impair such right or remedy or be construed as a waiver. A consent to or
approval of any act shall not be deemed to waive or render unnecessary consent
to or approval of any other or subsequent act. Any waiver of a default under
this Agreement must be in writing and shall not be a waiver of any other default
concerning the same or any other provision of this Agreement.
23. DRAFTING AMBIGUITIES. The parties to this Agreement acknowledge that each
party to this Agreement and its counsel have reviewed and revised this Agreement
and that the normal rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or of any amendments or exhibits to this
Agreement.
Executed on August 21, 1992 at San Diego, California.
Scripps Bank
by: /s/ William E. Nelson
--------------------------------------
William E. Nelson, Chairman
/s/ Ronald J. Carlson
- -----------------------------------------
Ronald J Carlson, Individually
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MODIFICATION OF UNFUNDED DEFERRED COMPENSATION AGREEMENT
In accordance with the provisions of Section 4.3 of the Unfunded Deferred
Compensation Agreement dated August 21, 1992 by and between a California banking
corporation ("Scripps Bank") and Ronald J. Carlson, a California resident,
("Carlson"), as amended, the agreement is hereby modified to include the
following, as may be applicable to the original agreement:
3.4 Any such optional increases to the Annual Benefit may be revoked by Scripps
at any time by written notice to Carlson or Barbara Ann Carlson, if applicable.
4.2 if Carlson shall separate from service due to his death, then payment of
the accrued Annual Benefit to Barbara Ann Carlson, if any, shall commence as of
the first day of the first month after notice of such death has been delivered
to Scripps. Subject to paragraph 4.3 below, if Carlson. shall die before
attaining age 65, then payment of the accrued Annual Benefit to Barbara Ann
Carlson , if any, shall commence as of the first day of the first month after
the date on which Carlson would have attained age 65 had he lived to that date.
4.3 For the purposes of this Agreement, the accrued Annual Benefit payments
shall be continued by Scripps, without reduction other than a reduction provided
in paragraph 3 above or paragraph 6 below to Barbara Ann Carlson, as follows:
4.3.1 If Carlson shall die, then the accrued Annual Benefit shall be paid to
Barbara Ann Carlson, as determined under this paragraph 4, for so long as she
may live.
4.3.2 If Carlson shall be impaired by a Disability, an if thereafter he shall
begin to receive payment of the accrued Annual Benefit, and if Carlson shall
thereafter die, then the accrued Annual Benefit shall be paid to Barbara Ann
Carlson for so long as she may live, as determined under this paragraph 4
4.3.3 For the purpose of this agreement, this paragraph is null and void.
4.4 If Carlson or Barbara Ann Carlson, shall die during a month, then the
recipient shall be entitled to retain the entire payment of the portion of the
Annual Benefit due for such month. If at any time under this Agreement after the
death of Carlson, Barbara Ann Carlson is entitled the accrued Annual Benefit.
Scripps shalt have no liability to make any further payments of the Annual
Benefit to any other person.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as a
supplement to the Original Agreement
SCRIPPS BANK
/s/ Ronald J. Carlson
- -------------------------- /s/ [ILLEGIBLE]
Ronald J. Carlson ("Carlson") ----------------------------------
Chairman of the Board
Date: 12/22/97 Date: 12/22/97
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