EXHIBIT 10.18
FARMERS & MERCHANTS BANK OF CENTRAL CALIFORNIA
DEFERRED COMPENSATION PLAN
1. PURPOSE OF THE PLAN. The purpose of the Farmers & Merchants Bank Deferred
Compensation Plan is to recognize the valuable services performed by key
employees and directors (collectively "Employees") and encourage each
Employee's continued employment or participation (in the case of a
director) by providing an opportunity to defer a certain portion of
compensation payable to him or her.
2. DEFINITIONS. As used in this Plan, the following terms shall have the
meanings indicated below:
"Bank" shall mean Farmers & Merchants Bank of Central California and any of
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its subsidiaries.
"Board of Directors" shall mean the Board of Directors of the Bank.
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"Committee" shall mean the Personnel Committee of the Board of
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Directors or such other committee that the Board of Directors may designate
from time to time.
"Change of Control" means a change, after January 1, 2005, of control
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of the Holding Company. Such a Change of Control will be deemed to have
occurred immediately before any of the following occur: (i) individuals,
who were members of the Board of Directors of the Holding Company
immediately prior to a meeting of the shareholders of the Holding Company
which meeting involved a contest for the election of directors, do not
constitute a majority of the Board of Directors of the Holding Company
following such election or meeting, (ii) an acquisition, directly or
indirectly, of more than 35% of the outstanding shares of any class of
voting securities of the Holding Company by any Person, (iii) a merger (in
which the Holding Company is not the surviving entity), consolidation or
sale of all, or substantially all, of the assets of the Holding Company, or
(iv) there is a change, during any period of one year, of a majority of the
Board of Directors of the Holding Company as constituted as of the
beginning of such period, unless the election of each director who is not a
director at the beginning of such period was approved by a vote of at least
a majority of the directors then in office who were directors at the
beginning of such period. If the events or circumstances described in
(i)-(iv), above, shall occur to or be applicable to the Bank, then such
Change of Control shall be deemed for all purposes of this Plan to also be
a "Change of Control" of the Holding Company. For purposes of this Plan,
the term "Person" shall mean and include any individual, corporation,
partnership, group, association or other "person", as such term is used in
Section 14(d) of the Securities Exchange Act of 1934, other than the
Holding Company, the Bank, any other wholly owned subsidiary of the Bank or
any employee benefit plan(s) sponsored by the Bank or other subsidiary of
the Holding Company.
"Compensation" shall mean all salary, directors' fees, bonuses and
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incentive compensation paid to the Employee by the Bank in cash, including
amounts deferred. All other forms of compensation shall be disregarded for
purposes of this Plan.
"Disability" means when an Employee (i) is unable to engage in any
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substantial gainful activity by reason of any medical determinable physical
or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or
(ii) is by reason of any medical determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an accident and
health plan covering employees of Bank. Disability shall be determined by a
physician acceptable to both the Bank and the Employee.
"Election of Deferral" shall mean a written notice filed by the
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Employee with the chief financial officer of the Bank in substantially the
form attached hereto specifying the amount of Compensation to be deferred.
"Normal Retirement Date" shall mean the date an employee attains the
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age of sixty-five (65) or a director attains the age of seventy-five (75).
"Holding Company" means Farmers & Merchants Bancorp.
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"Plan" shall mean the Farmers & Merchants Bank of Central California
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Deferred Compensation Plan as set forth in this document, as successor of
any prior plans of the same name, and as the same may be amended or
supplemented from time to time.
3. DEFERRED COMPENSATION. The Board of Directors shall have the sole
discretion to determine whether the Employee is eligible to participate in
the Plan. Commencing on the date when an eligible Employee executes his
first Election of Deferral, and continuing through the date on which the
eligible Employee's employment terminates because of his or her death,
retirement, Disability, or any other cause, the Employee may defer into his
or her account the amount set forth in the Election of Deferral, which the
Employee would otherwise be entitled to receive from the Bank in each
calendar year, subject to any changes made to the Election of Deferral in
accordance with this Plan.
The amount of Compensation selected for deferral by the Employee
pursuant to an Election of Deferral is referred to as the "Annual Deferral
Sum". The amounts of Compensation actually deferred, are hereinafter
collectively included as the "Deferred Amounts". The Employee's Deferred
Amounts shall be credited to the Employee's Deferred Compensation Account
as of the dates such Deferred Amounts would, but for such deferral, be
payable to the Employee.
The eligible Employee may elect an Annual Deferral Sum hereunder by
filing an Election of Deferral Notice. An Election of Deferral must be
filed at least ten (10) days prior to the beginning of the calendar year to
which it pertains and shall be effective with the first pay period of the
calendar year following the filing thereof. In the first year for which the
Employee is determined by the Board of Directors to be eligible to
participate, an Election of Deferral must be filed within thirty (30) days
after notice to the Employee of eligibility. The Employee may elect to
defer a maximum Annual Deferral Sum of one hundred percent (100%) of base
salary and one hundred percent (100%) of any incentive bonus. A minimum
Annual Deferral Sum shall be one percent (1%) of Compensation, which
minimum may be changed from time to time by the Bank.
4. DEFERRED COMPENSATION ACCOUNT. The Bank shall establish a Deferred
Compensation Account on its books for the Employee. Incremental Employee
deferrals will be credited to this account and, for those Employees
participating in the rabbi trust, transferred to the rabbi trust
established under Section 17, no less frequently than monthly. An Employee
shall be entitled to the amount set forth in the Deferred Compensation
Account applicable to him or her, subject to the terms and conditions of
this Plan, including the payment rules set forth in Section 8.
5. EARNINGS ON ACCOUNT BALANCES. The Bank and the Employee agree that Deferred
Amounts will be self-directed by each individual participating Employee.
Accordingly, the Bank shall have no responsibility for the Employee's
investment decisions or results, nor provide any assurances that amounts
actually deferred will not incur investment losses up to and including all
amounts deferred.
Deferred amounts may either be (i) transferred to the rabbi trust
established under Section 17 and invested according to the options provided
in the trust, or (ii) be maintained in the Bank and receive interest based
upon a market rate index approved by the Committee.
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Earnings will be credited to each Employee's Deferred Compensation
Account balance, and, for those Employees participating in the rabbi trust,
transferred to the rabbi trust established under Section 17, at the end of
each calendar month. Earnings shall be posted (i) based upon the previous
month's trust account statement, or (ii) for those Employees electing to
have the money retained in the Bank, as of the last day of each month.
6. STATEMENT OF ACCOUNTS. The Bank shall provide to the Employee, within sixty
(60) days after each calendar year-end, a statement setting forth the
Employee's Deferred Compensation Account balance.
7. ACCOUNTING DEVICE ONLY. The Deferred Compensation Account is solely a
device for measuring amounts to be paid under this Plan. It is not a trust
fund of any kind. The Employee is a general unsecured creditor of the Bank
for the payment of benefits. The benefits represent the mere promise of the
Bank to pay such benefits. The Employee's rights are not subject in any
manner to anticipation, alienation, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Employee's creditors.
8. PAYMENT.
a. Retirement. The Bank agrees that, from and after the retirement
of the Employee from the service of the Bank upon reaching his or her
Normal Retirement Date, the Bank shall pay to the Employee the balance
in his/her Deferred Compensation Account in accordance with the
Employee's election on the attached Payment Election.
b. Disability. The Employee shall be entitled to receive payment of
the balance in his/her Deferred Compensation Account prior to his or
her Normal Retirement Date, if his/her termination of employment is
due to Disability. The Bank shall pay to the Employee the balance in
his/her Deferred Compensation Account in accordance with the
Employee's election on the attached Payment Election.
c. Death. In the event of the Employee's death the Bank shall pay
the balance in the Employee's Deferred Compensation Account in one
lump sum to the Employee's designated beneficiary (the "Beneficiary"),
in accordance with the last such designation received pursuant to
Section 10 by the Bank from the Employee prior to death. The lump sum
payment shall be made on the first day of the second month following
the Employee's death.
d. Change of Control. The Employee shall be entitled to receive
payment of the balance in his/her Deferred Compensation Account upon a
Change of Control. The Bank shall pay to the Employee the balance in
his/her Deferred Compensation Account in accordance with the
Employee's election on the attached Payment Election.
e. Termination. In the event of the Employee's termination of
employment with the Bank before the Normal Retirement Date for any
reason, other than Disability, Change of Control, retirement or death,
the Bank shall pay to the Employee the balance in his/her Deferred
Compensation Account in accordance with the Employee's election on the
attached Payment Election.
f. In Service Distribution. The Employee shall have the option to
elect to receive payments of his or her account balance as an in
service distribution, notwithstanding his or her continued employment
with the Bank. The Employee's election to receive an in service
distribution must be made in writing on the attached Payment Election.
9. HARDSHIP WITHDRAWAL. In the event the Employee suffers an unforeseen
financial emergency, as defined hereafter, the Bank may, if it deems
advisable in its sole and absolute discretion, distribute to or utilize on
behalf of the Employee as a hardship benefit (the "Hardship Benefit") a
portion of the
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Employee's account. The Bank shall have exclusive authority to
determine whether to make a hardship distribution, and the Bank's decision
shall be final and binding on all parties. Any hardship distribution shall,
like all distributions, reduce the amounts available for subsequent
distributions and be deducted from the Employee's Deferred Compensation
Account. The Employee shall apply for such a Hardship Benefit in writing
and shall provide such additional information as the Bank shall require.
For purposes of this Paragraph, "unforeseen financial emergency" means an
immediate and heavy financial need caused by an unforeseeable emergency, as
described in Treasury Regulations Section 1.457-2(h) (4) and (5), resulting
from any of the following, and in an amount not in excess of the amount
needed to pay for the following unreimbursed expenses:
(a) expenses which are not covered by insurance and which the
Employee or his or her spouse or dependents (as defined in Code
Section 152 (a)) has incurred as a result of, or is required to incur
in order to receive, medical care described in Code Section 213 (d),
as a result of a sudden or unexpected illness;
(b) payment of funeral, marital dissolution and other costs
recognized by the Bank to pose an immediate and heavy financial need
on the Employee, or;
(c) payment of extraordinary, unforeseeable expenses attributable to
forces beyond the Employee's control in order to prevent eviction of
the Employee from his or her principal residence or foreclosure on the
mortgage of the Employee's principal residence.
No distribution shall be made pursuant to this paragraph in excess of
the amount of the immediate and heavy financial need of the Participant.
The amount of the immediate and heavy financial need may include any
amounts necessary to pay federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution. Any distribution
under this Section shall reduce the Employee's Deferred Compensation
Account. Any distribution under this Section shall be limited to the lesser
of either: (a) the amount designated by the Employee as a requested
Hardship benefit in a form determined by the Bank, or (b) Fifty Percent
(50%) of the Employee's Deferred Compensation Account.
10. BENEFICIARY DESIGNATION. The Employee shall have the right, at any time to
submit a Beneficiary Designation Form designating primary and contingent
beneficiaries to whom payment under this Plan shall be made in the event of
death prior to complete distribution of the benefits due and payable under
the Plan. Each beneficiary designation shall become effective only when
receipt thereof is acknowledged in writing by the Bank.
11. ASSIGNMENT OF RIGHTS. Neither the Employee nor any designated beneficiary
shall have any right to sell, assign, transfer, or otherwise convey the
right to receive any payments hereunder without the prior written consent
of the Bank.
12. UNFUNDED AND UNSECURED OBLIGATION OF THE BANK. The Bank is not required to
earmark or otherwise set aside any funds or other assets or in any way
secure payment of its obligations under the Plan. Any asset which may be
set aside by the Bank for accounting purposes is not to be treated as held
in trust for any Employee or for his or her account. Each Employee shall
have only the rights of a general, unsecured creditor of the Bank with
respect to any of his or her rights under the Plan.
13. CLAIMS PROCEDURE. Any claim pertaining to an Employee's benefits under the
Plan shall be filed with the Chairman of the Personnel Committee of the
Board of Directors for the consideration of the Committee. Written notice
of the disposition of a claim shall be furnished the Employee within 30
days after the application therefore is filed. In the event the claim is
denied, the specific reasons for such denial shall be set forth, pertinent
provisions of the Plan shall be cited and, where appropriate, an
explanation as to how the Employee can perfect his or her claim will be
provided.
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14. NO CONTRACT OF EMPLOYMENT. Nothing contained herein shall be construed to
be a contract of employment for any term of years, nor as conferring upon
the Employee the right to continue to be employed by the Bank, in any
capacity, nor in any way vary the Bank's policy of at-will employment. It
is expressly understood by the parties hereto that this Plan relates
exclusively to deferred compensation as set forth in this Plan.
15. CONSTRUCTION OF PLAN. Any payments under this Plan shall be independent of,
and in addition to, those under any other plan, program, or agreement which
may be in effect between the parties hereto, or any other compensation
payable to the Employee or the Employee's designated beneficiary by the
Bank. All legal issues pertaining to the Plan shall be determined in
accordance with the laws of the State of California except as preempted by
Federal law.
16. AMENDMENT. The Bank shall have the right at any time to modify, alter or
amend this Plan, in whole or in part, provided that the amendment shall not
reduce any Employee's interest in the Plan, calculated as of the date on
which the amendment is adopted.
17. THE COMMITTEE.
a) The Committee shall, for the purpose of administering the Plan,
choose a secretary and an assistant secretary (either of whom is
hereafter referred to as "Secretary") who shall keep minutes of the
Committee's proceedings and all records and documents pertaining to
the Committee's administration of the Plan. The Secretary may execute
any certificates or other written direction on behalf of the
Committee. A majority of the members of the Committee shall constitute
a quorum.
b) The Committee on behalf of the Employees shall be charged with
the general administration of the Plan and shall have all powers
necessary to accomplish those purposes including, but not by way of
limitation, the following:
- to construe, interpret, and administer the Plan;
- to make determinations under the Plan;
- to establish a rabbi trust for the Plan and to deposit
amounts determined under Sections 4 and 5 into such trust
established by the Committee;
- to maintain the necessary records for the administration of
the Plan; and
- to make and publish such rules for the regulation of the
Plan as are not inconsistent with the terms hereof.
Decisions and determinations by the Committee shall be final and
binding upon all parties and shall be given the maximum deference
allowed by law.
c) The members of the Committee shall serve without bond and without
compensation (except for director fees) for their services hereunder.
All expenses of the Committee shall be paid by the Bank. The Bank
shall furnish the Committee with such clerical and other assistance as
is necessary in the performance of its duties. No member of the
Committee shall be liable for the act or omission of any other member
of the Committee, nor for any act or omission on his or her own part,
excepting only his or her own willful misconduct or gross negligence.
The Bank shall indemnify and hold harmless each member of the
Committee against any and all expenses and liabilities arising out of
his or her membership on the Committee, excepting only expenses and
liabilities arising out of his or her own willful misconduct or gross
negligence.
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18. HEADINGS. Headings and subheadings in this Plan are inserted for
convenience or reference only and are not to be considered in the
construction of the provisions hereof.
19. INTENT. To the extent that this Plan may be construed to be a plan
maintained to provide deferred compensation, it is intended to be limited
to a "select group of management or highly compensated employees" within
the meaning of Section 201(2) of ERISA. The Plan is intended to be exempt
from the participation, vesting, funding, and fiduciary requirements of
Title 1 of ERISA, to the fullest extent permitted under the law. The Plan
shall at all times be "unfunded" within the meaning of ERISA.
20. GENDER AND NUMBER. Where the context permits, words in any gender shall,
include any other gender; words in the singular shall include the plural,
and the plural shall include the singular
IN WITNESS WHEREOF, the Bank has caused this plan to be duly executed this 17th
day of October, 2006.
FARMERS & MERCHANTS BANK OF
CENTRAL CALIFORNIA
By: /s/ Kent A. Steinwert
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President and C.E.O.
By: /s/ Ole R. Mettler
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Chairman of the Board
By: /s/ Stewart C. Adams, Jr.
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Chairman of the Personnel Committee of the Board
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