Forward-Looking Information

EX-10.3 10 v80322ex10-3.txt EXHIBIT 10.3 EXHIBIT 10.3 - -------------------------------------------------------------------------------- (C) 2001 BANK COMPENSATION STRATEGIES THIS DOCUMENT IS PROVIDED TO ASSIST YOUR LEGAL COUNSEL IN DOCUMENTING YOUR SPECIFIC ARRANGEMENT. IT IS NOT A FORM TO BE SIGNED, NOR IS IT TO BE CONSTRUED AS LEGAL ADVICE. FAILURE TO ACCURATELY DOCUMENT YOUR ARRANGEMENT COULD RESULT IN SIGNIFICANT LOSSES, WHETHER FROM CLAIMS OF THOSE PARTICIPATING IN THE ARRANGEMENT, FROM THE HEIRS AND BENEFICIARIES OF PARTICIPANTS, OR FROM REGULATORY AGENCIES SUCH AS THE INTERNAL REVENUE SERVICE AND THE DEPARTMENT OF LABOR. LICENSE IS HEREBY GRANTED TO YOUR LEGAL COUNSEL TO USE THESE MATERIALS IN DOCUMENTING SOLELY YOUR ARRANGEMENT. - -------------------------------------------------------------------------------- [NAME OF BANK] EXECUTIVE DEFERRED COMPENSATION AGREEMENT THIS AGREEMENT is made this _______ day of ________________, 2001, by and between [NAME OF BANK], a [state/nationally-] chartered commercial bank, located in [City], [State] (the "Company"), and [NAME OF EXECUTIVE] (the "Executive"). INTRODUCTION To encourage the Executive to remain an employee of the Company, the Company is willing to provide to the Executive a deferred compensation opportunity [TOGETHER WITH MATCHING CONTRIBUTIONS BY THE COMPANY]. The Company will pay the Executive's benefits from the Company's general assets. AGREEMENT The Executive and the Company agree as follows: ARTICLE 1 DEFINITIONS Whenever used in this Agreement, the following words and phrases shall have the meanings specified: 1.1 "Anniversary Date" means December 31 of each year. 1.2 "Change of Control" means the transfer of shares of the Company's voting common stock such that one entity or one person acquires (or is deemed to acquire when applying Section 318 of the Code) more than 50 percent of the Company's outstanding voting common stock followed within twelve (12) months by the Executive's Termination of Employment for reasons other than death, Disability or retirement. 1.3 "Code" means the Internal Revenue Code of 1986, as amended. 1.4 "Compensation" means the total salary and bonus paid to the Executive during a Plan Year. 1.5 "Deferral Account" means the Company's accounting of the Executive's accumulated Deferrals plus accrued interest. 1.6 "Deferrals" means the amount of the Executive's Compensation, which the Executive elects to defer according to this Agreement. 1.7 "Disability" means, if the Executive is covered by a Company sponsored disability policy, total disability as defined in such policy without regard to any waiting period. If the Executive is not covered by such a policy, Disability means the Executive suffering a sickness, accident or injury, which, in the judgment of a physician satisfactory to the Company, prevents the Executive from performing substantially all of the Executive's normal duties for the Company. As a condition to any Disability benefits, the Company may require the Executive to submit to such physical or mental evaluations and tests as the Company's Board of Directors deems appropriate. 1.8 "Effective Date" means __________________________. 1.9 "Election Form" means the Form attached as Exhibit 1. 1.10 "Normal Retirement Age" means the Executive's ______ birthday. 1.11 "Normal Retirement Date" means the later of the Normal Retirement Age or Termination of Employment. 1.12 "Plan Year" means the calendar year. 1.13 "Termination of Employment" means that the Executive ceases to be employed by the Company for any reason whatsoever other than by reason of a leave of absence, which is approved by the Company. For purposes of this Agreement, if there is a dispute over the employment status of the Executive or the date of the Executive's Termination of Employment, the Company shall have the sole and absolute right to decide the dispute. 2 ARTICLE 2 DEFERRAL ELECTION 2.1 Initial Election. The Executive shall make an initial deferral election under this Agreement by filing with the Company a signed Election Form within thirty (30) days after the Effective Date of this Agreement. The Election Form shall set forth the amount of Compensation to be deferred and shall be effective to defer only Compensation earned after the date the Election Form is received by the Company. 2.2 Election Changes 2.2.1 Generally. Upon the Company's approval, the Executive may modify the amount of Compensation to be deferred annually by filing a new Election Form with the Company prior to the beginning of the Plan Year in which the Compensation is to be deferred. The modified deferral election shall not be effective until the calendar year following the year in which the subsequent Election Form is received and approved by the Company. 2.2.2 Hardship. If an unforeseeable financial emergency arising from the death of a family member, divorce, sickness, injury, catastrophe or similar event outside the control of the Executive occurs, the Executive, by written instructions to the Company, may reduce future deferrals under this Agreement. ARTICLE 3 DEFERRAL ACCOUNT 3.1 Establishing and Crediting. The Company shall establish a Deferral Account on its books for the Executive and shall credit to the Deferral Account the following amounts: 3.1.1 Deferrals. The Compensation deferred by the Executive as of the time the Compensation would have otherwise been paid to the Executive. [MATCHING OPTION: 3.1.2 Matching Contribution. A matching contribution equal to (and credited to the Deferral Account at the same time as) the amounts credited to the Deferral Account under Section 3.1.1, subject to an annual maximum matching contribution of [OPTION: $______________] [OPTION: THE LESSER OF $______________ OR _____% OF THE EXECUTIVE'S COMPENSATION] [OPTION: _____% OF THE EXECUTIVE'S COMPENSATION] [OPTION: _____% OF THE COMPENSATION DEFERRED BY THE EXECUTIVE]. ] 3.1.3 Interest. On each Anniversary Date of this Agreement and immediately prior to the payment of any benefits, but only until commencement of the benefit payments under this Agreement, interest is to be accrued on the account balance and compounded at an annual rate equal to ________ percent, compounded monthly [OPTION: THE WALL STREET JOURNAL PRIME RATE [PLUS ONE PERCENT] ON THE FIRST BUSINESS DAY OF THE PLAN YEAR, COMPOUNDED MONTHLY]. 3 3.2 Statement of Accounts. The Company shall provide to the Executive, within 120 days after each Anniversary Date, 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 Executive is a general unsecured creditor of the Company for the payment of benefits. The benefits represent the mere Company promise to pay such benefits. The Executive's rights are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by the Executive's creditors. ARTICLE 4 LIFETIME BENEFITS 4.1 Normal Retirement Benefit. Upon the Normal Retirement Date, the Company shall pay to the Executive the benefit described in this Section 4.1 in lieu of any other benefit under this Agreement. 4.1.1 Amount of Benefit. The benefit under this Section 4.1 is the Deferral Account balance at the Executive's Normal Retirement Date. 4.1.2 Payment of Benefit. The Company shall pay the benefit to the Executive in [months] equal monthly installments commencing on the first day of the month following the Executive's Normal Retirement Date. The Company shall credit interest [OPTION: PURSUANT TO SECTION ____] [OPTION: AT AN ANNUAL RATE OF _____ PERCENT, COMPOUNDED MONTHLY] on the remaining account balance during any applicable installment period. 4.2 Early Retirement Benefit. Upon Termination of Employment prior to the Normal Retirement Age for reasons other than death, Change of Control or Disability, the Company shall pay to the Executive the benefit described in this Section 4.2 in lieu of any other benefit under this Agreement. 4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the Deferral Account balance at the Executive's Termination of Employment [OPTION: CALCULATED BY RECOMPUTING THE DEFERRAL ACCOUNT BALANCE FROM ITS INCEPTION WITH THE FOLLOWING MODIFICATION: [OPTION: (a) INTEREST RATE REDUCTION. THE INTEREST RATE UNDER SECTION 3.1.3 SHALL BE REDUCED [OPTION: TO ____%] [OPTION: BY ____ PERCENTAGE POINTS]. ] [OPTION: (b) COMPANY MATCH REDUCTION. THE COMPANY'S MATCHING CONTRIBUTIONS 4 UNDER SECTION _____ SHALL BE [OPTION: ELIMINATED] [OPTION: REDUCED BY _____ PERCENT]. ]] 4.2.2 Payment of Benefit. The Company shall pay the benefit to the Executive in [months] equal monthly installments commencing on the first day of the month following the Executive's Normal Retirement Age. The Company shall credit interest [OPTION: PURSUANT TO SECTION _____] [OPTION: AT AN ANNUAL RATE OF _____ PERCENT, COMPOUNDED MONTHLY] on the remaining account balance during any applicable installment period. 4.3 Disability Benefit. If the Executive terminates employment due to Disability prior to Normal Retirement Age, the Company shall pay to the Executive the benefit described in this Section 4.3 in lieu of any other benefit under this Agreement. 4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the Deferral Account balance at the Executive's Termination of Employment. 4.3.2 Payment of Benefit. The Company shall pay the benefit to the Executive in [months] equal monthly installments commencing on the first day of the month following the Executive's Termination of Employment. The Company shall credit interest [OPTION: PURSUANT TO SECTION _____] [OPTION: AT AN ANNUAL RATE OF _____ PERCENT, COMPOUNDED MONTHLY] on the remaining account balance during any applicable installment period. 4.4 Change of Control Benefit. Upon a Change of Control, the Company shall pay to the Executive 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 on the Executive's Termination of Employment. 4.4.2 Payment of Benefit. The Company shall pay the benefit to the Executive in a lump sum within 60 days after the Executive's Termination of Employment. 4.4.3 Excess Parachute Payment. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement to the extent the benefit would create an excise tax under the excess parachute rules of Section 280G of the Code. 4.5 Hardship Distribution. Upon the Board of Director's determination (following petition by the Executive) that the Executive has suffered an unforeseeable financial emergency as described in Section 2.2.2, the Company shall distribute to the Executive all or a portion of the Deferral Account balance as determined by the Company, but in no event shall the distribution be greater than is necessary to relieve the financial hardship. 5 ARTICLE 5 DEATH BENEFITS 5.1 Death During Active Service. If the Executive dies while in the employment of the Company, the Company shall pay to the Executive's beneficiary the benefit described in this Section 5.1 in lieu of any other benefit under this Agreement. 5.1.1 Amount of Benefit. The benefit under Section 5.1 is the greater of: a) the Deferral Account balance; or b) $__________________. 5.1.2 Payment of Benefit. The Company shall pay the benefit to the beneficiary in [months] equal monthly installments commencing on the first day of the month following the Executive's death. The Company shall credit interest [OPTION: PURSUANT TO SECTION _____] [OPTION: AT AN ANNUAL RATE OF _____ PERCENT, COMPOUNDED MONTHLY] on the remaining account balance during any applicable installment period. 5.2 Death During Payment of a Lifetime Benefit. If the Executive dies after any Lifetime Benefit payments have commenced under this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Executive's beneficiary at the same time and in the same amounts they would have been paid to the Executive had the Executive survived. 5.3 Death After Termination of Employment But Before Payment of a Lifetime Benefit Commences. If the Executive is entitled to a Lifetime Benefit under this Agreement, but dies prior to the commencement of said benefit payments, the Company shall pay the same benefit payments to the Executive's beneficiary that the Executive was entitled to prior to death except that the benefit payments shall commence on the first day of the month following the date of the Executive's death. ARTICLE 6 BENEFICIARIES 6.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a written designation with the Company. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and accepted by the Company during the Executive's lifetime. The Executive's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive'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 Company may pay such benefit to the guardian, legal representative or person having the care or 6 custody of such minor, incompetent person or incapable person. The Company may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit. ARTICLE 7 GENERAL LIMITATIONS 7.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement that is in excess of the Executive's Deferrals ([THE COMPANY MATCH CREDITED UNDER SECTION 3.1.2 AND] the interest earned on the Deferral Account) if the Company terminates the Executive's employment for: (a) Gross negligence or gross neglect of duties to the Company; (b) Commission of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive's employment with the Company; or (c) Fraud, disloyalty, dishonesty or willful violation of any law or significant Company policy committed in connection with the Executive's employment and resulting in an adverse effect on the Company. 7.2 Suicide or Misstatement. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any death benefit under this Agreement exceeding the Deferral Account if the Executive commits suicide within two years after the date of this Agreement, or if the Executive has made any material misstatement of fact on any application for life insurance purchased by the Company. ARTICLE 8 CLAIMS AND REVIEW PROCEDURES 8.1 Claims Procedure. The Company shall notify any person or entity that makes a claim against the Agreement (the "Claimant") in writing, within 90 days of Claimant's written application for benefits, of his or her eligibility or non-eligibility for benefits under the Agreement. If the Company determines that the Claimant 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 the 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 the Agreement's claims review procedure and other appropriate information as to the steps to be taken if the Claimant wishes to have the claim reviewed. If the Company determines that there are special circumstances requiring additional time to make a decision, the Company shall notify the Claimant of the special 7 circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional 90 days. 8.2 Review Procedure. If the Claimant is determined by the Company not to be eligible for benefits, or if the Claimant believes that he or she is entitled to greater or different benefits, the Claimant shall have the opportunity to have such claim reviewed by the Company by filing a petition for review with the Company within 60 days after receipt of the notice issued by the Company. Said petition shall state the specific reasons which the Claimant believes entitle him or her to benefits or to greater or different benefits. Within 60 days after receipt by the Company of the petition, the Company shall afford the Claimant (and counsel, if any) an opportunity to present his or her position to the Company verbally or in writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Company shall notify the Claimant of its decision in writing within the 60-day period, stating specifically the basis of its decision, written in a manner to be understood by the Claimant and the specific provisions of the Agreement on which the decision is based. If, because of the need for a hearing, the 60-day period is not sufficient, the decision may be deferred for up to another 60 days at the election of the Company, but notice of this deferral shall be given to the Claimant. ARTICLE 9 AMENDMENTS AND TERMINATION This Agreement may be amended or terminated only by a written agreement signed by the Company and the Executive. [OPTION Notwithstanding the previous paragraph in this Article 9, the Company 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 Executive prior to actual receipt, or (ii) result in significant financial penalties or other significantly detrimental ramifications to the Company (other than the financial impact of paying the benefits). In no event shall this Agreement be terminated under this section without payment to the Executive of the Deferral Account balance attributable to the Executive's Deferrals and interest credited on such amounts. ] ARTICLE 10 MISCELLANEOUS 10.1 Binding Effect. This Agreement shall bind the Executive and the Company and their beneficiaries, survivors, executors, administrators and transferees. 10.2 No Guarantee of Employment. This Agreement is not a contract for employment. It does not give the Executive the right to remain an employee of the Company, nor does it interfere with the Company's right to discharge the Executive. It also does not require the Executive to 8 remain an employee nor interfere with the Executive's right to terminate employment at any time. 10.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner. 10.4 Tax Withholding. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement. 10.5 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of [State], except to the extent preempted by the laws of the United States of America. 10.6 Unfunded Arrangement. The Executive and the Executive's beneficiary are general unsecured creditors of the Company for the payment of benefits under this Agreement. The benefits represent the mere promise by the Company to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life is a general asset of the Company to which the Executive and the Executive's beneficiary have no preferred or secured claim. 10.7 Reorganization. The Company shall not merge or consolidate into or with another company, or reorganize, or sell substantially all of its assets to another company, firm, or person unless such succeeding or continuing company, firm, or person agrees to assume and discharge the obligations of the Company under this Agreement. Upon the occurrence of such event, the term "Company" as used in this Agreement shall be deemed to refer to the successor or survivor company 10.8 Entire Agreement. This Agreement constitutes the entire agreement between the Company and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein. 10.9 Administration. The Company shall have powers which are necessary to administer this Agreement, including but not limited to: (a) Interpreting the provisions of the Agreement; (b) Establishing and revising the method of accounting for the Agreement; (c) Maintaining a record of benefit payments; and (d) Establishing rules and prescribing any forms necessary or desirable to administer the Agreement. 10.10 Named Fiduciary. For purposes of the Employee Retirement Income Security Act of 9 1974, if applicable, the Company shall be the named fiduciary and plan administrator under this Agreement. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the plan including the employment of advisors and the delegation of ministerial duties to qualified individuals. IN WITNESS WHEREOF, the Executive and a duly authorized Company officer have signed this Agreement. EXECUTIVE: COMPANY: [NAME OF BANK] BY - ----------------------------------- --------------------------------------- [NAME OF EXECUTIVE] TITLE ------------------------------------ 10 EXHIBIT 1 TO [NAME OF BANK] EXECUTIVE DEFERRED COMPENSATION AGREEMENT DEFERRAL ELECTION I elect to defer my Compensation received under this Agreement with the Company, as follows:
AMOUNT OF DEFERRAL DURATION ------------------ -------- [INITIAL AND COMPLETE ONE] [INITIAL ONE] ____ I elect to defer ____% of my ____ One Year only Compensation. ____ For ______ [INSERT ____ I elect to defer $_____ of all NUMBER] Years Compensation. ____ Until Termination ____ I elect not to defer any of my of Employment Compensation. ____ Until ___________, ___________ (date)
Upon the Company's approval, I understand that I may change the amount and duration of my deferrals by filing a new election form with the Company; provided, however, that any subsequent election will not be effective until the calendar year following the year in which the new election is received by the Company. Signature ---------------------------------- Date -------------------------------- Accepted by the Company this day of , 2001. ----- ---------- By ------------------------------------------- Title -------------------------------- 11 BENEFICIARY DESIGNATION [NAME OF BANK] EXECUTIVE DEFERRED COMPENSATION AGREEMENT I designate the following as beneficiary of benefits under this Agreement payable following my death: Primary: ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- Contingent: --------------------------------------------------------------------- - -------------------------------------------------------------------------------- NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE(s) AND THE EXACT NAME AND DATE OF THE TRUST AGREEMENT. I understand that I may change these beneficiary designations by filing a new written designation with the Company. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our marriage is subsequently dissolved. Signature ------------------------------------- Date --------------------------------- Acknowledged by the Company this day of , 2001. ----- ---------- By -------------------------------------------- Title -------------------------------- 12