TEMECULA VALLEY BANK
EXECUTIVE SUPPLEMENTAL COMPENSATION
AGREEMENT
Effective this 20 th day of April, 2008, this SALARY CONTINUATION
AGREEMENT (“Agreement”) is adopted by and between
TEMECULA VALLEY BANK (“Bank”), a bank located in
Temecula Valley, California, and organized under the laws of the
State of California, and DAVID BARTRAM (“Executive”), a
member of a select group of management and highly compensated
employees of the Bank. The purpose of this Agreement is
to further the growth and development of the Bank by providing
Executive with supplemental retirement income, and thereby
encourage Executive’s productive efforts on behalf of the
Bank and the Bank’s shareholders, and to align the interests
of the Executive and those shareholders.
It is intended
that the Agreement be "unfunded" for purposes of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and
not be construed to provide income to the participant or
beneficiary under the Internal Revenue Code of 1986, as amended
(the "Code"), particularly Section 409A of the Code and guidance or
regulations issued thereunder, prior to actual receipt of
benefits.
Article 1
Definitions and
Construction
Where the
following words and phrases appear in the Agreement, they shall
have the respective meanings set forth below, unless their context
clearly indicates to the contrary:
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“Accrued
Liability Balance” shall mean the amount accrued by the
Company to fund the future benefit expense associated with this
Agreement, as of the end of the month preceding the
Executive’s Separation from Service. The Company
shall account for this benefit using Generally Accepted Accounting
Principles, regulatory accounting guidance of the Company’s
primary federal regulator, and other applicable accounting
guidance, including APB 12 and FAS 106. Accordingly, the
Company shall establish a liability retirement account for the
Executive into which appropriate accruals shall be made using a
discount that is reasonable, which is consistent with guidance
issued by the Company’s primary federal regulator, and which
may be adjusted thereafter at the Board’s discretion to
comply with regulatory guidance. This Agreement is
intended to be a “non-account balance” plan, as that
term is used under the Code.
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“Board” shall mean the Board of
Directors of the Bank.
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“Change
in Control” shall mean: a change in ownership or
control of the Company as defined in Treasury Regulation
§1.409A-3(i)(5) or any subsequently applicable Treasury
Regulation.
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“Code” shall mean the United States
Internal Revenue Code of 1986, as amended.
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“Disability” shall mean Executive
(i) is unable to engage in any substantial gainful activity by
reason of any medically 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 medically 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 3 months
under an accident and health plan covering employees of the
Bank. Medical determination of Disability may be made by
either the Social Security Administration or by the provider of an
accident or health plan covering employees of the
Bank. Upon the request of the Plan Administrator, the
Executive must submit proof to the Plan Administrator of Social
Security Administration’s or the provider’s
determination.
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“Early
Termination” shall mean that Executive’s employment
with the Bank has terminated, voluntarily or involuntarily, prior
to Normal Retirement Age and such termination is not due to death,
Termination for Cause, Disability, or Separation from Service
following a Change in Control.
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“Effective Date” shall mean January
8, 2008.
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“Normal
Retirement Age” shall mean the date on which the Executive
attains age 65.
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“Plan
Administrator” shall mean the plan administrator described in
Article 6.
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“Plan
Year” shall mean each twelve-month period commencing on
January 1 and ending on December 31 of each year. The
initial Plan Year shall commence on the Effective Date of this Plan
and end on the following December 31.
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“Separation from Service” shall mean
the Executive has experienced a termination of employment with the
Bank. For purposes of this Agreement, whether a
termination of employment or service has occurred is determined
based on whether the facts and circumstances indicate that the Bank
and Executive reasonably anticipated that no further services would
be performed after a certain date or that the level of bona fide
services the Executive would perform after such date (whether as an
Executive or as an independent contractor) would permanently
decrease to no more than twenty percent (20%) of the average level
of bona fide services performed (whether as an Executive or an
independent contractor) over the immediately preceding thirty-six
(36) month period (or the full period of services to the Bank if
the Executive has been providing services to the Bank less than 36
months). Facts and circumstances to be considered in
making this determination include, but are not limited to, whether
the Executive continues to be treated as an Executive for other
purposes (such as continuation of salary and participation in
Executive benefit programs), whether similarly situated service
providers have been treated consistently, and whether the Executive
is permitted, and realistically available, to perform services for
other service recipients in the same line of
business. An Executive will be presumed not to have
separated from service where the level of bona fide services
performed continues at a level that is fifty percent (50%) or more
of the average level of service performed by the Executive during
the immediately preceding thirty-six (36) month period.
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“Termination for Cause” has
that meaning set forth in Article 5.
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“Termination of Employment” shall
mean that Executive’s employment with the Bank has
terminated.
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Article 2
Distributions During
Executive’s Lifetime
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2.1
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Normal
Retirement Benefit . Upon Executive’s attainment
of the Normal Retirement Age, the Bank shall distribute to the
Executive the benefit described in this Section 2.1 in lieu of any
other benefit under this Article.
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Amount of
Benefit . The
annual benefit under this Section 2.1 is One Hundred Thousand
Dollars ($100,000). The Board may, in its sole
discretion, increase this benefit from time to time.
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Form and
Timing of Benefit . The Bank shall distribute the
annual benefit to the Executive in twelve (12) equal monthly
installments, commencing on the first day of the month following
the Executive’s Normal Retirement Age. The annual
benefit shall be distributed to the Executive for fifteen (15)
years.
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Early
Termination Benefit. Upon the Executive’s Early
Termination, the Bank shall distribute to the Executive the benefit
described in this Section 2.2 in lieu of any other benefit under
this Article. Notwithstanding anything to the contrary
in this Section 2.2, Executive shall not be entitled to a benefit
under this Section 2.2 if Executive terminates employment prior to
the fulfillment of five full Plan Years from the date of this
Agreement. For purposes of this Section 2.2, if the
first Plan Year is only a partial calendar year, the partial
calendar year shall be considered one full Plan Year.
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Amount of
Benefit. The
benefit under this Section 2.2 is the Accrued Liability Balance,
calculated as of the end of the Plan Year immediately preceding
Executive’s Separation from Service.
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Form and
Timing of Benefit. The Bank shall distribute the annual
benefit to the Executive in a lump sum within 60 days following a
Separation from Service.
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Disability
Benefit .
Upon Executive’s
Separation from Service due to Disability, the Bank shall
distribute to the Executive the benefit described in this Section
2.3 in lieu of any other benefit under this Article.
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Amount of
Benefit .
The benefit under this
Section 2.3 is the Accrued Liability Balance, determined as of the
end of the Plan Year immediately preceding notification of
Disability and subsequent Separation from Service.
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Form and
Timing of Benefit . The Bank shall distribute the
benefit to the Executive in a lump sum within 60 days following
Separation from Service.
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Change in
Control Benefit . Upon a Change in Control followed
by Executive’s Termination of Employment, the Executive shall
be entitled to the benefit described in this Section 2.4 in lieu of
any other benefit under this Article.
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Amount of
Benefit .
The benefit under this
Section 2.4 is the Accrued Liability Balance, calculated as of the
date of Termination of Employment.
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Form and
Timing of Benefit .
The Bank shall distribute the benefit to the
Executive in a lump sum within 60 days following Executive’s
Separation from Service.
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Restriction
on Timing of Distribution . Notwithstanding any provision of this
Agreement to the contrary, distributions to Executive may not
commence earlier than six (6) months after the date of a Separation
from Service if, pursuant to Section 409A of the Code and
regulations and guidance promulgated thereunder, Executive is
considered a “specified employee” under Section
416(i) of the Code. In the event a distribution is
delayed pursuant to this Section 2.6, the originally scheduled
payment shall be delayed for 6 months, and shall commence instead
on the first day of the seventh month following the
delay. If payments are scheduled to be made in
installments, the first six months of installment payments shall be
delayed, aggregated, and paid instead on the first day of the
seventh month, after which all installment payments shall be made
on their regular schedule. If payment is scheduled to be
made in a lump sum, the lump sum payment shall be delayed for six
months and instead be made on the first day of the seventh
month.
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Payments
Upon Income Inclusion . Should amounts deferred under this
Agreement become includable in the Executive’s income by
reason of a failure of this Agreement to comply with the
requirements of Section 409A of the Code, the Bank shall distribute
to the Executive an amount necessary to cover the includable
amounts, as well as other amounts necessary to cover FICA,
employment, and income taxes, to the extent such distributions do
not exceed the Executive’s vested account
balances.
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Article 3
Distribution Upon
Death
No death
benefit shall be payable under this Agreement.
Article 4
Beneficiaries
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