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EXHIBIT 10 (iii)
NORTH VALLEY BANCORP
SALARY CONTINUATION PLAN
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NORTH VALLEY BANCORP
SALARY CONTINUATION PLAN
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
-----------
1.1
BENEFIT..............................................................1
1.2 CHANGE IN
CONTROL....................................................1
1.3
CODE.................................................................2
1.4
COMPANY..............................................................2
1.5
COMPENSATION.........................................................2
1.6 CONSTRUCTIVE TERMINATION OF
EMPLOYMENT...............................2
1.7
DISABILITY...........................................................3
1.8 DISCOUNT
RATE........................................................3
1.9 EARLY
TERMINATION....................................................3
1.10 EARLY TERMINATION
DATE...............................................3
1.11 EFFECTIVE
DATE.......................................................3
1.12 ELECTION
FORM........................................................4
1.13
EMPLOYER.............................................................4
1.14
ERISA................................................................4
1.15
EXECUTIVE............................................................4
1.16 INVOLUNTARY TERMINATION OF
EMPLOYMENT................................4
1.17 NORMAL RETIREMENT
AGE................................................4
1.18 NORMAL RETIREMENT
DATE...............................................4
1.19 PLAN
YEAR............................................................4
1.20 SECTION
409A.........................................................4
1.21 SPECIFIED
EMPLOYEE...................................................4
1.22 TERMINATION FOR
CAUSE................................................4
1.23 TERMINATION OF
EMPLOYMENT............................................5
1.24 VESTED
BENEFIT.......................................................5
1.25 YEAR OF
SERVICE......................................................5
ARTICLE 2
LIFETIME BENEFITS
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2.1 NORMAL RETIREMENT
BENEFIT............................................5
2.2 EARLY TERMINATION
BENEFIT............................................6
2.3 DISABILITY
BENEFIT...................................................7
2.4 CHANGE IN CONTROL (ACCOMPANIED BY TERMINATION OF
EMPLOYMENT)
BENEFIT............................................................7
2.5 CHANGE OF CONTROL/NO TERMINATION OF
EMPLOYMENT.......................8
2.6 EXCESS PARACHUTE
PAYMENT.............................................9
2.7
ASSUMPTIONS..........................................................9
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ARTICLE 3
DEATH BENEFITS
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3.1 DEATH BEFORE BENEFIT PAYMENTS
COMMENCE...............................9
3.2 DEATH DURING BENEFIT
PERIOD..........................................9
3.3 DEATH AFTER BENEFIT
PERIOD...........................................9
3.4 DEATH BENEFITS IN THE ABSENCE OR INADEQUACY OF SPLIT DOLLAR
AGREEMENT..........................................................9
ARTICLE 4
GENERAL LIMITATIONS
-------------------
4.1 TERMINATION FOR
CAUSE...............................................10
4.2 SUICIDE OR
MISSTATEMENT.............................................10
ARTICLE 5
CLAIMS AND REVIEW PROCEDURES
----------------------------
5.1 CLAIMS
PROCEDURE....................................................11
ARTICLE 6
AMENDMENTS AND TERMINATION
--------------------------
6.1
TERMINATION.........................................................14
6.2
AMENDMENT...........................................................15
ARTICLE 7
MISCELLANEOUS
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7.1 BINDING
EFFECT......................................................15
7.2 NO GUARANTEE OF
EMPLOYMENT..........................................15
7.3
NON-TRANSFERABILITY.................................................15
7.4
REORGANIZATION......................................................15
7.5 TAX
WITHHOLDING.....................................................15
7.6 APPLICABLE
LAW......................................................15
7.7 UNFUNDED
ARRANGEMENT................................................15
7.8 ENTIRE
AGREEMENT....................................................16
7.9
ADMINISTRATION......................................................16
7.10 NAMED
FIDUCIARY.....................................................16
7.11 REIMBURSEMENT OF EXPENSES IN ENFORCING
RIGHTS.......................16
7.12 PROHIBITED ACCELERATION/DISTRIBUTION
TIMING.........................16
7.13 AGGREGATION OF
EMPLOYERS............................................17
EXHIBIT
1....................................................................18
EXHIBIT
2....................................................................19
EXHIBIT
3....................................................................20
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NORTH VALLEY BANCORP
SALARY CONTINUATION PLAN
Amended and Restated
Effective January 1, 2007
Purpose
The purpose of this North Valley Bancorp Salary Continuation Plan
is to
provide salary continuation benefits to a select group of
management or highly
compensated employees of North Valley Bancorp and those of its
affiliates that
are participating employers under this Plan, as set forth in
Section 1.14. This
Plan shall be unfunded for tax purposes and for purposes of Title I
of the
Employee Retirement Income Security Act of 1974, as amended. This
Plan is
intended to comply with the requirements of Section 409A of the
Internal Revenue
Code of 1986, as amended, as added by the American Jobs Creation
Act of 2004 and
the Treasury regulations or any other authoritative guidance issued
thereunder.
This Plan amends and restates the Salary Continuation
Agreements
between North Valley Bank and the executives covered hereunder, as
set forth in
Section 1.16, that previously governed the salary continuation
benefits
contemplated under this Plan. All such salary continuation
benefits, including
those that accrued prior to January 1, 2005, are subject to Section
409A
(defined below).
Article 1
Definitions
Whenever used in this Plan, the following words and phrases shall
have
the meanings specified:
1.1 "Benefit" means an annual benefit equal the percentage of
Compensation or the fixed dollar amount set forth next to the
Executive's name
on Exhibit 1 hereto.
1.2 "Change in Control" means the occurrence of any of the
following events with respect to the Company or the Employer: (i) a
change in
control of a nature that would be required to be reported in
response to Item
6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or in response to any
other form
or report to the regulatory agencies or governmental authorities
having
jurisdiction over the Company or any stock exchange on which the
Company's
shares are listed which requires the reporting of a change in
control; (ii) any
merger, consolidation or reorganization of the Company or the
Employer in which
the Company or the Employer does not survive; (iii) any sale,
lease, exchange,
mortgage, pledge, transfer or other disposition (in one transaction
or a series
of transactions) of any assets of the Company or the Employer
having an
aggregate fair market value of fifty percent (50%) of the total
value of the
assets of the Company or the Employer, reflected in the most recent
balance
sheet of the Company or the Employer; (iv) a transaction whereby
any "person"
(as such term is used in the Exchange Act or any individual,
corporation,
partnership, trust or any other entity) is or becomes the
beneficial owner,
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directly or indirectly, of securities of Employer representing
fifty percent
(50%) or more of the combined voting power of the Company's or the
Employer's
then outstanding securities; (v) if in any one year period,
individuals who at
the beginning of such period constitute the Board of Directors of
the Company
cease for any reason to constitute at least a majority thereof,
unless the
election, or the nomination for election by the Company's
shareholders, of each
new director is approved by a vote of a least three-quarters of the
directors
then still in office who were directors at the beginning of the
period; (iv) a
majority of the members of the Board of Directors of the Company in
office prior
to the happening of any event determines in its sole discretion
that as a result
of such event there has been a change in control. Notwithstanding
the foregoing
or anything else contained herein to the contrary, there shall not
be a "change
in control" for purposes of this Plan if the event which would
otherwise come
within the meaning of the term "change of control" involves (a) an
Employee
Stock Ownership Plan or similar plan sponsored by the Company which
is the party
that acquires "control" or is the principal participant in the
transaction
constituting a "change in control," as described above; or (b) the
merger or
consolidation or other restructuring of an Employer with another
Employer
participating in the Plan; or (c) for purposes of Section 2.5 only,
an event
that does not constitute a change in control within the meaning of
subsection
(a)(2)(A)(v) of Section 409A and any authoritative guidance issued
thereunder
from time to time by the Internal Revenue Service.
1.3 "Code" means the Internal Revenue Code of 1986, as amended,
and the regulations issued thereunder.
1.4 "Company" means North Valley Bancorp, and any successor.
1.5 "Compensation" means the Executive's total rate of annual
base
salary as of the Executive's date of Termination of Employment plus
the average
incentive compensation earned by the Executive in the three (3)
calendar years
next preceding the Executive's Termination of Employment (provided
that the
calendar year prior to Termination of Employment shall be ignored
if no
incentive compensation was earned by the Executive in such prior
calendar year).
For purposes of clarification, incentive compensation that is paid
based on the
performance of services in a year shall be deemed earned in the
year the
services giving rise to the incentive compensation were performed,
even if the
payment is made in a later year.
1.6 "Constructive Termination of Employment" means, following a
Change in Control, the Executive experiences a Termination of
Employment
following the occurrence of one or more of the following:
(i) Without the Executive's express written consent, the
assignment to the Executive of any duties
inconsistent with his or her positions, duties,
responsibilities and status with the Employer, or a
change in the Executive's reporting responsibilities,
titles or offices, or any removal of the Executive
from or any failure to re-elect the Executive to any
of such positions, except in connection with the
termination of the Executive's employment for Cause,
Disability or retirement or as a result of his or her
death;
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(ii) A reduction by the Employer in the Executive's base
salary as in effect on the date hereof or as the same
may be increased from time to time;
(iii) Without the Executive's express written consent, the
failure by the Employer to continue any action which
would adversely affect the Executive's participation
in or materially reduce the Executive's benefits
under any of such plans, or the failure by the
Employer to provide the Executive with the number of
paid vacation days to which the Executive is then
entitled on the basis of years of service with the
Employer in accordance with the Employer's normal
vacation policy in effect on the date hereof;
(iv) The Employer requiring the Executive to be based
anywhere other than in the community where the
Executive is based at the time of a Change in
Control, except for required travel on Employer
business to an extent substantially consistent with
the Executive's business travel obligations at the
time of a Change in Control, or in the event the
Executive consents to a proposed relocation, the
failure by the Employer to pay (or reimburse the
Executive) for all reasonable moving expenses
incurred by the Executive relating to a change of his
or her principal residence in connection with such
relocation and to indemnify the Executive against any
loss of the fair market value of such residence as
determined by a real estate appraiser designated by
the Executive and reasonably satisfactory to the
Employer realized on the sale of the Executive's
principal residence in connection with any such
change of residence.
1.7 "Disability" means, a condition pursuant to which an
Executive
(i) is unable to engage in any substantial gainful activity by
reason of any
medically determinable physical or mental impairment that can be
expected to
result in death or can be expected to last for a continuous period
of not less
than twelve (12) months, or (ii) is, by reason of any medically
determinable
physical or mental impairment that can be expected to result in
death or can be
expected to last for a continuous period of not less than twelve
(12) months,
receiving income replacement benefits for a period of not less than
three (3)
months under an accident or health policy covering employees of
Employer.
1.8 "Discount Rate" means the average return on long-term
Moody's
AA rated bonds as of the date of reference as published in the Wall
Street
Journal.
1.9 "Early Termination" means the Executive's Termination of
Employment before Normal Retirement Age for reasons other than
death or
Termination for Cause.
1.10 "Early Termination Date" means the month, day and year on
which an Executive's Early Termination occurs.
1.11 "Effective Date" means January 1, 2005. This document is
an
amendment and restatement of the Plan effective January 1,
2007.
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1.12 "Election Form" means the Form attached as Exhibit 3.
1.13 "Employer" means the Company and any affiliate of the
Company
that adopts this Plan with the approval of the Company and that
employs the
Executive, and any successor.
1.14 "ERISA" means the Employee Retirement Income Security Act
of
1974, as amended.
1.15 "Executive" means any employee of the Employer who the
Employer designates for Plan participation, provided that employees
may not
participate in the Plan unless they are members of a select group
of management
or highly compensated employees of the Employer, as membership in
such group is
determined for purposes of Sections 201(2), 301(a)(3) and 401(a)(1)
of ERISA
(which determination shall be made by the Employer in its sole
discretion). As
of the Effective Date, the participating Executives are as set
forth on the
attached Exhibit 1.
1.16 "Involuntary Termination of Employment" means, following a
Change in Control, the Executive experiencing a Termination of
Employment
following having been notified in writing by the Employer that
employment with
the Employer is terminated.
1.17 "Normal Retirement Age" means the Executive's sixty-fifth
(65th) birthday.
1.18 "Normal Retirement Date" means the later of the
Executive's
Normal Retirement Age or Termination of Employment.
1.19 "Plan Year" means a twelve-month period commencing on
January
1 and ending on December 31 of each year.
1.20 "Section 409A" means Code section 409A and the Treasury
regulations or other authoritative guidance issued thereunder.
Whenever the
terms "subject to Section 409A" or "to the extent permitted by
Section 409A" (or
any such similar reference so as to indicate that a Plan provision
is subject to
Section 409A) are used, such terms shall be interpreted to mean
that the
applicable Plan provision shall be effective only if and to the
extent such
provision would not trigger penalty taxes or interest under Section
409A.
1.21 "Specified Employee" means, with respect to a corporation
any
stock of which is publicly traded on an established securities
market or
otherwise, a key employee, as currently defined in Code ss.416(i)
(without
regard to paragraph (5) thereof) to mean, as of the Effective Date,
an employee
of the Employer who, at any time during the Plan Year, is (1) an
officer of the
Employer having an annual compensation greater than one hundred
thirty-five
thousand dollars ($135,000) for 2005 (indexed for inflation in
future years);
(ii) a five-percent (5%) owner of the Employer; or (iii) a
one-percent (1%)
owner of the Employer having an annual compensation from the
Employer of more
than one hundred fifty thousand dollars ($150,000).
1.22 "Termination for Cause" is as described in Article 5.
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1.23 "Termination of Employment" means that the Executive ceases
to
be employed by the Employer for any reason whatsoever other than by
reason of a
leave of absence, which is approved by the Employer.
Notwithstanding the
preceding, a Termination of Employment shall not include any event
that does not
qualify as a "Separation from Service" under Code section 409A.
1.24 "Vested Benefit" means the amount of an Executive's
Benefit
accrued and subject to payment as of the date of reference. Subject
to Article
4, unless otherwise specified with respect to any Executive on the
attached
Exhibit 1, an Executive shall vest in his or her Benefit at the
rate of ten
percent (10%) per year for each Year of Service (such that the
Benefit will be
vested in full after ten (10) Years of Service). In all cases, an
Executive's
Benefit shall be one hundred percent (100%) vested upon a Change in
Control, and
in such cases the Executive's Benefit shall be equal to the one
hundred percent
(100%) Vested Benefit.
1.25 "Year of Service" means, unless otherwise specified with
respect to any Executive on the attached Exhibit 1, each twelve
(12) consecutive
month period of the Executive's employment with the Employer. As of
the
Effective Date, each participating Executive's Years of Service are
as set forth
on the attached Exhibit 1.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. Upon Termination of Employment
on
or after Normal Retirement Age for reasons other than death, the
Company shall
pay to the Executive the benefit described in this Section 2.1 in
lieu of any
other benefit under the Plan (except as provided in Section 2.4 or
2.5).
2.1.1 Amount of Benefit. The annual benefit under this
Section 2.1 shall equal the Vested Benefit as of the Executive's
Normal
Retirement Date.
2.1.2 Payment of Benefit. The Company shall pay the benefit
under this Section 2.1 to the Executive (i) as an annual benefit
in
twelve (12) equal monthly installments payable over twenty (20)
years
or the Executive's lifetime, whichever is greater, on the first day
of
each month commencing with the month following the Executive's
Normal
Retirement Date, or (ii) as a lump sum equal to the actuarial
equivalent present value of (i) payable as soon as practicable
following the Executive's Normal Retirement Date, as
irrevocably
elected by the Executive on the Election Form (Exhibit 3) submitted
to
the Company on the later of December 31, 2007 (subject to any
Section
409A restrictions on such election) or the date of the
Executive's
commencement of Plan participation; provided, however, that to
the
extent required under Code section 409A, the payment (or the
first
monthly payment) of the benefit shall be made no earlier than the
date
which is six (6) months after the Executive's Normal Retirement
Date
(or, if earlier, his or her death) if the Executive is a
Specified
Employee. Notwithstanding the preceding, (i) the Executive's
benefit
shall automatically be paid in a present value lump sum as soon
as
practicable following the Executive's Normal Retirement Date (or
six
(6) month anniversary thereof, in the case of a Specified Employee)
if
the lump sum value of the Executive's benefit as of the
Executive's
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Normal Retirement Date is one hundred thousand dollars ($100,000)
or
less and (ii) the Executive's benefit shall automatically be paid
in
installments if (i) is not applicable and if the Executive does
not
make a timely election as to form of benefit. In the case of any
six
(6) month delay in installment payments to a Specified Employee,
the
first payment hereunder shall include all payments delayed due to
the
six (6) month delay.
2.2 Early Termination Benefit. Upon Early Termination, the
Company
shall pay to the Executive the benefit described in this Section
2.2 in lieu of
any other benefit under the Plan (except as provided in Section
2.3, 2.4 or
2.5).
2.2.1 Amount of Benefit. The annual benefit under this
Section 2.2 shall equal the Vested Benefit as of the Executive's
Early
Termination Date.
2.2.2 Payment of Benefit. The Company shall pay the benefit
under this Section 2.2 to the Executive (i) as an annual benefit
in
twelve (12) equal monthly installments payable over fifteen (15)
years
on the first day of each month commencing with the month following
the
Executive's Normal Retirement Age, or (ii) as an annual benefit
that is
actuarially equivalent to (i) in twelve (12) equal monthly
installments
payable over ten (10) years on the first day of each month
commencing
with the month following the Executive's Normal Retirement Age,
or
(iii) as an annual benefit that is actuarially equivalent to (i)
in
twelve (12) equal monthly installments payable over five (5) years
on
the first day of each month commencing with the month following
the
Executive's Normal Retirement Age, or (iv) as a present value lump
sum
equivalent of (i) reflecting the lump sum form payable as soon
as
practicable following the Executive's Normal Retirement Age. The
form
of benefit payment shall be irrevocably elected on the Election
Form
(Exhibit 3) submitted to the Company on the later of December 31,
2007
(subject to any Section 409A restrictions on such election) or the
date
of the Executive's commencement of Plan participation;
provided,
however, that to the extent required under Code section 409A,
the
payment (or the first monthly payment) of the benefit shall be made
no
earlier than the date which is six (6) months after the
Executive's
Termination of Employment (or, if earlier, his or her death) if
the
Executive is a Specified Employee. Notwithstanding the preceding,
(i)
the Executive's benefit shall automatically be paid in a present
value
lump sum as soon as practicable following the Executive's Early
Retirement Date (or six (6) month anniversary thereof, in the case
of a
Specified Employee) if the lump sum present value of the
Executive's
benefit as of the Executive's Early Retirement Date is five
hundred
thousand dollars ($500,000) or less and the Executive is under
age
fifty-five (55) at the time of his or her Early Termination and
(ii)
the Executive's benefit shall automatically be paid in twelve
(12)
equal monthly installments payable over fifteen (15) years on the
first
day of each month commencing with the month following the
Executive's
Normal Retirement Age if (i) is not applicable and if the
Executive
does not make a timely election as to form of benefit. In the case
of
any six (6) month delay in installment payments to a Specified
Employee, the first payment hereunder shall include all
payments
delayed due to the six (6) month delay.
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2.3 Disability Benefit. If the Executive experiences a
Termination
of Employment due to Disability prior to Normal Retirement Age and
is eligible
to receive a Vested Benefit under Section 2.2, the Company shall
pay to the
Executive the benefit described in Section 2.3.1 in addition to the
Vested
Benefit described in Section 2.2.
2.3.1 Amount of Benefit. The Executive shall receive
continued Compensation for a period of two (2) years or, if
shorter,
for the period from the Executive's Termination of Employment due
to
Disability through the Executive's Normal Retirement Age.
2.3.2 Payment of Benefit. The Company shall pay the benefit
under Section 2.3.1 to the Executive in equal monthly installments
on
the first day of each month commencing with the month following
the
determination of Disability by the Company (including
retroactive
payments to account for any delay between Termination of Employment
and
such determination). The payment of a benefit to the Executive
under
this Section 2.3 shall not alter the form or timing of commencement
of
the Executive's Vested Benefit under Section 2.2.
2.4 Change in Control (Accompanied by Termination of
Employment)
Benefit. If, upon a Change in Control, or up to twelve (12) months
following a
Change in Control, the Executive experiences an Involuntarily
Termination of
Employment or Constructive Termination of Employment, the Company
shall pay to
the Executive the benefit described in th
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