Exhibit 10.(ii)A(10)
MONTEREY COUNTY BANK
Supplemental Life Insurance
Agreement
MONTEREY COUNTY
BANK
SUPPLEMENTAL
LIFE INSURANCE AGREEMENT
EFFECTIVE
October 26, 2006
THIS SUPPLEMENTAL LIFE INSURANCE AGREEMENT (the
“Agreement”) is adopted this 26th day of October, 2006,
by and between MONTEREY COUNTY BANK, a state-chartered commercial
bank located in Monterey, California (the “Bank”), and
CHARLES T. CHRIETZBERG (the “Executive”).
The
purpose of this Agreement is to retain and reward the Executive, by
dividing the death proceeds of certain life insurance policies
which are owned by the Bank on the life of the Executive with the
designated beneficiary of the Executive. The Bank will pay the life
insurance premiums from its general assets.
Article 1
Definitions
Whenever used in this Agreement, the following
terms shall have the meanings specified:
1.1
“ Agreement 1 ” refers to the Survivor Income
Agreement between the Bank and the Executive and the Split Dollar
addendum thereto, all dated December 31, 1993.
1.2
“Agreement 2 ” refers to the Life Insurance
Agreement Endorsement Method Split Dollar Plan Agreement between
the Bank and the Executive, effective October 12, 1999, and
the two amendments thereto dated August 15, 2001 and
August 16, 2001, respectively.
1.3
Bank’s Interest ” means the benefit set forth in
Section 2.1.
1.4
“ Beneficiary ” means each designated person, or
the estate of the deceased Executive, entitled to benefits, if any,
upon the death of the Executive.
1.5
“ Beneficiary Designation Form ” means the
form established from time to time by the Plan Administrator
that the Executive completes, signs and returns to the Plan
Administrator to designate one or more Beneficiaries.
1.6
“ Board ” means the Board of Directors of the
Bank as from time to time constituted.
1.7
“ Code ” means the Internal Revenue Code of
1986, as amended.
1.8
“ Executive’s Interest ” means the benefit
set forth in Section 2.2.
1.9
“ Insurer ” means the insurance company issuing
the Policy on the life of the Executive.
1.10
“ Net Death Proceeds ” means the total death
proceeds of the Policy minus the greater of (i) the cash
surrender value or (ii) the aggregate premiums paid by the
Bank.
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1.11
“ Plan Administrator ” means the plan
administrator described in Article 12.
1.12
“ Policy ” or “ Policies ”
means the individual insurance policy or policies adopted by the
Bank for purposes of insuring the Executive’s life under this
Agreement.
1.13
“ Separation from Service ” means the
termination of the Executive’s employment with the Bank for
reasons other than death. Whether a Separation from Service takes
place is determined based on the facts and circumstances
surrounding the termination of the Executive’s employment and
whether the Bank and the Executive intended for the Executive to
provide significant services for the Bank following such
termination. A termination of employment will not be considered a
Separation from Service if:
(a)
the Executive continues to provide services as an employee of the
Bank at an annual rate that is twenty percent (20%) or more of the
services rendered, on average, during the immediately preceding
three full calendar years of employment (or, if employed less than
three years, such lesser period) and the annual remuneration for
such services is twenty percent (20%) or more of the average annual
remuneration earned during the final three full calendar years of
employment (or, if less, such lesser period), or
(b)
the Executive continues to provide services to the Bank in a
capacity other than as an employee of the Bank at an annual rate
that is fifty percent (50%) or more of the services rendered, on
average, during the immediately preceding three full calendar years
of employment (or if employed less than three years, such less
period) and the annual remuneration for such services is fifty
percent (50%) or more of the average annual remuneration earned
during the final three full calendar years of employment (or if
less, such lesser period).
1.14
“Vested Insurance Benefit ” means the Bank will
provide the Executive with continued insurance coverage from the
date of vesting until death, subject to the forfeiture provisions
detailed in Section 3.2 and Article 6. Article 3
explains how the Executive achieves vested status.
Article 2
Policy
Ownership/Interests
2.1
Bank’s Interest . The Bank shall own the Policies and
shall have the right to exercise all incidents of ownership and,
subject to Article 4, the Bank may terminate a Policy
without the consent of the Executive. The Bank shall be the
beneficiary of the remaining death proceeds of the Policies after
the Executive’s Interest is determined according to
Section 2.2 below.
2.2
Executive’s Interest . The Executive, or the
Executive’s assignee, shall have the right to designate the
Beneficiary of an amount of death proceeds as specified in
Section 2.2.1 or 2.2.2. The Executive shall also have the
right to elect and change settlement options with respect to the
Executive’s Interest by providing written notice to the Bank
and the Insurer.
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2.2.1
Death Prior to Separation from Service . If the Executive
dies while employed by the Bank, the Executive’s Beneficiary
shall be entitled to a benefit equal to one hundred percent (100%)
of the Net Death Proceeds minus the benefit amounts paid to the
Executive’s beneficiary pursuant to Agreement 1 and Agreement
2.
2.2.2
Death After Separation from Service . If, pursuant to
Article 3, the Executive has a Vested Insurance Benefit at the
date of death, the Executive’s Beneficiary shall be entitled
to a benefit equal to the Net Death Proceeds minus the benefit
amounts paid to the Executive’s beneficiary pursuant to
Agreement 1 and Agreement 2. If the Executive has not achieved a
Vested Insurance Benefit on the date of death, the Beneficiary will
not be entitled to a benefit under this Agreement.
Article 3
Vesting
3.1
Vested Insurance Benefit . The Executive shall have a Vested
Insurance Benefit equal to the amount specified in Section 2.2
at the earliest of the following events:
3.1.1
Attainment of age sixty-five (65) while in the employ of the Bank;
or
3.1.2
Adoption, by the Board at its discretion, of a resolution entitling
the Executive to the Vested Insurance Benefit in Section 2.2
under circumstances not otherwise addressed in this
Section 3.1.
3.2
Forfeiture of Benefit . Notwithstanding the provisions of
Section 3.1, the Executive will forfeit his Vested Insurance
Benefit if: (i) the Executive violates any of the provisions
detailed in Article 6; or (ii) the Executive provides written
notice to the Bank declining further participation in the
Agreement.
Article 4
Comparable
Coverage
4.1
Insurance Policies . If the Executive has a Vested Insurance
Benefit, the Bank may provide such benefit through the
Policies purchased at the commencement of this Agreement, or
may provide comparable insurance coverage to the Executive
through whatever means the Bank deems appropriate. If the Executive
waives or forfeits his right to the Vested Insurance Benefit, the
Bank shall choose to cancel the Policies on the Executive, or
may continue such coverage and become the direct beneficiary
of the entire death proceeds.
4.2
Offer to Purchase . If the Bank discontinues a Policy while
the Executive is employed by the Bank at the date of discontinuance
or while the Executive has a Vested Insurance Benefit that has not
been forfeited, the Bank shall give the Executive at least thirty
(30) days to purchase such Policy. The purchase price shall be the
fair market value of the Policy, as determined under Treasury Reg.
§1.61-22(g)(2) or any subsequent applicable
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authority. Such notification shall be in
writing.
Article 5
Premiums and Imputed
Income
5.1
Premium Payment . The Bank shall pay all premiums due on all
Policies.
5.2
Economic Benefit . The Bank shall determine the economic
benefit attributable to the Executive based on the life insurance
premium factor for the Executive’s age multiplied by the
aggregate death benefit payable to the Beneficiary hereunder. The
“life insurance premium factor” is the minimum factor
applicable under guidance published pursuant to Treasury Reg.
§ 1.61-22(d)(3)(ii) or any subsequent authority.
5.3
Imputed Income . The Bank shall impute the economic benefit
to the Executive on an annual basis, by adding the economic benefit
to the Executive’s W-2, or if applicable, Form 1099.
Article 6
General
Limitations
6.1
Excess Parachute or Golden Parachute Payment . If the
payments and benefits pursuant to this Agreement, either alone or
together with other payments and benefits which the Executive has
the right to receive from the Bank, would constitute an
“excess parachute payment” under Section 280G of
the Code, or would be a prohibited golden parachute payment
pursuant to 12 C.F.R. §359.2 and for which the appropriate
federal banking agency has not given written consent to pay
pursuant to 12 C.F.R. §359.4, the payments and benefits
pursuant to this Agreement shall be reduced, in the manner
determined by the Executive in the case of the application of
Section 280G of the Code, by the amount, if any, which is the
minimum necessary to result in (i) no portion of the payments
and benefits under this Agreement being non-deductible to the Bank
pursuant to Section 280G of the Code and subject to the excise
tax imposed under Section 4999 of the Code, and (ii) no
adverse consequence to the Bank under or pursuant to such banking
regulations. All benefits payable under this Agreement shall also
be subject to limitations or prohibitions imposed by subsequent
changes or amendments to the cited laws and regulations except to
the extent that any benefits payable under this Agreement are
grandfathered or otherwise exempt or excluded from the change or
amendment.
6.2
Termination for Cause . Notwithstanding any provision of
this Agreement to the contrary, the Executive shall forfeit any
right to a benefit under this Agreement if the Bank terminates the
Executive’s employment for cause. Termination of the
Executive’s employment for “Cause” shall mean
termination because of personal dishonesty, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order or material
breach of any provision of the Agreement. For purposes of this
paragraph, no act or failure to act on the Executive’s
part shall be considered “willful” unless done, or
omitted to be done, by the Executive not in good faith and w
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