BCTF 8-K
Bancorp 34, Inc. (BCTF)
8-K
2020-08-04
For: 2020-07-30
View Original
Added on
April 12, 2026
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 30, 2020
BANCORP 34, INC.
(Exact Name of Registrant as Specified in Charter)
|
Maryland
|
001-37912
|
74-2819148
|
||
|
(State or Other Jurisdiction
of Incorporation)
|
(Commission File No.)
|
(I.R.S. Employer
Identification No.)
|
||
|
500 East 10th Street, Suite 100, Alamogordo, New Mexico
|
88310
|
|||
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
|||
Registrant's telephone number, including area code: (575) 437-9334
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
| [ ] |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
| [ ] |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
| [ ] |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class
|
Trading
Symbol(s)
|
Name of each exchange on which registered
|
||
|
Common Stock, par value $0.01 per share
|
BCTF
|
The NASDAQ Stock Market LLC
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange
Act. [ ]
| Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
|
(e) Employment
Agreements. On July 30, 2020, Bancorp 34, Inc. (the “Company”) and Bank 34 (the “Bank”), each entered into an employment agreement with James T. Crotty, Co-President and Chief Executive Officer of the Company and the Bank. The employment
agreements are retroactively effective as of July 20, 2020
The employment agreements each have an initial term of two years. At least 60 days prior to the anniversary date of the agreements the disinterested members of the board of
directors must conduct a comprehensive performance evaluation of Mr. Crotty and affirmatively approve any extension of the agreements for an additional year or determine not to extend the term of the agreements. If the board of directors determines
not to extend the term, it shall provide the executive with a written notice of non-renewal at least 30 days, but not more than 60 days, prior to such date. If the board fails to conduct the comprehensive performance evaluation prior to the
anniversary date, the employment agreements will not renew.
Under the employment agreements, the current annual base salary for Mr. Crotty is $260,000. Mr. Crotty’s base salary may be increased, but not decreased (other
than a decrease which is applicable to all senior officers). In addition to base salary, Mr. Crotty is entitled to a retention bonus of $200,000 payable ratably over a five-year period, on each anniversary of his employment date. Upon the
completion of 90 days of employment, Mr. Crotty will receive a grant of 25,000 stock options. The stock options will vest in five equal annual installments on each anniversary of the grant date, provided Mr. Crotty remains employed on each such
date. He will also be entitled to participate in any bonus programs and benefit plans that are made available to management employees and will be eligible for certain perquisites, including a monthly
automobile allowance of $600, a monthly cell phone allowance of $100, participation in a deferred compensation plan and 25 days of paid leave annually. Mr. Crotty will be reimbursed for all reasonable business expenses incurred.
Under the employment agreements, if the Company or the Bank terminates Mr. Crotty’s employment for “cause,” as that term is defined in the employment agreements, he
will not receive any compensation or benefits after the termination date other than compensation and benefits that have accrued through his date of termination. In the event of Mr. Crotty’s involuntary termination of employment for reasons other
than cause, disability or death, or in the event of his resignation for “good reason,” as that term is defined in the employment agreements, Mr. Crotty will receive a severance payment equal to the base salary (in effect at the date of termination)
that he would have earned during the remaining term of the employment agreements. Such payment will be payable in a lump sum within 10 days following his date of termination. In order to be entitled to the benefit set forth above, Mr. Crotty will
be required to enter into a release of claims against the Company and the Bank.
In the event of his termination without “cause” or for “good reason” (as each is defined in employment agreements) occurs on or after the effective date of a change in control of
the Company or the Bank, Mr. Crotty will be entitled to (in lieu of the payments and benefits described in the previous paragraph) a severance payment equal to three (3) times the sum of (i) his highest annual rate of base salary, and (ii) highest
annual bonus paid to or earned by Mr. Crotty during the calendar year in which the date of termination occurs or either of the two calendar years immediately preceding the date of termination. Such payment will be payable in a lump sum within 10
days following his date of termination. If Mr. Crotty has an involuntary termination or terminates for good reason within six months prior to the change in control, he will be entitled to an additional payment within ten days following the change in
control equal to the difference, if any, between what he would have been entitled to under the change in control provisions of the contract and the severance benefit paid to him on the involuntary or good reason termination occurring prior to the
change in control. In the event the payments and benefits payable to Mr. Crotty on a change in control result in an excess parachute payment, then under the Bank employment agreement, the severance benefit would be reduced to an amount that would
avoid the occurrence of an excess parachute payment. The Company employment agreement would not include such a reduction.
Notwithstanding anything in the employment agreements to the contrary, there will be no duplication of benefits to Executive as between the Bank and the Company employment
agreements.
The employment agreements also contain certain post-employment obligations (non-competition, non-solicitation and non-disparagement) that may apply for 12 months
following a termination of employment depending on the nature of the termination.
Deferred Compensation Agreement. On July 30, 2020, the Bank and Mr. Crotty entered into a Deferred Compensation Agreement
(the “Agreement”). The purpose of the Agreement, which is effective as of July 20, 2020, is to provide Mr. Crotty with retirement benefits.
Under the Agreement, Mr. Crotty may annually elect to defer the payment of a portion of his base salary, bonus and/or performance-based compensation by filing a deferral election
form with the plan administrator, setting forth the amount of the deferral and its duration. The Bank may, in its discretion, at any time make a contribution to his deferral account. Mr. Crotty will be at all times 100% vested in any of his elective
deferrals and will vest in contributions made by the Bank and any interest incrementally, over a period of seven years. The Agreement provides that interest will be credited monthly on the deferral account at an annual rate equal to the greater of The Wall Street Journal prime rate on the first business day of the plan year or 5%, compounded monthly.
Benefits under the Agreement will be paid to Mr. Crotty upon attainment of his “normal retirement date” or in the event of “early retirement” or “disability” (each as defined in the
Agreement), following separation from service. Benefits will be distributed in 120 monthly installments, as selected by Mr. Crotty and set forth in the Agreement. Payment of benefits will commence on the first day of the month following his normal
retirement date, separation from service or disability. In the event a “change in control” (as defined in the Agreement) occurs prior to Mr. Crotty’s normal retirement age, death or disability, followed by his separation from service, the benefit
under the Agreement will be equal to his deferral account balance, determined as of the date of the separation from service, and payable in 60 monthly installments commencing on the first day of the month following his separation from service. If
Mr. Crotty dies during active service, his deferral account balance will be paid to his beneficiary in 60 monthly installments commencing on the first day of the fourth month following his death.
In the event Mr. Crotty is deemed to be a “specified employee” (as defined in the Agreement) at the time of separation from service, any payment due under the Agreement (other than
due to his disability or death) will be paid on the first day of the seventh month after his separation from service.
The foregoing description of the employment agreements and the deferred compensation agreement does not purport to be complete and it is qualified in its entirety by reference to copies of the agreements
included as Exhibits 10.1, 10.2 and 10.3 to this Current Report and incorporated by reference into this Item 5.02.
Item 9.01 Financial
Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
| Exhibit 10.1 |
Employment Agreement between Bancorp 34, Inc. and James T. Crotty
|
| Exhibit 10.2 |
Employment Agreement between Bank 34 and James T. Crotty
|
| Exhibit 10.3 |
Deferred Compensation Agreement between Bank 34 and James T. Crotty
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly
authorized.
|
BANCORP 34, INC.
|
||
|
DATE: August 3, 2020
|
By:
|
/s/ Jill Gutierrez
|
|
Jill Gutierrez
|
||
|
Co-President and Chief Executive Officer
|
Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is entered into as of the 30th day of July, 2020, and made effective as of July 20, 2020 (the “Effective
Date”), by and between Bancorp 34, Inc. (the “Company”) and James T. Crotty (“Executive”). Any reference to the “Bank” shall mean Bank 34, the wholly-owned subsidiary of the Company.
WHEREAS, the Company wishes to assure itself of the continued services of Executive for the period provided in this
Agreement; and
WHEREAS, in order to induce Executive to accept employment with the Company and to provide further incentive for
Executive to achieve the financial and performance objectives of the Company, the parties desire to enter into this Agreement; and
WHEREAS, the Company desires to set forth the rights and responsibilities of Executive and the compensation payable to
Executive, as modified from time to time.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions
hereinafter provided, the parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the term of this Agreement, Executive agrees to serve initially as the Co-President and Chief Executive Officer of the Company, and agrees to serve
subsequently as the President and Chief Executive Officer of the Company (the “Executive Position”) and will perform the duties and will have all powers associated with such position as set forth in any job description provided to Executive by the
Company, and as may be set forth in the bylaws of the Company. During the period provided in this Agreement, Executive also agrees to serve, if elected, as an officer of any subsidiary or affiliate of the Company and in such capacity carry out such
duties and responsibilities reasonably appropriate to that office.
2. TERM AND DUTIES.
(a) The term of
this Agreement and the period of Executive’s employment hereunder shall begin as of the Effective Date and shall, initially, continue through the second anniversary of the Effective Date. Commencing on January 1, 2021 (the “Renewal Date”) and
continuing on each January 1st thereafter (each a “Renewal Date”), this Agreement shall renew for an additional year such that the remaining term shall be twenty-four (24) months, provided, however, that in order for this Agreement to renew, the
disinterested members of the Board of Directors of the Company (the “Board”) must take the following actions within the time frames set forth below prior to each Renewal Date: (i) at least sixty (60) days prior to the Renewal Date, conduct a
comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement; and (ii) affirmatively approve the renewal or non-renewal of this Agreement, which such decision shall be included in the
minutes of the Board’s meeting. If the decision of such disinterested members of the Board is not to renew this Agreement, then the Board shall provide Executive with a written notice of non-renewal (“Non-Renewal Notice”) at least thirty (30) days
and not more than sixty (60) days prior to any Renewal Date, such that this Agreement shall terminate at the end of twenty-four (24) months following such Renewal Date. The failure of the disinterested members of the Board to take the actions set
forth herein before any Renewal Date will result in the automatic non-renewal of this Agreement, even if the Board fails to affirmatively issue the Non-Renewal Notice to Executive. If the Board fails to inform Executive of its determination
regarding the renewal or non-renewal of this Agreement, the Executive may request, in writing, the results of the Board’s action (or non-action) and the Board shall, within thirty (30) days of the receipt of such request, provide a written response
to Executive. Reference herein to the term of this Agreement shall refer to both such initial term and such extended terms.
(b) Notwithstanding
the foregoing, in the event that the Company or the Bank has entered into an agreement to effect a transaction which would be considered a Change in Control as defined under Section 5 hereof while the Executive is employed pursuant to this
Agreement, then the term of this Agreement shall automatically be extended for twenty-four (24) months following the date on which the Change in Control occurs.
(c) During the
period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence, Executive will devote all of his business time, attention, skill and efforts to the faithful
performance of his duties under this Agreement, including activities and duties related to the Executive Position. Notwithstanding the preceding sentence, subject to the approval of the Board, Executive may
serve as a member of the board of directors of business, community and charitable organizations, provided that in each case such service shall not materially interfere with the performance of his duties under this Agreement, adversely affect the
reputation of the Company or any other affiliates of the Company, or present any conflict of interest.
(d) Nothing in
this Agreement shall mandate or prohibit a continuation of Executive’s employment following the expiration of the term of this Agreement.
|
3.
|
COMPENSATION, BENEFITS AND REIMBURSEMENT.
|
(a) Base Salary. In consideration of Executive’s performance of the responsibilities and duties set forth in this Agreement, the Company will provide Executive the compensation specified in this Agreement.
The Company will pay Executive a salary of $260,000.00 per year (“Base Salary”). Such Base Salary will be payable in accordance with the customary payroll practices
of the Company. During the term of this Agreement, the Board may consider increasing, but not decreasing (other than a decrease which is applicable to all senior officers of the Company and in a percentage
not in excess of the percentage decrease for other senior officers), Executive’s Base Salary as the Board deems appropriate. Any change in Base Salary will become the “Base Salary” for purposes of this Agreement.
(b) Retention Bonus. Executive shall be entitled to a retention bonus of $200,000.00 payable ratably over a five-year period, on each annual anniversary of the Executive’s employment date. The net after-tax
value of these funds is expected to be used to purchase Company common stock, unless the value of Executive’s then investment in Company common stock, excluding Company provided equity benefits, exceeds the cumulative retention bonus paid through
such anniversary date.
2
(c) Regular Bonuses. Based upon achievement of the goals and objectives agreed to in the performance development planning process with the Board, Executive may be eligible for a performance or other bonuses,
in accordance with any plan established for senior officer of the Company or solely for Executive. Any bonus plan in which Executive shall be entitled to participate, and the formula for determining such bonus, shall be approved by the Board from
year to year.
(d) Company Stock Options. Upon the successful completion of 90 days of employment, Executive shall receive a grant of 25,000 Company stock options, which will vest in equal annual installments over a
five-year period on each annual anniversary of the grant date, provided Executive remains in employment of the Bank on such date and subject to such other terms and conditions as may be set forth in a stock option award agreement among the Company
and Executive.
(e) Benefit Plans. Executive will be entitled to participate in all employee benefit plans, arrangements and perquisites offered to employees and officers of the Company. Without limiting the generality of
the foregoing provisions of this Section 3(e), Executive also will be entitled to participate in any employee benefit plans including but not limited to retirement plans, pension plans, profit-sharing plans, health-and-accident plans, or any other
employee benefit plan or arrangement made available by the Company in the future to management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. In addition,
Executive will be entitled to participate in a non-qualified deferred compensation plan which will allow the Executive to defer up to 100% of his Base Salary per year, subject to applicable tax withholding. Executive will also receive a $600.00
automobile allowance per month of employment and a $100.00 monthly cell phone allowance.
(f) Vacation and Paid Time Off. Executive will be entitled to paid vacation time each year during the term of this Agreement measured on a calendar year basis, in accordance with the Company’s customary
practices, as well as sick leave, holidays and other paid absences in accordance with the Company’s policies and procedures for officers. Executive will be entitled to 25 days of paid time off annually.
(g) Expense Reimbursements. The Company will reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing his obligations
under this Agreement, including, without limitation, fees for memberships in such organizations as Executive and the Board mutually agree are necessary and appropriate in connection with the performance of his duties under this Agreement, upon
substantiation of such expenses in accordance with applicable policies and procedures of the Company. All reimbursements pursuant to this Section 3(g) shall be paid promptly by the Company and in any event no later than thirty (30) days following the date on which the expense
reimbursement was requested, provided however, that any such expense is reimbursed no later than the last day of the calendar year immediately following the year in which the expense is incurred.
3
(h) To the extent not specifically set forth in this Section 3, any compensation payable or provided under this Section 3 shall be paid or provided no later than two and one-half (2.5) months after the calendar year in which such compensation is
no longer subject to a substantial risk of forfeiture within the meaning of Treasury Regulation Section 1.409A-1(d).
|
4.
|
TERMINATION AND TERMINATION PAY.
|
Subject to Section 5 of this Agreement which governs the occurrence of a Change in Control, Executive’s employment under this Agreement may be terminated in the
following circumstances:
(a) Death. Executive’s employment under this Agreement will terminate upon his death during the term of this Agreement, in which event Executive’s estate or beneficiary shall be paid Executive’s
Base Salary at the rate in effect at the time of Executive’s death for a period of one (1) year following Executive’s death (payable in accordance with the regular payroll practices of the Company).
(b) Disability. Termination of Executive’s employment based on “Disability” shall mean termination because of any permanent and totally physical or mental impairment that restricts Executive from
performing all the essential functions of normal employment. In the event of Executive’s termination due to Disability, Executive will be entitled to disability benefits, if any, provided under a long term disability plan sponsored by the Company,
if applicable.
(c) Termination for Cause. The Board may immediately terminate his employment at any time for “Cause.” Executive shall have no right to receive compensation or other benefits for any period after termination
for Cause, except for already vested benefits. Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:
| (i) |
personal dishonesty;
|
| (ii) |
incompetence;
|
| (iii) |
willful misconduct;
|
| (iv) |
breach of fiduciary duty involving personal profit;
|
| (v) |
intentional failure to perform stated duties;
|
| (vi) |
willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or
|
| (vii) |
material breach by Executive of any provision of this Agreement.
|
4
(d) Voluntary Termination by Executive. In addition to his other rights to terminate his employment under this Agreement, Executive may voluntarily terminate employment during the term of this
Agreement (other than “With Good Reason” as defined below) upon at least thirty (30) days prior written notice to the Board. Upon Executive’s voluntary termination, Executive will receive only his earned but unpaid compensation and vested rights
and benefits as of the date of his termination.
(e) Termination Without Cause or With Good Reason.
|
(i)
|
The Board may immediately terminate Executive’s employment at any time for a reason other than Cause (a termination “Without Cause”), and Executive may, by written notice
to the Board, terminate this Agreement at any time within ninety (90) days following an event constituting “Good Reason,” as defined below (a termination “With Good Reason”); provided, however, that the Company shall have thirty (30) days
to cure the “Good Reason” condition, but the Company may waive its right to cure. Any termination of Executive’s employment, other than Termination for Cause shall have no effect on or prejudice the vested rights of Executive under the
Company’s qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans
or other employee benefit plans or programs, or compensation plans or programs in which Executive was a participant.
|
|
(ii)
|
In the event of termination as described under Section 4(e)(i) and subject to the requirements of Section 4(e)(v), the Company shall pay Executive, or in the event of
Executive’s subsequent death, Executive’s beneficiary or estate, as the case may be, as severance pay, a cash lump sum payment equal to the Base Salary (at the rate in effect as of his date of termination) that Executive would have earned
had he remained employed with the Company from his date of termination until, and including, the last day of the remaining term of this Agreement. Such payment shall be made to Executive within ten (10) days following Executive’s date of
termination, or if later, following the seventh (7th) day after Executive’s execution of the Release required under Section 4(e)(iv) hereof.
|
|
(iii)
|
“Good Reason” exists if, without Executive’s express written consent, any of the following occurs:
|
|
(A)
|
the failure of the Company to appoint or re-elect Executive to the Executive Position;
|
|
(B)
|
a material reduction in Executive’s Base Salary or benefits provided in this Agreement (other than a reduction or elimination of Executive’s benefits under one or more
benefit plans maintained by the Company as part of a good faith, overall reduction or elimination of such plans or benefits applicable to all participants in a manner that does not discriminate against Executive (except as such
discrimination may be necessary to comply with applicable law));
|
5
|
(C)
|
a change in Executive’s Executive Position to be one of lesser authority or a material reduction in Executive’s authority, duties or responsibilities from the position
and attributes associated with the Executive Position;
|
|
(D)
|
a relocation of Executive’s principal place of employment by more than twenty-five (25) miles from Executive’s principal place of employment as of the initial Effective
Date of this Agreement; or
|
|
(E)
|
a material breach of this Agreement by the Company.
|
|
(iv)
|
Notwithstanding the foregoing, Executive shall not be entitled to any payments or benefits under this Section 4(e) unless and until Executive executes a release of his
claims (“Release”), satisfactory in form to the Company, against the Company, the Bank and any affiliate, and their officers, directors, successors and assigns, releasing said persons from any and all claims, rights, demands, causes of
action, suits, arbitrations or grievances relating to the employment relationship, including claims under the Age Discrimination in Employment Act (“ADEA”), but not including claims for benefits under tax-qualified plans or other benefit
plans in which Executive is vested, claims for benefits required by applicable law or claims with respect to obligations set forth in this Agreement that survive the termination of this Agreement. In order to comply with the requirements
of Code Section 409A and the ADEA, the Release shall be provided to Executive no later than the date of his Separation from Service and Executive shall have no fewer than twenty-one (21) days to consider the Release, and following
Executive’s execution of the Release, Executive shall have seven (7) days to revoke said Release.
|
|
5.
|
CHANGE IN CONTROL.
|
(a) Change in Control Defined. For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of any of the following events:
|
(i)
|
Merger: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Company or the Bank, and as a
result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or
consolidation;
|
|
(ii)
|
Acquisition of Significant Share Ownership: There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule
13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class
of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company
directly or indirectly beneficially owns 50% or more of its outstanding voting securities;
|
6
|
(iii)
|
Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s or Bank’s Board of Directors at the beginning of
the two-year period cease for any reason to constitute at least a majority of the Company’s or Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first
nominated by the board for election by the stockholders or corporators) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the Board as the result of a
directive, supervisory agreement or order issued by the primary federal regulator of the Bank or the Company or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such
period; or
|
|
(iv)
|
Sale of Assets: The Company or the Bank sells to a third party all or substantially all of its assets.
|
(b) Change in Control Benefits. Upon the occurrence of Executive’s termination Without Cause or With Good Reason on or after the effective time of a Change in Control, the Company (or any
successor) shall pay Executive, or in the event of Executive’s subsequent death, Executive’s beneficiary or estate, as severance pay, an amount equal to three (3) times the sum of (i) his highest rate of Base Salary, and (ii) the highest annual
bonus paid to, or earned by, Executive during the current calendar year of Executive’s date of termination or either of the two (2) calendar years immediately preceding Executive’s date of termination. Such payment shall be made in a lump sum
within ten (10) days following Executive’s date of termination. Notwithstanding the foregoing, the payment provided in this Section 5(b) shall be payable to Executive in lieu of any payment that is payable under Section 4(e).
(c) Termination within Six Months Prior to Change in Control. In the event of Executive’s termination of employment under Section 4(e) within six (6) months prior to a Change in Control, Executive
shall be entitled to the difference, if any, between the benefit received under Section 4(e) and the benefit available to Executive under this Section 5 upon the effective date of the Change in Control. Such benefit shall be payable in a cash lump
sum payment to the former Executive within ten (10) days following the effective date of the Change in Control.
7
|
6.
|
COVENANTS OF EXECUTIVE.
|
(a) Non-Solicitation/Non-Compete. Executive hereby covenants and agrees that, for a period of one (1) year following his termination of employment with the Company
(other than a termination of employment following a Change in Control), Executive shall not, without the written consent of the Company, either directly or indirectly:
|
(i)
|
solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any
officer or employee of the Company, or any of its respective subsidiaries or affiliates, to terminate his employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any
business whatsoever that competes with the business of the Company, or any of their direct or indirect subsidiaries or affiliates, that has headquarters or offices within twenty-five (25) miles of any location(s) in which the Company has
business operations or has filed an application for regulatory approval to establish an office (the “Restricted Territory”);
|
|
(ii)
|
become an officer, employee, consultant, director, independent contractor, agent, joint venturer, partner or trustee of any savings bank, savings and loan association,
savings and loan holding company, commercial bank, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity that competes with the business of the Company or any of their
direct or indirect subsidiaries or affiliates, that: (i) has a headquarters within the Restricted Territory or (ii) has one or more offices, but is not headquartered, within the Restricted Territory, but in the latter case, only if
Executive would be employed, conduct business or have other responsibilities or duties within the Restricted Territory; or
|
|
(iii)
|
solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to
have the effect of causing any customer of the Company to terminate an existing business or commercial relationship with the Company.
|
(b) Non-disparagement. Executive agrees that, during the term and thereafter, he will not, directly or indirectly, alone or in conjunction with any other party, make statements to customers or suppliers of
the Company and/or the Bank or to other members of the public that are in any way disparaging or negative towards the Company or the Bank, or the products or services of either, or the Company’s or the Bank’s representatives, directors, or
employees. The Company agrees that, during the term and thereafter, the Company will not, directly or indirectly, alone or in conjunction with any other party, make statements to customers or suppliers of the Company and/or the Bank or to other
members of the public that are in any way disparaging or negative towards the Executive.
8
(c) Confidentiality. Executive recognizes and acknowledges that the knowledge of the business activities, plans for business activities, and all other proprietary information of the Company, as it may exist
from time to time, are valuable, special and unique assets of the Company. Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities or any other similar
proprietary information of the Company to any person, firm, corporation, or other entity for any reason or purpose whatsoever unless expressly authorized by the Board or required by law. Notwithstanding the foregoing, Executive may disclose any
knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Company. Further, Executive may disclose information regarding the business
activities of the Company to any Company regulator having regulatory jurisdiction over the activities of the Company pursuant to a formal regulatory request. In the event of a breach or threatened breach by Executive of the provisions of this
Section, the Company will be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of the Company or any other similar proprietary
information, or from rendering any services to any person, firm, corporation, or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the
Company from pursuing any other remedies available to the Company for such breach or threatened breach, including the recovery of damages from Executive.
(d) Information/Cooperation. Executive shall, upon reasonable notice, furnish such information and assistance to the Company as may be reasonably required by the Company, in connection with any litigation in
which it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between Executive and the Company or any other
subsidiaries or affiliates.
(e) Reliance. Except as otherwise provided, all payments and benefits to Executive under this Agreement shall be subject to
Executive’s compliance with this Section 6, to the extent applicable. The parties hereto, recognizing that irreparable injury will result to the Company, its business and property in the event of Executive’s breach of this Section 6, agree that,
in the event of any such breach by Executive, the Company will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive and all persons acting for or with Executive.
Executive represents and admits that Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines of business than the Company, and that the enforcement of a remedy by way of injunction
will not prevent Executive from earning a livelihood. Nothing herein will be construed as prohibiting the Company from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from
Executive
.
|
7.
|
SOURCE OF PAYMENTS.
|
All payments provided in this Agreement shall be timely paid by check or direct deposit from the general funds of the Company (or any successor of the Company).
Notwithstanding any provision in this Agreement to the contrary, there will be no duplication of benefits between this Agreement and any employment agreement to which the Executive may be subject with the Bank. To the extent payments and benefits,
as provided for under this Agreement, are paid or received by Executive under an employment agreement in effect between Executive and the Bank, the payments and benefits paid by the Bank will be subtracted from any amount or benefit due
simultaneously to Executive under similar provisions of this Agreement.
9
|
8.
|
EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
|
This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Company or any predecessor
of the Company and Executive, except that this Agreement shall not affect or operate to reduce the re-location assistance offered under the Offer Letter dated June 3, 2020 between the Bank and the Executive or any benefit or compensation inuring to
Executive under another plan, program or agreement (other than an employment agreement) between the Company and the Executive.
|
9.
|
NO ATTACHMENT; BINDING ON SUCCESSORS.
|
(a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or
similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.
(b) The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company, expressly and unconditionally to assume and
agree to perform the Company’s obligations under this Agreement, in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place.
10. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or
condition for the future as to any act other than that specifically waived.
11.
REQUIRED PROVISIONS.
REQUIRED PROVISIONS.
Notwithstanding anything herein contained to the contrary, the following provisions shall apply:
(a) The Board may terminate Executive’s employment at any time, but any termination by the Company’s Board other than termination for Cause shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive
shall have no right to receive compensation or other benefits for any period after Executive’s termination for Cause.
10
(b) Notwithstanding anything else in this Agreement to the contrary (with the exception of Section 4(c)(i)), Executive’s employment shall not be deemed to have been terminated unless and until Executive has a Separation from Service within the
meaning of Code Section 409A. For purposes of this Agreement, a “Separation from Service” shall have occurred if the Company and Executive reasonably anticipate that either no further services will be performed by Executive after the date of
termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the
termination. For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii). Notwithstanding the foregoing, this Section 11(b) is not applicable in the event
of the Executive’s termination for Cause.
(c) Notwithstanding the foregoing, if Executive is a “specified employee” (i.e., a “key employee” of a publicly traded company within the meaning of Section 409A of the Code and the final regulations issued thereunder) and any payment under this
Agreement is triggered due to Executive’s Separation from Service (other than due to Disability or death), then solely to the extent necessary to avoid penalties under Section 409A of the Code, no payment shall be made during the first six (6)
months following Executive’s Separation from Service. Rather, any payment which would otherwise be paid to Executive during such period shall be accumulated and paid to Executive in a lump sum on the first day of the seventh month following such
Separation from Service. All subsequent payments shall be paid in the manner specified in this Agreement.
12. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this
Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.
13.
GOVERNING LAW.
GOVERNING LAW.
This Agreement shall be governed by the laws of State of Arizona, but only to the extent not superseded by federal law.
14.
ARBITRATION.
ARBITRATION.
Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil
litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator mutually acceptable to the Company and Executive, sitting in a location selected by the Company within fifty
(50) miles from the Bank’s office located in Scottsdale, Arizona, in accordance with the rules of the American Arbitration Association’s National Rules for the Resolution of Employment Disputes then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.
11
15.
PAYMENT OF LEGAL FEES.
PAYMENT OF LEGAL FEES.
To the extent that such payment(s) may be made without triggering penalty under Code Section 409A, all reasonable legal fees paid or incurred by Executive
pursuant to any dispute relating to this Agreement shall be paid or reimbursed by the Company, provided that the dispute is resolved in Executive’s favor, and such reimbursement shall occur no later than sixty (60) days after the end of the year in
which the dispute is settled or resolved in Executive’s favor.
16.
INDEMNIFICATION.
INDEMNIFICATION.
The Company shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability
insurance policy at its expense, and shall indemnify Executive (and his heirs, executors and administrators) for the term of the Agreement and for a period of six (6) years thereafter to the fullest extent permitted under applicable law against all
expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Company or the Bank or any subsidiary or
affiliate of the Company or the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and
attorneys’ fees and the cost of reasonable settlements (such settlements must be approved by the Board or the board of directors of the Bank, as appropriate); provided, however, neither the Company nor Bank shall be required to indemnify or reimburse
Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive.
17.
NOTICE.
NOTICE.
For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered
or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:
|
To the Company:
|
Bancorp 34, Inc.
500 East 10th Street
Alamogordo, New Mexico 88310
Attn: Randal L. Rabon, Director
|
|
To Executive:
|
Most recent address on file with the Company
|
[Signature Page Follows]
12
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
|
BANCORP 34, INC.
|
|
|
By: /s/ Randal L. Rabon
|
|
|
Name: Randal L. Rabon
|
|
|
Title: Board Chairman
|
|
|
EXECUTIVE
|
|
| /s/ James T. Crotty |
|
|
James T. Crotty
|
13
Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the “Agreement”) is entered into as of the 30th day of July, 2020, and made effective as of July 20, 2020 (the “Effective
Date”), by and between Bank 34 (the “Bank”) and James T. Crotty (“Executive”). Any reference to the “Company” shall mean Bancorp 34, Inc., the stock holding company of the Bank.
WHEREAS, the Bank wishes to assure itself of the continued services of Executive for the period provided in this
Agreement; and
WHEREAS, in order to induce Executive to accept employment with the Bank and to provide further incentive for Executive
to achieve the financial and performance objectives of the Bank, the parties desire to enter into this Agreement; and
WHEREAS, the Bank desires to set forth the rights and responsibilities of Executive and the compensation payable to
Executive, as modified from time to time.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions
hereinafter provided, the parties hereby agree as follows:
1. POSITION AND
RESPONSIBILITIES.
During the term of this Agreement, Executive agrees to serve initially as the Co-President and Chief Executive Officer of the Bank, and agrees to serve
subsequently as the President and Chief Executive Officer of the Bank (the “Executive Position”) and will perform the duties and will have all powers associated with such position as set forth in any job description provided to Executive by the Bank,
and as may be set forth in the bylaws of the Bank. During the period provided in this Agreement, Executive also agrees to serve, if elected, as an officer of any subsidiary or affiliate of the Bank and in such capacity carry out such duties and
responsibilities reasonably appropriate to that office.
2. TERM AND DUTIES.
(a) The term of
this Agreement and the period of Executive’s employment hereunder shall begin as of the Effective Date and shall, initially, continue through the second anniversary of the Effective Date. Commencing on January 1, 2021 (the “Renewal Date”) and
continuing on each January 1st thereafter (each a “Renewal Date”), this Agreement shall renew for an additional year such that the remaining term shall be twenty-four (24) months, provided, however, that in order for this Agreement to renew, the
disinterested members of the Board of Directors of the Bank (the “Board”) must take the following actions within the time frames set forth below prior to each Renewal Date: (i) at least sixty (60) days prior to the Renewal Date, conduct a
comprehensive performance evaluation and review of Executive for purposes of determining whether to extend this Agreement; and (ii) affirmatively approve the renewal or non-renewal of this Agreement, which such decision shall be included in the
minutes of the Board’s meeting. If the decision of such disinterested members of the Board is not to renew this Agreement, then the Board shall provide Executive with a written notice of non-renewal (“Non-Renewal Notice”) at least thirty (30) days
and not more than sixty (60) days prior to any Renewal Date, such that this Agreement shall terminate at the end of twenty-four (24) months following such Renewal Date. The failure of the disinterested members of the Board to take the actions set
forth herein before any Renewal Date will result in the automatic non-renewal of this Agreement, even if the Board fails to affirmatively issue the Non-Renewal Notice to Executive. If the Board fails to inform Executive of its determination
regarding the renewal or non-renewal of this Agreement, the Executive may request, in writing, the results of the Board’s action (or non-action) and the Board shall, within thirty (30) days of the receipt of such request, provide a written response
to Executive. Reference herein to the term of this Agreement shall refer to both such initial term and such extended terms.
(b) Notwithstanding
the foregoing, in the event that the Bank or the Company has entered into an agreement to effect a transaction which would be considered a Change in Control as defined under Section 5 hereof while the Executive is employed pursuant to this
Agreement, then the term of this Agreement shall automatically be extended for twenty-four (24) months following the date on which the Change in Control occurs.
(c) During the
period of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable leaves of absence, Executive will devote all of his business time, attention, skill and efforts to the faithful
performance of his duties under this Agreement, including activities and duties related to the Executive Position. Notwithstanding the preceding sentence, subject to the approval of the Board, Executive may
serve as a member of the board of directors of business, community and charitable organizations, provided that in each case such service shall not materially interfere with the performance of his duties under this Agreement, adversely affect the
reputation of the Bank or any other affiliates of the Bank, or present any conflict of interest.
(d) Nothing in
this Agreement shall mandate or prohibit a continuation of Executive’s employment following the expiration of the term of this Agreement.
3. COMPENSATION, BENEFITS AND
REIMBURSEMENT.
(a) Base Salary. In consideration of Executive’s performance of the responsibilities and duties set forth in this Agreement, the Bank will provide Executive the compensation specified in this Agreement. The
Bank will pay Executive a salary of $260,000.00 per year (“Base Salary”). Such Base Salary will be payable in accordance with the customary payroll practices of the
Bank. During the term of this Agreement, the Board may consider increasing, but not decreasing (other than a decrease which is applicable to all senior officers of the Bank and in a percentage not in excess
of the percentage decrease for other senior officers), Executive’s Base Salary as the Board deems appropriate. Any change in Base Salary will become the “Base Salary” for purposes of this Agreement.
(b) Retention Bonus. Executive shall be entitled to a retention bonus of $200,000.00, payable ratably over a five-year period, on each annual anniversary of Executive’s employment date. The net after-tax
value of these funds is expected to be used to purchase Company common stock, unless the value of Executive’s then investment in Company common stock, excluding Company provided equity benefits, exceeds the cumulative retention bonus paid through
such anniversary date.
2
(c) Regular Bonuses. Based upon achievement of the goals and objectives agreed to in the performance development planning process with the Board, Executive may be eligible for a performance or other bonuses,
in accordance with any plan established for senior officer of the Bank or solely for Executive. Any bonus plan in which Executive shall be entitled to participate, and the formula for determining such bonus, shall be approved by the Board from
year to year.
(d) Company Stock Options. Upon the successful completion of 90 days of employment, Executive shall receive a grant of 25,000 Company stock options, which will vest in equal annual installments over a
five-year period on each annual anniversary of the grant date, provided Executive remains in employment of the Bank on such date and subject to such other terms and conditions as may be set forth in a stock option award agreement among the Company
and Executive.
(e) Benefit Plans. Executive will be entitled to participate in all employee benefit plans, arrangements and perquisites offered to employees and officers of the Bank. Without limiting the generality of the
foregoing provisions of this Section 3(e), Executive also will be entitled to participate in any employee benefit plans including but not limited to retirement plans, pension plans, profit-sharing plans, health-and-accident plans, or any other
employee benefit plan or arrangement made available by the Bank in the future to management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. In addition,
Executive will be entitled to participate in a non-qualified deferred compensation plan which will allow the Executive to defer up to 100% of his Base Salary per year, subject to applicable tax withholding. Executive will also receive a $600.00
automobile allowance per month of employment and a $100.00 monthly cell phone allowance.
(f) Vacation and Paid Time Off. Executive will be entitled to paid vacation time each year during the term of this Agreement measured on a calendar year basis, in accordance with the Bank’s customary
practices, as well as sick leave, holidays and other paid absences in accordance with the Bank’s policies and procedures for officers. Executive will be entitled to accrue 25 days of paid time off annually.
(g) Expense Reimbursements. The Bank will reimburse Executive for all reasonable travel, entertainment and other reasonable expenses incurred by Executive during the course of performing his obligations under
this Agreement, including, without limitation, fees for memberships in such organizations as Executive and the Board mutually agree are necessary and appropriate in connection with the performance of his duties under this Agreement, upon
substantiation of such expenses in accordance with applicable policies and procedures of the Bank. All reimbursements pursuant to this Section 3(g) shall be paid promptly by the Bank and in any event no later than thirty (30) days following the
date on which the expense was requested, provided however, that any such expense is reimbursed no later than the last day of the calendar year immediately following the year in which the expense is incurred.
3
(h) To the extent not specifically set forth in this Section 3, any compensation payable or provided under this Section 3 shall be paid or provided no later than two and one-half (2.5) months after the calendar year in which such compensation is
no longer subject to a substantial risk of forfeiture within the meaning of Treasury Regulation Section 1.409A-1(d).
4. TERMINATION
AND TERMINATION PAY.
Subject to Section 5 of this Agreement which governs the occurrence of a Change in Control, Executive’s employment under this Agreement may be terminated in the
following circumstances:
(a) Death. Executive’s employment under this Agreement will terminate upon his death during the term of this Agreement, in which event Executive’s estate or beneficiary shall be paid Executive’s
Base Salary at the rate in effect at the time of Executive’s death for a period of one (1) year following Executive’s death (payable in accordance with the regular payroll practices of the Bank).
(b) Disability. Termination of Executive’s employment based on “Disability” shall mean termination because of any permanent and total physical or mental impairment that restricts Executive from
performing all the essential functions of normal employment. In the event of Executive’s termination due to Disability, Executive will be entitled to disability benefits, if any, provided under a long term disability plan sponsored by the Bank, if
applicable.
(c) Termination for Cause. The Board may immediately terminate his employment at any time for “Cause.” Executive shall have no right to receive compensation or other benefits for any period after termination
for Cause, except for already vested benefits. Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:
| (i) |
personal dishonesty;
|
| (ii) |
incompetence;
|
| (iii) |
willful misconduct;
|
| (iv) |
breach of fiduciary duty involving personal profit;
|
| (v) |
intentional failure to perform stated duties;
|
| (vi) |
willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order: or
|
| (vii) |
material breach by Executive of any provision of this Agreement.
|
(d) Voluntary Termination by Executive. In addition to his other rights to terminate his employment under this Agreement, Executive may voluntarily terminate employment during the term of this
Agreement (other than “With Good Reason” as defined below) upon at least thirty (30) days prior written notice to the Board. Upon Executive’s voluntary termination, Executive will receive only his earned but unpaid compensation and vested rights
and benefits as of the date of his termination.
4
(e) Termination Without Cause or With Good Reason.
|
(i)
|
The Board may immediately terminate Executive’s employment at any time for a reason other than Cause (a termination “Without Cause”), and Executive may, by written notice
to the Board, terminate this Agreement at any time within ninety (90) days following an event constituting “Good Reason,” as defined below (a termination “With Good Reason”); provided, however, that the Bank shall have thirty (30) days to
cure the “Good Reason” condition, but the Bank may waive its right to cure. Any termination of Executive’s employment, other than Termination for Cause shall have no effect on or prejudice the vested rights of Executive under the Bank’s
qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans or other
employee benefit plans or programs, or compensation plans or programs in which Executive was a participant.
|
|
(ii)
|
In the event of termination as described under Section 4(e)(i) and subject to the requirements of Section 4(e)(iv), the Bank shall pay Executive, or in the event of
Executive’s subsequent death, Executive’s beneficiary or estate, as the case may be, as severance pay, a cash lump sum payment equal to the Base Salary (at the rate in effect as of his date of termination) that Executive would have earned
had he remained employed with the Bank from his date of termination until, and including, the last day of the remaining term of this Agreement. Such payment shall be made to Executive within ten (10) days following Executive’s date of
termination, or if later, following the seventh (7th) day after Executive’s execution of the Release required under Section 4(e)(iv) hereof.
|
|
(iii)
|
“Good Reason” exists if, without Executive’s express written consent, any of the following occurs:
|
|
(A)
|
the failure of the Bank to appoint or re-elect Executive to the Executive Position;
|
|
(B)
|
a material reduction in Executive’s Base Salary or benefits provided in this Agreement (other than a reduction or elimination of Executive’s benefits under one or more
benefit plans maintained by the Bank as part of a good faith, overall reduction or elimination of such plans or benefits applicable to all participants in a manner that does not discriminate against Executive (except as such discrimination
may be necessary to comply with applicable law));
|
5
|
(C)
|
a change in Executive’s Executive Position to be one of lesser authority or a material reduction in Executive’s authority, duties or responsibilities from the position
and attributes associated with the Executive Position;
|
|
(D)
|
a relocation of Executive’s principal place of employment by more than twenty-five (25) miles from Executive’s principal place of employment as of the initial Effective
Date of this Agreement; or
|
|
(E)
|
a material breach of this Agreement by the Bank.
|
|
(iv)
|
Notwithstanding the foregoing, Executive shall not be entitled to any payments or benefits under this Section 4(e) unless and until Executive executes a release of his
claims (“Release”), satisfactory in form to the Bank and the Company, against the Bank, the Company and any affiliate, and their officers, directors, successors and assigns, releasing said persons from any and all claims, rights, demands,
causes of action, suits, arbitrations or grievances relating to the employment relationship, including claims under the Age Discrimination in Employment Act (“ADEA”), but not including claims for benefits under tax-qualified plans or other
benefit plans in which Executive is vested, claims for benefits required by applicable law or claims with respect to obligations set forth in this Agreement that survive the termination of this Agreement. In order to comply with the
requirements of Code Section 409A and the ADEA, the Release shall be provided to Executive no later than the date of his Separation from Service and Executive shall have no fewer than twenty-one (21) days to consider the Release, and
following Executive’s execution of the Release, Executive shall have seven (7) days to revoke said Release.
|
5. CHANGE IN CONTROL.
(a) Change in Control Defined. For purposes of this Agreement, the term “Change in Control” shall mean the occurrence of any of the following events:
|
(i)
|
Merger: The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a
result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or
consolidation;
|
|
(ii)
|
Acquisition of Significant Share Ownership: There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule
13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class
of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company
directly or indirectly beneficially owns 50% or more of its outstanding voting securities;
|
6
|
(iii)
|
Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the
beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the
board (or first nominated by the board for election by the stockholders or corporators) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the Board as
the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the
beginning of such period; or
|
|
(iv)
|
Sale of Assets: The Company or the Bank sells to a third party all or substantially all of its assets.
|
(b) Change in Control Benefits. Upon the occurrence of Executive’s termination Without Cause or With Good Reason on or after the effective time of a Change in Control, the Bank (or any successor)
shall pay Executive, or in the event of Executive’s subsequent death, Executive’s beneficiary or estate, as severance pay, an amount equal to three (3) times the sum of (i) his highest rate of Base Salary, and (ii) the highest annual bonus paid to,
or earned by, Executive during the current calendar year of Executive’s date of termination or either of the two (2) calendar years immediately preceding Executive’s date of termination. Such payment shall be made in a lump sum within ten (10)
days following Executive’s date of termination. Notwithstanding the foregoing, the payment provided in this Section 5(b) shall be payable to Executive in lieu of any payment that is payable under Section 4(e).
(c) Termination within Six Months Prior to Change in Control. In the event of Executive’s termination of employment under Section 4(e) within six (6) months prior to a Change in Control, Executive
shall be entitled to the difference, if any, between the benefit received under Section 4(e) and the benefit available to Executive under this Section 5 upon the effective date of the Change in Control. Such benefit shall be payable in a cash lump
sum payment to the former Executive within ten (10) days following the effective date of the Change in Control.
(d) 280G Cutback. Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate payments or benefits to be made or afforded to
Executive under this Agreement, either as a stand-alone benefit or when aggregated with other payments to, or for the benefit of, Executive (collectively referred to as the “Change in Control Benefits”) that are contingent on a change in control
(as defined under Code Section 280G), constitute an “excess parachute payment” under Code Section 280G or any successor thereto, and in order to avoid such a result, Executive’s benefits payable under this Agreement shall be reduced by the minimum
amount necessary so that the Change in Control Benefits that are payable to Executive are not subject to penalties under Code Sections 280G and 4999.
7
6. COVENANTS OF EXECUTIVE.
(a) Non-Solicitation/Non-Compete. Executive hereby covenants and agrees that, for a period of one (1) year following his termination of employment with the Bank (other
than a termination of employment following a Change in Control), Executive shall not, without the written consent of the Bank, either directly or indirectly:
|
(i)
|
solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any
officer or employee of the Bank, or any of its respective subsidiaries or affiliates, to terminate his employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any
business whatsoever that competes with the business of the Bank, or any of their direct or indirect subsidiaries or affiliates, that has headquarters or offices within twenty-five (25) miles of any location(s) in which the Bank has business
operations or has filed an application for regulatory approval to establish an office (the “Restricted Territory”);
|
|
(ii)
|
become an officer, employee, consultant, director, independent contractor, agent, joint venturer, partner or trustee of any savings bank, savings and loan association,
savings and loan holding company, commercial bank, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity that competes with the business of the Bank or any of their direct
or indirect subsidiaries or affiliates, that: (i) has a headquarters within the Restricted Territory or (ii) has one or more offices, but is not headquartered, within the Restricted Territory, but in the latter case, only if Executive would
be employed, conduct business or have other responsibilities or duties within the Restricted Territory; or
|
|
(iii)
|
solicit, provide any information, advice or recommendation or take any other action intended (or that a reasonable person acting in like circumstances would expect) to
have the effect of causing any customer of the Bank to terminate an existing business or commercial relationship with the Bank.
|
(b) Non-disparagement. Executive agrees that, during the term and thereafter, he will not, directly or indirectly, alone or in conjunction with any other party, make statements to customers or suppliers of
the Company and/or the Bank or to other members of the public that are in any way disparaging or negative towards the Company or the Bank, or the products or services of either, or the Company’s or the Bank’s representatives, directors, or
employees. The Bank agrees that, during the term and thereafter, the Bank will not, directly or indirectly, alone or in conjunction with any other party, make statements to customers or suppliers of the Company and/or the Bank or to other members
of the public that are in any way disparaging or negative towards the Executive.
8
(c) Confidentiality. Executive recognizes and acknowledges that the knowledge of the business activities, plans for business activities, and all other proprietary information of the Bank, as it may exist from
time to time, are valuable, special and unique assets of the Bank. Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities or any other similar
proprietary information of the Bank to any person, firm, corporation, or other entity for any reason or purpose whatsoever unless expressly authorized by the Board or required by law. Notwithstanding the foregoing, Executive may disclose any
knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank. Further, Executive may disclose information regarding the business
activities of the Bank to any bank regulator having regulatory jurisdiction over the activities of the Bank pursuant to a formal regulatory request. In the event of a breach or threatened breach by Executive of the provisions of this Section, the
Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of the Bank or any other similar proprietary information, or from
rendering any services to any person, firm, corporation, or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any
other remedies available to the Bank for such breach or threatened breach, including the recovery of damages from Executive.
(d) Information/Cooperation. Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may be reasonably required by the Bank, in connection with any litigation in which
it or any of its subsidiaries or affiliates is, or may become, a party; provided, however, that Executive shall not be required to provide information or assistance with respect to any litigation between Executive and the Bank or any other
subsidiaries or affiliates.
(e) Reliance. Except as otherwise provided, all payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with this Section 6, to the extent applicable. The parties
hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of this Section 6, agree that, in the event of any such breach by Executive, the Bank will be entitled, in addition to
any other remedies and damages available, to an injunction to restrain the violation hereof by Executive and all persons acting for or with Executive. Executive represents and admits that Executive’s experience and capabilities are such that
Executive can obtain employment in a business engaged in other lines of business than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Bank from pursuing any other remedies available to them for such breach or threatened breach, including the recovery of damages from Executive.
9
7. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid by check or direct deposit from the general funds of the Bank (or any successor of the Bank).
8. EFFECT ON PRIOR AGREEMENTS
AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of
the Bank and Executive, except that this Agreement shall not affect or operate to reduce the re-location assistance offered under the Offer Letter dated June 3, 2020 between the Bank and the Executive or any benefit or compensation inuring to
Executive under another plan, program or agreement (other than an employment agreement) between the Bank and the Executive.
9. NO ATTACHMENT; BINDING ON
SUCCESSORS.
(a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or
similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.
(b) The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree
to perform the Bank’s obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such succession or assignment had taken place.
10. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or
condition for the future as to any act other than that specifically waived.
11. REQUIRED PROVISIONS.
Notwithstanding anything herein contained to the contrary, the following provisions shall apply:
(a) The Board may terminate Executive’s employment at any time, but any termination by the Bank’s Board other than termination for Cause shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive
shall have no right to receive compensation or other benefits for any period after Executive’s termination for Cause.
10
(b) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) [12 U.S.C. §1818(e)(3)] or 8(g)(1) [12 U.S.C. §1818(g)(1)] of the Federal
Deposit Insurance Act (the “FDI Act”), the Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion:
(i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.
(c) If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) [12 U.S.C. §1818(e)(4)] or 8(g)(1) [12 U.S.C. §1818(g)(1)] of the FDI Act, all obligations
of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x)(1) [12 U.S.C. §1813(x)(1)] of the FDI Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights
of the contracting parties.
(e) All obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary for the continued operation of the Bank, (i) by the Comptroller of the Office of the Comptroller of
the Currency or his or her designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) [12 U.S.C. §1823(c)] of the FDI Act; or (ii) by the Comptroller or
his or her designee at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by the Comptroller to be in an unsafe or unsound condition. Any
rights of the parties that have already vested, however, shall not be affected by such action.
(f) Notwithstanding anything else in this Agreement to the contrary (with the exception of Section 4(c)(i)), Executive’s employment shall not be deemed to have been terminated unless and until Executive has a Separation from Service within the
meaning of Code Section 409A. For purposes of this Agreement, a “Separation from Service” shall have occurred if the Bank and Executive reasonably anticipate that either no further services will be performed by Executive after the date of
termination (whether as an employee or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level of bona fide services in the thirty-six (36) months immediately preceding the
termination. For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).
(g) Notwithstanding the foregoing, if Executive is a “specified employee” (i.e., a “key employee” of a publicly traded company within the meaning of Section 409A of the Code and the final regulations issued thereunder) and any payment under this
Agreement is triggered due to Executive’s Separation from Service (other than due to Disability or death), then solely to the extent necessary to avoid penalties under Section 409A of the Code, no payment shall be made during the first six (6)
months following Executive’s Separation from Service. Rather, any payment which would otherwise be paid to Executive during such period shall be accumulated and paid to Executive in a lump sum on the first day of the seventh month following such
Separation from Service. All subsequent payments shall be paid in the manner specified in this Agreement.
11
12. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this
Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.
13. GOVERNING LAW.
This Agreement shall be governed by the laws of State of Arizona, but only to the extent not superseded by federal law.
14. ARBITRATION.
Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil
litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator mutually acceptable to the Bank and Executive, sitting in a location selected by the Bank within fifty (50)
miles from the Bank’s office located in Scottsdale, Arizona, in accordance with the rules of the American Arbitration Association’s National Rules for the Resolution of Employment Disputes then in effect. Judgment may be entered on the arbitrator’s
award in any court having jurisdiction.
15. PAYMENT OF LEGAL FEES.
To the extent that such payment(s) may be made without triggering penalty under Code Section 409A, all reasonable legal fees paid or incurred by Executive
pursuant to any dispute relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute is resolved in Executive’s favor, and such reimbursement shall occur no later than sixty (60) days after the end of the year in
which the dispute is settled or resolved in Executive’s favor.
16. INDEMNIFICATION.
The Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance
policy at its expense, and shall indemnify Executive (and his heirs, executors and administrators) for the term of the Agreement and for a period of six (6) years thereafter to the fullest extent permitted under applicable law against all expenses
and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Bank or the Company or any subsidiary or affiliate
of the Bank or the Company (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees
and the cost of reasonable settlements (such settlements must be approved by the Board or the board of directors of the Company, as appropriate); provided, however, neither the Bank nor Company shall be required to indemnify or reimburse Executive
for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive.
12
17. NOTICE.
For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered
or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:
|
To the Bank:
|
Bank 34.
500 East 10th Street
Alamogordo, New Mexico 88310
Attn: Randal L. Rabon, Director
|
|
To Executive:
|
Most recent address on file with the Bank
|
[Signature Page Follows]
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
|
BANK 34
|
|
|
By: /s/ Randal L. Rabon
|
|
|
Name: Randal L. Rabon
|
|
|
Title: Board Chairman
|
|
|
EXECUTIVE
|
|
|
/s/ James T. Crotty
|
|
|
James T. Crotty
|
14
Exhibit 10.3
BANK 34
DEFERRED COMPENSATION AGREEMENT
This DEFERRED COMPENSATION AGREEMENT (this “Agreement”) is entered into this 30th day of July, 2020, and effective as of July 20, 2020 (the
“Effective Date”), by and between BANK 34, a federally-chartered savings and loan located in Alamogordo, New Mexico (the “Bank”), and JAMES T. CROTTY (the “Executive”).
The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated
employees who contribute materially to the continued growth, development and future business success of the Bank. This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974
(“ERISA”), as amended from time to time.
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall have the meanings specified:
|
1.1
|
“Bank Contribution” means the contribution to the Deferral Account, if any, as set forth in Section 3.1.
|
|
1.2
|
“Base Salary” means the annual cash compensation relating to services performed during any calendar year, excluding distributions from nonqualified deferred compensation plans,
bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, non-monetary awards, and other fees, and automobile and other allowances paid to the Executive for employment rendered (whether or not
such allowances are included in the Executive’s gross income). Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Executive pursuant to all qualified or non‑qualified plans of the
Bank and shall be calculated to include amounts not otherwise included in the Executive's gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by the Bank; provided, however, that all such amounts
will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Executive.
|
|
1.3
|
“Beneficiary” means each designated person or entity, or the estate of the deceased Executive, entitled to any benefits upon the death of the Executive.
|
|
1.4
|
“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.
|
|
1.5
|
“Board” means the Board of Directors of the Bank as from time to time constituted.
|
|
1.6
|
“Bonus” means the cash bonus, if any awarded to the Executive for services performed, but excluding any amounts that are Performance-Based Compensation. For these purposes, the term “Bonus”
shall also exclude the Retention Bonus payable to Executive under his Employment Agreements.
|
|
1.7
|
“Change in Control” means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined
in Code Section 409A and regulations thereunder.
|
|
1.8
|
“Code” means the Internal Revenue Code of 1986, as amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the
Effective Date of this Agreement.
|
|
1.9
|
“Crediting Rate” means the greater of the (i) Wall Street Journal prime rate on the first business day of the Plan Year or (ii) five percent (5%).
|
|
1.10
|
“Deferrals” means the amount of Base Salary, Bonus and Performance-Based Compensation the Executive elects to defer according to this Agreement.
|
|
1.11
|
“Deferral Account” means the Bank’s accounting of the accumulated Deferrals, plus Bank Contributions, plus accrued interest.
|
|
1.12
|
“Deferral Election Form” means each form established from time to time by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate
the amount of Deferrals.
|
|
1.13
|
“Disability” means the 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 twelve (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 twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees or directors
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 or directors of the Bank, provided that the definition of
“disability” applied under such insurance program complies with the requirements of the preceding sentence. Upon the request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of the Social Security
Administration’s or the provider’s determination.
|
|
1.14
|
“Early Retirement” means a Separation from Service occurring before Normal Retirement Age, except a Separation from Service that occurs (i) within twenty-four (24) months following a
Change in Control or (ii) due to death, Disability, or Termination for Cause.
|
|
1.15
|
“Effective Date” means July 20, 2020.
|
2
|
1.16
|
“Normal Retirement Age” means age sixty-seven (67).
|
|
1.17
|
“Normal Retirement Date” means the later of the Normal Retirement Age or Separation from Service.
|
|
1.18
|
“Performance-Based Compensation” means an amount earned over a period of at least twelve (12) months that is awarded to the Executive and qualifies as “performance-based compensation” under
Code Section 409A. For these purposes, an amount qualifies as “performance-based compensation” under Code Section 409A if: (i) the performance period is at least 12 months long; (ii) the Executive performs services continuously from the
later of the beginning of the performance period or the date the performance criteria are established through the date the election is made: and (iii) the election to defer performance-based compensation is not made after such compensation
has become readily ascertainable. For these purposes, an amount has become readily ascertainable once it is substantially certain that the performance requirement will be met.
|
|
1.19
|
“Plan Administrator” means the Board or such committee or person as the Board shall appoint.
|
|
1.20
|
“Plan Year” means each twelve (12) 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
Agreement and end on the following December 31.
|
|
1.21
|
“Separation from Service” means termination of the Executive’s employment with the Bank for reasons other than death or Disability. Whether a Separation from Service has occurred is
determined in accordance with the requirements of Code Section 409A 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 employee 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 employee 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 thirty-six (36) months).
|
|
1.22
|
“Specified Employee” means an employee who at the time of Separation from Service is a key employee of the Bank, if any stock of the Bank is publicly traded on an established
securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and
disregarding section 416(i)(5)) at any time during the twelve (12) month period ending on December 31 (the “identification period”). If the employee is a key employee during an identification period, the employee is treated as a key
employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of April following the close of the identification period.
|
3
|
1.23
|
“Termination for Cause” means a Separation from Service due to:
|
|
(a)
|
personal dishonesty;
|
|
(b)
|
incompetence;
|
| (c) |
willful misconduct;
|
| (d) |
breach of fiduciary duty involving personal profit;
|
| (e) |
material breach of the Bank’s Code of Ethics;
|
| (f) |
intentional failure to perform stated duties;
|
| (g) |
willful violation of any law, rule or regulation (other than traffic violations or similar offenses), any felony conviction, any violation of law involving moral turpitude, or any violation of a final
cease-and-desist order; or
|
| (h) |
material breach by Executive of any provision of this Agreement.
|
Notwithstanding the foregoing, the Executive’s Termination for Cause will not become effective unless the Bank has delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of a majority of the independent directors of the Board, at a meeting of the Board called and held for the purpose of finding that, in the good faith opinion of the Board (after reasonable notice to the Executive and an
opportunity for the Executive to be heard before the Board), the Executive was guilty of the conduct described above and specifying the particulars of such conduct.
|
1.24
|
“Unforeseeable Emergency” means a severe financial hardship to the Executive resulting from an illness or accident of the Executive, the Executive’s spouse, the Beneficiary, or the Executive’s dependent (as defined in
Section 152(a) of the Code), loss of the Executive’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control
of the Executive.
|
|
1.25
|
“Years of Participation” means the consecutive twelve (12) month period beginning on the Effective Date of this Agreement and any twelve (12) month anniversary thereof during the
entirety of which time the Executive is a participant in this Agreement.
|
Article 2
Deferral Election
| 2.1 |
Elections Generally. The Executive may annually file a Base Salary and/or Bonus Deferral Election Form with the Plan Administrator no later than the end of the Plan Year preceding the Plan Year in which
services leading to such Base Salary will be performed. Additionally, the Executive may file a Performance-Based Compensation Deferral Election Form with the Plan Administrator, provided, the Executive does so at least six months before the
end of the performance period and otherwise satisfies the requirements of Code Section 409A. With respect to Performance-Based Compensation to be earned over a single calendar year, the Performance-Based Compensation Deferral Election may be
filed no later than June 30 of the calendar year in which services leading to the Performance-Based Compensation to be deferred will be performed, provided that the Performance-Based Compensation is not readily ascertainable at such time.
For Performance-Based Compensation to be earned over a period longer than one year, the Performance-Based Compensation Deferral Election
|
4
| 2.2 |
Initial Election. After being notified by the Plan Administrator of becoming eligible to participate in this Agreement, the Executive may make an initial deferral election by delivering to the Plan
Administrator a signed Deferral Election Form and Beneficiary Designation Form within thirty (30) days of becoming eligible. The Deferral Election Form shall set forth the amount of Base Salary to be deferred. However, if the Executive was
eligible to participate in any other account balance plans sponsored by the Bank (as referenced in Code Section 409A) prior to becoming eligible to participate in this Agreement, the initial election to defer Base Salary under this Agreement
shall not be effective until the Plan Year following the Plan Year in which the Executive became eligible to participate in this Agreement.
|
| 2.3 |
Election Changes. The Executive may modify the amount of Deferrals annually by filing a new Base Salary, Bonus and/or Performance-Based Compensation Deferral Election Form with the Bank. The modified
elections shall not be effective until the calendar year following the year in which the subsequent Base Salary and/or Bonus Deferral Election Form is received by the Bank. The Performance-Based Compensation Deferral Election Form may be
immediately effective if it is received by the Bank prior to June 30, otherwise it will be effective the calendar year following the year in which it is received by the Bank.
|
| 2.4 |
Hardship. If an Unforeseeable Emergency occurs, the Executive, by written instructions to the Bank, may discontinue deferrals hereunder. Any subsequent Deferral Elections may be made only in accordance
with Section 2.1 hereof.
|
Article 3
Bank Contribution and Deferral Account
| 3.1 |
Bank Contribution. In addition to any Deferrals, the Bank may, at any time, make a Bank Contribution to the Deferral Account.
|
| 3.2 |
Establishing and Crediting. The Bank shall establish a Deferral Account on its books for the Executive and shall credit to the Deferral Account the following amounts:
|
| (a) |
The Bank Contribution;
|
| (b) |
Any Deferrals hereunder; and
|
| (c) |
Interest as follows:
|
| (i) |
On the last day of each month and immediately prior to the distribution of any benefits, but only until commencement of benefit distributions under this Agreement, interest shall be credited on the Deferral Account
at an annual rate equal to the Crediting Rate, compounded monthly; and
|
| (ii) |
On the last day of each month during any applicable installment period, interest shall be credited on the unpaid Deferral Account balance at an annual rate equal to the Crediting Rate, compounded monthly. Prior to
any event causing distributions hereunder, the Board, in its sole discretion, may change the rate used to calculate interest in this Section 3.2(c)(ii).
|
| 3.3 |
Accounting Device Only. The Deferral Account is solely a device for measuring amounts to be paid under this Agreement and is not a trust fund of any kind.
|
5
Article 4
Distributions During Lifetime
| 4.1 |
Normal Retirement Benefit. Upon the Normal Retirement Date, the Bank shall distribute to the Executive the benefit described in this Section 4.1 in lieu of any other benefit under this Article.
|
| 4.1.1 |
Amount of Benefit. The benefit under this Section 4.1 is the Deferral Account balance at the Normal Retirement Date, subject to Section 4.5, if applicable.
|
| 4.1.2 |
Distribution of Benefit. The Bank shall distribute the benefit to the Executive in one hundred twenty (120) monthly installments commencing on the first day of the month following Normal Retirement Date,
subject to Section 4.5, if applicable. If there is more than one monthly installment, the monthly installments shall be equal to the extent possible.
|
| 4.2 |
Early Retirement Benefit. If Early Retirement occurs, the Bank shall distribute to the Executive the benefit described in this Section 4.2 in lieu of any other benefit under this Article.
|
|
4.2.1
|
Amount of Benefit. The benefit under this Section 4.2 is the Deferral Account balance determined as of the date of Separation from Service and adjusted by the vesting schedule set
forth in Section 4.2.2.
|
|
4.2.2
|
Vesting Schedule. The Executive shall at all times be one hundred percent (100%) vested in any Deferrals. The Executive shall vest in the Bank Contribution and any Interest based
upon the Executive’s Years of Participation completed prior to Separation from Service as follows:
|
|
Years of Participation
|
Percentage Vested
|
|
1
|
10%
|
|
2
|
20%
|
|
3
|
35%
|
|
4
|
50%
|
|
5
|
65%
|
|
6
|
80%
|
|
7
|
100%
|
| 4.2.3 |
Distribution of Benefit. The Bank shall distribute the benefit to the Executive in one hundred twenty (120) monthly installments commencing on the first day of the month following Separation from Service,
subject to Section 4.5, if applicable. If there is more than one monthly installment, the monthly installments shall be equal to the extent possible.
|
6
| 4.3 |
Disability Benefit. If the Executive experiences a Disability prior to the Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 4.3 in lieu of any other
benefit under this Article.
|
| 4.3.1 |
Amount of Benefit. The benefit under this Section 4.3 is the Deferral Account balance determined as of the date of Disability.
|
| 4.3.2 |
Distribution of Benefit. The Bank shall distribute the benefit to the Executive in one hundred twenty (120) monthly installments commencing on the first day of the month following Disability. If there is
more than one monthly installment, the monthly installments shall be equal to the extent possible.
|
| 4.4 |
Change in Control Benefit. If a Change in Control occurs, followed within twenty-four (24) months by Separation from Service, provided, however, that such Separation from Service is prior to the Normal
Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 4.4 in lieu of any other benefit under this Article.
|
| 4.4.1 |
Amount of Benefit. The benefit under this Section 4.4 is the Deferral Account balance determined as of the date of Separation from Service.
|
| 4.4.2 |
Distribution of Benefit. The Bank shall distribute the benefit to the Executive in 60 monthly installments commencing on the first day of the month following the occurrence of a Change in Control, subject
to Section 4.5, if applicable. If there is more than one monthly installment, the monthly installments shall be equal to the extent possible.
|
| 4.5 |
Restriction on Commencement of Distributions. Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee, the provisions of this Section 4.5 shall
govern all distributions hereunder. If benefit distributions which would otherwise be made to the Executive due to Separation from Service are limited because the Executive is a Specified Employee, then such distributions shall not be made
during the first six (6) months following Separation from Service. Rather, any distribution which would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of
the seventh month following Separation from Service. All subsequent distributions shall be paid in the manner specified.
|
| 4.6 |
Distributions Upon Taxation of Amounts Deferred. If, pursuant to Code Section 409A, the Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the
amounts deferred hereunder, then the Bank may make a limited distribution to the Executive in a manner that conforms to the requirements of Code section 409A. Any such distribution will decrease the Deferral Account balance.
|
| 4.7 |
Change in Form or Timing of Distributions. For distribution of benefits under this Article 4, the Executive and the Bank may, subject to the terms of Section 10.1, amend this Agreement to delay the timing
or change the form of distributions. Any such amendment:
|
7
|
(a)
|
may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A;
|
|
(b)
|
must, for benefits distributable under Sections 4.1, 4.2 and 4.4, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally
scheduled to be made; and
|
|
(c)
|
must take effect not less than twelve (12) months after the amendment is made.
|
Article 5
Distributions at Death
| 5.1 |
Death During Active Service. If the Executive dies prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 5.1. This benefit shall be
distributed in lieu of any benefit under Article 4.
|
| 5.1.1 |
Amount of Benefit. The benefit under this Section 5.1 is the Deferral Account balance determined as of the date of the Executive’s death.
|
| 5.1.2 |
Distribution of Benefit. The Bank shall distribute the benefit to the Beneficiary in sixty (60) monthly installments commencing on the first day of the fourth month following the Executive’s death. If there
is more than one monthly installment, the monthly installments shall be equal to the extent possible. The Beneficiary shall be required to provide to the Bank the Executive’s death certificate.
|
| 5.2 |
Death During Distribution of a Benefit. If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to
the Beneficiary the remaining benefits at the same time and in the same amounts they would have been distributed to the Executive had the Executive survived.
|
| 5.3 |
Death After Separation from Service But Before Benefit Distributions Commence. If the Executive is entitled to benefit distributions under this Agreement but dies prior to the date that commencement of said
benefit distributions are scheduled to be made under this Agreement, the Bank shall distribute to the Beneficiary the same benefits to which the Executive was entitled prior to death, except that the benefit distributions shall be paid in the
manner specified in Section 5.1.2 and shall commence on the first day of the fourth month following the Executive’s death.
|
Article 6
Beneficiaries
| 6.1 |
In General. The Executive shall have the right, at any time, to designate a Beneficiary to receive any benefit distributions under this Agreement upon the death of the Executive. The Beneficiary designated
under this Agreement may be the same as or different from the beneficiary designated under any other plan of the Bank in which the Executive participates.
|
8
| 6.2 |
Designation. The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form and delivering it to the Plan Administrator or its designated agent. If the Executive
names someone other than the Executive’s spouse as a Beneficiary, the Plan Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Plan Administrator, executed by the
Executive’s spouse and returned to the Plan Administrator. 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. The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and
procedures. Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled. The Plan Administrator shall be entitled to rely on the last Beneficiary
Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executive’s death.
|
| 6.3 |
Acknowledgment. No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.
|
| 6.4 |
No Beneficiary Designation. If the Executive dies without a valid Beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated
Beneficiary. If the Executive has no surviving spouse, any benefit shall be paid to the personal representative of the Executive's estate.
|
| 6.5 |
Facility of Distribution. If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent or to a person incapable of handling the
disposition of that person’s property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan
Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Any distribution of a benefit shall be a distribution for the account of the Executive and the
Beneficiary, as the case may be, and shall completely discharge any liability under this Agreement for such distribution amount.
|
Article 7
General Limitations
| 7.1 |
Termination for Cause. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement in excess of the Deferrals if the Executive’s
employment with the Bank is terminated by the Bank or an applicable regulator due to a Termination for Cause.
|
| 7.2 |
Suicide or Misstatement. No benefit in excess of the Deferrals shall be distributed if the Executive commits suicide within two (2) years after the Effective Date, or if an insurance company which issued a
life insurance policy covering the Executive and owned by the Bank denies coverage (i) for material misstatements of fact made by the Executive on an application for such life insurance, or (ii) for any other reason; provided, however that
the Bank shall evaluate the reason for the denial, and upon advice of legal counsel and in its sole discretion, consider judicially challenging any denial.
|
9
| 7.3 |
Removal. Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement in excess of Deferrals if
the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act. Notwithstanding anything herein to the contrary, any payments
made to the Executive pursuant to this Agreement, or otherwise, shall be subject to and conditioned upon compliance with 12 U.S.C. 1828 and FDIC Regulation 12 CFR Part 359, Golden Parachute Indemnification Payments and any other regulations
or guidance promulgated thereunder.
|
Article 8
Administration of Agreement
| 8.1 |
Plan Administrator Duties. The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce
all appropriate rules and regulations for the administra-tion of this Agreement and (ii) decide or resolve any and all ques-tions, including interpretations of this Agreement, as may arise in connection with this Agreement to the extent the
exercise of such discretion and authority does not conflict with Code Section 409A.
|
| 8.2 |
Agents. In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as the Plan Administrator sees fit, including acting through a duly
appointed representative, and may from time to time consult with counsel who may be counsel to the Bank.
|
| 8.3 |
Binding Effect of Decisions. Any decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation or application of this
Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Agreement.
|
| 8.4 |
Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator.
|
|
8.5
|
Bank Information. To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the
date and circum-stances of the Executive’s death, Disability or Separation from Service, and such other pertinent information as the Plan Administrator may reasonably require.
|
10
| 8.6 |
Annual Statement. The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under
this Agreement.
|
Article 9
Claims and Review Procedures
| 9.1 |
Claims Procedure. An Executive or Beneficiary (“claimant”) who has not received benefits under this Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:
|
| 9.1.1 |
Initiation – Written Claim. The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits. If such a claim relates to the contents of a notice received by the
claimant, the claim must be made within sixty (60) days after such notice was received by the claimant. All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise
occurred. The claim must state with particularity the determination desired by the claimant.
|
| 9.1.2 |
Timing of Plan Administrator Response. The Plan Administrator shall respond to such claimant within ninety (90) days after receiving the claim. If the Plan
Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying the claimant in writing, prior to the
end of the initial ninety (90) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.
|
| 9.1.3 |
Notice of Decision. If the Plan Administrator denies part or all of the claim, the Plan Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the
notification in a manner calculated to be understood by the claimant. The notification shall set forth:
|
| (a) |
The specific reasons for the denial;
|
| (b) |
A reference to the specific provisions of this Agreement on which the denial is based;
|
| (c) |
A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;
|
| (d) |
An explanation of this Agreement’s review procedures and the time limits applicable to such procedures; and
|
| (e) |
A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.
|
| 9.2 |
Review Procedure. If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial as follows:
|
11
| 9.2.1 |
Initiation – Written Request. To initiate the review, the claimant, within sixty (60) days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request
for review.
|
| 9.2.2 |
Additional Submissions – Information Access. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator
shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.
|
| 9.2.3 |
Considerations on Review. In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination.
|
| 9.2.4 |
Timing of Plan Administrator Response. The Plan Administrator shall respond in writing to such claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines
that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty
(60) day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.
|
| 9.2.5 |
Notice of Decision. The Plan Administrator shall notify the claimant in writing of its decision on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the
claimant. A notification of denial shall set forth:
|
| (a) |
The specific reasons for the denial;
|
| (b) |
A reference to the specific provisions of this Agreement on which the denial is based;
|
| (c) |
A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA
regulations) to the claimant’s claim for benefits; and
|
| (d) |
A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).
|
Article 10
Amendments and Termination
|
10.1
|
Amendments. This Agreement may be amended only by a written agreement signed by the Bank and the Executive. However, the Bank may unilaterally amend this Agreement to conform with
written directives to the Bank from its auditors or banking regulators or to comply with legislative changes or tax law, including without limitation Code Section 409A.
|
12
|
10.2
|
Plan Termination Generally. This Agreement may be terminated only by a written agreement signed by the Bank and the Executive. Except as provided in Section 10.3, the termination of
this Agreement shall not cause a distribution of benefits under this Agreement. Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 4 or Article 5.
|
|
10.3
|
Plan Terminations Under Section 409A. Notwithstanding anything to the contrary in Section 10.2, if the Bank terminates this Agreement in the following circumstances:
|
|
(a)
(b)
|
Within thirty (30) days before or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of this Agreement and further
provided that all the Bank's arrangements which are substantially similar to this Agreement are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under
the terminated arrangements within twelve (12) months of such termination;
Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under this Agreement are included in the Executive's gross income in the latest of (i) the calendar year in
which this Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or
|
| (c) |
Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Treasury Regulations Section 1.409A-1(c) if the Executive participated in such arrangements
(“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all termination distributions are made no earlier than twelve (12) months and no
later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action
to irrevocably terminate and liquidate the Agreement;
|
the Bank may distribute the Deferral Account balance, determined as of the date of the termination of this Agreement, to the Executive in a lump sum subject to the above terms.
Article 11
Miscellaneous
| 11.1 |
Binding Effect. This Agreement shall bind the Executive and the Bank and their beneficiaries, survivors, executors, administrators and transferees.
|
13
| 11.2 |
No Guarantee of Employment. This Agreement is not a contract for employment. It does not give the Executive the right to remain as an employee of the Bank nor interfere with the Bank's right to discharge
the Executive. It does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time.
|
| 11.3 |
Non-Transferability. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner.
|
| 11.4 |
Tax Withholding and Reporting. The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Code Section 409A from the benefits provided under this
Agreement. The Executive acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authorities. The Bank shall satisfy all applicable reporting requirements, including those
under Code Section 409A.
|
| 11.5 |
Applicable Law. This Agreement and all rights hereunder shall be governed by the laws of the State of New Mexico, except to the extent preempted by the laws of the United States of America.
|
| 11.6 |
Unfunded Arrangement. The Executive and the Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement. The benefits represent the mere promise by the
Bank to distribute 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 or other informal funding asset is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim.
|
| 11.7 |
Reorganization. The Bank shall not merge or consolidate into or with another bank, or reorganize, or sell substantially all of its assets to another bank, firm or person unless such succeeding or continuing
bank, firm or person agrees to assume and discharge the obligations of the Bank under this Agreement. Upon the occurrence of such an event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor
entity.
|
| 11.8 |
Entire Agreement. This Agreement constitutes the entire agreement between the Bank 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.
|
| 11.9 |
Interpretation. Wherever the fulfillment of the intent and purpose of this Agreement requires and the context will permit, the use of the masculine gender includes the feminine and use of the singular
includes the plural
|
| 11.10 |
Alternative Action. In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Agreement due to regulatory or other constraints, the Bank or Plan
Administrator may perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Bank, provided that such alternative act does not violate Code Section 409A.
|
14
| 11.11 |
Headings. Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any provision herein.
|
| 11.12 |
Validity. If any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and
enforced as if such illegal or invalid provision had never been included herein.
|
| 11.13 |
Notice. Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered or sent by registered or certified
mail to the address below:
|
|
BANK 34
|
|
C/O RANDAL L. RABON, CHAIRMAN OF THE BOARD
|
|
500 10th STREET
|
|
ALAMOGORDO, NM 88310
|
Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration
or certification.
Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered or sent by mail to the last known
address of the Executive.
| 11.14 |
Deduction Limitation on Benefit Payments. If the Bank reasonably anticipates that the Bank’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of
Code Section 162(m), then to the extent deemed necessary by the Bank to ensure that the entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under
this Agreement. The delayed amounts shall be distributed to the Executive (or the Beneficiary in the event of the Executive's death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will
not be limited or eliminated by application of Code Section 162(m).
|
| 11.15 |
Compliance with Section 409A. This Agreement shall be interpreted and administered consistent with Code Section 409A.
|
[Signature Page Follows]
15
IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement, effective as of the day and
date set forth above.
|
EXECUTIVE:
|
BANK:
|
||
| /s/ James T. Crotty |
By: /s/ Randal L. Rabon
|
||
|
JAMES T. CROTTY
|
Title: Board Chairman
|
||
16