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Proc-Type: 2001,MIC-CLEAR
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UNITED STATES
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) February 24, 2006 ITLA CAPITAL CORPORATION
Registrant's telephone number, including area code: (858) 551-0511 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: Item 1.01 Entry Into a Material Definitive Agreement The following information is filed under Items 1.01 and 8.01 of Form 8-K: Following a review of its compensation plans and agreements, ITLA Capital Corporation (the "Company"), upon the direction of the Compensation Committee of its Board of Directors, took the following actions: (1) executed an amendment and restatement of its employment agreement, and executed a non-competition and non-solicitation agreement, with George W. Haligowski, the Company's Chairman, President and Chief Executive Officer; (2) executed change in control severance agreements with nine officers, including the following executive officers: Norval L. Bruce, Vice Chairman of the Board and Chief Credit Officer, Timothy M. Doyle, Executive Managing Director and Chief Financial Officer, Lyle C. Lodwick, Executive Managing Director and Chief Operating Officer, and Maria P. Kunac, Senior Managing Director and Chief Lending Officer (in the case of Messsrs. Bruce and Doyle and one of the other officers not named above, these
agreements replace their existing change in control severance agreements with the Company); (3) amended and restated its employer securities and non-employer securities non-qualified deferred compensation plans (the "Deferred Compensation Plans") and supplemental executive retirement plan (the "SERP") primarily to conform those plans with Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"); (4) amended and restated its salary continuation plan (the "Salary Continuation Plan") to conform that plan with Section 409A of the Code and to make certain other changes described below; and (5) made a clarifying amendment to its 2005 Re-Designated, Amended and Restated Employee Stock Incentive Plan (the "ESIP") intended to ensure the deductibility under Section 162(m) of the Code of compensation attributable to stock options or stock appreciation rights granted under that plan to executive officers. Copies of the amended and restated employment agreement and non-competition and non-solicitation agreement with Mr. Haligowski, the change in control severance agreements with the executive officers named above, and the amended and restated Deferred Compensation Plans, SERP, Salary Continuation Plan and ESIP are attached as exhibits to this report and are incorporated herein by reference. Agreements with Mr. Haligowski Amended and Restated Employment Agreement and Non-competition and Non-Solicitation Agreement. The amended and restated employment agreement was entered into on February 24, 2006, and constitutes an amendment and restatement of Mr. Haligowski's employment agreement with the Company dated January 28, 2000 (the "Original Employment Agreement," and as amended and restated, the "Employment Agreement"). The Employment Agreement has a five-year term which commenced effective as of January 1, 2006 and is renewable on each subsequent January 1st, as long as neither the Company nor Imperial Capital Bank, a wholly owned subsidiary of the Company (the "Bank"), has notified Mr. Haligowski at least 90 days in advance that the term will not be so extended. If a "change in control" (as defined in the Employment Agreement) occurs during the term of the Employment Agreement, then no
twithstanding the delivery of any notice of non-renewal to Mr. Haligowski, the employment term will automatically be extended until five years after the date of the change in control. The Employment Agreement entitles Mr. Haligowski to: (1) an annual base salary of not less than $590,000; (2) participate in any performance-based awards and discretionary bonuses paid to executive officers; (3) receive a minimum monthly housing allowance of $3,500 and, at his
Delaware
0-26960
95-4596322
(State or other jurisdiction
of incorporation)(Commission File No.)
(IRS Employer
Identification No.)
888 Prospect Street, Suite 110, La Jolla, California
92037
(Address of principal executive offices)
(Zip Code)
(Former name or former address, if changed since last report)
[ ]
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))
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Item 8.01 Other Events
election, a minimum monthly automobile allowance of $2,600 or the use of a Company vehicle pursuant to the Company's automobile policy; (4) receive a personal life insurance policy, with premiums paid by the Company, providing a death benefit of at least four times his annual base salary; (5) receive Company-paid memberships in certain organizations and clubs; (6) up to $6,500 per year, plus imputed taxes, for the maintenance of his personal estate and tax planning; and (7) participate in benefit plans and receive other fringe benefits provided by the Company and the Bank. These provisions are the same as those contained in the Original Employment Agreement.
The Employment Agreement provides that if Mr. Haligowski is "involuntarily terminated" prior to a change in control, then he will:(1) receive a prorated lump sum payment based on the amount of cash bonus and other cash incentive compensation paid to him for the Company's last completed fiscal year; (2) either (a)continue to receive monthly through the remaining term of the agreement one-twelfth of his base salary at the highest annual rate in effect during the three years before the termination date and one-twelfth of the average amount of cash bonus and cash incentive compensation earned by him during the two fiscal years preceding the termination date or (b) at his election, receive the amount of all payments described in (a) in a lump sum; (3) either (a) continue to receive for himself and his dependents substantially the same medical, dental and disability benefits at the same cost to him for five years after the date of termination, reduced to the extent he receives substantially the same coverage at substantially the same cost to him from another employer, or (b) at his election (or at the Company's or the Bank's election, if coverage under the Company's group plan is not available to Mr. Haligowski and his dependents), receive an amount in cash equal to the premium cost being paid by the Company or the Bank before the termination date; (4) be provided with office space and secretarial support of the same type provided during his employment for 18 months after the termination date; (5) receive title t o the Company-owned or leased vehicle being used by him; (6) receive all interests maintained by the Company or the Bank in life insurance policies maintained on his life, including the cash surrender values; and (7) become vested in all of his outstanding unvested stock options and restricted stock awards held in the SERP. The term "involuntary termination" is defined to include termination of Mr. Haligowski's employment by the Company or the Bank (other than for cause or due to retirement after attaining age 65) without his consent, by Mr. Haligowski following a material reduction of or interference with his duties, responsibilities or benefits without his consent or by the Company or the Bank (or their successors) or by Mr. Haligowski at the time of or within five years after a change in control. Certain termination benefits that Mr. Haligowski was entitled to receive under his Original Employment Agreement were eliminated from his Employment Agreement as part of the amendment and restatement, specificall y: (a) continuing employee and welfare benefits beyond those set forth in item 3 above and (b) consulting fees for 18 months. The only termination benefit added to the Employment Agreement by the amendment and restatement is set forth in item 6 above. This additional benefit was approved by the Compensation Committee of the Company's Board of Directors prior to its consideration of the amendment and restatement of the Original Employment Agreement and is considered to be a benefit that Mr. Haligowski was entitled to prior to January 1, 2006 and thus deemed to be part of the termination benefits that he would otherwise be entitled to receive under the Original Employment Agreement. The current value of this termination benefit (i.e., approximately $630,000) is substantially less than the current value of the termination benefits that have been eliminated from the Employment Agreement (i.e., in excess of $1 million).
The Employment Agreement provides that if Mr. Haligowski is involuntarily terminated in connection with or within five years after a change in control of the Company, then he will receive a lump sum payment equal to 299% of his "base amount," as defined in Section 280G of the Code, less the present value of the benefits to be received by him under the Company's Salary Continuation Plan and the accelerated vesting present value of stock options and restricted stock, to the extent such amounts are required to be considered in the calculation of parachute payments under Section 280G of the Code (the "Lump Sum Change in Control Payment"). Instead of receiving the full amount of the Lump Sum Change in Control Payment, however, Mr. Haligowski may elect to receive the continued health, medical and disability insurance benefits, 18 months of office space and secretarial support, title to his Company-owned or leased vehicle and the Company's interests in the life insurance policies on his life, each as described in the immediately preceding paragraph, in which case the amount of the Lump Sum Change in Control Payment will be reduced by the present value of these elected benefits ( the "Elective Benefits"). In no event may the Lump Sum Change in Control Payment, prior to reduction for Elective Benefits, exceed the aggregate of 100% of the total value of the payments and benefits Mr. Haligowski would receive under the Employment Agreement if the involuntarily termination occurred prior to a change in control, plus 150% of his annual base salary in effect before the change in control. This resulting aggregate amount is equal to the value of Mr. Haligowski's change in control benefits under the Original Employment Agreement, excluding the SERP change in control benefit referred to in the Original Employment Agreement of 3.95 times his annual base salary but inclusive of the life insurance benefit described in the preceding paragraph (the "Original Agreement Adjusted Change in Control Benefit"). The amendment and restatement of the Original Employment Agreement eliminates Mr. Haligowski's SERP change in control benefit and his enhanced change in control benefit under the Salary Continuatio n Plan (i.e., no accelerated payment of full benefit over ten years). The Employment Agreement provides that if a change in control occurs on or after January 1, 2008, the Lump Sum Change in Control Payment prior to reduction for Elective Benefits may not be less than the Original Agreement Adjusted Change in Control Benefit less $1.0 million, notwithstanding the fact that this amount exceeds 299% of Mr. Haligowski's base amount.
Mr. Haligowski's non-competition and non-solicitation agreement (the "Non-Competition Agreement") was entered into on February 24, 2006. Like the Employment Agreement, the Non-Competition Agreement has a five-year term which commenced effective as of January 1, 2006. Mr. Haligowski's forbearance obligations under the Non-Competition Agreement begin on his employment termination in connection with or following an acquisition of the Company or the Bank and continues for three years thereafter (the "Restricted Period"). Mr. Haligowski will receive aggregate payments of $3.5 million during the Restricted Period in consideration of his compliance with his obligations under the Non-Competition Agreement during the Restricted Period. The Company has the unilateral right to extend the term of the Non-Competition Agreement for an additional five year term by adjusting the compensation to be paid to Mr. Haligowski under that agreement.
It is intended that the Lump Sum Change in Control Payment, together with the $3.5 million in payments to be made to Mr. Haligowski under the Non-Competition Agreement, shall not be substantially greater or less than the change in control benefits Mr. Haligowski would have received under the Original Employment Agreement inclusive of the SERP change in control benefit referred to in the Original Employment Agreement.
The Employment Agreement provides that if any payments or benefits to be provided under the agreement in combination with any payments or benefits under other plans or arrangements constitute "excess parachute payments" under Section 280G of the Code, Mr. Haligowski will be paid an additional amount (referred to as a "gross up payment") that will offset, on an after tax basis, the effect of any excise tax consequently imposed upon him under Section 4999 of the Code. This is the same provision that was contained in the Original Employment Agreement.
Under the Employment Agreement, if Mr. Haligowski is terminated due to disability or death, then he or his estate will be entitled to the same payments and benefits to which he would have been entitled if he were involuntarily terminated prior to a change in control, other than the continued use of office space and secretarial support, plus a prorated amount of any bonus or other incentive compensation for the year in which the termination occurs. If Mr. Haligowski voluntarily terminates his employment other than for a reason that constitutes involuntary termination or other than in connection with or within five years after a change in control, he will receive his base salary and benefits earned through the date of termination plus any benefit continuation required by law. If Mr. Haligowski's employment is terminated for cause, the Company will have no obligations to him under the Employment Agreement, other than any benefit continuation required by law. While the disability benefit was added by the amendment and restatement of the Original Employment Agreement, the other provisions are the same as those contained in the Original Employment Agreement.
Salary Continuation Plan
The Salary Continuation Plan, which was originally adopted by the Company in March 2000 and in which Mr. Haligowski is currently the only participant, was amended to eliminate an enhanced change in control benefit, which was to provide for an increased monthly payout over ten years instead of over 15 years as with other types of termination, and to eliminate the reduction in benefit that was to occur if the participant voluntarily terminated his employment before retirement age. As a result, under the amended plan, if the participant's employment is terminated for any reason other than cause, or if the participant retires after attaining age 65, the participant will begin receiving his full salary continuation benefit six months thereafter (or starting on the first day of the next calendar month, if termination is due to death or disability), payable monthly over 15 years. The amount of Mr. Haligowski's annual salary continuation benefit, which was not changed by the amendment, is 75% of his average annual base salary for the three full calendar years preceding the year in which termination occurs or in which he attains age 65.
In addition to the modifications described above, a number of other amendments were made to the Salary Continuation Plan to conform the plan to Section 409A of the Code, including changes to definitions, the elimination of the Company's ability to accelerate benefits and changes to plan termination provisions.
Change in Control Severance Agreements
As of February 24, 2006, the Company had executed change in control severance agreements with Messrs. Bruce, Doyle and Lodwick and Ms. Kunac and with five other officers. As noted above, in the
The agreements with Messrs. Bruce and Doyle provides that if their employment is terminated for any reason other than cause within six months before or within three years after a change in control, or if the officer terminates his employment for any reason within one year after a change in control, he will: (1) receive a lump sum payment equal to 299% of his "base amount" (not to exceed $1.0 million in the case of Mr. Bruce and $1.25 million in the case of Mr. Doyle); (2) either (a) continue to receive substantially the same health, dental and life insurance benefits for two years after the termination date, in the case of Mr. Bruce, and three years after the termination date, in the case of Mr. Doyle, or (b) at his election, (or at the Company's election, if coverage under the Company's group plan is not available to the officer) receive an amount in cash equal to the premium cost being paid by the Company before the termination date; (3) receive title to the Company-owned or leased vehicle being used by him or, if the officer receives a monthly car allowance in lieu of a Company vehicle, an amount in cash equal to 24 times, in the case of Mr. Bruce, and 36 times, in the case of Mr. Doyle, the greater of the monthly allowance on the date of the change in control or on the termination date; and (4) become vested in all of his outstanding unvested stock options and restricted stock awards.
Each of the other agreements provide that if the officer's employment is "involuntarily terminated" in connection with or within two years after a change in control, he or she will: (1) receive a lump sum payment equal to the sum of (a) a multiple of his or her base salary on the date of the change in control or the date of termination, whichever is greater (1.5 times, in the case of Mr. Lodwick and Ms. Kunac and two of the other officers and 1 times, in the case of each of the three remaining other officers) and (b) a prorated bonus amount for the year in which the termination occurs based on the officer's prior year annual bonus, (2) either (a) continue to receive substantially the same health, dental and life insurance benefits for a specified period after the termination date (18 months, in the case of Mr. Lodwick and Ms. Kunac and two of the other officers and one year, in the case of each of the three remaining other officers), or (b) at his or her election (or at the Company's election, if coverage under the Company's group plan is not available to the officer), receive an amount in cash equal to the premium cost being paid by the Company before the termination date; (3) receive title to the Company-owned or leased vehicle being used by him or her or, if the officer receives a monthly car allowance in lieu of a Company vehicle, an amount in cash equal to 18 times, in the case of Mr. Lodwick and Ms. Kunac and two of the other officers, and 12 times, in the case of each of the three remaining other officers, the greater of the monthly allowance on the date of the change in control or on the termination date; and (4) become vested in all of his or her outstanding unvested stock options and restricted stock awards.
Each agreement provides that to the extent the value and amounts of benefits under the agreement, together with any other amounts and the value of other benefits received by the officer in connection with a change in control would cause any amount to be non-deductible by the Company pursuant to Section 280G of the Code, then the amounts and benefits under the agreement will be reduced to the extent necessary to avoid the non-deductibility of any such amounts and benefits under Section 280G.
Deferred Compensation Plans and SERP
The Deferred Compensation Plans and the SERP were amended primarily to conform these plans to Section 409A of the Code. The modifications to the Deferred Compensation Plans primarily relate to the timing of deferral elections, the distribution of account balances and plan termination provisions. Similar type modifications have been made to the SERP. The Deferred Compensation Plans were also amended to expand the employees eligible to participate to include any employee at or above the level of Deputy Managing Director and any employee who in the previous year earned commissions of at least $200,000 from the Company and its subsidiaries.
ESIP
The ESIP was amended to specifically state the maximum number of shares with respect to which stock options or stock appreciation rights may be granted under the plan during any calendar year. This amendment was made to ensure the deductibility under Section 162(m) of the Code of compensation attributable to stock options or stock appreciation rights granted under the ESIP to executive officers.
Item 9.01 Financial Statements and Exhibits
(d) | Exhibits |
|
10.1 | Amended and Restated Employment Agreement between ITLA Capital Corporation and George W. Haligowski | |
10.2 | Non-Competition and Non-Solicitation Agreement between ITLA Capital Corporation and George W. Haligowski | |
10.3 | ITLA Capital Corporation Amended and Restated Salary Continuation Plan | |
10.4 | Change in Control Severance Agreement between ITLA Capital Corporation and Norval L. Bruce | |
10.5 | Change in Control Severance Agreement between ITLA Capital Corporation and Timothy M. Doyle | |
10.6 | Change in Control Severance Agreement between ITLA Capital Corporation and Lyle C. Lodwick | |
10.7 | Change in Control Severance Agreement between ITLA Capital Corporation and Maria P. Kunac | |
10.8 | ITLA Capital Corporation 409A Consolidated Non-Qualified (Employer Securities) 2005 Deferred Compensation Plan | |
10.9 | ITLA Capital Corporation 409A Consolidated Non-Qualified (Non-Employer Securities) 2005 Deferred Compensation Plan |
10.10 | ITLA Capital Corporation Amended and Restated Supplemental Executive Retirement Plan | |
10.11 | Amended and Restated ITLA Capital Corporation 2005 Re-Designated, Amended and Restated Employee Stock Incentive Plan |
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.
ITLA CAPITAL CORPORATION |
||
Date: February 24, 2006 |
By: | /s/ Timothy M. Doyle Timothy M. Doyle Executive Managing Director and Chief Financial Officer |
EXHIBIT INDEX
Exhibit No. |
Description |
10.1 |
Amended and Restated Employment Agreement between ITLA Capital Corporation and George W. Haligowski |
10.2 |
Non-Competition and Non-Solicitation Agreement between ITLA Capital Corporation and George W. Haligowski |
10.3 |
ITLA Capital Corporation Amended and Restated Salary Continuation Plan |
10.4 |
Change in Control Severance Agreement between ITLA Capital Corporation and Norval L. Bruce |
10.5 |
Change in Control Severance Agreement between ITLA Capital Corporation and Timothy M. Doyle |
10.6 |
Change in Control Severance Agreement between ITLA Capital Corporation and Lyle C. Lodwick |
10.7 |
Change in Control Severance Agreement between ITLA Capital Corporation and Maria P. Kunac |
10.8 |
ITLA Capital Corporation 409A Consolidated Non-Qualified (Employer Securities) 2005 Deferred Compensation Plan |
10.9 |
ITLA Capital Corporation 409A Consolidated Non-Qualified (Non-Employer Securities) 2005 Deferred Compensation Plan |
10.10 |
ITLA Capital Corporation Amended and Restated Supplemental Executive Retirement Plan |
10.11 |
Amended and Restated ITLA Capital Corporation 2005 Re-Designated, Amended and Restated Employee Stock Incentive Plan |
EXHIBIT 10.1
ITLA CAPITAL CORPORATION and IMPERIAL CAPITAL BANK |
EXECUTIVE | |||
By: | /s/Jeffrey Lipscomb Jeffrey Lipscomb |
By: | /s/George W. Haligowski George W. Haligowski | |
Its: | Member of the Board of Directors Chairman of the Compensation Committee |
Executive | ||
ITLA CAPITAL CORPORATION and IMPERIAL CAPITAL BANK | ||||
By: | /s/Hirotaka Oribe Hirotaka Oribe | |||
Its: | Member of the Board of Directors and the Compensation Committee |
|||
ITLA CAPITAL CORPORATION and IMPERIAL CAPITAL BANK | ||||
By: | /s/Timothy Doyle Timothy Doyle | |||
Its: | Managing Director and Chief Financial officer |
EXHIBIT 10.2
ITLA CAPITAL CORPORATION |
EXECUTIVE | |||
By: | /s/Jeffrey Lipscomb Jeffrey Lipscomb |
By: | /s/George W. Haligowski George W. Haligowski | |
Its: | Member of the Board of Directors Chairman of the Compensation Committee |
Executive | ||
ITLA CAPITAL CORPORATION | ||||
By: | /s/Hirotaka Oribe Hirotaka Oribe | |||
Its: | Member of the Board of Directors and the Compensation Committee |
|||
ITLA CAPITAL CORPORATION | ||||
By: | /s/Timothy Doyle Timothy Doyle | |||
Its: | Managing Director and Chief Financial officer |
EXHIBIT 10.3
ITLA CAPITAL CORPORATION
SALARY CONTINUATION PLAN
(Effective March 31, 2000)
As Amended and Restated and In Effect February 1, 2006
Preamble
ITLA Capital Corporation, a Delaware business corporation and its subsidiaries, have adopted the ITLA Capital Corporation Salary Continuation Plan as of the Effective Date (the "Old Plan"), for a select group of executives and senior management personnel to ensure that the overall effectiveness of the Company's executive compensation program will attract, retain and motivate qualified executives and senior management personnel. The Old Plan is hereby and restated in full for the purposes of (a) complying with the applicable requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code") and related guidance of general applicability issued thereunder, effective January 1, 2005, and shall be administered and interpreted accordingly, and (b) to provide changes unrelated to compliance with Section 409A of the Code, effective February 1, 2006.
ARTICLE I
DEFINITIONS
When used herein, the following words shall have the meanings below unless the context clearly indicates otherwise:
1.1 "Change in Control" means the occurrence of any of the following events with respect to the Company: (a) a "change in the ownership of the Company", (b) a "change in the effective control of the Company, or (c) a "change in the ownership of a substantial portion of the Company's assets", as such phrases are defined in Section 409A.
1.2 "Claims Reviewer" means the Compensation Committee of the Board of Directors of the Company, unless another person or organizational unit is designated by the Company as Claims Reviewer.
1.3 "Company" means ITLA Capital Corporation and its subsidiaries and any successor(s) thereto. Where applicable, including for purposes of determining whether a Participant is employed by the Company at any particular time, the term "Company" shall also include any entity that would be treated as a single employer with the Company under Section 414 of the Internal Revenue Code.
1.4 "Designated Beneficiary" means the individual the Participant designates as his or her beneficiary in such Participant's ITLA Capital Corporation Salary Continuation Plan designation of beneficiary form.
1.5 "Disability" means the Participant is unable to engage in any substantial activity by reason of any physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. The determination of whether a Participant has a Disability shall be determined by the Claims Reviewer in its sole discretion.
1.6 "Effective Date" means March 31, 2000.
1.7 "Normal Retirement Date" means retirement from service with the Company, which becomes effective on or after the first day of the calendar month following the month in which the Participant reaches his or her 65th birthday.
1.8 "Participant" means any employee of the Company who meets the eligibility requirements of Article II and is designated and approved for participation in the Plan as set forth in Article II.
1.9 "Participation Date" means the date any employee of the Company becomes a Participant in the Plan.
1.10 "Plan" means the ITLA Capital Corporation Salary Continuation Plan, as set forth herein and as amended from time-to-time.
1.11 "Plan Year" means the calendar year.
1.12 "Section 409A" means Section 409A of the Code and related guidance of general applicability issued thereunder.
1.13 "Termination for Cause" means, with respect to Mr. Haligowski, a termination prior to the Normal Retirement Date for cause as defined in Mr. Haligowski's Employment Agreement dated January 28, 2000, or as later amended, or, with respect to any other Participant prior to the Normal Retirement Date, as defined in the Participant's Change in Control Severance Agreement.
1.14 "Termination without Cause" means the termination of employment of the Participant with the Company for any reason other than a Termination for Cause or attainment of the Normal Retirement Date. The phrase "Termination without Cause" shall be applied and interpreted in the same manner as "separation from service" under Section 409A.
ARTICLE II
ELIGIBILITY TO PARTICIPATE
2.1 Eligibility to Participate. For purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Plan is limited to a select group of management and highly compensated employees.
2.2 Designated Participants. An executive or senior management employee of the
Company is eligible to become a Participant in the Plan; provided such employee is designated as
a Participant on Exhibit A attached hereto or, such employee is later designated as a Participant
by the Compensation Committee of the Board of Directors of the Company and, such designation
is attached as a written amendment to the Plan signed by a duly authorized officer of the
Company. Under no circumstance shall an employee below the level of Managing Director
ARTICLE III
ELIGIBILITY FOR AND PAYMENT
OF BENEFITS
3.1 Eligibility for Retirement Benefits. Each Participant shall be eligible to receive the benefits under the Plan upon the earlier of the attainment of the Normal Retirement Date or Termination without Cause. No benefits shall be payable from the Plan to a Participant while such Participant is employed with the Company.
3.2 Calculation of Benefit. A Participant's benefit under the Plan will be calculated as of the earlier of Participant's attainment of the Normal Retirement Date or his Termination without Cause.
3.3 Incidents of Ownership. Notwithstanding the above, a Participant shall have no incidents of ownership with respect to the benefits under the Plan.
3.4 Benefits. If the Participant experiences a Termination without Cause or as a result of attaining the Normal Retirement Date, the Participant shall be entitled to receive a monthly salary continuation benefit from the Company, beginning on the first day of the month following the expiration of six months after his attainment of the Normal Retirement Date or Termination without Cause, and continuing on the first day of each month thereafter for a period of 15 years in an amount set forth in Exhibit A attached hereto or in the written amendment to the Plan designating the individual as a Participant in the Plan. Provided, however, if the Participant's Termination without Cause is on account of death or Disability, then payment of the salary continuation benefit shall commence on the first day of the calendar month after the Participant's Termination without Cause and continue for a period of 15 years.
3.5 Intentionally Omitted.
3.6 Intentionally Omitted.
3.7 Participant's Death. If a Participant dies while employed by the Company or prior to commencement of benefits following a Termination without Cause or attainment of the Normal Retirement Date, the Participant's Designated Beneficiary shall receive the benefits the Participant would otherwise receive under the Plan. If a Participant dies after the commencement of benefits hereunder, all of the remaining benefits to which the Participant was entitled at the time of his or her death shall be paid to the Participant's Designated Beneficiary. If a Participant survives his Designated Beneficiary or the Participant fails to name a Designated Beneficiary prior to receipt of the entire distribution to which the Participant is entitled hereunder, then all of the distribution to which the Participant is entitled under the Plan and which has not been distributed to such Participant at the date of death shall be payable to the Participant's estate.
3.8 Termination for Cause. Notwithstanding any other provision of this Plan, in no event shall any benefits be payable under this Plan to a Participant whose employment with the Company is Terminated for Cause.
3.9 Intentionally Omitted.
3.10 No Duplication of Benefits. The Plan is intended to pay salary continuation benefits to eligible Participants in connection with the first to occur of the events described in Section 3.1 of the Plan: attainment of Normal Retirement Date or Termination without Cause. In no event shall benefits be payable to any Participant under this Plan for more than one event listed in Section 3.1 of the Plan. No benefits shall be payable to a Participant while the Participant continues to be employed by a subsidiary or successor of the Company (as such continued employment would preclude the occurrence of a Termination without Cause).
3.11 Limitation on Distribution to Covered Employees. Notwithstanding any other provision of the Plan, in the event that the Participant is a "covered employee" as defined in Section 162(m)(3) of the Internal Revenue Code, or would be a covered employee if the benefits were distributed in accordance with the other provisions of Article III, the maximum amount which may be distributed in any Plan Year shall not exceed one million dollars ($1,000,000) less the amount of compensation paid by the Company to the Participant in such Plan Year which is not "performance-based" (as defined in Internal Revenue Code Section 162(m)(4)(C)). The amount of compensation which is not "performance-based" shall be reasonably determined by the Company at the time of the proposed distribution. Any amount which is not distributed to the Participant in a Plan Year as a result of the limitation set forth in this Section 3.11 shall be distributed to the Participant in the next Plan Year, subject to compliance with the foregoing limitation set forth in this Section 3.11 as soon as possible after the Company reasonably anticipates that the deduction of the payment will not be limited by Code Section 162(m), or the calendar year in which the Participant attains the Normal Retirement Date or experiences a Termination without Cause. The provisions of this Section 3.11 shall not apply if the Compensation Committee of the Board of Directors, upon consultation with legal counsel, determines that the restrictions of Code Section 162(m) do not apply to limit the deductibility of payments made under the Plan (or otherwise by the Company) to the Participant.
3.12 Intentionally Omitted due to Section 409A.
3.13 Parachute Payments. In the event that any payments or benefits provided or to be
provided to a Participant pursuant to this Plan in combination with payments or benefits, if any,
from other plans or arrangements maintained by the Company constitute "excess parachute
payments" under Section 280G of the Internal Revenue Code of 1986, as amended, the Company
shall either reduce the payments to the Participant under the Plan or provide an additional Gross
Up Payment to the Participant in a lump sum amount in accordance with the provisions of the
Participant's Change in Control Severance Agreement or Employment Agreement. If the
Participant does not have a Change in Control Severance Agreement or Employment Agreement
that addresses the treatment of excess parachute payments, then the Compensation Committee of
the Board of Directors of the Company shall, in its sole and absolute discretion and
notwithstanding any other provision of this Plan, either reduce the benefits payable to the
Participant under this Plan so that none of the payments are excess parachute payments or
ARTICLE IV
AMENDMENT AND TERMINATION
4.1 Amendment or Termination. The Company intends the Plan to remain in existence until all Participants in the Plan have received all of their benefits payable under the Plan. The Company, however, reserves the right to amend or terminate the Plan. No such amendment may reduce or eliminate benefits payable under the Plan to any Participant or remove the obligation of the Company to contribute amounts to a grantor trust as set forth in Section 5.1 below. Except as provided in this Section 4.1 or in Section 409A, in the event that the Company elects to terminate the Plan prior to the commencement of any benefits hereunder, each Participant shall be entitled to begin receiving the salary continuation benefit set forth in Section 3.4 of the Plan, with the amount of the benefit calculated as of the date of termination of the Plan. Any amendment or termination of the Plan shall be made pursuant to a resolution of the Compensation Committee of the Board of Directors of the Company.
The ability of the Company to amend or terminate the Plan and distribute benefits in accordance with such amendment or termination shall be subject to and limited by Section 409A. Accordingly, unless Section 409A provides otherwise, the Plan may be terminated only if: (a) all arrangements sponsored by the Company that are required to be aggregated with this Plan under Section 409A are terminated; (b) no payments other than payments that would be payable under the terms of the Plan or an aggregated plan if the termination had not occurred are made within 12 months of the termination of the arrangements; (c) all payments are made within 24 months of the termination of the Plan and related arrangements; and (d) the Company does not adopt a new arrangement that would be required to be aggregated with this Plan under Section 409A if the same Participant participated in both arrangements, within five years of the termination of the Plan.
The Company also may terminate the Plan within the thirty (30) days preceding a Change in Control, provided that all substantially similar arrangements also are terminated, so that the Participants in this Plan, and participants in all substantially similar arrangements, receive all amounts deferred under this Plan and the arrangements within twelve (12) months of the date of the termination of this Plan and the other arrangements.
Benefits payable to a Participant on account of the termination of the Plan shall be paid in a single lump sum, notwithstanding any provision of the Plan to the contrary, and the lump sum benefit shall be equal to the present value of the benefit the Participant would have received under the Plan had he or she experienced a Termination without Cause on the date of the Plan termination, determined using an interest rate of 120 percent of the applicable Federal long-term rate determined as of the first day of the month in which the Plan termination distribution occurs.
The Plan may not be amended or terminated after a Change in Control without the written consent of the Participants, except to the extent necessary to comply with applicable law.
ARTICLE V
ADMINISTRATION
5.1 Funding of Benefits. The Company shall establish a grantor trust to hold assets to pay benefits due Participants under the Plan. At least annually, the Company shall contribute to the trust an amount determined by the actuaries for the Company (using reasonable actuarial assumptions) as necessary to fund the benefits payable under the Plan. In addition, within 15 days after a Change in Control, the Company shall contribute an amount to the trust as determined by the actuaries for the Company to be necessary to fully fund the benefits payable under Article III of the Plan. At no time shall the Participant be deemed to have a lien nor right, title nor interest in or to any specific funding investment or to any assets of the Company. If the Company elects to invest in a life insurance or annuity policy for the life of the Participant, then the Participant shall assist the Company by freely submitting to a physical examination and supply such additional information necessary to obtain such insurance or annuities. The funding of benefits under the Plan shall comply in all respects with the requirements of Section 409A.
5.2 Unsecured Claims. The right of a Participant or his or her Designated Beneficiary to receive a benefit hereunder shall be an unsecured claim against the general assets of the Company, and neither a Participant nor his or her Designated Beneficiary shall have any rights in or against any amount credited under this Plan or under any trust established under the Plan or any other assets of the Company. Notwithstanding any other provisions to the contrary, the Plan at all times shall be considered entirely unfunded both for tax purposes and for purposes of Title I of ERISA as amended. Any funds invested hereunder shall continue for all purposes to be part of the general assets of the Company and available to its general creditors in the event of bankruptcy or insolvency. Any benefits which may be payable pursuant to this Plan are not subject in any manner to anticipation, sale, alienation, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of a Participant or his or her Designated Beneficiary. The Plan constitutes a mere unsecured promise by the Company to make benefit payments in the future. No interest or right to receive a benefit may be taken, either voluntarily of involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.
5.3 Plan Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company, which shall have the authority, duty and power in its sole and absolute discretion to interpret and construe the provisions of the Plan as the Compensation Committee of the Board of Directors deems appropriate including the authority to determine eligibility for benefits under the Plan. The Compensation Committee of the Board of Directors shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The interpretations, determinations, regulations and calculations of the Compensation Committee of the Board of Directors shall be final and binding on all persons and parties concerned. The Compensation Committee may delegate any of its duties, to an employee or employees of the Company or other persons as it deems appropriate. The Plan shall also be administered and interpreted in a manner consistent with Section 409A.
5.4 Expenses. Expenses of administration of the Plan shall be paid by the Company. The Compensation Committee of the Board of Directors of the Company shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.
5.5 Statements. The Compensation Committee of the Board of Directors of the Company or its agents shall furnish individual periodic statements of benefits being paid to each Participant (or if the Participant's Designated Beneficiary is currently receiving benefits under the Plan, to such Participant's Designated Beneficiary) in such form as determined by the Compensation Committee of the Board of Directors or as may be required by the law.
5.6 No Enlargement of Rights. The sole rights of a Participant or his or her Designated Beneficiary under this Plan shall be to have this Plan administered according to its provisions, to receive whatever benefits he or she may be entitled to hereunder, and nothing in the Plan shall be interpreted as a guaranty that any benefits which may be established in connection with the Plan or assets of the Company will be sufficient to pay any benefit hereunder. Further, the adoption and maintenance of this Plan shall not be construed as creating any contract of employment between the Company and the Participant. The Plan shall not affect the right of the Company to deal with any Participants in employment respects, including their hiring, discharge, compensation and conditions of employment.
5.7 Rules and Procedures. The Company may from time to time establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to an individual in the event that individual is declared incompetent and a conservator or other person legally charged with that individual's care is appointed. Except as otherwise provided herein, when the Company determines that such individual is unable to manage his or her financial affairs, the Company may pay such individual's benefits to such conservator, person legally charged with such individual's care, or institution then contributing toward or providing for the care and maintenance of such individual. Any such payment shall constitute a complete discharge of any liability of the Company and the Plan for such individual.
5.8 Information. Each Participant shall keep the Company informed of his or her current address and the current address of his or her Designated Beneficiary. The Company shall not be obligated to search for any person. If such person(s) is (are) not located within three (3) years after the date on which payment of the Participant's benefits payable under this Plan may first be made, payment may be made as though the Participant or his or her Designated Beneficiary had died at the end of such three-year period.
5.9 Loss. Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to any Participant, his or her Designated Beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.
5.10 Indemnification. The Company shall indemnify and hold harmless the members of
the Board of Directors, and any other employees to whom any responsibility with respect to
5.11 Applicable Law. All questions pertaining to the construction, validity and effect of the Plan shall be determined in accordance with the laws of the United States and the extent not preempted by such laws, by the laws of the State of California.
5.12 Withholdings. All benefit payments under this Plan shall be reduced by taxes and other required or authorized withholdings. The Company may also, in its discretion, reduce any benefit payment payable hereunder to a Participant by any amounts that the Participant owes the Company at the time of the payment from the Plan.
ARTICLE VI
CLAIMS PROCEDURE
6.1 Claims Procedure. An initial claim for benefits under the Plan must be made by the
Participant or his or her Designated Beneficiary in accordance with the terms of
the Plan through which the benefits are provided. Not later than 90 days after
receipt of such a claim, the Claims Reviewer will render a written decision on the
claim to the claimant, unless special circumstances require the extension of such
90-day period. If such extension is necessary, the Claims Reviewer shall provide
the Participant or his or her Designated Beneficiary with written notification of
such extension before the expiration of the initial 90-day period. Such notice shall
specify the reason or reasons for such extension and the date by which the final
decision can be expected. In no event shall such extension exceed a period of 90
days from the end of the initial 90-day period. In the event the Claims Reviewer
denies the claim of a Participant or his or her Designated Beneficiary in whole or in
part, the Claims Reviewer's written notification shall specify, in a manner
calculated to be understood by the claimant, the reason for the denial; a reference
to the Plan or other document or form that is the basis for the denial; a description
of any additional material or information necessary for the claimant to perfect the
claim; an explanation as to why such information or material is necessary; and an
explanation of the applicable claims procedure. Should the claim be denied in
whole or in part and should the claimant be dissatisfied with the Claim's Reviewer's
disposition of the claimant's claim, the claimant may have a full and fair review of
the claim by the Company upon written request therefore submitted by the
claimant or the claimant's duly authorized representative and received by the
Company within 60 days after the claimant receives written notification that the
claimant's claim has been denied. In connection with such review, the claimant or
the claimant's duly
ITLA Capital Corporation has caused this Plan to be executed as of this 1st day of February, 2006.
By: | /s/Jeffrey Lipscomb Jeffrey Lipscomb, Member of the Board of Directors Chairman of the Compensation Committee On Behalf of ITLA Capital Corporation and Its Subsidiaries |
ITLA CAPITAL CORPORATION
SALARY CONTINUATION PLAN
EXHIBIT A
Designated Participant |
Date of Designation |
Salary Continuation Benefit |
George Haligowski |
March 31, 2000 | 75 percent of Mr. Haligowski's average annual base salary for the three full calendar years preceding the calendar year in which he becomes eligible for benefits under Article III of the Plan. The monthly salary continuation benefit shall be 1/12th of the annual amount determined under the preceding sentence. |
EXHIBIT 10.4
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and entered into as of this 1st day of February, 2006, by and between ITLA Capital Corporation (the "Company"), and Norval L. Bruce (the "Employee").
WHEREAS, the Employee is currently serving as Vice Chairman of the Board of Directors and Chief Credit Officer of the Company; and
WHEREAS, the Board of Directors of the Company (the "Board of Directors") recognizes that, as is the case with publicly held corporations generally, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company and its stockholders;
WHEREAS, the Employee is a party to that certain Change in Control Severance Agreement dated May 12, 1998 with the Company under which the Employee is entitled to certain severance benefits under certain conditions (the "Prior Severance Agreement"), which he or she is willing to terminate in consideration of this Agreement's becoming effective;
WHEREAS, the Board of Directors believes it is in the best interests of the Company to enter into this Agreement with the Employee in order to assure continuity of management of the Company and to reinforce and encourage the continued attention and dedication of the Employee to the Employee's assigned duties without distraction in the face of potentially disruptive circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and
WHEREAS, the Board of Directors has approved and authorized the execution of this Agreement with the Employee;
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The term "Change in Control" means the occurrence of any of the following events
with respect to the Company: (1) any person (as the term is used in section 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Company
representing 33.33% or more of the Company's outstanding securities; (2) individuals who are
members of the Board of Directors of the Company on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of at least two
thirds of the directors comprising the Incumbent Board, or
(b) The term "Disability" means the Employee's absence from his or her duties with the Company on a full time basis for six consecutive months as a result of his or her incapacity due to mental or physical illness, unless within 30 days after the Company gives the Employee written notice of termination of employment for such reason the Employee shall have returned to full time performance of his or her duties.
(c) The term "Date of Termination" means the date specified in the Notice of Termination, given pursuant to Section 4 of this Agreement, provided that if within 15 days after any Notice of Termination for Cause is given or, if later, prior to the Date of Termination specified in such Notice, the Employee notifies the Company that a dispute exists concerning the Notice of Termination, then the Date of Termination shall be the date on which the dispute is finally determined, whether by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); and provided further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and sets forth in reasonable detail the facts and circumstances that are the basis for the dispute, and the Employee pursues the resolution of such dispute with reasonable diligence. For purposes of this Section 1(c), a "dispute" extending the Date of Termination shall be limited to a dispute as to whether the termination was a "Termination for Cause" by the Company. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Employee the Employee's full base salary at the rate in effect when the Notice of Termination was given and continue the Employee as a participant in all benefit plans in which the Employee was participating when the Notice of Termination was given) unless continued employment is a requirement for participation in any such benefit plan), until the dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Termination without Cause" means the termination of the employment of the Employee without the Employee's express written consent for any reason other than a Termination for Cause within six months prior to or within thirty-six months after a Change in Control or a termination by the Employee for any reason within twelve months after a Change in Control.
(e) The term "Notice of Termination" means a notice of termination of the Employee's employment pursuant to Section 4 of this Agreement.
(f) The terms "Termination for Cause" and "Terminated for Cause" mean termination by the Company of the employment of the Employee because of (i) willful and continued failure by the Employee substantially to perform his or her duties (other than a failure resulting from physical or mental illness) after a demand for substantial performance is delivered to the Employee by the Chairman of the Board of Directors or the Chief Executive Officer of the Company which specifically identifies the manner in which the Employee has not substantially performed his or her duties, (ii) the Employee's willful dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, regulation, or final cease-and-desist order, relating to the Employee's employment with the Company or otherwise interfering with the Employee's ability to carry out the duties of the employment, or material breach of any provision of this Agreement or any employment agreement between the Company and the Employee; provided that no act or failure to act shall be considered "willful" unless done or omitted to be done by the Employee in bad faith and without reasonable belief that the act or omission was in or not opposed to the beat interests of the Company. Any act or failure to act based upon authority pursuant to a resolution duly adopted by the Board of Directors or upon the advice of counsel for the Company shall be conclusively presumed to be done or omitted to be done in good faith and in the beat interacts of the Company. The Employee's attention to matters not directly related to the business of the Company shall not provide a basis for Termination for Cause if the Board of Directors or the Chief Executive Officer of the Company has approved the Employee's engaging in such activities. The Employee shall not be deemed to have been Terminated for Cause unless and until the Company has delivered to the Employee a notice containing a resolution adopted by not less than three-quarters of the entire membership of the Board of Directors at a meeting called and held for the purpose, after reasonable notice to the Employee and opportunity for him to appear with counsel before the Board of Directors, finding that in the good faith opinion of the Board of Directors the Employee has engaged in conduct described in this Section 1(f) and specifying the particulars in detail.
2. Term. The term of this Agreement shall be three years from the date first written above, provided that on each anniversary of such date, the term shall be extended for an additional year unless at least 90 days prior such anniversary, either the Company or the Employee gives notice to the other that the term of this Agreement shall not be extended further, and provided further that notwithstanding the delivery of any such notice, the term of this Agreement shall be extended until the expiration of 36 months following the date upon which a Change in Control shall have occurred during the term of the Agreement including extensions of the term pursuant to the first proviso of this sentence.
3. Severance Benefits.
(a) In the event of a Termination without Cause, the Company shall, (1) pay to the Employee in a lump sum in cash within 25 business days after the Date of Termination an amount equal to the sum of (i) 299% of the Employee's "base amount" as defined under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), but such amount shall not exceed $1,000,000; (2) provide to the Employee for 24 months following the Date of Termination, such health, dental and life insurance benefits as the Company maintained for the Employee at the Date of Termination on terms as favorable to the Employee as applied at the Date of Termination, or at the election of the Employee (or, notwithstanding the election of the Employee at the election of the Company if coverage under the Company's group plan is not available to the Employee) cash in an amount equal to the premium cost being paid by the company with respect to the Employee for such benefits immediately prior to the Date of Termination); (3) transfer to Employee title to the Company owned vehicle currently used by the Employee, if any, with the Company paying all coats, licensing fees and taxes (excluding income taxes) associated with the transfer of title, or in the event the Employee receives a monthly cash car allowance in lieu of use of a Company vehicle, the Company shall pay to the Employee pursuant to this paragraph an additional sum equal to 24 times the greater of the monthly car allowance in effect on the date of the Change of Control or the Date of Termination; (4) and vesting of all of Employee's outstanding stock options and/or restricted stock awards with the Company or its affiliates. The provision of any medical benefits under this Section 3(a) shall not extend to the period for the continuation of group health benefits under the COBRA health care continuation provisions of Section 601 of the Employee Retirement Income Security Act of 1974 ("ERISA") or other applicable state laws. Nothing herein shall diminish the right of the Employee to receive any earned and accrued bonus, on a pro rata basis, for the year in which Termination without Cause occurs or to be compensated for accrued but unused vacation and sick time.
(b) Notwithstanding any other provision of this Agreement, if the value and amounts of benefits under this Agreement, together with any other amounts and the value of benefits received or to be received by the Employee in connection with a Change in Control would cause any amount to be nondeductible by the Company or any of its subsidiaries for federal income tax purposes pursuant to Section 280G of the Code, then amounts and benefits under this Agreement shall be reduced (not less than zero) to the extent necessary so as to maximize amounts and the value of benefits to the Employee without causing any amount to become nondeductible by the Company or its subsidiaries pursuant to or by reason of Section 280G of the Code. The Employee shall determine the allocation of such reduction among payments and benefits to the Employee.
(c) Any payments made to the Employee pursuant to this Agreement are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and any regulations promulgated thereunder.
4. Notice of Termination. In the event that the Company desires to terminate the employment of the Employee without his consent during the term of this Agreement in connection with or after a Change in Control has occurred, the Company shall deliver to the Employee a written notice of termination, stating (i) whether such termination constitutes Termination for Cause, and, if so, setting forth in reasonable detail the facts and circumstances that are the basis for the Termination for Cause, and (ii) specifying the Date of Termination. In the event that the Employee determines in good faith that he or she has suffered Involuntary Termination of his employment, the Employee shall send a written notice to the Company stating the circumstances that constitute Involuntary Termination and the Date of Termination. No provision of this Agreement shall be construed as providing to the Employee any right to be retained as an employee of the Company.
5. No Mitigation. The Employee shall not be required to mitigate the amount of any salary or other payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by the Employee as the result of employment by another employer, by retirement benefits after the date of termination or otherwise, except as expressly set forth herein.
6. Attorneys and/or Fees. If the Employee is purportedly Terminated for Cause or experiences a Termination without Cause and the Company denies payments and/or benefits under Section 3 of this Agreement on the basis that the Employee experienced Termination for Cause rather than a Termination without Cause, but it is determined by a court of competent jurisdiction or by an arbitrator pursuant to Section 14 that cause as contemplated by Section 1(f) of this Agreement did not exist for termination of the Employee's employment, or if in any event it is determined by any such court or arbitrator that the Company has failed to make timely payment of any amounts or provision of any benefits owed to the Employee under this Agreement, the Employee shall be entitled to reimbursement for all reasonable costs, including attorneys' fees, incurred in challenging such termination of employment or collecting such amounts or benefits. Such reimbursement shall be in addition to all rights which the Employee is otherwise entitled under this Agreement.
7. No Assignments.
(a) This Agreement is personal to each of the parties hereto, and neither party
may assign or delegate any of its rights or obligations hereunder without first obtaining the written
consent of the other party; provided, however, that the Company shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by an assumption agreement in
form and substance satisfactory to the Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession or assignment
shall be a breach of this Agreement and shall entitle the Employee to compensation from the
Company in the same amount and on the same terms as the compensation
pursuant to Section 3 hereof. For purposes of implementing the provisions of this Section 7, the date on which any such succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Employee hereunder shall inure to the benefit of and be enforceable by the Employee's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Employee should die while any amounts would still be payable to the Employee hereunder if the Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Employee's devisee, legatee or other designee or if there is no such designee, to the Employee's estate.
8. Termination of Prior Severance Agreement. Upon execution of this agreement by the Employee, the Prior Severance Agreement shall terminate and have no further force and effect. Regardless of whether any benefits are paid to the Employee under this Agreement, no benefits shall be paid to the Employee under the Prior Severance Agreement.
9. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, to the Company at its home office, to the attention of the Board of Directors with a copy to the Secretary of the Company, or, it to the Employee, to such home or other address as the Employee has most recently provided in writing to the Company.
10. Amendments. No amendments or additions to this Agreement hall be binding unless in writing and signed by both parties, except as herein otherwise provided.
11. Headings. The headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.
12. Severablility. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceablity of the other provisions hereof.
13. Governing Law. This Agreement shall be governed by the laws of the United States to the extent applicable and otherwise by the laws of the State of California.
14. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by non-binding arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction, and shall include an award of attorneys fees and costs to the prevailing party.
The parties have executed this Agreement as of the day and year first above written.
THIS AGREEMENT CONTAINS A NON-BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
ITLA CAPITAL CORPORATION /s/George W. Haligowski | ||
By: | George W. Haligowski | |
Its: | Chairman, President and Chief Executive Officer | |
EMPLOYEE /s/Norval L. Bruce Norval L. Bruce |
EXHIBIT 10.5
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and entered into as of this 1st day of February, 2006, by and between ITLA Capital Corporation (the "Company"), and Timothy M. Doyle (the "Employee").
WHEREAS, the Employee is currently serving as Executive Managing Director, Chief Financial Officer of the Company; and
WHEREAS, the Board of Directors of the Company (the "Board of Directors") recognizes that, as is the case with publicly held corporations generally, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company and its stockholders;
WHEREAS, the Employee is a party to that certain Change in Control Severance Agreement dated May 12, 1998 with the Company under which the Employee is entitled to certain severance benefits under certain conditions (the "Prior Severance Agreement"), which he or she is willing to terminate in consideration of this Agreement's becoming effective;
WHEREAS, the Board of Directors believes it is in the best interests of the Company to enter into this Agreement with the Employee in order to assure continuity of management of the Company and to reinforce and encourage the continued attention and dedication of the Employee to the Employee's assigned duties without distraction in the face of potentially disruptive circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and
WHEREAS, the Board of Directors has approved and authorized the execution of this Agreement with the Employee;
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The term "Change in Control" means the occurrence of any of the following events
with respect to the Company: (1) any person (as the term is used in section 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Company
representing 33.33% or more of the Company's outstanding securities; (2) individuals who are
members of the Board of Directors of the Company on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of at least two
thirds of the directors comprising the Incumbent Board, or
(b) The term "Disability" means the Employee's absence from his or her duties with the Company on a full time basis for six consecutive months as a result of his or her incapacity due to mental or physical illness, unless within 30 days after the Company gives the Employee written notice of termination of employment for such reason the Employee shall have returned to full time performance of his or her duties.
(c) The term "Date of Termination" means the date specified in the Notice of Termination, given pursuant to Section 4 of this Agreement, provided that if within 15 days after any Notice of Termination for Cause is given or, if later, prior to the Date of Termination specified in such Notice, the Employee notifies the Company that a dispute exists concerning the Notice of Termination, then the Date of Termination shall be the date on which the dispute is finally determined, whether by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); and provided further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and sets forth in reasonable detail the facts and circumstances that are the basis for the dispute, and the Employee pursues the resolution of such dispute with reasonable diligence. For purposes of this Section 1(c), a "dispute" extending the Date of Termination shall be limited to a dispute as to whether the termination was a "Termination for Cause" by the Company. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Employee the Employee's full base salary at the rate in effect when the Notice of Termination was given and continue the Employee as a participant in all benefit plans in which the Employee was participating when the Notice of Termination was given) unless continued employment is a requirement for participation in any such benefit plan), until the dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Termination without Cause" means the termination of the employment of the Employee without the Employee's express written consent for any reason other than a Termination for Cause within six months prior to or within thirty-six months after a Change in Control or a termination by the Employee for any reason within twelve months after a Change in Control.
(e) The term "Notice of Termination" means a notice of termination of the Employee's employment pursuant to Section 4 of this Agreement.
(f) The terms "Termination for Cause" and "Terminated for Cause" mean termination by the Company of the employment of the Employee because of (i) willful and continued failure by the Employee substantially to perform his or her duties (other than a failure resulting from physical or mental illness) after a demand for substantial performance is delivered to the Employee by the Chairman of the Board of Directors or the Chief Executive Officer of the Company which specifically identifies the manner in which the Employee has not substantially performed his or her duties, (ii) the Employee's willful dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, regulation, or final cease-and-desist order, relating to the Employee's employment with the Company or otherwise interfering with the Employee's ability to carry out the duties of the employment, or material breach of any provision of this Agreement or any employment agreement between the Company and the Employee; provided that no act or failure to act shall be considered "willful" unless done or omitted to be done by the Employee in bad faith and without reasonable belief that the act or omission was in or not opposed to the beat interests of the Company. Any act or failure to act based upon authority pursuant to a resolution duly adopted by the Board of Directors or upon the advice of counsel for the Company shall be conclusively presumed to be done or omitted to be done in good faith and in the beat interacts of the Company. The Employee's attention to matters not directly related to the business of the Company shall not provide a basis for Termination for Cause if the Board of Directors or the Chief Executive Officer of the Company has approved the Employee's engaging in such activities. The Employee shall not be deemed to have been Terminated for Cause unless and until the Company has delivered to the Employee a notice containing a resolution adopted by not less than three-quarters of the entire membership of the Board of Directors at a meeting called and held for the purpose, after reasonable notice to the Employee and opportunity for him to appear with counsel before the Board of Directors, finding that in the good faith opinion of the Board of Directors the Employee has engaged in conduct described in this Section 1(f) and specifying the particulars in detail.
2. Term. The term of this Agreement shall be three years from the date first written above, provided that on each anniversary of such date, the term shall be extended for an additional year unless at least 90 days prior such anniversary, either the Company or the Employee gives notice to the other that the term of this Agreement shall not be extended further, and provided further that notwithstanding the delivery of any such notice, the term of this Agreement shall be extended until the expiration of 36 months following the date upon which a Change in Control shall have occurred during the term of the Agreement including extensions of the term pursuant to the first proviso of this sentence.
3. Severance Benefits.
(a) In the event of a Termination without Cause, the Company shall, (1) pay to the Employee in a lump sum in cash within 25 business days after the Date of Termination an amount equal to the sum of (i) 299% of the Employee's "base amount" as defined under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), but such amount shall not exceed $1,250,000; (2) provide to the Employee for thirty-six months following the Date of Termination, such health, dental and life insurance benefits as the Company maintained for the Employee at the Date of Termination on terms as favorable to the Employee as applied at the Date of Termination, or at the election of the Employee (or, notwithstanding the election of the Employee at the election of the Company if coverage under the Company's group plan is not available to the Employee) cash in an amount equal to the premium cost being paid by the company with respect to the Employee for such benefits immediately prior to the Date of Termination); (3) transfer to Employee title to the Company owned vehicle currently used by the Employee, if any, with the Company paying all coats, licensing fees and taxes (excluding income taxes) associated with the transfer of title, or in the event the Employee receives a monthly cash car allowance in lieu of use of a Company vehicle, the Company shall pay to the Employee pursuant to this paragraph an additional sum equal to 36 times the greater of the monthly car allowance in effect on the date of the Change of Control or the Date of Termination; (4) and vesting of all of Employee's outstanding stock options and/or restricted stock awards with the Company or its affiliates. The provision of any medical benefits under this Section 3(a) shall not extend to the period for the continuation of group health benefits under the COBRA health care continuation provisions of Section 601 of the Employee Retirement Income Security Act of 1974 ("ERISA") or other applicable state laws. Nothing herein shall diminish the right of the Employee to receive any earned and accrued bonus, on a pro rata basis, for the year in which Termination without Cause occurs or to be compensated for accrued but unused vacation and sick time.
(b) Notwithstanding any other provision of this Agreement, if the value and amounts of benefits under this Agreement, together with any other amounts and the value of benefits received or to be received by the Employee in connection with a Change in Control would cause any amount to be nondeductible by the Company or any of its subsidiaries for federal income tax purposes pursuant to Section 280G of the Code, then amounts and benefits under this Agreement shall be reduced (not less than zero) to the extent necessary so as to maximize amounts and the value of benefits to the Employee without causing any amount to become nondeductible by the Company or its subsidiaries pursuant to or by reason of Section 280G of the Code. The Employee shall determine the allocation of such reduction among payments and benefits to the Employee.
(c) Any payments made to the Employee pursuant to this Agreement are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and any regulations promulgated thereunder.
4. Notice of Termination. In the event that the Company desires to terminate the employment of the Employee without his consent during the term of this Agreement in connection with or after a Change in Control has occurred, the Company shall deliver to the Employee a written notice of termination, stating (i) whether such termination constitutes Termination for Cause, and, if so, setting forth in reasonable detail the facts and circumstances that are the basis for the Termination for Cause, and (ii) specifying the Date of Termination. In the event that the Employee determines in good faith that he or she has suffered Involuntary Termination of his employment, the Employee shall send a written notice to the Company stating the circumstances that constitute Involuntary Termination and the Date of Termination. No provision of this Agreement shall be construed as providing to the Employee any right to be retained as an employee of the Company.
5. No Mitigation. The Employee shall not be required to mitigate the amount of any salary or other payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by the Employee as the result of employment by another employer, by retirement benefits after the date of termination or otherwise, except as expressly set forth herein.
6. Attorneys and/or Fees. If the Employee is purportedly Terminated for Cause or experiences a Termination without Cause and the Company denies payments and/or benefits under Section 3 of this Agreement on the basis that the Employee experienced Termination for Cause rather than a Termination without Cause, but it is determined by a court of competent jurisdiction or by an arbitrator pursuant to Section 14 that cause as contemplated by Section 1(f) of this Agreement did not exist for termination of the Employee's employment, or if in any event it is determined by any such court or arbitrator that the Company has failed to make timely payment of any amounts or provision of any benefits owed to the Employee under this Agreement, the Employee shall be entitled to reimbursement for all reasonable costs, including attorneys' fees, incurred in challenging such termination of employment or collecting such amounts or benefits. Such reimbursement shall be in addition to all rights which the Employee is otherwise entitled under this Agreement.
7. No Assignments.
(a) This Agreement is personal to each of the parties hereto, and neither party
may assign or delegate any of its rights or obligations hereunder without first obtaining the written
consent of the other party; provided, however, that the Company shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by an assumption agreement in
form and substance satisfactory to the Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. Failure of the Company to obtain
such an assumption agreement prior to the effectiveness of any such succession or assignment
shall be a breach of this Agreement and shall entitle the Employee to compensation from the
Company in the same amount and on the same terms as the compensation
pursuant to Section 3 hereof. For purposes of implementing the provisions of this Section 7, the date on which any such succession becomes effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Employee hereunder shall inure to the benefit of and be enforceable by the Employee's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Employee should die while any amounts would still be payable to the Employee hereunder if the Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Employee's devisee, legatee or other designee or if there is no such designee, to the Employee's estate.
8. Termination of Prior Severance Agreement. Upon execution of this agreement by the Employee, the Prior Severance Agreement shall terminate and have no further force and effect. Regardless of whether any benefits are paid to the Employee under this Agreement, no benefits shall be paid to the Employee under the Prior Severance Agreement.
9. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, to the Company at its home office, to the attention of the Board of Directors with a copy to the Secretary of the Company, or, it to the Employee, to such home or other address as the Employee has most recently provided in writing to the Company.
10. Amendments. No amendments or additions to this Agreement hall be binding unless in writing and signed by both parties, except as herein otherwise provided.
11. Headings. The headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.
12. Severablility. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceablity of the other provisions hereof.
13. Governing Law. This Agreement shall be governed by the laws of the United States to the extent applicable and otherwise by the laws of the State of California.
14. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by non-binding arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction, and shall include an award of attorneys fees and costs to the prevailing party.
The parties have executed this Agreement as of the day and year first above written.
THIS AGREEMENT CONTAINS A NON-BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
ITLA CAPITAL CORPORATION /s/George W. Haligowski | ||
By: | George W. Haligowski | |
Its: | Chairman, President and Chief Executive Officer | |
EMPLOYEE /s/Timothy M. Doyle Timothy M. Doyle |
EXHIBIT 10.6
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and entered into as of this 1st day of February, 2006, by and between ITLA Capital Corporation (the "Company"), and Lyle C. Lodwick (the "Employee").
WHEREAS, the Employee is currently serving as Executive Managing Director, Chief Operating Officer of the Company; and
WHEREAS, the Board of Directors of the Company (the "Board of Directors") recognizes that, as is the case with publicly held corporations generally, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company and its stockholders;
WHEREAS, the Board of Directors believes it is in the best interests of the Company to enter into this Agreement with the Employee in order to assure continuity of management of the Company and to reinforce and encourage the continued attention and dedication of the Employee to the Employee's assigned duties without distraction in the face of potentially disruptive circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and
WHEREAS, the Board of Directors has approved and authorized the execution of this Agreement with the Employee;
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The term "Change in Control" means the occurrence of any of the following events with
respect to the Company: (1) any person (as the term is used in section 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Company
representing 33.33% or more of the Company's outstanding securities; (2) individuals who are
members of the Board of Directors of the Company on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of at least two
thirds of the directors comprising the Incumbent Board, or whose nomination for election by the
Company's stockholders was approved by the nominating committee serving under an Incumbent
Board, shall be considered a member of the Incumbent Board; (3) a reorganization, merger,
consolidation, sale of all or substantially all of the assets of the Company or a similar transaction
in which the Company is not the resulting entity (unless the continuing ownership requirements
clause (4) below are met with respect to the resulting entity); or (4) a merger or consolidation of
the Company with any other corporation other than a merger or consolidation in which the voting
securities of the Company outstanding immediately prior
(b) The term "Disability" means the Employee's absence from his or her duties with the Company on a full time basis for six consecutive months as a result of his or her incapacity due to mental or physical illness, unless within 30 days after the Company gives the Employee written notice of termination of employment for such reason the Employee shall have returned to full time performance of his or her duties.
(c) The term "Date of Termination" means the date specified in the Notice of Termination, given pursuant to Section 4 of this Agreement, provided that if within 15 days after any Notice of Termination is given or, if later, prior to the Date of Termination specified in such Notice, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the Notice of Termination, then the Date of Termination shall be the date on which the dispute is finally determined, whether by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); and provided further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and sets forth in reasonable detail the facts and circumstances that are the basis for the dispute, and the party giving such notice pursues the resolution of such dispute with reasonable diligence. For purposes of this Section 1(c), a "dispute" extending the Date of Termination shall be limited to a dispute as to whether the termination was a "Termination for Cause" if the Notice of Termination given by the Company states that the termination was a Termination for Cause or whether the termination was an Involuntary Termination if the Notice of Termination is given by the Employee. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Employee the Employee's full base salary at the rate in effect when the Notice of Termination was given and continue the Employee as a participant in all benefit plans in which the Employee was participating when the Notice of Termination was given ) unless continued employment is a requirement for participation in any such benefit plan), until the dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Involuntary Termination" means the termination of the employment of the
Employee without the Employee's express written consent or a material diminution of or
interference with the Employee's duties, responsibilities and benefits as these same duties,
responsibilities and benefits exist the day prior to the Change the Change of Control, including
(without limitation) any of the following actions unless consented to in writing by the Employee:
(1) a requirement that the Employee be based at a place other than the Employee's work location
immediately prior to the Change of Control or within 35 miles thereof, except for reasonable
travel on Company business; (2) a material demotion of the Employee; (3) a material reduction in
the number or seniority of other Company personnel reporting to the Employee or a material
reduction in the frequency with which, or in the nature of the matters with respect to which, such
(e) The term "Notice of Termination" means a notice of termination of the Employee's employment pursuant to Section 4 of this Agreement.
(f) The terms "Termination for Cause" and "Terminated for Cause" mean termination by the Company of the employment of the Employee because of (i) willful and continued failure by the Employee substantially to perform his or her duties (other than a failure resulting from physical or mental illness) after a demand for substantial performance is delivered to the Employee by the Chairman of the Board of Directors or the Chief Executive Officer of the Company which specifically identifies the manner in which the Employee has not substantially performed his or her duties, (ii) the Employee's willful dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, regulation, or final cease-and-desist order, relating to the Employee's employment with the Company or otherwise interfering with the Employee's ability to carry out the duties of the employment, or material breach of any provision of this Agreement or any employment agreement between the Company and the Employee; provided that no act or failure to act shall be considered "willful" unless done or omitted to be done by the Employee in bad faith and without reasonable belief that the act or omission was in or not opposed to the beat interests of the Company. Any act or failure to act based upon authority pursuant to a resolution duly adopted by the Board of Directors or upon the advice of counsel for the Company shall be conclusively presumed to be done or omitted to be done in good faith and in the beat interacts of the Company. The Employee's attention to matters not directly related to the business of the Company shall not provide a basis for Termination for Cause if the Board of Directors or the Chief Executive Officer of the Company has approved the Employee's engaging in such activities. The Employee shall not be deemed to have been Terminated for Cause unless and until the Company has delivered to the Employee a notice containing a resolution adopted by not less than three-quarters of the entire membership of the Board of Directors at a meeting called and held for the purpose, after reasonable notice to the Employee and opportunity for him to appear with counsel before the Board of Directors, finding that in the good faith opinion of the Board of Directors the Employee has engaged in conduct described in this Section 1(f) and specifying the particulars in detail.
2. Term. The term of this Agreement shall be one year from the date first written above,
provided that on each anniversary of such date, the term shall be extended for an additional year
unless at least 90 days prior such anniversary, either the Company or the Employee gives notice
3. Severance Benefits.
(a) In the event of Involuntary Termination in connection with or within 24 months after a Change in Control which occurs during the term of this Agreement, the Company shall, (1) pay to the Employee in a lump sum in cash within 25 business days after the Date of Termination an amount equal to the sum of (i) the Employee's base salary for a period of 18 months at the rate of base salary in effect on the date of the Change in Control or the Date of Termination, whichever is greater, and (ii) the amount of the Employee's prior year's annual bonus multiplied by a fraction with a numerator of the number of days which have elapsed through the Date of Termination in the fiscal year in which the Date of Termination occurs and a denominator of 365; (2) provide to the Employee for 18 months following the Date of Termination, such health, dental and life insurance benefits as the Company maintained for the Employee at the Date of Termination on terms as favorable to the Employee as applied at the Date of Termination, or at the election of the Employee (or, notwithstanding the election of the Employee at the election of the Company if coverage under the Company's group plan is not available to the Employee) cash in an amount equal to the premium cost being paid by the company with respect to the Employee for such benefits immediately prior to the Date of Termination); (3) transfer to Employee title to the Company owned vehicle currently used by the Employee, if any, with the Company paying all coats, licensing fees and taxes (excluding income taxes) associated with the transfer of title, or in the event the Employee receives a monthly cash car allowance in lieu of use of a Company vehicle, the Company shall pay to the Employee pursuant to this paragraph an additional sum equal to 18 times the greater of the monthly car allowance in effect on the date of the Change of Control or the Date of Termination; (4) and vesting of all of Employee's outstanding stock options and/or restricted stock awards with the Company or its affiliates. The provision of any medical benefits under this Section 3(a) shall not extend to the period for the continuation of group health benefits under the COBRA health care continuation provisions of Section 601 of the Employee Retirement Income Security Act of 1974 ("ERISA"( or other applicable state laws. Nothing herein shall diminish the right of the Employee to receive any earned and accrued bonus, on a pro rata basis, for the year in which Involuntary Termination occurs or to be compensated for accrued but unused vacation and sick time.
(b) Notwithstanding any other provision of this Agreement, if the value and amounts of
benefits under this Agreement, together with any other amounts and the value of benefits received
or to be received by the Employee in connection with a Change in Control would cause any
amount to be nondeductible by the Company or any of its subsidiaries for federal income tax
purposes pursuant to Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then amounts and benefits under this Agreement shall be reduced (not less than zero) to
the extent necessary so as to maximize amounts and the value of benefits to the Employee without
causing any amount to become nondeductible by the Company or its subsidiaries
(c) Any payments made to the Employee pursuant to this Agreement are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and any regulations promulgated thereunder.
4. Notice of Termination. In the event that the Company desires to terminate the employment of the Employee without his consent during the term of this Agreement in connection with or after a Change in Control has occurred, the Company shall deliver to the Employee a written notice of termination, stating (i) whether such termination constitutes Termination for Cause, and, if so, setting forth in reasonable detail the facts and circumstances that are the basis for the Termination for Cause, and (ii) specifying the Date of Termination. In the event that the Employee determines in good faith that he or she has suffered Involuntary Termination of his employment, the Employee shall send a written notice to the Company stating the circumstances that constitute Involuntary Termination and the Date of Termination. No provision of this Agreement shall be construed as providing to the Employee any right to be retained as an employee of the Company.
5. No Mitigation. The Employee shall not be required to mitigate the amount of any salary or other payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by the Employee as the result of employment by another employer, by retirement benefits after the date of termination or otherwise, except as expressly set forth herein.
6. Attorneys and/or Fees. If the Employee is purportedly Terminated for Cause or Involuntarily Terminated and the Company denies payments and/or benefits under Section 3 of this Agreement on the basis that the Employee experienced Termination for Cause rather than Involuntary Termination, but it is determined by a court of competent jurisdiction or by an arbitrator pursuant to Section 14 that cause as contemplated by Section 1(f) of this Agreement did not exist for termination of the Employee's employment, or if in any event it is determined by any such court or arbitrator that the Company has failed to make timely payment of any amounts or provision of any benefits owed to the Employee under this Agreement, the Employee shall be entitled to reimbursement for all reasonable costs, including attorneys' fees, incurred in challenging such termination of employment or collecting such amounts or benefits. Such reimbursement shall be in addition to all rights which the Employee is otherwise entitled under this Agreement.
7. No Assignments.
(a) This Agreement is personal to each of the parties hereto, and neither party may assign or
delegate any of its rights or obligations hereunder without first obtaining the written consent of
the other party; provided, however, that the Company shall require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company, by an assumption agreement
(b) This Agreement and all rights of the Employee hereunder shall inure to the benefit of and be enforceable by the Employee's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Employee should die while any amounts would still be payable to the Employee hereunder if the Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Employee's devisee, legatee or other designee or if there is no such designee, to the Employee's estate.
8. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, to the Company at its home office, to the attention of the Board of Directors with a copy to the Secretary of the Company, or, it to the Employee, to such home or other address as the Employee has most recently provided in writing to the Company.
9. Amendments. No amendments or additions to this Agreement hall be binding unless in writing and signed by both parties, except as herein otherwise provided.
10. Headings. The headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.
11. Severablility. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceablity of the other provisions hereof.
12. Governing Law. This Agreement shall be governed by the laws of the United States to the extent applicable and otherwise by the laws of the State of California.
13. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by non-binding arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction, and shall include an award of attorneys' fees and costs to the prevailing party.
The parties have executed this Agreement as of the day and year first above written.
THIS AGREEMENT CONTAINS A NON-BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
ITLA CAPITAL CORPORATION /s/George W. Haligowski | ||
By: | George W. Haligowski | |
Its: | Chairman, President and Chief Executive Officer | |
EMPLOYEE /s/Lyle C. Lodwick Lyle C. Lodwick |
EXHIBIT 10.7
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the "Agreement") is made and entered into as of this 1st day of February, 2006, by and between ITLA Capital Corporation (the "Company"), and Maria P. Kunac (the "Employee").
WHEREAS, the Employee is currently serving as Senior Managing Director, Chief Lending Officer of the Company; and
WHEREAS, the Board of Directors of the Company (the "Board of Directors") recognizes that, as is the case with publicly held corporations generally, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company and its stockholders;
WHEREAS, the Board of Directors believes it is in the best interests of the Company to enter into this Agreement with the Employee in order to assure continuity of management of the Company and to reinforce and encourage the continued attention and dedication of the Employee to the Employee's assigned duties without distraction in the face of potentially disruptive circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and
WHEREAS, the Board of Directors has approved and authorized the execution of this Agreement with the Employee;
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein, it is AGREED as follows:
1. Definitions.
(a) The term "Change in Control" means the occurrence of any of the following events with
respect to the Company: (1) any person (as the term is used in section 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Company
representing 33.33% or more of the Company's outstanding securities; (2) individuals who are
members of the Board of Directors of the Company on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of at least two
thirds of the directors comprising the Incumbent Board, or whose nomination for election by the
Company's stockholders was approved by the nominating committee serving under an Incumbent
Board, shall be considered a member of the Incumbent Board; (3) a reorganization, merger,
consolidation, sale of all or substantially all of the assets of the Company or a similar transaction
in which the Company is not the resulting entity (unless the continuing ownership requirements
clause (4) below are met with respect to the resulting entity); or (4) a merger or consolidation of
the Company with any other corporation other than a merger or consolidation in which the voting
securities of the Company outstanding immediately prior
(b) The term "Disability" means the Employee's absence from his or her duties with the Company on a full time basis for six consecutive months as a result of his or her incapacity due to mental or physical illness, unless within 30 days after the Company gives the Employee written notice of termination of employment for such reason the Employee shall have returned to full time performance of his or her duties.
(c) The term "Date of Termination" means the date specified in the Notice of Termination, given pursuant to Section 4 of this Agreement, provided that if within 15 days after any Notice of Termination is given or, if later, prior to the Date of Termination specified in such Notice, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the Notice of Termination, then the Date of Termination shall be the date on which the dispute is finally determined, whether by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); and provided further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and sets forth in reasonable detail the facts and circumstances that are the basis for the dispute, and the party giving such notice pursues the resolution of such dispute with reasonable diligence. For purposes of this Section 1(c), a "dispute" extending the Date of Termination shall be limited to a dispute as to whether the termination was a "Termination for Cause" if the Notice of Termination given by the Company states that the termination was a Termination for Cause or whether the termination was an Involuntary Termination if the Notice of Termination is given by the Employee. Notwithstanding the pendency of any such dispute, the Company shall continue to pay the Employee the Employee's full base salary at the rate in effect when the Notice of Termination was given and continue the Employee as a participant in all benefit plans in which the Employee was participating when the Notice of Termination was given ) unless continued employment is a requirement for participation in any such benefit plan), until the dispute is finally resolved in accordance with this Section 1(c).
(d) The term "Involuntary Termination" means the termination of the employment of the
Employee without the Employee's express written consent or a material diminution of or
interference with the Employee's duties, responsibilities and benefits as these same duties,
responsibilities and benefits exist the day prior to the Change the Change of Control, including
(without limitation) any of the following actions unless consented to in writing by the Employee:
(1) a requirement that the Employee be based at a place other than the Employee's work location
immediately prior to the Change of Control or within 35 miles thereof, except for reasonable
travel on Company business; (2) a material demotion of the Employee; (3) a material reduction in
the number or seniority of other Company personnel reporting to the Employee or a material
reduction in the frequency with which, or in the nature of the matters with respect to which, such
(e) The term "Notice of Termination" means a notice of termination of the Employee's employment pursuant to Section 4 of this Agreement.
(f) The terms "Termination for Cause" and "Terminated for Cause" mean termination by the Company of the employment of the Employee because of (i) willful and continued failure by the Employee substantially to perform his or her duties (other than a failure resulting from physical or mental illness) after a demand for substantial performance is delivered to the Employee by the Chairman of the Board of Directors or the Chief Executive Officer of the Company which specifically identifies the manner in which the Employee has not substantially performed his or her duties, (ii) the Employee's willful dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, regulation, or final cease-and-desist order, relating to the Employee's employment with the Company or otherwise interfering with the Employee's ability to carry out the duties of the employment, or material breach of any provision of this Agreement or any employment agreement between the Company and the Employee; provided that no act or failure to act shall be considered "willful" unless done or omitted to be done by the Employee in bad faith and without reasonable belief that the act or omission was in or not opposed to the beat interests of the Company. Any act or failure to act based upon authority pursuant to a resolution duly adopted by the Board of Directors or upon the advice of counsel for the Company shall be conclusively presumed to be done or omitted to be done in good faith and in the beat interacts of the Company. The Employee's attention to matters not directly related to the business of the Company shall not provide a basis for Termination for Cause if the Board of Directors or the Chief Executive Officer of the Company has approved the Employee's engaging in such activities. The Employee shall not be deemed to have been Terminated for Cause unless and until the Company has delivered to the Employee a notice containing a resolution adopted by not less than three-quarters of the entire membership of the Board of Directors at a meeting called and held for the purpose, after reasonable notice to the Employee and opportunity for him to appear with counsel before the Board of Directors, finding that in the good faith opinion of the Board of Directors the Employee has engaged in conduct described in this Section 1(f) and specifying the particulars in detail.
2. Term. The term of this Agreement shall be one year from the date first written above,
provided that on each anniversary of such date, the term shall be extended for an additional year
unless at least 90 days prior such anniversary, either the Company or the Employee gives notice
3. Severance Benefits.
(a) In the event of Involuntary Termination in connection with or within 24 months after a Change in Control which occurs during the term of this Agreement, the Company shall, (1) pay to the Employee in a lump sum in cash within 25 business days after the Date of Termination an amount equal to the sum of (i) the Employee's base salary for a period of 18 months at the rate of base salary in effect on the date of the Change in Control or the Date of Termination, whichever is greater, and (ii) the amount of the Employee's prior year's annual bonus multiplied by a fraction with a numerator of the number of days which have elapsed through the Date of Termination in the fiscal year in which the Date of Termination occurs and a denominator of 365; (2) provide to the Employee for 18 months following the Date of Termination, such health, dental and life insurance benefits as the Company maintained for the Employee at the Date of Termination on terms as favorable to the Employee as applied at the Date of Termination, or at the election of the Employee (or, notwithstanding the election of the Employee at the election of the Company if coverage under the Company's group plan is not available to the Employee) cash in an amount equal to the premium cost being paid by the company with respect to the Employee for such benefits immediately prior to the Date of Termination); (3) transfer to Employee title to the Company owned vehicle currently used by the Employee, if any, with the Company paying all coats, licensing fees and taxes (excluding income taxes) associated with the transfer of title, or in the event the Employee receives a monthly cash car allowance in lieu of use of a Company vehicle, the Company shall pay to the Employee pursuant to this paragraph an additional sum equal to 18 times the greater of the monthly car allowance in effect on the date of the Change of Control or the Date of Termination; (4) and vesting of all of Employee's outstanding stock options and/or restricted stock awards with the Company or its affiliates. The provision of any medical benefits under this Section 3(a) shall not extend to the period for the continuation of group health benefits under the COBRA health care continuation provisions of Section 601 of the Employee Retirement Income Security Act of 1974 ("ERISA"( or other applicable state laws. Nothing herein shall diminish the right of the Employee to receive any earned and accrued bonus, on a pro rata basis, for the year in which Involuntary Termination occurs or to be compensated for accrued but unused vacation and sick time.
(b) Notwithstanding any other provision of this Agreement, if the value and amounts of
benefits under this Agreement, together with any other amounts and the value of benefits received
or to be received by the Employee in connection with a Change in Control would cause any
amount to be nondeductible by the Company or any of its subsidiaries for federal income tax
purposes pursuant to Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then amounts and benefits under this Agreement shall be reduced (not less than zero) to
the extent necessary so as to maximize amounts and the value of benefits to the Employee without
causing any amount to become nondeductible by the Company or its subsidiaries
(c) Any payments made to the Employee pursuant to this Agreement are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and any regulations promulgated thereunder.
4. Notice of Termination. In the event that the Company desires to terminate the employment of the Employee without his consent during the term of this Agreement in connection with or after a Change in Control has occurred, the Company shall deliver to the Employee a written notice of termination, stating (i) whether such termination constitutes Termination for Cause, and, if so, setting forth in reasonable detail the facts and circumstances that are the basis for the Termination for Cause, and (ii) specifying the Date of Termination. In the event that the Employee determines in good faith that he or she has suffered Involuntary Termination of his employment, the Employee shall send a written notice to the Company stating the circumstances that constitute Involuntary Termination and the Date of Termination. No provision of this Agreement shall be construed as providing to the Employee any right to be retained as an employee of the Company.
5. No Mitigation. The Employee shall not be required to mitigate the amount of any salary or other payment or benefit provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced by any compensation earned by the Employee as the result of employment by another employer, by retirement benefits after the date of termination or otherwise, except as expressly set forth herein.
6. Attorneys and/or Fees. If the Employee is purportedly Terminated for Cause or Involuntarily Terminated and the Company denies payments and/or benefits under Section 3 of this Agreement on the basis that the Employee experienced Termination for Cause rather than Involuntary Termination, but it is determined by a court of competent jurisdiction or by an arbitrator pursuant to Section 14 that cause as contemplated by Section 1(f) of this Agreement did not exist for termination of the Employee's employment, or if in any event it is determined by any such court or arbitrator that the Company has failed to make timely payment of any amounts or provision of any benefits owed to the Employee under this Agreement, the Employee shall be entitled to reimbursement for all reasonable costs, including attorneys' fees, incurred in challenging such termination of employment or collecting such amounts or benefits. Such reimbursement shall be in addition to all rights which the Employee is otherwise entitled under this Agreement.
7. No Assignments.
(a) This Agreement is personal to each of the parties hereto, and neither party may assign or
delegate any of its rights or obligations hereunder without first obtaining the written consent of
the other party; provided, however, that the Company shall require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company, by an assumption agreement in
(b) This Agreement and all rights of the Employee hereunder shall inure to the benefit of and be enforceable by the Employee's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Employee should die while any amounts would still be payable to the Employee hereunder if the Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Employee's devisee, legatee or other designee or if there is no such designee, to the Employee's estate.
8. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, to the Company at its home office, to the attention of the Board of Directors with a copy to the Secretary of the Company, or, it to the Employee, to such home or other address as the Employee has most recently provided in writing to the Company.
9. Amendments. No amendments or additions to this Agreement hall be binding unless in writing and signed by both parties, except as herein otherwise provided.
10. Headings. The headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.
11. Severablility. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceablity of the other provisions hereof.
12. Governing Law. This Agreement shall be governed by the laws of the United States to the extent applicable and otherwise by the laws of the State of California.
13. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by non-binding arbitration in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction, and shall include an award of attorneys' fees and costs to the prevailing party.
The parties have executed this Agreement as of the day and year first above written.
THIS AGREEMENT CONTAINS A NON-BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.
ITLA CAPITAL CORPORATION /s/George W. Haligowski | ||
By: | George W. Haligowski | |
Its: | Chairman, President and Chief Executive Officer | |
EMPLOYEE /s/Maria P. Kunac Maria P. Kunac |
EXHIBIT 10.8
ITLA CAPITAL CORPORATION 409A CONSOLIDATED
NONQUALIFIED (EMPLOYER SECURITIES ONLY)
2005 DEFERRED COMPENSATION PLAN
ITLA Capital Corporation, a Delaware business corporation, has adopted the ITLA Capital Corporation 409A Consolidated Nonqualified (Employer Securities Only) 2005 Deferred Compensation Plan (the "Plan" or " 2005 ITLA Non-Qualified (Employer Securities Only) Deferred Compensation Plan") effective as of January 1, 2005. The Plan is an unfunded plan, hereby adopted, established and maintained by ITLA Capital Corporation (the "Company") for the purpose of providing benefits for certain individuals as provided herein. The Plan is intended to comply with the applicable requirements of Section 409A of the Code and related guidance of general applicability issued thereunder (together referred to herein as "Section 409A").
ARTICLE I
ELIGIBILITY TO PARTICIPATE
1.1 Eligibility to Participate. For purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Plan is limited to a select group of management or highly compensated employees, and shall at all times remain unfunded.
1.2 Designated Participants. A highly compensated employee of the Company or its subsidiaries (which shall include for employment and compensation purposes all other related employers of the Company under Section 414 of the Internal Revenue Code of 1986, as amended (the "Code")) is eligible to become a Participant in the Plan. A highly compensated employee of the Company or its subsidiaries shall be:
a. | Any employee holding a title of Deputy Managing Director or greater; or | |
b. | Any employee, who in the previous year earned commissions of two hundred thousand dollars ($200,000.00) or greater from the Company or its subsidiaries. |
Once an employee becomes a Participant, he or she shall remain a Participant until all benefits to which he or she (or to the individual the Participant designates as his or her "Designated Beneficiary" in such Participant's designation of beneficiary form) is entitled to under the Plan have been paid. To the extent any employee's employment agreement (as the same may be thereafter amended) differs from the terms of the Plan, the employment agreement shall be the controlling document except that the Plan shall control to the extent necessary to comply with Section 409A.
1.3 Written Deferral Election. The individuals described in Section 1.2 shall be eligible
to participate in the Plan and may do so by filing a written deferral election with the Company in a
form approved by the Company. This form may set forth a minimum annual deferral by the
Participant. In the first year in which a Participant becomes eligible to participate
1.4 Deferred Compensation Account. For each individual electing to participate in the Plan, the Company shall establish and maintain a Deferred Compensation Account. The amount of each Participant's deferred compensation shall be credited to his or her Deferred Compensation Account no later than the end of the month following the month in which the compensation would otherwise have been paid to the Participant. The Participant's Deferred Compensation Account shall be invested solely in ITLA Capital Corporation stock. The Deferred Compensation Account shall be reduced for any distributions and withdrawals made under the Plan to a Participant or his or her Designated Beneficiary including tax withholdings. Any Participant to whom an amount is credited under the Plan shall be deemed a general, unsecured creditor of the Company.
1.5 Amount of Deferrals. Each Participant may defer all or any portion of the compensation otherwise payable to him or her by the Company for the calendar year beginning after the date of said election (or for the remaining portion of the first year of participation) as specified in said written election to the Company, and the amounts so deferred by a Participant shall be distributed only as provided in the Plan. In no event shall the amount of compensation deferred by a Participant under the Plan and the Non-Employer Securities 2005 Deferred Compensation Plan exceed the amount needed to satisfy employment tax and other required payroll withholdings. A Participant may change the amount of, or suspend, future deferrals with respect to compensation otherwise payable to him or her for calendar years beginning after the date of change or suspension as specified by written notice to the Company. If a Participant elects to suspend deferrals, the Participant may make a new election to again become a Participant in the Plan. Any new election to defer payment of compensation must be made before the beginning of the next calendar year for which the compensation is payable and shall apply to compensation otherwise payable in that next calendar year. The election to defer shall be irrevocable as to the deferred compensation for the calendar year for which the election is made. In no event may a Participant suspend or change the amount of deferrals for a calendar year once the calendar year has commenced.
ARTICLE II
DEFERRED COMPENSATION
2.1 Contributions to, Investments by, and Withdrawals from Trust. Within thirty (30) days after each calendar month, the Company shall transfer into the ITLA Capital Corporation Rabbi Trust (the "Trust") an amount in cash or a number of shares of ITLA Capital Corporation stock (based upon the closing sale price as of the most recent trading day preceding the contribution date) equal to the total amount of all Participant deferrals under the Plan for the preceding calendar month. All cash contributions to the Trust shall, as soon as practicable, be invested solely in ITLA Capital Corporation stock. All cash dividends received on shares of ITLA Capital Corporation stock held by the Trust shall be reinvested in ITLA Capital Corporation stock (other than cash representing fractional interests). To satisfy tax and other withholding obligations of the Company relating to a Participant's Deferred Compensation Account under the Plan, the Trust shall timely deliver to the Company a sufficient number of shares of ITLA Capital Corporation stock from a Participant's Deferred Compensation Account (based upon the closing sale price on the most recent trading day prior to the date of delivery) equal to withholding obligation, and the Participant's Deferred Compensation Account shall be reduced by such number of shares so delivered.
ARTICLE III
DISTRIBUTION
3.1 Distribution of Deferred Compensation Accounts. On the first day of the month
next following the date on which a Participant's experiences a "Separation from Service" (as that
phrase is defined by Section 409A) for any reason including death, distribution of the Participant's
Deferred Compensation Account in accordance with the Plan shall commence in accordance with
one of the alternatives set forth below as selected by the Participant. Notwithstanding the
preceding sentence, if the Participant is a "specified employee" (within the meaning of Section 409A, and
assuming for this purpose that the "identification date" is December 31) then (a) the Participant's distribution (or
initial distribution) shall occur on the first day of the month next following the six month anniversary of the date of
the Participant's Separation from Service, if such termination of employment occurs for any reason other than the
Participant's death or becoming disabled (as that term is defined in Code Section 409A(a)(2)(C)) (the "Delayed
Distribution Date"), and (b) in the event the Participant elected to receive his Deferred Compensation Account in
installments, subsequent distributions shall be made on the first day of the month next following the anniversary
date of the Participant's Separation from Service. A Participant's initial selection of the method of
distribution shall be made in writing at the time the Participant first elects to defer compensation
under the Plan for any given calendar year. Any such selection may be subsequently changed by a
Participant by delivering a new written election to the Company (such new written election shall
automatically revoke any prior written election). However, except as may otherwise be provided
in Section 409A, (1) any such change in the method of distribution shall not take effect until at least twelve
months after the date the election is made, (2) in the case of an election made in relation to a payment to be made
a) a single lump sum distribution of the Participant's Deferred Compensation
Account at the time of his Separation from Service, or the Delayed Distribution
Date, if applicable;
b) five annual installments with the first installment (1/5 of the Participant's
Deferred Compensation Account) being distributed on the first day of the month
next following the Participant's Separation from Service, or the Delayed
Distribution Date, if applicable and subsequent annual installments being made on
each annual anniversary of the Participant's Separation from Service (e.g., 1/4 of
the Participant's Deferred Compensation Account on the second distribution
date); or |
c) ten annual installments with the first installment (1/10 of the Participant's Deferred Compensation Account) being distributed on the first day of the month next following the Participant's Separation from Service, or the Delayed Distribution Date, if applicable and subsequent annual installments being made on each annual anniversary of the Participant's Separation from Service (e.g., 1/9 of the Participant's Deferred Compensation Account on the second distribution date). |
If at the time of distribution the Participant does not have in effect a valid election regarding the form of distribution of his benefit, distribution shall be made in a single lump sum payment. All distributions shall be made solely in shares of ITLA Capital Corporation stock (except for cash in lieu of fractional share interests). All such distributions from the Plan shall comply with all applicable federal and state securities laws. All distributions under the Plan shall be less applicable tax and other required or authorized withholdings. Notwithstanding the distribution election made by a Participant and notwithstanding that distributions have commenced in installments, the distribution of the Participant's total remaining Deferred Compensation Account shall be made in a single lump sum upon a Change of Control or termination of the Plan.
3.2 Participant's Death. If a Participant should die before full distribution of his or her
Deferred Compensation Account, such Participant's remaining Deferred Compensation Account
shall be distributed to the Participant's Designated Beneficiary by the method designated by the
Participant in his or her most recent effective written election, as determined under Section 3.1
hereunder. If a Participant has no Designated Beneficiary at the time of death, then,
notwithstanding any provision herein to the contrary, his or her remaining Deferred
Compensation Account shall be distributed to such Participant's estate in a single lump sum distribution as soon as administratively feasible following such Participant's death.withstanding the foregoing, distributions under this Section 3.2 shall be made in a manner not inconsistent with Section 409A.
3.3 Advance Distribution for Financial Hardship. In the event a Participant incurs an Unforeseeable Financial Emergency, such Participant may make a written request to the Company for a withdrawal from his or her Deferred Compensation Account established under the Plan. The amount of the withdrawal will be net of applicable tax and other required or authorized withholdings. An "Unforeseeable Financial Emergency" shall mean severe financial hardship to Participant resulting from (i) an illness or accident of the Participant, the Participant's spouse or a of the Participant, (within the meaning of Section 152(a) of the Code), (ii) a loss of the Participant's property due to casualty, or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Withdrawals of amounts because of an unforeseeable emergency are only permitted to the extent reasonably needed to satisfy the emergency need, taking into account taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement by insurance or otherwise or by liquidation of the Participant's assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). This Section shall be interpreted in a manner consistent with Section 409A. The Compensation Committee of the Board of Directors of the Company shall determine in its sole discretion whether an advance withdrawal shall be permitted due to an Unforeseeable Financial Emergency. The Participant's Deferred Compensation Account shall be reduced by the amount of any advance distribution for Unforeseeable Financial Emergency, including withholdings.
3.4 Change of Control Event. Upon a Change of Control Event, as defined in Section 6.7 of the Plan, the Deferred Compensation Accounts of all Participants shall be paid in a single lump sum distribution of shares of ITLA Capital Corporation stock as soon as practicable to the Participants or to the Designated Beneficiaries of any deceased Participants.
3.5 Distribution for Tax Purposes. Anything herein to the contrary notwithstanding, pay the Federal Income Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a), and 3121(v)(2) on compensation deferred under the Plan (the "FICA Amount"), plus (b) the income tax at source on wages imposed under Code Section 3401 on the FICA Amount, plus (c) the additional income tax at source on wages attributable to the pyramiding Code Section 3401 wages and taxes. In no event shall the amount distributable under the preceding sentence exceed the aggregate of the FICA Amount and the income tax withholding related to such FICA Amount. The cash distribution shall be made from the Trust to the Company to satisfy the withholding tax obligation and the Participant's Deferred Compensation Account shall be reduced by the amounts so withheld. The Compensation Committee shall also permit the distribution of any other income or withholding taxes attributable to the Participant's benefit under the Plan, to the extent permitted by Section 409A.
3.6 Limitation on Distribution to Covered Employees. Notwithstanding any other
provision of the Plan, in the event that the Participant is a "covered employee" as defined in
Section 162(m)(3) of the Code, or would be a covered employee if the Participant's Deferred
Compensation Account were distributed in accordance with the other provisions of Article III,
ARTICLE IV
AMENDMENT AND TERMINATION OF PLAN
4.1 Amendment or Termination. The Company intends the Plan to remain in existence until all Participants in the Plan have received all of their benefits payable under the Plan. The Company, however, reserves the right to amend or terminate the Plan when, in the sole opinion of the Company, such amendment or termination is advisable. Any such amendment or termination shall be made pursuant to a resolution of the Compensation Committee of the Board of Directors of the Company. No amendment or termination of the Plan shall reduce the number of shares of ITLA Capital Corporation stock credited to the Participant's Deferred Compensation Account below the balance immediately prior to the effective date of the resolution amending or terminating the Plan or delay the distribution date for the Participant's Deferred Compensation Account. The ability of the Company to amend or terminate the Plan and distribute benefits in accordance with such amendment or termination shall be subject to and limited by Section 409A. Accordingly, unless Section 409A provides otherwise, the Plan may be terminated only if: (a) all arrangements sponsored by the Company that are required to be aggregated with this Plan under Section 409A are terminated; (b) no payments other than payments that would be payable under the terms of the Plan or an aggregated plan if the termination had not occurred are made within 12 months of the termination of the arrangements; (c) all payments are made within 24 months of the termination of the Plan and related arrangements; and (d) the Company does not adopt a new arrangement that would be required to be aggregated with this Plan under Section 409A if the same Participant participated in both arrangements, within five years of the termination of the Plan.
4.2 Distribution on Termination. Subject to Section 4.1, upon termination of the Plan, the Deferred Compensation Accounts of all Participants shall be paid in kind, in a single lump sum distribution, as soon as practicable following the effective date of the Plan termination.
ARTICLE V
CLAIMS PROCEDURE
5.1 Claims Procedure. An initial claim for benefits under the Plan must be made by the Participant or his or her Designated Beneficiary to the Claims Reviewer which shall be the Compensation Committee of the Board of Directors of the Company (unless another person or organizational unit is designated by the Company as Claims Reviewer), in accordance with the terms of this Claims Procedure. Not later than 90 days after receipt of such a claim, the Claims Reviewer will render a written decision on the claim to the claimant, unless special circumstances require the extension of such 90-day period. If such extension is necessary, the Claims Reviewer shall provide the Participant or his or her Designated Beneficiary with written notification of such extension before the expiration of the initial 90-day period. Such notice shall specify the reason or reasons for such extension and the date by which the final decision can be expected. In no event shall such extension exceed a period of 90 days from the end of the initial 90-day period. In the event the Claims Reviewer denies the claim of a Participant or his or her Designated Beneficiary in whole or in part, the Claims Reviewer's written notification shall specify, in a manner calculated to be understood by the claimant, the reason for the denial; a reference to the Plan or other document or form that is the basis for the denial; a description of any additional material or information necessary for the claimant to perfect the claim; an explanation as to why such information or material is necessary; and an explanation of the applicable claims procedure. Should the claim be denied in whole or in part and should the claimant be dissatisfied with the Claim's Reviewer's disposition of the claimant's claim, the claimant may have a full and fair review of the claim by the Company upon written request therefor submitted by the claimant or the claimant's duly authorized representative and received by the Company within 60 days after the claimant receives written notification that the claimant's claim has been denied. In connection with such review, the claimant or the claimant's duly authorized representative shall be entitled to review pertinent documents and submit the claimant's views as to the issues in writing. The Company shall act to deny or accept the claim within 60 days after receipt of the claimant's written request for review unless special circumstances require the extension of such 60-day period. If such extension is necessary, the Company shall provide the claimant with written notification of such extension before the expiration of such initial 60-day period. In all events, the Company shall act to deny or accept the claim within 120 days of the receipt of the claimant's written request for review. The action of the Company shall be in the form of a written notice to the claimant and its contents shall include all of the requirements for action on the original claim. In no event may a claimant commence legal action for benefits the claimant believes are due the claimant until the claimant has exhausted all of the remedies and procedures afforded the claimant by this Article V.
ARTICLE VI
ADMINISTRATION
6.1 Unsecured Claims. The right of a Participant or a Participant's Designated
Beneficiary to receive a distribution hereunder shall be an unsecured claim against the general
assets of the Company, and neither a Participant nor his or her Designated Beneficiary shall
6.2 Plan Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company, which shall have the authority, duty and power to interpret and construe the provisions of the Plan as the Compensation Committee deems appropriate including the authority to determine eligibility for benefits under the Plan. The Compensation Committee shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing benefits hereunder. The interpretations, determinations, regulations and calculations of the Compensation Committee shall be final and binding on all persons and parties concerned. The Compensation Committee may delegate any of its duties of Plan Administration to such employees or other persons as it deems appropriate. The Plan shall also be administered and interpreted in a manner consistent with Section 409A .
6.3 Expenses. Expenses of administration shall be paid by the Company. The Compensation Committee of the Board of Directors of the Company shall be entitled to rely on all tables, certificates, opinions, data and reports furnished by any accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.
6.4 Statements. The Compensation Committee of the Board of Directors of the Company shall furnish individual annual or more frequent statements to each Participant, or each Designated Beneficiary currently receiving benefits, in such form as determined by the Compensation Committee or as required by law. The Compensation Committee may delegate the duty to provide such statements to the trustee of the Trust.
6.5 No Enlargement of Rights. The sole rights of a Participant or Designated Beneficiary under the Plan shall be to have the Plan administered according to its provisions, to receive whatever benefits he or she may be entitled to hereunder, and nothing in the Plan shall be interpreted as a guaranty that any assets or funds in any trust which may be established in connection with the Plan or assets of the Company will be sufficient to pay any benefits hereunder. Further, the adoption and maintenance of the Plan shall not be construed as creating any contract of employment between the Company and any Participant. The Plan shall not affect the right of the Company to deal with any Participants in employment respects, including their hiring, discharge, compensation, and conditions of employment.
6.6 Rules and Procedures. The Company may from time to time establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to an individual in the event that individual is declared incompetent and a conservator or other person legally charged with that individual's care is appointed. Except as otherwise provided herein, when the Company determines that such individual is unable to manage his or her financial affairs, the Company may distribute such individual's benefits to such conservator, person legally charged with such individual's care, or institutions contributing toward or providing for the care and maintenance of such individual. Any such distribution shall constitute a complete discharge of any liability of the Company and the Plan to such individual.
6.7 Change of Control. Notwithstanding any provision to the contrary, in the event of the earliest Change of Control Event, as defined herein, Participants shall receive their Deferred Compensation Accounts in a single lump sum payment as soon as administratively feasible following the date of the Change of Control Event. The term "Change of Control Event" shall mean (a) a "change in the ownership of the Company", (b) a "change in the effective control of the Company", or (c) a "change in the ownership of a substantial portion of the Company's assets", all within the meaning of Section 409A. The preceding sentence shall be applied using the least restrictive interpretation of each applicable Change in Control Event under Section 409A.
6.8 Information. Each Participant shall keep the Company informed of his or her current address and the current address of his or her Designated Beneficiary. The Company shall not be obligated to search for any person. If such person is not located within three (3) years after the date on which distribution of the Participant's benefits payable under the Plan may first be made, distribution may be made as though the Participant or his or her Designated Beneficiary had died at the end of such three-year period.
6.9 Loss. Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company including the trustee of the Trust shall be liable to any Participant, any Participant's Designated Beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.
6.10 Indemnification. The Company shall indemnify and hold harmless the members of
the Board of Directors, the trustee of the Trust and any other persons to whom any responsibility
with respect to the Plan is allocated or delegated, from and against any and all liabilities, costs and
expenses, including attorneys' fees, incurred by such persons as a result of any act, or omission to
act, in connection with the performance of their duties, responsibilities and obligations under the
Plan and under ERISA, other than such liabilities, costs and expenses as may result from the bad
faith, willful misconduct or criminal acts of such persons or to the extent such indemnification is
specifically prohibited by ERISA. The Company shall have the obligation to conduct the defense
of such persons in any proceeding to which this Section applies. If any Board member or any
person covered by this indemnification clause determines that the defense provided by the
Company is inadequate, that member or person shall be entitled to retain separate legal counsel
for his or her defense and the Company shall be obligated to pay
6.11 Trust Matters. The Company's obligations under the Plan with respect to Deferred Compensation Accounts may be satisfied with Trust assets distributed in kind pursuant to the terms of the Plan and any such distribution shall reduce the Company's corresponding obligation under the Plan with respect thereto. The provisions of the Plan shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Company, Participants and the creditors of the Company to the assets transferred to, invested by, and held in the Trust. The Company shall at all times remain liable to carry out its obligations under the Plan. Except for amendments to the Trust to comply with applicable laws, no amendment or modification shall be made to the Trust with respect to the Plan without the prior written consent of all Participants in the Plan who have Deferred Compensation Accounts. The funding of benefits under the Plan shall comply in all respects with the requirements of Section 409A.
6.12 Applicable Law. All questions pertaining to the construction, validity and effect of the Plan shall be determined in accordance with the laws of the State of California.
ITLA Capital Corporation has caused the Plan to be executed on this 1st day of February, 2006.
/s/Jeffrey Lipscomb Name: Jeffrey Lipscomb Compensation Committee Chairman On behalf of ITLA Capital Corporation |
EXHIBIT 10.9
ITLA CAPITAL CORPORATION 409A CONSOLIDATED
NONQUALIFIED (NON-EMPLOYER SECURITIES)
2005 DEFERRED COMPENSATION PLAN
ITLA Capital Corporation, a Delaware business corporation, has adopted the ITLA Capital Corporation 409A Consolidated Nonqualified (Non-Employer Securities) 2005 Deferred Compensation Plan (the "Plan") effective as of January 1, 2005. The Plan is an unfunded plan, hereby adopted, established and maintained by ITLA Capital Corporation (the "Company") for the purpose of providing benefits for certain individuals as provided herein. The Plan is intended to comply with the applicable requirements of Section 409A of the Code and related guidance of general applicability issued thereunder (together referred to herein as "Section 409A").
ARTICLE I
ELIGIBILITY TO PARTICIPATE
1.1 Eligibility to Participate. For purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Plan is limited to a select group of highly compensated employees of the Company or its subsidiaries, and shall at all times remain unfunded.
1.2 Designated Participants. A highly compensated employee of the Company or its subsidiaries (which shall include for employment and compensation purposes all other related employers of the Company under Section 414 of the Internal Revenue Code of 1986, as amended (the "Code")) is eligible to become a Participant in the Plan. A highly compensated employee of the Company or its subsidiaries shall be:
a. | Any employee holding a title of Deputy Managing Director or greater; or | |
b. | Any employee, who in the previous year earned commissions of two hundred thousand dollars ($200,000.00) or greater from the Company or its subsidiaries. |
Once an employee becomes a Participant, he or she shall remain a Participant until all benefits to which he or she (or to the individual the Participant designates as his or her "Designated Beneficiary" in such Participant's designation of beneficiary form) is entitled to under the Plan have been paid. To the extent any employee's employment agreement differs from the terms of the Plan, the employment agreement shall be the controlling document except that the Plan shall control to the extent necessary to comply with Section 409A.
1.3 Written Deferral Election. The individuals described in Section 1.2 shall be eligible
to participate in the Plan and may do so by filing a written deferral election with the Company in a
form approved by the Company. This form may set forth a minimum annual deferral by the
Participant. In the first year in which a Participant becomes eligible to participate in the Plan, the
newly eligible Participant may make an election to defer compensation for services to be
performed subsequent to the election within thirty (30) days after the date the
1.4 Deferred Compensation Account. For each individual electing to participate in the Plan, the Company shall establish and maintain a Deferred Compensation Account. The amount of each Participant's deferred compensation shall be credited to his or her Deferred Compensation Account no later than the end of the month following the month in which the compensation would otherwise have been paid to the Participant. The Participant's Deferred Compensation Account shall also be credited and debited for deemed earnings and losses attributable to the investment (or deemed investment) of, or interest credits on, such Deferred Compensation Account under Section 2.2 or 3.1 of the Plan, whichever is applicable. The Deferred Compensation Account shall also be reduced for any distributions and withdrawals made under the Plan to a Participant or his or her Designated Beneficiary including tax withholdings. In general, the Deferred Compensation Accounts will be valued at the end of each calendar quarter (each a "Valuation Date"). Any Participant to whom an amount is credited under the Plan shall be deemed a general, unsecured creditor of the Company.
1.5 Amount of Deferrals. Each Participant may defer all or any portion of the compensation otherwise payable to him or her by the Company for the calendar year beginning after the date of said election (or for the remaining portion of the first year of participation) as specified in said written election to the Company, and the amounts so deferred by a Participant shall be paid only as provided in the Plan. In no event shall the amount of compensation deferred by a Participant under the Plan and the ITLA Consolidated Non Qualified (Employer Securities Only) 2005 Deferred Compensation Plan (the "Employer Securities Deferred Compensation Plan") exceed the amount needed to satisfy employment tax and other required payroll withholdings. A Participant may change the amount of, or suspend, future deferrals with respect to compensation otherwise payable to him or her for calendar years beginning after the date of change or suspension as specified by written notice to the Company. If a Participant elects to suspend deferrals, the Participant may make a new election to again become a Participant in the Plan. Any new election to defer payment of compensation must be made before the beginning of the next calendar year for which the compensation is payable and shall apply to compensation otherwise payable in that next calendar year. The election to defer shall be irrevocable as to the deferred compensation for the calendar year for which the election is made. In no event may a Participant suspend or change the amount of deferrals for a calendar year once the calendar year has commenced.
ARTICLE II
DEFERRED COMPENSATION
2.1 Contributions to and Withdrawals from Trust by the Company. Within thirty (30) days after each calendar month, the Company shall transfer into the ITLA Capital Corporation Rabbi Trust (the "Trust") an amount in cash equal to the total amount of all Participant deferrals under the Plan for the preceding calendar month. In addition, as soon as practicable after each Valuation Date, the Company shall contribute cash to the Trust equal to the amount by which the deemed earnings or interest credits, whichever is applicable, on the Deferred Compensation Accounts of all Participants for the applicable calendar quarter exceeded the actual earnings of the Trust for such period, and appropriate adjustment will be made to each Participant's Deferred Compensation Account for such period. To the extent that the actual earnings of the Trust exceeded the deemed earnings or interest credits, whichever is applicable, on the Deferred Compensation Accounts of all Participants for such calendar quarter, the excess earnings will be promptly paid by the Trust to the Company, and appropriate adjustment will be made to each Participant's Deferred Compensation Account for such period. The adjustments referred to in the preceding two sentences shall likewise be made with respect to a Participant's Deferred Compensation Account as of the day next preceding (a) a Change of Control Event as defined in Section 6.7, (b) the effective date of a termination of the Plan or (c) the final installment payment of such Participant's Deferred Compensation Account, whichever is applicable. The Trust shall likewise pay funds from a Participant's Deferred Compensation Account to the Company to satisfy any tax and other withholding obligations.
2.2 Deemed Investments. All amounts credited under the terms of the Plan to a
Deferred Compensation Account maintained in the name of a Participant by the Company shall be
invested (or deemed invested) in various mutual funds selected by the Company while such
Participant is employed by the Company. Each Participant may select the deemed investment for
his/her Deferred Compensation Account from the investment options selected by the Company
and may change such deemed investments at such times and in accordance with the rules adopted
by the Company. In the absence of any investment directions, Deferred Compensation Accounts
will be deemed invested in the in-house sweep funds of the trustee of the Trust. Notwithstanding
that the earnings or losses on deemed investments used to determine the value of Participants'
Deferred Compensation Accounts are based on the actual performance of certain specified
investments, neither the Company nor the Trust is obligated to invest deferrals in any particular
investments. However, the Company and the Trust are required to make the adjustments set forth
in Section 2.1 based upon the performance of deemed investments vs. actual investments. If any
investments are made with deferrals, Participants shall have no right or interest in or with respect
to such investments. Specifically, Participants shall have no voting rights with respect to any stock
or securities held by the Plan. None of the Deferred Compensation Accounts in the Plan shall be
actually (or deemed) invested in ITLA Capital Corporation stock. In the case of a deemed
investment in ITLA Capital Corporation stock, such investment will be changed as soon as
practicable, or alternatively, at the written election of the Participant, the amount represented
thereby shall be transferred to the Participant's Deferred
ARTICLE III
DISTRIBUTION
3.1 Distribution of Deferred Compensation Accounts. On the first day of the month next following the date on which a Participant experiences a "Separation from Service" (as that phrase is defined by Section 409A) for any reason, including death, distribution of the amount credited to the Participant's Deferred Compensation Account in accordance with the Plan shall commence in accordance with one of the alternatives set forth below as selected by the Participant. Notwithstanding the preceding sentence, if the Participant is a "specified employee" (within the meaning of Section 409A, and assuming for this purpose that the "identification date" is December 31) then (a) the Participant's distribution (or initial distribution) shall occur on the first day of the month next following the six month anniversary of the date of the Participant's Separation from Service, if such termination of employment occurs for any reason other than the Participant's death or becoming disabled (as that term is defined in Code Section 409A(a)(2)(C)) (the "Delayed Distribution Date"), and (b) in the event the Participant elected to receive his Deferred Compensation Account in installments, subsequent distributions shall be made on the first day of the month next following the anniversary date of the Participant's Separation from Service. A Participant's initial selection of the method of distribution shall be made in writing at the time the Participant first elects to defer compensation under the Plan for any given calendar year. Any such selection may be subsequently changed by a Participant by delivering a new written election to the Company (such new written election shall automatically revoke any prior written election). However, except as may otherwise be provided in Section 409A, (1) any such change in the method of distribution shall not take effect until at least twelve months after the date the election is made, (2) in the case of an election made in relation to a payment to be made at a specific time or pursuant to a fixed schedule (i.e., in installments), the election may not be made less than 12 months prior to the date of the first scheduled payment, and (3) payment of the amount with respect to which the form of distribution is being changed shall commence upon the fifth anniversary of the date the such payment otherwise would have been paid (except for payments made pursuant to Section 3.2 or Section 3.3). The alternative forms of distribution shall be:
a) a single lump sum payment equal to the Participant's total Deferred
Compensation Account at the time of his Separation from Service, or the Delayed
Distribution Date, if applicable;
b) five annual installments with the first installment (1/5 of the Participant's
Deferred Compensation Account) being distributed on the first day of the month
next following the Participant's Separation from Service, or the Delayed
Distribution Date, if applicable, and subsequent annual installments being made on
each annual anniversary of the Participant's Separation from Service (e.g., 1/4 of
the Participant's Deferred Compensation Account on the second distribution
date); or |
c) ten annual installments with the first installment (1/10 of the Participant's Deferred Compensation Account) being distributed on the first day of the month next following the Participant's Separation from Service, or the Delayed Distribution Date, if applicable, and subsequent annual installments being made on each annual anniversary of the Participant's Separation from Service (e.g., 1/9 of the Participant's Deferred Compensation Account on the second distribution date). |
The amount of each such annual installment will be calculated based upon the amortization of the value of the Participant's Deferred Compensation Account balance as the date of his or her termination of employment at a credited interest rate equal to 125% of the Imperial Capital Bank's (or its successor in interest) cost of funds. Interest credited to a Participant's Deferred Compensation Account as of the Valuation Date preceding the date of the next distribution shall be added to the Participant's Deferred Compensation Account and distributed as a part of the next installment. The final installment will be the balance of the Participant's Deferred Compensation Account and interest credited to the Account as of the day next preceding such final distribution.
Except as set forth above with respect to interest crediting, a Participant's Deferred Compensation Account shall not be adjusted for any deemed earnings or losses after the date of the Participant's termination of employment. If at the time of distribution the Participant does not have in effect a valid election regarding the form of distribution his benefit, distribution shall be made in a single lump sum payment. The Compensation Committee of the Board of Directors of the Company shall determine whether the distribution is made in cash or in-kind. Any distribution of securities from the Plan shall comply with all applicable federal and state securities laws. All distributions under the Plan shall be less applicable tax and other required or authorized withholdings. Notwithstanding the distribution election made by a Participant and notwithstanding that distributions have commenced in installments, the distribution of the Participant's total remaining Deferred Compensation Account shall be made in a single lump sum upon a Change of Control or termination of the Plan.
3.2 Participant's Death. If a Participant should die before distribution of the full amount of the Deferred Compensation Account described in the Plan has been made to the Participant, any remaining amounts shall be distributed to the Participant's Designated Beneficiary by the method designated by the Participant in his or her most recent effective written election, as determined under Section 3.1 hereunder. If a Participant has no Designated Beneficiary at the time of death, then, notwithstanding any provision herein to the contrary, such amounts shall be distributed to such Participant's estate in a single lump sum distribution as soon as administratively feasible following such Participant's death. Notwithstanding the foregoing, distributions under this Section 3.2 shall be made in a manner not inconsistent with Section 409A.
3.3 Advance Distribution for Financial Hardship. In the event a Participant incurs an Unforeseeable Financial Emergency, such Participant may make a written request to the Company for a withdrawal from his or her Deferred Compensation Account established under the Plan. The amount of the withdrawal will be net of applicable tax and other required or authorized withholdings. An "Unforeseeable Financial Emergency" shall mean a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant, the Participant's spouse or a dependent of the Participant, (within the meaning of Section 152(a) of the Code), (ii) a loss of the Participant's property due to casualty, or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. Withdrawals of amounts because of an unforeseeable emergency are only permitted to the extent reasonably needed to satisfy the emergency need, taking into account taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement by insurance or otherwise or by liquidation of the Participant's assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). This Section shall be interpreted in a manner consistent with Section 409A. The Compensation Committee of the Board of Directors of the Company shall determine in its sole discretion whether an advance withdrawal shall be permitted due to an Unforeseeable Financial Emergency. The Participant's Deferred Compensation Account shall be reduced by the amount of any advance distribution for Unforeseeable Financial Emergency, including withholdings.
3.4 Change of Control Event. Upon a Change of Control, as defined in Section 6.7 of the Plan, the Deferred Compensation Accounts of all Participants shall be distributed in a single lump sum payment as soon as practicable to the Participants or to the Designated Beneficiaries of any deceased Participants.
3.5 Distribution for Tax Purposes. Anything herein to the contrary notwithstanding, the Compensation Committee shall permit a lump sum distribution in cash from the Participant's Deferred Compensation Account to pay the Federal Income Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a), and 3121(v)(2) on compensation deferred under the Plan (the "FICA Amount"), plus (b) the income tax at source on wages imposed under Code Section 3401 on the FICA Amount, plus (c) the additional income tax at source on wages attributable to the pyramiding Code Section 3401 wages and taxes. In no event shall the amount distributable under the preceding sentence exceed the aggregate of the FICA Amount and the income tax withholding related to such FICA Amount. The cash distribution shall be made from the Trust to the Company to satisfy the withholding tax obligation and the Participant's Deferred Compensation Account shall be reduced by the amounts so withheld. The Compensation Committee shall also permit the distribution of any other income or withholding taxes attributable to the Participant's benefit under the Plan, to the extent permitted by Section 409A.
3.6 Limitation on Distribution to Covered Employees. Notwithstanding any other
provision of the Plan, in the event that the Participant is a "covered employee" as defined in
Section 162(m)(3) of the Code, or would be a covered employee if the Participant's Deferred
Compensation Account were distributed in accordance with the other provisions of Article III, the
maximum amount which may be distributed from the Participant's Deferred Compensation
ARTICLE IV
AMENDMENT AND TERMINATION OF PLAN
4.1 Amendment or Termination. The Company intends the Plan to remain in existence until all Participants in the Plan have received all of their benefits payable under the Plan. The Company, however, reserves the right to amend or terminate the Plan when, in the sole opinion of the Company, such amendment or termination is advisable. Any such amendment or termination shall be made pursuant to a resolution of the Compensation Committee of the Board of Directors of the Company. No amendment or termination of the Plan shall reduce the amount credited to the Participant's Deferred Compensation Account below the balance immediately prior to the effective date of the resolution amending or terminating the Plan or delay the distribution date for the Participant's Deferred Compensation Account. The ability of the Company to amend or terminate the Plan and distribute benefits in accordance with such amendment or termination shall be subject to and limited by Section 409A. Accordingly, unless Section 409A provides otherwise, the Plan may be terminated only if: (a) all arrangements sponsored by the Company that are required to be aggregated with this Plan under Section 409A are terminated; (b) no payments other than payments that would be payable under the terms of the Plan or an aggregated plan if the termination had not occurred are made within 12 months of the termination of the arrangements; (c) all payments are made within 24 months of the termination of the Plan and related arrangements; and (d) the Company does not adopt a new arrangement that would be required to be aggregated with this Plan under Section 409A if the same Participant participated in both arrangements, within five years of the termination of the Plan.
4.2 Distribution on Termination. Subject to Section 4.1, upon termination of the Plan, the Deferred Compensation Accounts of all Participants shall be distributed in a single lump sum payment as soon as practicable following the effective date of the Plan termination.
ARTICLE V
CLAIMS PROCEDURE
5.1 Claims Procedure. An initial claim for benefits under the Plan must be made by the Participant or his or her Designated Beneficiary to the Claims Reviewer which shall be the Compensation Committee of the Board of Directors of the Company (unless another person or organizational unit is designated by the Company as Claims Reviewer), in accordance with the terms of this Claims Procedure. Not later than 90 days after receipt of such a claim, the Claims Reviewer will render a written decision on the claim to the claimant, unless special circumstances require the extension of such 90-day period. If such extension is necessary, the Claims Reviewer shall provide the Participant or his or her Designated Beneficiary with written notification of such extension before the expiration of the initial 90-day period. Such notice shall specify the reason or reasons for such extension and the date by which the final decision can be expected. In no event shall such extension exceed a period of 90 days from the end of the initial 90-day period. In the event the Claims Reviewer denies the claim of a Participant or his or her Designated Beneficiary in whole or in part, the Claims Reviewer's written notification shall specify, in a manner calculated to be understood by the claimant, the reason for the denial; a reference to the Plan or other document or form that is the basis for the denial; a description of any additional material or information necessary for the claimant to perfect the claim; an explanation as to why such information or material is necessary; and an explanation of the applicable claims procedure. Should the claim be denied in whole or in part and should the claimant be dissatisfied with the Claim's Reviewer's disposition of the claimant's claim, the claimant may have a full and fair review of the claim by the Company upon written request therefor submitted by the claimant or the claimant's duly authorized representative and received by the Company within 60 days after the claimant receives written notification that the claimant's claim has been denied. In connection with such review, the claimant or the claimant's duly authorized representative shall be entitled to review pertinent documents and submit the claimant's views as to the issues in writing. The Company shall act to deny or accept the claim within 60 days after receipt of the claimant's written request for review unless special circumstances require the extension of such 60-day period. If such extension is necessary, the Company shall provide the claimant with written notification of such extension before the expiration of such initial 60-day period. In all events, the Company shall act to deny or accept the claim within 120 days of the receipt of the claimant's written request for review. The action of the Company shall be in the form of a written notice to the claimant and its contents shall include all of the requirements for action on the original claim. In no event may a claimant commence legal action for benefits the claimant believes are due the claimant until the claimant has exhausted all of the remedies and procedures afforded the claimant by this Article V.
ARTICLE VI
ADMINISTRATION
6.1 Unsecured Claims. The right of a Participant or a Participant's Designated Beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of the Company, and neither a Participant nor his or her Designated Beneficiary shall have any rights in or against any amount credited to any Deferred Compensation Account under the Plan or any other assets of the Company. The Plan at all times shall be considered entirely unfunded both for tax purposes and for purposes of Title I of ERISA, as amended. Any funds invested hereunder shall continue for all purposes to be part of the general assets of the Company and available to its general creditors in the event of bankruptcy or insolvency. Deferred Compensation Accounts under the Plan and any benefits which may be payable pursuant to the Plan are not subject in any manner to anticipation, sale, alienation, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Participant or a Participant's Designated Beneficiary. The Plan constitutes a mere unsecured promise by the Company to make benefit payments in the future. No interest or right to receive a benefit may be taken, either voluntarily or involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.
6.2 Plan Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company, which shall have the authority, duty and power to interpret and construe the provisions of the Plan as the Compensation Committee deems appropriate including the authority to determine eligibility for benefits under the Plan. The Compensation Committee shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The interpretations, determinations, regulations and calculations of the Compensation Committee shall be final and binding on all persons and parties concerned. The Compensation Committee may delegate any of its duties of Plan Administration to such employees or other persons as it deems appropriate. The Plan shall also be administered and interpreted in a manner consistent with Section 409A.
6.3 Expenses. Expenses of administration shall be paid by the Company. The Compensation Committee of the Board of Directors of the Company shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.
6.4 Statements. The Compensation Committee of the Board of Directors of the Company shall furnish individual annual or more frequent statements to each Participant, or each Designated Beneficiary currently receiving benefits, in such form as determined by the Compensation Committee or as required by law. The Compensation Committee may delegate the duty to provide such statements to the trustee of the Trust.
6.5 No Enlargement of Rights. The sole rights of a Participant or Designated Beneficiary under the Plan shall be to have the Plan administered according to its provisions, to receive whatever benefits he or she may be entitled to hereunder, and nothing in the Plan shall be interpreted as a guaranty that any assets or funds in any trust which may be established in connection with the Plan or assets of the Company will be sufficient to pay any benefits hereunder. Further, the adoption and maintenance of the Plan shall not be construed as creating any contract of employment between the Company and any Participant. The Plan shall not affect the right of the Company to deal with any Participants in employment respects, including their hiring, discharge, compensation, and conditions of employment.
6.6 Rules and Procedures. The Company may from time to time establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to an individual in the event that individual is declared incompetent and a conservator or other person legally charged with that individual's care is appointed. Except as otherwise provided herein, when the Company determines that such individual is unable to manage his or her financial affairs, the Company may pay such individual's benefits to such conservator, person legally charged with such individual's care, or institutions contributing toward or providing for the care and maintenance of such individual. Any such payment shall constitute a complete discharge of any liability of the Company and the Plan to such individual.
6.7 Change of Control. Notwithstanding any provision to the contrary, in the event of the earliest Change of Control Event, as defined herein, Participants shall receive their Deferred Compensation Accounts in a single lump sum payment as soon as administratively feasible following the date of the Change of Control Event. The term "Change of Control Event" shall mean (a) a "change in the ownership of the Company", (b) a "change in the effective control of the Company", or (c) a "change in the ownership of a substantial portion of the Company's assets", all within the meaning of Section 409A. The preceding sentence shall be applied using the least restrictive interpretation of each applicable Change in Control Event under Section 409A.
6.8 Information. Each Participant shall keep the Company informed of his or her current address and the current address of his or her Designated Beneficiary. The Company shall not be obligated to search for any person. If such person is not located within three (3) years after the date on which payment of the Participant's benefits payable under the Plan may first be made, payment may be made as though the Participant or his or her Designated Beneficiary had died at the end of such three-year period.
6.9 Loss. Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company including the trustee of the Trust shall be liable to any Participant, any Participant's Designated Beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.
6.10 Indemnification. The Company shall indemnify and hold harmless the members of the Board of Directors, the trustee of the Trust and any other persons to whom any responsibility with respect to the Plan is allocated or delegated, from and against any and all liabilities, costs and expenses, including attorneys' fees, incurred by such persons as a result of any act, or omission to act, in connection with the performance of their duties, responsibilities and obligations under the Plan and under ERISA, other than such liabilities, costs and expenses as may result from the bad faith, willful misconduct or criminal acts of such persons or to the extent such indemnification is specifically prohibited by ERISA. The Company shall have the obligation to conduct the defense of such persons in any proceeding to which this Section applies. If any Board member or any person covered by this indemnification clause determines that the defense provided by the Company is inadequate, that member or person shall be entitled to retain separate legal counsel for his or her defense and the Company shall be obligated to pay for all reasonable legal fees and other court costs incurred in the course of such defense unless a court of competent jurisdiction finds such person has acted in bad faith or engaged in willful misconduct or criminal acts.
6.11 Trust Matters. The Company's obligations under the Plan with respect to Deferred Compensation Accounts may be satisfied with Trust assets distributed pursuant to the terms of the Plan and any such distribution shall reduce the Company's corresponding obligation under the Plan with respect thereto. The provisions of the Plan shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Company, Participants and the creditors of the Company to the assets transferred to, invested by, and held in the Trust. The Company shall at all times remain liable to carry out its obligations under the Plan. Except for amendments to the Trust to comply with applicable laws, no amendment or modification shall be made to the Trust with respect to the Plan without the prior written consent of all Participants in the Plan who have Deferred Compensation Accounts. The funding of benefits under the Plan shall comply in all respects with the requirements of Section 409A.
6.12 Applicable Law. All questions pertaining to the construction, validity and effect of the Plan shall be determined in accordance with the laws of the State of California.
ITLA Capital Corporation has caused this Plan to be executed on this 1st day of February, 2006.
/s/ Jeffrey Lipscomb Name: Jeffrey Lipscomb Compensation Committee Chairman On behalf of ITLA Capital Corporation |
EXHIBIT 10.10
ITLA CAPITAL CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Effective January 1, 1997)
Amended as of January 28, 2000 and January 1, 2003
(Amended and Restated Effective January 1, 2005)
Preamble
ITLA Capital Corporation, a Delaware corporation, has adopted the ITLA Supplemental Executive Retirement Plan, effective January 1, 1997, as amended as of January 28, 2000 and January 1, 2003, for a select group of executives and senior management personnel to ensure that the overall effectiveness of the Company's executive compensation program will attract, retain and motivate qualified executives and senior management personnel. The Plan is intended to comply with the applicable requirements of Section 409A of the Code and related guidance of general applicability issued thereunder (together referred to herein as "Section 409A").
ARTICLE I
DEFINITIONS
When used herein, the following words shall have the meanings below unless the context clearly indicates otherwise:
1.1 "Applicable Measurement Period" means the period of time since the last day investment credit had been previously allocated on the Participant's Change in Control Cash Account Balance under Section 5.2
1.2 "Change in Control" means the occurrence of any of the following events with
respect to the Company: (1) and person(as the term is used in section 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") is or becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Company
representing 33.33% or more of the Company's outstanding voting securities; (2) individuals who
are members of the Board of Directors of the Company on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election was approved by a vote of at
least two thirds of the directors comprising the Incumbent Board, or whose nomination for
election by the Company's stockholders was approved by the nominating committee serving under
an Incumbent Board, shall be considered a member of the Incumbent Board; (3) a reorganization,
merger, consolidation, sale of all or substantially all of the assets of the Company or a similar
transaction in which the Company is not the resulting entity (unless the continuing ownership
requirements clause (4) below are met with respect to the resulting entity); or (4) a merger or
consolidation of the Company with any other corporation other than a merger or consolidation in
which the voting securities of the Company outstanding immediately prior thereto represent at
least 66.67% of the total voting power represented by the voting securities of the Company or the
surviving entity outstanding immediately after such merger or consolidation. The term "Change in
Control" shall not include: (1) an acquisition of securities by an employee benefit plan of the
Company; or (2) any of the above mentioned events or
1.3 "Change in Control Cash Account Balance" means, with respect to a Participant, a credit to a Participant under the Plan on the records of the Company equal to the Initial Change in Control Cash Balance plus amounts credited pursuant to Section 5.2. The Change in Control Cash Account Balance, if applicable, shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the cash amounts to be paid to a Participant, or his or her Designated Beneficiary, pursuant to the Plan.
1.4 "Claims Reviewer" means the Compensation Committee of the Board of Directors of the Company, unless another person or organizational unit is designated by the Company as Claims Reviewer.
1.5 "Company" means ITLA Capital Corporation, a Delaware corporation, and any successor thereto. Where applicable, including for purposes of determining whether a Participant is employed by, or received Earnings from, the Company at any particular time, the term "Company" shall also include any entity that would be treated as a single employer with the Company under Section 414 of the Internal Revenue Code of 1986, as amended.
1.6 "Company Stock" means the Company's designated Recognition and Retention Plan shares, treasury shares and publicly traded common stock including publicly traded common stock of a successor in interest.
1.7 "Designated Beneficiary" means the individual the Participant designates as his or her Beneficiary in such Participant's Supplemental Executive Retirement Plan designation of beneficiary form.
1.8 "Disability" means total and permanent disability as defined in the Company's long term disability plan.
1.9 "Earnings" means the Participant's base annual salary from the Company (without regard to any deferral election made by the Participant and/or any bonuses paid to the Participant).
1.10 "Haligowski Employment Agreement" means that certain employment agreement between the Company and George Haligowski dated January 28, 2000, as the same may be thereafter amended.
1.11 "Initial Change in Control Cash Balance" means, with respect to a Participant, the
unsecured obligation of the Company that is intended to represent a cash amount based upon the
conversion of his Stock Account Balance to cash on the day next following the consummation of
a Change in Control pursuant to a Participant's election, or an automatic conversion, under
Section 5.1, in exchange for the cancellation of his or her Vested Stock Account Balance, equal
to the number of shares of Company Stock allocated to his or her Vested Stock Account Balance
as of the consummation of the Change in Control multiplied by the cash value of the per share
merger consideration to be received in the Change in Control transaction as of the date of
consummation of the Change in Control (i.e., in the case of a common stock for common stock
exchange, the exchange ratio multiplied by the closing sales price of the acquiror's common stock
on the date of the
1.12 "Participant" means any employee of the Company who meets the eligibility requirements of Article II and is designated and approved for participation in the Plan as set forth in Article II.
1.13 "Participant's Account" or "Account" means the Vested Stock Account Balance or Change in Control Cash Account Balance of each Participant, whichever is applicable.
1.14 "Plan" means the ITLA Capital Corporation Supplemental Executive Retirement Plan, as set forth herein and as amended from time-to-time.
1.15 "Plan Year" means the calendar year.
1.16 "Retirement Date" means the later of the date a Participant leaves the employ of the Company or the date upon which the Participant attains the age of 62.
1.17 "Stock Account Balance" means, with respect to a Participant, the number of shares of Company Stock allocated to a Participant, whether vested or unvested, under the Plan.
1.18 "Trust" means the Trust under the Company Rabbi Trust Agreement.
1.19 "Trustee" means Union Bank of California or any other person or corporation selected by the Company to serve in such capacity of the Trust.
1.20 "Vested Stock Account Balance" means, with respect to a Participant, the number of vested shares of Company Stock credited to the Stock Account Balance of a Participant.
1.21 "Vesting Cycle" means one of the following of seven consecutive three calendar year periods: (1) January 1, 1997 through December 31, 1999; (2) January 1, 2000 through December 31, 2002; (3) January 1, 2003 through December 31, 2005; (4) January 1, 2006 through December 31, 2008; (5) January 1, 2009 through December 31, 2011; (6) January 1, 2012 through December 31, 2014 and (7) January 1, 2015 through December 31, 2017.
ARTICLE II
ELIGIBILITY TO PARTICIPATE
2.1 Eligibility to Participate. For purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the Plan is limited to a select group of management and highly compensated employees.
2.2 Designated Participants. An executive or senior management employee of the Company is eligible to become a Participant in the Plan; provided such employee is designated as a Participant below or, such employee is later designated as a Participant by the Compensation Committee of the Board of Directors of the Company and, such designation is attached as a written amendment to the Plan signed by a duly authorized officer of the Company. Under no circumstance shall an employee below the level of Managing Director or Senior Vice President be eligible to participate in the Plan. The following individuals are Participants in the Plan as of January 1, 2003.
George W. Haligowski (effective January 1997)
Norval L. Bruce (effective January 1997)
Timothy Doyle (effective January 1997)
Steven Romelt (effective January 1997)
Don Nickbarg (effective May 2000)
William Schack (effective January 2002)
Scott Wallace (effective January 2002)
William Callam (effective January 2003)
Once an employee becomes a Participant, he or she shall remain a Participant until all benefits, if any, to which he or she (or his or her Designated Beneficiary) is entitled under the Plan have been distributed.
ARTICLE III
ELIGIBILITY FOR AND DISTRIBUTION OF BENEFITS
3.1 Eligibility for Benefits. Each Participant shall be eligible to receive his or her Vested Stock Account Balance or Change in Control Cash Account Balance, whichever is applicable, under the Plan as provided in Sections 3.3 and 3.4 below. Except as set forth in Sections 3.5 and 6.1 below, no benefits shall be payable from the Plan to a Participant while such Participant is employed by the Company.
3.2 Incidents of Ownership. Notwithstanding the above, a Participant shall have no incidents of ownership with respect to the Company Stock or any other assets held under the Plan. A Participant shall not have any right to vote shares of Company Stock allocated or credited to the Participant's Stock Account Balance under the Plan.
3.3 Form of Distribution. A Participant's Vested Stock Account Balance shall be distributed solely in Company Stock. A Participant's Change in Control Cash Account Balance shall be distributed solely in cash.
3.4 Election and Timing of Distribution.
(a) Except as provided in this Section 3.4, Section 3.5 and 6.1, a Participant's Account shall be distributed either in a single lump sum distribution, five (5) annual installments or ten (10) annual installments in accordance with the written election of such Participant. Such written election must be in form acceptable to the Compensation Committee of the Board of Directors of the Company and shall not be effective until received by the Compensation Committee. If no written election is made, then the Participant's Account shall be paid in a single lump sum distribution.
(b) With respect to the value of the Participant's Account determined as of December 31, 2004 (the "Pre-Section 409A Balance"), a Participant's election may be changed at any time by filing a new written election (which shall automatically revoke his or her prior written election) with the Compensation Committee of the Board of Directors of the Company, which election shall become effective upon its receipt by the Compensation Committee; provided however, the most recent written election received prior to the thirteenth (13th) month before the Participant's termination of employment shall be controlling and any written election received within the thirteen (13) month period immediately preceding the Participant's termination of employment shall be disregarded; and provided further, that the first written election made under the Plan by a Participant in calendar year 2003 and received by the Compensation Committee prior to January 1, 2004 shall in all cases be honored unless timely revoked thereafter by a new binding written election.
(c) With respect to the value of the Participant's Account in excess of the Participant's Pre-Section 409A Balance (the "Section 409A Balance") the Participant may select a form of distribution (among the options described in Section 3.4(a)) with respect to any allocation contributed on his behalf, provided that the election is made before the Participant has a legally binding right to the allocation. Any such selection (including a default election in the event the Participant did not make an election) may be subsequently changed by a Participant by delivering a new written election to the Compensation Committee. However, except as may otherwise be provided in Section 409A, (1) any such change in the form of distribution shall not take effect until at least twelve months after the date the election is made, and (2) payment of the amount with respect to which the form of distribution is being changed shall commence upon the fifth anniversary of the date the Participant experiences a "Separation From Service" (as that phrase is defined in Section 409A).
(d) Except as provided in Section 3.4(c): (1) a single lump sum distribution shall be
made within forty-five (45) days after a Participant's Separation From Service; (2) in the case of
an annual installment method (5 or 10 year term), the first annual distribution shall be made on the
first day of the calendar month next following the one year anniversary of the Participant's
Separation From Service, termination of employment (1/5 or 1/10 of the Participant's Account,
whichever is applicable), and subsequent annual installments will be made on each annual
anniversary of the first distribution (1/4 or 1/9 of the Participant's Account on the second
distribution date, whichever is applicable). Notwithstanding the foregoing, with respect to
Section 409A Balances, except as provided in Section 3.4(c), if the Participant is a "specified
employee" (within the meaning of
(e) All distributions under the Plan shall be less applicable tax and other required or authorized withholdings. The Trust shall timely deliver to the Company a sufficient number of shares of Company Stock from a Participant's Vested Stock Account Balance (based upon the closing price on the most recent trading date prior to the date of delivery) or cash from his or her Change in Control Cash Account Balance to satisfy the withholding obligations of such Participant. All distributions of Company Stock shall comply with federal and state securities laws.
3.5 Advance Distribution for Financial Hardship. With the consent of the Compensation Committee of the Board of Directors of the Company, and notwithstanding anything contained in Section 3.4 to the contrary, a Participant may withdraw up to one hundred percent (100%) of his or her Vested Stock Account Balance (in shares) or Change in Control Cash Account Balance (in cash), in each case less applicable tax and other required or authorized withholdings, prior to termination of employment as may be required to meet a Participant's Unforeseeable Financial Emergency (as defined herein), provided that the entire amount requested by the Participant is not reasonably available from other resources of the Participant. An "Unforeseeable Financial Emergency" shall mean an unforeseeable, severe financial condition resulting from (1) a sudden and unexpected illness or accident of the Participant, the Participant's spouse or a dependent of the Participant (within the meaning of Section 152(a) of the Code); (2) a loss of the Participant's property due to casualty; or (3) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The withdrawal must be necessary to satisfy the Unforeseeable Financial Emergency and no more may be withdrawn from the Participant's Account than is required to relieve the financial need, taking into account taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement by insurance or otherwise or by liquidation of the Participant's assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). This Section shall be interpreted in a manner consistent with Section 409A. The Participant's Account shall be reduced by the amount of any advance distribution for financial hardship including withholdings.
3.6 Limitation on Distribution to Covered Employees. Notwithstanding any other
provision of the Plan, in the event that the Participant is a "covered employee" as defined in
Section 1 62(m)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), or would be
a covered employee if the benefits were distributed in accordance with Section 3.5 or 6.1, the
maximum amount which may be distributed from the Participant's Account under Section 3.5 or
6.1 in any Plan Year shall not exceed one million dollars ($1,000,000) less the amount of
compensation paid by the Company to the Participant in such Plan Year which is not
"performance-based" (as defined in Code Section 162(m)(4)(C)). The amount of compensation
which is not "performance-based" shall be reasonably determined by the Company at the time of
the proposed distribution. Any amount which
ARTICLE IV
ALLOCATION AND FUNDING OF STOCK ACCOUNT BALANCES
4.1 Allocation to Stock Account Balances. Shares of Company Stock under the Plan are allocated to a Participant's Stock Account Balance on an annual basis on or within ninety (90) days of the last day of the Plan Year. A Participant must be employed by the Company as of the last day of the Plan Year in order to receive an allocation of shares for such Plan Year under this Section 4.1 and Section 4.2. The amount of Company Stock allocated to a Participant's Stock Account Balance pursuant to this Section 4.1 and Section 4.2 shall be determined using the fair market value of the Company Stock as of October 8, 1998, of nine dollars ($9.00) a share.
4.2 Allocation Amounts. The annual amount allocated to a Participant pursuant to Section 4.1 shall be calculated as follows, subject to approval of the allocation by the Compensation Committee of the Board of Directors of the Company and the award of sufficient shares of Company Stock to fund the annual allocation:
- | The annual amount shall be equal to 20% of each such Participant's Earnings (except in the case of George Haligowski, 33 1/3% of his Earnings) for the Plan Year. |
Notwithstanding the preceding sentences, the Compensation Committee of the Board of Directors of the Company may approve a greater or lesser award for any Participant or determine that no award is appropriate for a Participant. In no event, however, shall the total number of shares of Company Stock allocated under the Plan (excluding reinvestments under Section 4.3 and stock dividends and distributions) exceed the issued Recognition and Retention Plan shares to be allocated under the Plan.
4.3 Contribution to Trust and Reinvestment of Cash Dividends. The Company shall contribute shares of Company Stock to the Trust on an annual basis in an amount equal to the total annual allocation for all Participants for the Plan Year as determined under Section 4.2 to the extent that the Compensation Committee of the Board of Directors of the Company approves such funding. The contributed shares shall come from the issued Recognition and Retention Plan shares approved for such use by the shareholders in the Company's Recognition and Retention Plan. All Recognition and Retention Plan terms pertaining to the granting of the shares shall remain in full force and effect. The Plan shall be funded with Recognition and Retention Plan shares only to the extent that shares are available and the shares are awarded by the Compensation Committee of the Board of Directors of the Company.
The number of shares of Company Stock allocated to each Participant's Stock Account Balance under the Plan for a Plan Year under Sections 4.1 and 4.2 shall be determined by dividing the Participant's allocation amount for such Plan Year as determined in Section 4.2 above by the fair market value of Company Stock on October 8, 1998, of nine dollars ($9.00) a share. If the available Recognition and Retention Plan shares should be insufficient to cover the allocation amounts for all Participants for any Plan Year as determined under Section 4.2 above, the allocation amounts shall be reduced for each Participant on a pro rata basis.
Stock dividends and distributions on shares of Company Stock allocated to a Participant's Stock Account Balance shall be added to the Participant's Stock Account Balance with the portion allocated to unvested shares being subject to the same vesting requirements of the underlying shares. All cash dividends received on shares of Company Stock allocated to a Participant's Stock Account Balance, whether vested or unvested, shall be reinvested by the Trustee in shares of Company Stock (rounded to the nearest whole share), such additional shares shall be added to the Participant's Stock Account Balance, and the Participant shall at all times be fully vested in such reinvestments.
4.4 Vesting. A Participant shall only have a vested right to the shares allocated to his or her Stock Account Balance for a Vesting Cycle under Sections 4.1 and 4.2 (and any stock dividends and distributions relating thereto) if such Participant is employed by the Company on the last day of the Vesting Cycle. Notwithstanding the preceding sentence, a Participant shall be 100% vested in all shares allocated to his or her Stock Account Balance under Sections 4.1 and 4.2 (including any stock dividends distributions relating thereto) in the event of the consummation of a Change of Control (if he or she is employed immediately prior to the Change in Control) or termination of employment due to death, Disability or after Retirement Date. A Participant shall at all times be 100% vested in reinvestments in Company Stock allocated to his or her Stock Account Balance under Section 4.3. A Participant employed by the Company on the date of termination of the Plan shall also be 100% vested in his or her Stock Account Balance upon Plan termination. Notwithstanding the foregoing or anything contained elsewhere in the Plan, a Participant's Vested Stock Account Balance shall be subject to forfeiture as provided in Section 7.1.
4.5 Forfeiture. In the event a Participant leaves the employ of the Company prior to a Change in Control and before the end of a Vesting Cycle for reasons other than death, Disability or after Retirement Date, all shares allocated to his or her Stock Account Balance under Section 4.1 and 4.2 (including stock dividends and distributions relating thereto) for that Vesting Cycle shall be forfeited. Forfeited shares shall be returned to the Company and may be reallocated to satisfy future contributions under Sections 4.1 through 4.3. Notwithstanding the foregoing or anything contained elsewhere in the Plan, the Vested Stock Account Balance of a Participant shall be subject to forfeiture as provided in Section 7.1.
4.6 No Further Contributions after a Change in Control. No further contributions of Company Stock shall be made under Sections 4.1 and 4.2 after a Change in Control.
ARTICLE V
CONVERSION TO INITIAL CHANGE IN CONTROL CASH BALANCE AND
INVESTMENT CREDITS
5.1 Procedure for Conversion. Within 30 days prior to the consummation of a Change in Control, a Participant (including a Participant or Designated Beneficiary who is then receiving installment distributions of Company Stock pursuant to Section 3.4) may make a written election to convert his or her Vested Stock Account Balance to the Initial Change in Control Cash Balance as of the day next following the Change in Control. Such written election must be received by the Compensation Committee of the Board of Directors of the Company within such 30 day period. If such written election is timely made, then on the day next following the Change in Control, the Vested Stock Account Balance of the electing Participant shall terminate and his or her benefits under the Plan shall then consist solely of his or her Change in Control Cash Account Balance. In the event the Change in Control transaction results in the exchange of the outstanding shares of common stock of the Company for consideration other than publicly traded shares of the acquiror (and cash in lieu of fractional share interests), then in that event, immediately following the consummation of the Change in Control the Stock Account Balance of each Participant shall be automatically converted to the Initial Change in Control Cash Balance. Nothing herein shall alter the method of distribution of a Participant's Account (i.e., lump sum, five (5) year installments or ten (10) year installments) under Section 3.4.
5.2 Investment Credits. Each Participant's Change in Control Cash Account Balance shall be credited with an investment credit through the close of business on each of (i) the last day of the Plan Year and (ii) the day next preceding the date of any distribution of benefits to the Participant from his or her Change in Control Cash Account Balance. The investment credit shall be determined by multiplying either (a) the average yield on the 10 year constant maturity U.S. Treasury Securities, as published in the Federal Reserve Statistical Release, determined by taking the average yield for the last active trading day of each calendar month during the Applicable Measurement Period times the average daily balance in the Participant's Change in Control Cash Account Balance for such Applicable Measurement Period or (b) 125% of the annualized average cost of funds of Imperial Capital Bank (or its successor in interest) during the Applicable Account Period times the average daily balance in the Participant's Change in Control Cash Account Balance for such Applicable Measurement Period, whichever results in the highest yield, with the yield being applied on a pro-rata basis for any Applicable Measurement Period that is less than one year.
5.3 Trust Provisions. As soon as practicable following the consummation of a Change
in Control (but not later than 30 days after the occurrence thereof), the Company shall contribute
cash to the Trust in an amount equal to the Initial Change in Control Cash Account Balance of
each Participant whose Vested Stock Account Balance is converted pursuant to Section 5.1, and
shares contained in the Stock Account Balance of each such Participant shall be tended by the
Trustee to the Company in cancellation of such Stock Account Balance. The preceding sentence
shall not apply, if the shares of Company Stock in the Stock Account Balance of a Participant are
exchanged for cash in the Change in Control transaction. To the extent that the actual earnings of
a Participant's Change in Control Cash Account Balance, based upon investments of the Trust,
exceed the amount of investment credit to be allocated to a Participant's Change in Control Cash
Account Balance pursuant
5.4 Vested Benefits. The Change in Control Cash Account Balance of each Participant shall be 100% vested at all times and shall not be subject to forfeiture.
ARTICLE VI
AMENDMENT AND TERMINATION
6.1 Amendment or Termination. The Company intends the Plan to remain in existence until all Participants in the Plan have received all of their benefits payable under the Plan. The Company, however, reserves the right to amend or terminate the Plan prior to a Change in Control when, in the sole opinion of the Company, such amendment or termination is advisable. Any such amendment or termination shall be made pursuant to a resolution of the Compensation Committee of the Board of Directors of the Company. No amendment or termination of the plan shall directly or indirectly reduce any Participant's Account below the balance of such Account immediately prior to the effective date of the resolution amending or termination the Plan; nor shall any amendment or termination of the Plan delay the distribution date of the Participant's Account. Upon termination of the Plan any unvested shares of Company Stock allocated to he Stock Account Balance of Participant who is then employed by the Company shall be come fully vested. Notwithstanding anything contained in Section 3.4 to the contrary, upon termination of the Plan all Participant Accounts (including those Accounts which are then being distributed to Participants or Designated Beneficiaries in installments) shall be paid in a single lump sum distribution within 30 days after such termination but subject to the limitations set forth in Section 3.6, regardless of the distribution elections made by the Participants. Distribution of Stock Account Balances shall be made solely in shares of Company Stock and distribution of Change in Control Cash Account Balances, if applicable, shall be made solely in cash. No amendment to (other than to comply with law) or termination of the Plan will be permitted to be made by the Company after a Change in Control without the written consent of all Participants including Participants or Designated Beneficiaries then receiving distributions.
Notwithstanding anything to the contrary in this Article VI, the ability of the Company to amend or terminate the Plan and distribute benefits in accordance with such amendment or termination shall be subject to and limited by Section 409A. Accordingly, unless Section 409A provides otherwise, the Plan may be terminated only if: (a) all arrangements sponsored by the Company that are required to be aggregated with this Plan under Section 409A are also terminated; (b) no payments other than payments that would be payable under the terms of the Plan or an aggregated plan if the termination had not occurred are made within 12 months of the termination of the Plan and the related arrangements; (c) all payments are made within 24 months of the termination of the Plan and related arrangements; and (d) the Company does not adopt a new arrangement that would be required to be aggregated with this Plan under Section 409A if the same Participant participated in both arrangements, within five years of the termination of the Plan.
The Company also may terminate the Plan within the thirty (30) days preceding a Change in Control Event, provided that all substantially similar arrangements also are terminated, so that the Participants in this Plan, and participants in all substantially similar arrangements, receive all amounts deferred under this Plan and the arrangements within twelve (12) months of the date of the termination of this Plan and the other arrangements. For purposes of the preceding sentence, the phrase "Change in Control Event" shall mean a "change in the ownership of the Company", a "change in the effective control of the Company", or a "change in the ownership of a substantial portion of the Company's assets", all within the meaning of Section 409A. Further, the provisions of this paragraph shall have priority over and supercede any election made by any Participant regarding the form of distribution of his or her benefits pursuant to Article III hereof.
The Plan may not be amended or terminated after a Change in Control Event without the written consent of the Participants, except to the extent necessary to comply with applicable law.
ARTICLE VII
ADMINISTRATION
7.1 Termination of Benefits. Notwithstanding any other provision of the Plan, the rights of a Participant or his or her Designated Beneficiary to benefits under the Plan will, at the discretion of the Compensation Committee of the Board of Directors, be terminated, and the Company will have no obligation hereunder to such Participant or his or her Designated Beneficiary, if such Participant is discharged from employment from the Company for cause (as defined in the Company's Change of Control Severance Agreements) prior to a Change in Control.
7.2 Unsecured Claims. The right of a Participant or his or her Designated Beneficiary to receive a benefit hereunder shall be an unsecured claim against the general assets of the Company, and neither a Participant nor his or her Designated Beneficiary shall have any rights in or against any shares or amount credited to any Accounts under this Plan or any other assets of the Company. Notwithstanding any other provisions to the contrary, the Plan at all times shall be considered entirely unfunded both for tax purposes and for purposes of Title I of ERISA as amended. Any assets or investments hereunder shall continue for all purposes to be part of the general assets of the Company and available to its general creditors in the event of bankruptcy or insolvency. Accounts under this Plan and any benefits which may be payable pursuant to this Plan are not subject in any manner to anticipation, sale, alienation, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of a Participant or his or her Designated Beneficiary. The Plan constitutes a mere unsecured promise by the Company to make benefit distributions in the future. No interest or right to receive a benefit may be taken, either voluntarily of involuntarily, for the satisfaction of the debts of, or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.
7.3 Plan Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company, which shall have the authority, duty and
power to interpret and construe the provisions of the Plan as the Compensation Committee deems
appropriate including the authority to determine eligibility for benefits under the Plan. The
Compensation Committee shall have the duty and responsibility of maintaining records, making
7.4 Expenses. Expenses of administration shall be paid by the Company. The Compensation Committee of the Board of Directors of the Company shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.
7.5 Statements. The Compensation Committee of the Board of Directors of the Company (or the Trustee if such duty is delegated to the Trustee) shall furnish individual annual or more frequent statements of accrued benefits to each Participant (or if the Participant's Designated Beneficiary is currently receiving benefits under the Plan, to such Participant's Designated Beneficiary) in such form as determined by the Compensation Committee of the Board of Directors of the Company or as required by the law.
7.6 No Enlargement of Rights. The sole rights of a Participant or his or her Designated Beneficiary under the Plan shall be to have this Plan administered according to its provisions, to receive whatever benefits he or she may be entitled to hereunder, and nothing in the Plan shall be interpreted as a guaranty that any assets or funds in any trust which may be established in connection with the Plan or assets of the Company will be sufficient to pay any benefit hereunder. Further, the adoption and maintenance of the Plan shall not be construed as creating any contract of employment between the Company and the Participant. The Plan shall not affect the right of the Company to deal with any Participants in employment respects, including their hiring, discharge, compensation and conditions of employment.
7.7 Rules and Procedures. The Company may from time to time establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to an individual in the event that individual is declared incompetent and a conservator or other person legally charged with that individual's care is appointed. Except as otherwise provided herein, when the Company determines that such individual is unable to manage his or her financial affairs, the Company may pay such individual's benefits to such conservator, person legally charged with such individual's care, or institution then contributing toward or providing for the care and maintenance of such individual. Any such distribution shall constitute a complete discharge of any liability of the Company, the Plan, the Trust and the Trustee to such individual.
7.8 Information. Each Participant shall keep the Company informed of his or her current address and the current address of his or her Designated Beneficiary. The Company shall not be obligated to search for any person. If such person(s) is (are) not located within three (3) years after the date on which distribution of the Participant's benefits payable under this Plan may first be made, distribution may be made as though the Participant or his or her Designated Beneficiary had died at the end of such three-year period.
7.9 Loss. Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company including the Trustee shall be liable to any Participant, his or her Designated Beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.
7.10 Indemnification. The Company shall indemnify and hold harmless the members of the Board of Directors, the Trustee, and any other persons to whom any responsibility with respect to the Plan is allocated or delegated, from and against any and all liabilities, costs and expenses, including attorneys' fees, incurred by such persons as a result of any act, or omission to act, in connection with the performance of their duties, responsibilities and obligations under the Plan and under ERISA, other than such liabilities, costs and expenses as may result from the bad faith, willful misconduct or criminal acts of such persons or to the extent such indemnification is specifically prohibited by ERISA. The Company shall have the obligation to conduct the defense of such persons in any proceeding to which this Section applies. If any Board member or any person covered by this indemnification clause determines that the defense provided by the Company is inadequate, that member or person shall be entitled to retain separate legal counsel for his or her defense and the Company shall be obligated to pay for all reasonable legal fees and other court costs incurred in the course of such defense unless a court of competent jurisdiction finds such person has acted in bad faith or engaged in willful misconduct or criminal acts.
7.11 Trust Matters. The Company's obligations under the Plan with respect to the Accounts may be satisfied with Trust assets distributed pursuant to the terms of the Plan and any such distribution shall reduce the Company's corresponding obligation under the Plan with respect to the Accounts. The provisions of the Plan shall govern the rights of a Participant to receive distributions pursuant to the Plan. The provisions of the Trust shall govern the rights of the Company, Participants and the creditors of the Company to the assets transferred to and/or held by the Trust. The Company shall at all times remain liable to carry out its obligations under the Plan. Except for amendments to the Trust to comply with applicable laws, no amendment or modification shall be made to the Trust without the prior written consent of all Participants who have Accounts. The funding of benefits under the Plan shall comply in all respects with the requirements of Section 409A.
7.12 Applicable Law. All questions pertaining to the construction, validity and effect of the Plan shall be determined in accordance with the laws of the State of California.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 Claims Procedure. An initial claim for benefits under the Plan must be made by the
Participant or his or her Designated Beneficiary in accordance with the terms of the Plan through
which the benefits are provided. Not later than 90 days after receipt of such a claim, the Claims
Reviewer will render a written decision on the claim to the claimant, unless special circumstances
require the extension of such 90-day period. If such extension is necessary, the Claims Reviewer
shall provide the Participant or his or her Designated Beneficiary with written notification of such
ITLA Capital Corporation has caused this Plan to be executed on this 1st day of February, 2006, but effective January 1, 2005).
/s/ Jeffrey Lipscomb Name: Jeffrey Lipscomb Compensation Committee Chairman On behalf of ITLA Capital Corporation |
EXHIBIT 10.11
ITLA CAPITAL CORPORATION
2005 RE-DESIGNATED, AMENDED AND RESTATED
EMPLOYEE STOCK INCENTIVE PLAN
(as amended as of February 1, 2006)
Section 1
Establishment, Purpose, and Effective Date of Plan
1.1 Purpose. The purpose of the Employee Stock Incentive Plan ("Plan") is to advance the interests of the Company, by encouraging and providing for the acquisition of an equity interest in the success of the Company by Participants, by providing additional incentives and motivation toward superior performance of the Company, and by enabling the Company to attract and retain the services of Participants, upon whose judgment, interest, and special effort and successful conduct of its operations is largely dependent.
1.2 Effective Date. The Plan was originally adopted on October 18, 1995 and amended effective July 31, 2001. This 2005 Re-Designated Amended and Restated Employee Stock Incentive Plan was approved by the Company's stockholders at the annual meeting of the Company's stockholders on July 27, 2005 (the "Effective Date"). This Plan shall be treated as a new plan for purposes of Section 422 of the Code, so that an Option granted hereunder on a date that is more than ten years after the original effective date of the Plan, and that is intended to qualify as an Incentive Stock Option under Section 422 of the Code, complies with the requirements of Code Section 422(b)(2) and the applicable regulations thereunder.
1.3 Nonapplicability of Section 409A of the Code. No benefit provided under this Plan is intended to constitute deferred compensation, within the meaning of Section 409A (as herein defined). Accordingly, the Plan shall be administered and interpreted consistent with this intent, with respect to any benefits provided hereunder after December 31, 2004, or any benefits provided hereunder prior to January 1, 2005 that are materially modified (within the meaning of Section 409A) after October 3, 2004.
Section 2
Definitions
2.1 Definitions. Whenever used herein, the following terms shall have their respective meanings set forth below:
2.1.1 "Affiliate" means any corporation or limited liability company, a majority of the voting stock or membership interests of which is directly or indirectly owned by the Company, and any partnership or joint venture designated by the Committee in which any such corporation or limited liability company is a partner or joint venturer.
2.1.2 "Agreement" means a written agreement (including any amendment or supplement thereto) between the Company and a Participant specifying the terms and conditions of an Award granted to such Participant.
2.1.3 "Award" means any arrangement, security or benefit that, by its terms, involves the issuance of Stock or provides a benefit that derives its value from Stock granted under this Plan, including, without limitation, Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units.
2.1.4 "Beneficiary" means the person or persons determined in accordance with Section 11.
2.1.5 "Board" means the Board of Directors of the Company.
2.1.6 "Code" means the Internal Code of 1986, as amended from time to time, and the rulings and regulations issued thereunder.
2.1.7 "Committee" means the Compensation Committee of the Board or such other committee selected by the Board, comprised of at least two Directors, each of whom is a Non-Employee Director.
2.1.8 "Company" means ITLA Capital Corporation, a Delaware corporation, or any successor thereto.
2.1.9 "Consultant" means any individual, other than an Employee or Director, who renders services to the Company and who qualifies as a consultant under the general instructions to the Form S-8 Registration Statement under the Securities Act of 1933, as amended, or any successor form.
2.1.10 "Director" means any member of the Board.
2.1.11 "Disability" means a condition of total and permanent disability whereby one is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, as defined by Section 22(e) of the Code.
2.1.12 "Employee" means any full-time or part-time employee of the Company or an Affiliate (including any officer or director who is also an employee) who was not hired for a specific job of limited duration, or for a position slotted for students.
2.1.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.1.14 "Fair Market Value" means with respect to the Stock the closing sales price of the Stock, as reported on the Nasdaq Stock Market or, if not so reported, the closing sales price as reported by any other appropriate reporting system of general circulation, on the date for which the value is to be determined, or if there is no closing sales price on such date, then on the last day for which transactions in Stock were so reported prior to the date on which the value is to be determined.
2.1.15 "Incentive Stock Option" means any Option intended to be and designated as an "Incentive Stock Option" within the meaning of Section 422 of the Code.
2.1.16 "Non-Employee Director" means a Director who qualifies as (i) a "Non-Employee Director" under Rule 16b-3 under the Exchange Act (or any successor provision) and (ii) an "Outside Director" under Section 162(m) of the Code (or any successor provision) and the regulations promulgated thereunder.
2.1.17 "Non-Qualified Stock Option" means any Option that is not an Incentive Stock Option.
2.1.18 "Option" means the right to purchase Stock at a stated price for a specified period of time. For purposes of the Plan an Option may be either (i) an Incentive Stock Option, (ii) a Non-Qualified Stock Option, or (iii) any other type of option encompassed by the Code.
2.1.19 "Participant" means an Employee of the Company or one of its Affiliates, including an Employee who is a Director, or a Consultant, and who is selected by the Committee to receive an Award.
2.1.20 "Performance Period," stated with reference to Performance Shares or Performance Units, means the time period during which the performance goals must be met, as determined by the Committee.
2.1.21 "Performance Share" means the right to receive payment equal to the value of a Performance Share as determined by the Committee.
2.1.22 "Performance Unit" means the right to receive payment equal to the value of a Performance Unit as determined by the Committee.
2.1.23 "Period of Restriction" means the period during which shares of Restricted Stock or Restricted Stock Units are subject to restrictions pursuant to Section 9 of the Plan.
2.1.24 "Related" means (i) in the case of an SAR, an SAR which is granted in connection with, and to the extent exercisable, in whole or in part, in lieu of, an Option and (ii) in the case of an Option, an Option with respect to which and to the extent an SAR or other right is exercisable, in whole or in part, in lieu thereof.
2.1.25 "Restricted Stock" means shares of Stock granted to a Participant which are subject to a Period of Restriction under Section 9 of the Plan.
2.1.26 "Restricted Stock Unit" means the right to receive a share of Stock, which right is subject to a Period of Restriction under Section 9 of the Plan.
2.1.27 "Retirement" (including "Early Retirement" and "Normal Retirement") means termination of employment on or after such Employee's early, normal or late retirement date or age as applicable under the terms of the Company's 401(k) Plan.
2.1.28 "Section 409A" means Section 409A of the Code and any regulations or guidance of general applicability thereunder
2.1.29 "Stock" means the Common Stock, par value $.01 per share, of the Company.
2.1.30 "Stock Appreciation Right" and "SAR" mean the right to receive a payment from the Company equal to the excess of the Fair Market Value of the share of Stock at the date of exercise over a specified price fixed by the Committee, which shall not be less than 100% of the Fair Market Value of the Stock on the date of grant. In the case of a Stock Appreciation Right which is granted in conjunction with an Option, the specified price shall be the Option exercise price.
2.2 Gender and Number. Except when otherwise indicated by the context, words in the masculine gender when used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular.
Section 3
Eligibility and Participation
All Employees (including Employee-Directors, but excluding Directors who are not Employees) and Consultants are eligible to participate in the Plan and to receive Awards. The Committee shall select and determine, in its sole discretion, those Employees and Consultants who will participate in the Plan and the extent of their participation. Notwithstanding the foregoing, Consultants shall not be eligible to receive Incentive Stock Options.
Section 4
Administration
4.1 Administration of the Plan. The Committee shall be responsible for the administration of the Plan. Any power of the Committee may also be exercised by the Board, except to the extent that the grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing profit recovery provisions of Section 16 of the Exchange Act or cause an Award not to qualify for treatment as "performance based compensation" under Section 162(m) of the Code. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control. The Committee may delegate any or all aspects of the day-to-day administration of the Plan to one or more officers or employees of the Company or any Affiliate, and/or to one or more agents.
4.2 Powers of the Committee. The Committee, by majority action thereof, is authorized to interpret
the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, to provide for conditions and
assurances deemed necessary or advisable to protect the interests of the Company, and to make all other
determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the
express provisions of the Plan. The Committee shall have the authority, in its discretion, to determine the
Participants to whom Awards shall be granted, the times when such Awards shall be granted, the number of
Awards,
4.3 Determinations by the Committee. All decisions, determinations and interpretations by the Committee regarding the Plan, any rules and regulations under the Plan, and the terms and conditions of or operation of any Award granted hereunder, shall be final and binding on all Participants, Beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan or any Award. The Committee shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select.
Section 5
Stock Subject to Plan
5.1 Number. Subject to increases and adjustments as provided in this Section 5, the maximum number of shares of Stock subject to Awards under the Plan may not exceed 1,561,000 (the "Limit"), provided that with respect to Awards of SARs, only the net number of shares issued to settle the SARs upon their exercise shall be counted against the Limit, and provided further that each share issued pursuant to Awards of SARs, Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units shall be counted against the Limit as two (2) shares. The shares of Stock to be delivered under the Plan may consist, in whole or in part, of authorized but unissued shares or treasury shares, not reserved for any other purpose. The maximum aggregate number of shares of Stock with respect to which Options or SARs may be granted during any calendar year to any Employee is 1,561,000, subject to adjustment as provided in Section 5.4.
5.2 Incentive Stock Options. The maximum aggregate number of shares of Stock that may be issued pursuant to the exercise of Options that are Incentive Stock Options granted under this Plan is 1,561,000, subject to adjustment as provided in Section 5.4.
5.3 Lapsed Awards. Subject to the express provisions of the Plan, if and to the extent any Award granted under the Plan terminates, expires or lapses for any reason, any Stock subject to such Award again shall be Stock available for the grant of an Award. Shares of Stock used to pay the exercise price of an Option and shares of Stock used to satisfy tax withholding obligations are not available for future Awards under the Plan.
5.4 Adjustment in Capitalization. In the event of any change in the outstanding shares of the Stock by reason of a stock dividend or split, recapitalization, merger, consolidation, combination, exchange of shares, or other similar corporate change, the aggregate number of shares of Stock available under the Plan and subject to each outstanding Award, as well as the annual share limits for Award types set forth in Section 5 and the stated exercise price of or the basis upon which the Award is measured, shall be adjusted appropriately by the Committee, whose determination shall be conclusive; provided, however, that fractional shares shall be rounded to the nearest whole share. Any adjustment to an Incentive Stock Option shall be made consistent with the requirements of Section 424(b) of the Code. Notice of any adjustment shall be given by the Company to each Participant, and such adjustment (whether or not notice is given) shall be effective and binding for all purposes of the Plan.
Section 6
Duration of Plan
The Plan shall remain in effect, subject to the Board's right to earlier terminate the Plan pursuant to Section 14.1 hereof, until all Awards hereunder shall have expired or terminated or shall have been exercised or fully vested, and any Stock subject thereto shall have been purchased or acquired pursuant to the provisions thereof. Notwithstanding the foregoing, no Award may be granted under the Plan after the tenth (10th) anniversary of the Effective Date.
Section 7
Stock Options
7.1 Grant of Options. Subject to the provisions of Sections 5 and 6, Options may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee shall have complete discretion in determining the number of Options granted to each Participant. The Committee may grant any type of Option to purchase Stock that is permitted by law at the time of grant. To the extent the aggregate Fair Market Value (determined at the time the Option is granted) of the Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant in any calendar year (under this Plan and any other plans of the Company) exceeds $100,000, such Options shall not be deemed Incentive Stock Options. In determining which Options may be treated as Non-Qualified Options under the preceding sentence, Options will be taken into account in the order of their dates of grant. Nothing in this Section 7 shall be deemed to prevent the grant of Non-Qualified Stock Options in amounts which exceed the maximum established by Section 422 of the Code.
7.2 Option Agreement. Each Option shall be evidenced by an Agreement that shall specify the type of Option granted, the Option exercise price, the duration of the Option, the number of shares of Stock to which the Option pertains, and such other provisions as the Committee shall determine.
7.3 Exercise Price. No Option shall be granted pursuant to the Plan at an exercise price that is less than the Fair Market Value of the Stock on the date the Option is granted, and no Option shall be granted to any person who owns Stock possessing more than 10% of the total combined voting power of the Stock at an exercise price which is less than 110% of the Fair Market Value on the date of the grant.
7.4 Duration of Options. Each Option shall expire at such time or times as the Committee shall determine at the time it is granted; provided, however, that no Option shall be exercisable later than ten years from the date of its grant.
7.5 Exercise of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for all Participants; provided, however, that Options granted pursuant to the Plan shall not vest at a rate of less than 20% per year.
7.6 Payment. The exercise price of any Option shall be paid in full either (i) in cash, (ii) in Stock valued at its Fair Market Value on the date of exercise, or (iii) by a combination of (i) and (ii). The Committee in its sole discretion may also permit payment of the exercise price upon exercise of any Option to be made by (i) having shares withheld from the total number of shares of Stock to be delivered upon exercise or (ii) delivering a properly executed notice together with irrevocable instructions to a broker to promptly deliver to the Company the amount of sale or loan proceeds to pay the exercise price. The proceeds from the exercise of Options shall be added to the general funds of the Company and shall be used for general corporate purposes.
7.7 Restrictions on Stock Transferability. The Committee may impose such restrictions on any shares of Stock acquired pursuant to the exercise of an Option under the Plan as it may deem advisable, including, without limitation, restrictions under applicable federal securities law, under the requirements of any stock exchange upon which such shares of Stock are then listed and under any blue sky or state securities laws applicable to such shares.
7.8 Early Termination of Options on Termination of Employment Due to Death, Disability, or Retirement. If a Participant holds any outstanding Option upon a termination of employment due to death, Disability or Retirement, such Option shall remain exercisable and shall continue to vest following such termination of employment in accordance with its terms until the earlier of (i) the expiration date of the term of the Option, or (ii) the last date on which such Option is exercisable as specified below, after which date such Option shall terminate.
7.8.1 Death or Disability. Unless the Committee provides otherwise in the terms of the
Agreement evidencing the Option, if the termination of employment is due to the Participant's death or Disability,
7.8.2 Retirement. If the Participant's termination of employment is due to Retirement, any outstanding Option then held by such Participant shall continue to be exercisable (subject to Section 7.8.3 below) for six (6) months after such Participant's termination of employment.
7.8.3 Incentive Stock Option Limit. Notwithstanding the foregoing, in the case of an Incentive Stock Option, the favorable tax treatment described in Section 422 of the Code shall not be available if such Option is exercised after three (3) months following a termination of employment due to Retirement.
7.9 Early Termination of Options on Termination of Employment Other than for Death, Disability, or Retirement. If a Participant holds any outstanding Option upon termination of employment due to a reason other than death, Disability or Retirement, such Option shall remain exercisable and shall continue to vest following such termination of employment until the earlier of (i) the expiration of the term of the Option, or (ii) the last date on which such Option is exercisable as specified below, after which date such Option shall terminate.
7.9.1 Resignation, Layoff and Other Events. If the Participant's termination of employment is due to any reason other than the Participant's death, Disability, Retirement or the action of the Company for cause, as determined (either before or after such event) by the Committee in its sole discretion, any outstanding Option then held by such Participant shall continue to be exercisable for three (3) months following such Participant's termination of employment.
7.9.2 Termination by the Company for Cause. If the Participant's employment is terminated by action of the Company for cause, as determined (either before or after such event) by the Committee in its sole discretion, any outstanding Option held by such Participant shall terminate immediately upon such Participant's termination of employment. Termination for cause is defined as termination for conduct that would be punishable as a felony if such conduct occurred outside the workplace, or conduct that could be damaging to either the Company's reputation or financial status. The Committee has the authority to make the final determination as to whether a termination is for cause for purposes of the Plan.
7.10 Non-Transferability of Options. No Option granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the rules thereunder, except that a Non-Qualified Stock Option may be transferred by gift to any member of the Participant's immediate family (defined as the Participant's spouse, children and grandchildren) if the Committee so specifies in the Agreement evidencing the Option. Further, all Incentive Stock Options granted to a Participant under the Plan shall be exercisable only by such Participant during his or her lifetime.
7.11 No Repricing. Other than in connection with a change in the Company's capitalization (as described in Section 5.4), an Option may not be repriced without stockholder approval (including canceling previously awarded Options and regranting them with a lower exercise price).
Section 8
Stock Appreciation Rights
8.1 Grant of Stock Appreciation Rights. Subject to the provisions of Sections 5 and 6, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. An Award of SARs shall be pursuant to an Agreement. An SAR may be Related to an Option or may be granted independently of any Option as the Committee shall from time to time in each case determine. In the case of a Related Option, such Related Option shall cease to be exercisable to the extent of the shares of Stock with respect to which the Related SAR was exercised. Upon the exercise or termination of a Related Option, any Related SAR shall terminate to the extent of the shares of Stock with respect to which the Related Option was exercised or terminated. SARs shall only be granted while the Stock is traded on the Nasdaq Stock Market or an established securities exchange.
8.2 Payment of SAR Amount. Upon exercise of the SAR, the holder shall be entitled to receive payment of an amount determined by multiplying:
(a) | The difference between the Fair Market Value of a share of Stock at the date of exercise over
the price fixed by the Committee at the date of grant (which price shall not be less than the
Fair Market Value of the underlying Stock on the date the SAR is granted), by | |
(b) | The number of shares with respect to which the SAR is exercised. |
8.3 Form and Timing of Payment. Payment for SARs shall be made in Stock, as soon as reasonably practicable after the Participant's exercise of the SAR. Fractional share interests shall be rounded up to the nearest whole share.
8.4 Term of SAR. The term of an SAR under the Plan shall not exceed ten years.
8.5 Termination of Employment. In the event the employment of a Participant is terminated by reason of death, Disability, Retirement, or any other reason, any SARs outstanding shall terminate in the same manner as specified for Options under Sections 7.8 and 7.9 herein.
8.6 Non-Transferability of SARS. No SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of ERISA, or the rules thereunder except that an SAR that is not Related to an Incentive Stock Option may be transferred by gift to any member of the Participant's immediate family (defined as the Participant's spouse, children and grandchildren) if the Committee so specifies in the Agreement evidencing the SAR. Further, all SARs Related to Incentive Stock Options granted to a Participant shall be exercisable only by such Participant during his lifetime.
8.7 No Repricing. Other than in connection with a change in the Company's capitalization (as described in Section 5.4), a Stock Appreciation Right may not be repriced without stockholder approval (including canceling previously awarded Stock Appreciation Rights and regranting them with a lower exercise price). No repricing shall occur that would cause any SAR (whether currently outstanding or newly granted) to be subject to Section 409A.
Section 9
Restricted Stock and Restricted Stock Units
9.1 Grant of Restricted Stock and Restricted Stock Units. Subject to the provisions of Sections 5 and 6, the Committee, at any time and from time to time, may grant shares of Restricted Stock and Restricted Stock Units under the Plan to such Participants and in such amounts as it shall determine. Each Award of Restricted Stock and Restricted Stock Units shall be pursuant to an Agreement.
9.2 Restrictions of Transferability. Except as provided in Sections 9.6 and 9.7 hereof, or pursuant to a qualified domestic relations order as defined by the Code or Title I of ERISA, or the rules thereunder, the shares of Restricted Stock and Restricted Stock Units granted hereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated for such period of time as shall be determined by the Committee and as specified in the Agreement evidencing the Award of Restricted Stock or Restricted Stock Units, or upon earlier satisfaction of other conditions as specified by the Committee in its sole discretion and set forth in the Agreement evidencing the Award of Restricted Stock or Restricted Stock Units.
9.3 Other Restrictions. The grant, issuance, retention, vesting and/or settlement of Restricted Stock
and Restricted Stock Units shall occur at such time and in such installments as determined by the Committee or
under criteria established by the Committee, provided that Restricted Stock Units may not be settled later than the
later of (a) the date that is 2 ½ months following the end of the Company's first taxable year in which the Restricted
Stock Units have vested or (b) the date that is 2 ½ months following the end of the Participant's first taxable year in
which the Restricted Stock Units have vested. The Committee shall have the right to make the timing of the grant
and/or the issuance, ability to retain and vesting of Restricted Stock and Restricted Stock Units subject to continued
9.4 Voting Rights. Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares during the Period of Restriction. Participants shall have no voting rights with respect to shares of Stock underlying Restricted Stock Units unless and until such shares of Stock are reflected as issued and outstanding shares of Stock on the Company's stock ledger.
9.5 Dividends and Other Distributions. During the Period of Restriction, Participants holding shares of Restricted Stock granted hereunder shall be entitled to receive all dividends and other distributions paid with respect to those shares while they are so held. If any such dividends or distributions are paid in shares of Stock, the shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock with respect to which they were paid. Shares underlying Restricted Stock Units shall be entitled to dividends or dividend equivalents only to the extent provided by the Committee.
9.6 Termination of Employment Due to Retirement. In the event that a Participant attains normal Retirement age under the Company's 401(k) Plan, the Period of Restriction applicable to the Restricted Stock or Restricted Stock Units pursuant to Subsection 9.2 hereof shall automatically terminate and, except as otherwise provided in Subsection 9.3, the shares of Restricted Stock shall thereby be free of restrictions and freely transferable or the shares underlying the Restricted Stock Units shall be delivered to the Participant, free of restrictions and freely transferable. In the event that a Participant terminates his employment with the Company because of Early Retirement under the Company's 401(k) Plan, any shares of Restricted Stock or Restricted Stock Units still subject to restrictions shall be forfeited and returned to the Company; provided, however, that the Committee in its sole discretion may waive the restrictions remaining on any or all shares of Restricted Stock or Restricted Stock Units or add such new restrictions to those shares of Restricted Stock or Restricted Stock Units as it deems appropriate.
9.7 Termination of Employment Due to Death or Disability. In the event a Participant terminates his employment with the Company because of death or Disability during the Period of Restriction, the restrictions applicable to the shares of Restricted Stock or Restricted Stock Units pursuant to Section 9.2 hereof shall terminate automatically with respect to that number of shares (rounded to the nearest whole number) equal to the number of shares of Restricted Stock granted to such Participant or the number of shares underlying Restricted Stock Units granted to the Participant multiplied by the number of full months which have elapsed since the date of grant divided by the maximum number of full months of the Period of Restriction. All remaining shares of Restricted Stock or Restricted Stock Units still subject to restrictions shall be forfeited and returned to the Company; provided, however, that the Committee in its sole discretion, may waive the restrictions remaining on any or all such remaining shares or Restricted Stock Units.
9.8 Termination of Employment for Reasons Other than Death, Disability, or Retirement. In the event that a Participant terminates his employment with the Company for any reason other than those set forth in Sections 9.6 and 9.7 hereof during the Period of Restriction, then any shares of Restricted Stock or Restricted Stock Units still subject to restrictions at the date of such termination automatically shall be forfeited and returned to the Company; provided, however, that, in the event of an involuntary termination of the employment of a Participant by the Company, the Committee in its sole discretion may waive the automatic forfeiture of any or all such shares of Restricted Stock or Restricted Stock Units and/or may add such new restrictions to such shares of Restricted Stock or Restricted Stock Units as it deems appropriate.
Section 10
Performance Shares and Performance Units
10.1 Grant of Performance Shares and Performance Units. Subject to the provisions of Sections 5
and 6, Performance Shares and Performance Units shall be based on performance goals established by the
10.2 Value of Performance Shares and Performance Units. Each Performance Share and each Performance Unit shall have a value determined by the Committee at the time of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the ultimate value of the Performance Share or Performance Unit to the Participant.
10.3 Performance Goals. Performance goals shall be established by the Committee as the Committee in its sole discretion deems appropriate, and may be based upon any one or more of the following performance criteria, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years' results or to a designated comparison group, in each case as specified by the Committee: (i) Company or Affiliate EBITDA (earnings before interest, taxes, depreciation and amortization); (ii) Company or Affiliate earnings or earnings per share; (iii) market prices of Stock; or (iv) division level operating income (operating income less general and administrative expenses and extraordinary expenses). Such performance goals may be (but need not be) different for each performance period. The Committee may set different (or the same) goals for different Participants and for different Awards, and performance goals may include standards for minimum attainment, target attainment, and maximum attainment. In all cases, however, performance goals shall include a minimum performance standard below which no part of the relevant Award will be earned. Each Performance Share shall have a value determined by the Committee at the time of grant.
10.4 Form and Timing of Payment. Payment shall be made in Stock. Payment may be made in a lump sum or installments as prescribed by the Committee. If any payment is to be made on a deferred basis, the Committee may provide for the payment of dividend equivalents or interest during the deferral period. Only Performance Shares and Performance Units granted on or prior to October 3, 2004, which have not been materially modified (within the meaning of Section 409A, which includes the deferral of payment of Performance Shares and Performance Units which have previously met the applicable performance criteria) after October 3, 2004, may be paid on a deferred basis. Performance Shares and Performance Units granted after October 3, 2004, may not be paid later than the later of the (a) the date that is 2 ½ months following the end of the Company's first taxable year in which the performance criteria pertaining to the Performance Shares and Performance Units have been satisfied, or (b) the date that is 2 ½ months following the end of the Participant's first taxable year in which the performance criteria pertaining to the Performance Shares and Performance Units have been satisfied.
10.5 Termination of Employment Due to Death, Disability or Retirement. In the case of death, Disability, or Retirement, the holder of a Performance Share (or his Beneficiary in the event of death) shall receive pro rata payment based on the number of months' service during the Performance Period but based on the achievement of performance goals during the entire Performance Period. Payment shall be made at the time payments are made to Participants who did not terminate service during the Performance Period, subject to Section 10.4 of the Plan.
10.6 Termination of Employment for Reasons Other than Death, Disability or Retirement. In the event that a Participant terminates employment with the Company for any reason other than death, Disability or Retirement, all Performance Shares shall be forfeited; provided, however, that in the event of an involuntary termination of the employment of the Participant by the Company, the Committee in its sole discretion may waive the automatic forfeiture provisions and pay out on a pro rata basis as set forth in Section 10.5.
10.7 Non-Transferability. No Performance Shares or Performance Units granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of ERISA, or the rules thereunder, until the termination of the applicable Performance Period. All rights with respect to Performance Shares granted to a Participant under the Plan shall be exercisable only by such Participant during his lifetime.
Section 11
Beneficiary Designation
Each Participant under the Plan may name, from time to time, any Beneficiary or Beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives any or all of such benefit. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during his lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to his or her estate.
Section 12
Rights of Employees
12.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company.
12.2 Participant. No Employee shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant.
Section 13
Change in Control
13.1 In General. In the event of a change in control of the Company as defined in Section 13.2 below, all Awards under the Plan shall vest 100%. All Performance Shares and Performance Units shall be paid out based upon the extent to which performance goals during the Performance Period have been met up to the date of the change in control, or at target, whichever is higher. Restrictions on Restricted Stock and Restricted Stock Units shall lapse. Options and SARs shall be immediately exercisable by the holder.
13.2 Definition. For purposes of the Plan, a "change in control" shall mean any of the following events:
(a) the Company receives a report on Schedule 13D filed with the Securities and Exchange Commission pursuant to Section 13(d) of the Exchange Act disclosing that any person, group, corporation or other entity is the beneficial owner directly or indirectly of 30% or more of the outstanding Stock;
(b) any person (as such term is defined in Section 13(d) of the Exchange Act), group, corporation or other entity other than the Company or a wholly-owned Subsidiary or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock in the Company, purchases shares pursuant to a tender offer or exchange offer to acquire any Stock of the Company, (or securities convertible into Stock) for cash, securities or any other consideration, provided that after consummation of the offer, the person, group, corporation or other entity in question is the beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 30% or more of the outstanding Stock of the Company (calculated as provided in paragraph (d) of Rule 13d-3 under the Exchange Act in the case of rights to acquire Stock);
(c) the stockholders of the Company approve (a) any consolidation or merger of the Company in which the Company, or any corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock in the Company, is not the continuing or surviving corporation or pursuant to which shares of Stock would be converted into cash, securities or other property, or (b) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; or
(d) there shall have been a change in a majority of the members of the Board of Directors of the Company within a 12 month period unless the election or nomination for election by the Company's stockholders of each new director was approved by the vote of two-thirds of the directors then still in office who were in office at the beginning of the 12 month period.
Section 14
Amendment, Modification, and Termination of Plan
14.1 Amendment, Modification, and Termination of Plan. The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made (i) which would impair the rights of any Participant with respect to an Award theretofore granted without the Participant's consent, (ii) which would cause Section 409A to apply to the Plan, unless the benefit affected thereby is subject to Section 409A or is intended to be subject to Section 409A or (iii) which, without the approval of the Company's stockholders, would:
(a) the except as expressly provided in this Plan, increase the total number of shares of Stock reserved for the purpose of the Plan as provided in Section 5 of the Plan;
(b) change the exercise price of any Option or SAR granted hereunder, other than in connection with a change in the Company's capitalization as described in Section 5.4 of the Plan;
(c) change the Participants eligible to participate in the Plan;
(d) extend the maximum option period under Section 7.4 of the Plan;
(e) extend the duration of the Plan; or
(f) otherwise amend the Plan in any manner requiring stockholder approval by law or regulation or under the listing requirements of the Nasdaq Stock Market or any other exchange on which the Stock is then listed.
14.2 Effect on Awards. The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Section 14.1 above, no such amendment shall impair the rights of any holder without the holder's consent.
14.3 Broad Authority. Subject to the above provisions, the Committee shall have broad authority to amend the Plan to take into account changes in applicable securities and tax laws and accounting rules, as well as other developments.
Section 15
Tax Withholding
15.1 Tax Withholding. The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local withholding tax requirements on any Award under the Plan. In addition, the Company may reasonably delay the issuance or delivery of shares pursuant to an Award as it determines appropriate to address tax withholding and other administrative matters.
15.2 Payment of Withholding Obligation. To the extent permissible under applicable tax, securities, and other laws, the Company may, in its sole discretion, permit the Participant to satisfy a tax withholding requirement by (i) using already owned shares; (ii) through a cashless transaction; or (iii) directing the Company to apply shares of stock to which the Participant is entitled as a result of the exercise of an option or the lapse of a Period of Restriction (including, for this purpose, the filing of an election under Section 83(b) of the Code), to satisfy such requirement.
15.3 Disposition of Shares. In the event that a Participant shall dispose (whether by sale, exchange,
gift, the use of a qualified domestic relations order as defined by the Code or Title I of ERISA, or the rules
thereunder, or any like transfer) of any shares of Stock (to the extent such shares are deemed to be purchased
pursuant to an Incentive Stock Option) acquired by such Participant within two years of the date of grant of the
Section 16
Indemnification
Each person who is or shall have been a member of the Committee or of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
Section 17
Requirements of Law
17.1 Compliance with Laws; Listing and Registration of Shares. All Awards granted under the Plan (and all issuances of Stock or other securities under the Plan) shall be subject to all applicable laws, rules and regulations, and to the requirement that if at any time the Committee shall determine that the listing, registration or qualification of the Stock covered thereby upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the grant of such Award or the issue or purchase of Stock thereunder, such Award may not be exercised in whole or in part, or the restrictions on such Award shall not lapse, unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.
17.2 Conditions and Restrictions Upon Securities Subject to Awards. The Committee may provide that the shares of Stock issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Committee in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of an Award, including without limitation, conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Stock issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Shares already owned by the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Stock issued under an Award, including without limitation (a) restrictions under an insider trading policy or pursuant to applicable law, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and holders of other Company equity compensation arrangements, and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.
17.3 Governing Law. The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware.
Section 18
Funding
Except in the case of Awards of Restricted Stock, the Plan shall be unfunded. The Company shall not be required to segregate any of its assets to assure the payment of any Award under the Plan. Neither the Participant nor any other persons shall have any interest in any fund or in any specific asset or assets of the Company or any other entity by reason of any Award, except to the extent expressly provided hereunder. The interests of each Participant and former Participant hereunder are unsecured and shall be subject to the general creditors of the Company.
Section 19
No Liability of Company
The Company and any Affiliate which is in existence or hereafter comes into existence shall not be liable to a Participant, Beneficiary or any other person as to: (a) the non-issuance or sale of Stock as to which the Company has been unable to obtain, from any regulatory body having jurisdiction over the matter, the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Stock hereunder; (b) any tax consequence to any Participant, Beneficiary or other person due to the receipt, exercise or settlement of any Award granted hereunder; or (c) any provision of law or legal restriction that prohibits or restricts the transfer of Stock issued pursuant to any Award.