Exhibit 10.23
Salary Continuation Agreement
     THIS SALARY CONTINUATION AGREEMENT (the “Agreement”) is made and entered
into effective April 1, 2006 and amended September 27, 2007, by and between
REDDING BANK OF COMMERCE, a California Corporation (the “Bank”), and PATRICK J.
MOTY (the “Executive”).
WHEREAS, the Executive’s competent and faithful efforts on behalf of the Bank
have resulted in substantial growth and profits to the Bank, and the Bank
desires that the Executive continue in its employ;
WHEREAS, the Company values the efforts, abilities, and accomplishments of the
Executive, recognizes that his future services are vital to its continued growth
and profits, and wants to encourage the Executive to remain an employee of the
Bank. The Bank is willing to provide salary continuation benefits to the
Executive, which the Bank will pay from its general assets.
ARTICLE 1
Definitions
In consideration of the mutual promises, covenants, and agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:
          1.1 “Change in Control” means (i) a Change in the Ownership of the
Relevant Corporation, (ii) a Change in the Effective Control of the Relevant
Corporation, or (iii) or a Change in the Ownership of a Substantial Portion of
the Assets of the Relevant Corporation, as those terms are defined herein. The
events giving rise to the Change in Control must be objectively determinable,
and the Board, in a ministerial capacity, shall certify there is a Change in
Control only when the events giving rise to the Change in Control are
objectively determinable. The Board shall not have any discretionary authority
to certify that there has been a Change in Control except as provided in the
preceding sentence. Notwithstanding anything to the contrary, (i) the term
“Change in Control” shall be interpreted in accordance with Section 409A;
(ii) any event which constitutes a “Change in Control” under Section 409A shall
constitute a “Change in Control” for purposes of this Agreement; (iii) and any
event which does not constitutes a “Change in Control” under Section 409A shall
not constitute a “Change in Control” for purposes of this Agreement.
               1.1.1 “Change in the Effective Control of the Relevant
Corporation” means either of the following:
               i. That one person, or more than one person acting as a group,
acquires (or has acquired during the twelve (12) month period ending on the date
of the most recent acquisition by such person or persons) ownership of stock of
the Relevant Corporation possessing thirty-five percent (35%) or more of the
total voting power of the stock of the Relevant Corporation, provided that no
other corporation is a majority shareholder of the Relevant Corporation; or
               ii. That a majority of the members of the board of directors of
the Relevant Corporation are replaced during any twelve (12) month period by
directors whose appointment or election is not endorsed by a majority of the
board members of the Relevant Corporation prior to the date of the appointment
or election, provided that no other corporation is a majority shareholder of the
Relevant Corporation.
               1.1.2 “Change in the Ownership of the Relevant Corporation” means
that any one person, or more than one person acting as a group, acquires
ownership of stock of the Relevant Corporation that, together with stock held by
such person or group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the stock of the Relevant
Corporation. However, if any one person, or more than one person acting as a
group, is considered to own more than fifty percent (50%) of the total fair
market value or total voting power of the stock of the Relevant Corporation, the
acquisition of additional stock by the same person or persons is not considered
to cause a Change in the Ownership of the Relevant Corporation (or to cause a
Change in the Effective Control of the Relevant Corporation as defined herein).

 

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An increase in the percentage of stock owned by any one person, or persons
acting as a group, as a result of a transaction in which the Relevant
Corporation acquires its stock in exchange for property will be treated as an
acquisition of stock for purposes of this Agreement. A Change in the Ownership
of the Relevant Corporation only occurs when there is a transfer of stock of the
Relevant Corporation (or issuance of stock of the Relevant Corporation) and
stock in the Relevant Corporation remains outstanding after the transaction.
               1.1.3 “Change in the Ownership of a Substantial Portion of the
Assets of the Relevant Corporation” means that any one person, or more than one
person acting as a group, acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such person or
persons) assets from the Relevant Corporation that have a total gross fair
market value equal to or more than forty percent (40%) of the total gross fair
market value of all of the assets of the Relevant Corporation immediately prior
to such acquisition or acquisitions. For this purpose, gross fair market value
means the value of the assets of the Relevant Corporation, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets.
               1.1.4 “Relevant Corporation” means (i) the corporation for whom
the Executive is performing services at the time of the Change in Control event;
(ii) the corporation that is liable for the payment of the deferred compensation
under this Plan; or (iii) a corporation that is a majority shareholder of a
corporation identified in sections (i) or (ii) above, or any corporation in a
chain of corporations in which each corporation is a majority shareholder of
another corporation in the chain, ending in a corporation identified in sections
(i) or (ii) above. A majority shareholder is a shareholder owning more than
fifty percent (50%) of the total fair market value and total voting power of
such corporation. Stock underlying a vested option is considered owned by the
individual who holds the vested option, and the stock underlying an unvested
option is not considered owned by the individual who holds the unvested option.
However, if a vested option is exercisable for stock that is not substantially
vested, the stock underlying the option is not treated as owned by the
individual who holds the option.”
               1.1.5 “Persons Acting as a Group.” Persons will not be considered
to be acting as a group solely because they purchase assets or stock of the same
corporation at the same time, or, in the case of stock, in the same public
offering. However, persons will be considered to be acting as a group if they
are owners of a corporation that enters into a merger, consolidation, purchase
or acquisition of assets, or similar business transaction with the corporation.
If a person, including an entity shareholder, owns stock in both corporations
that enter into a merger, consolidation, purchase or acquisition of assets, or
similar transaction, such shareholder is considered to be acting as a group with
other shareholders in a corporation only to the extent of the ownership that
corporation prior to the transaction giving rise to the change and not with
respect to the ownership interest in the other corporation.
          1.2 “Code” means the Internal Revenue Code of 1986, as from time to
time amended.
          1.3 “Disability.” Notwithstanding anything to the contrary, under no
circumstances shall Executive be deemed to have a “Disability” for purposes of
Sections 1.3 or 2.3 of the Agreement, unless Executive (i) is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months;
or (ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than 3 months under an accident and health
plan covering Bank employees.
          1.4 “Early Termination” means the Termination of Employment before the
Normal Retirement Age for reasons other than death, Disability, Termination for
Cause or following a Change in Control.
          1.5 “Early Termination Date” means the month, day and year in which
Early Termination occurs.
          1.6 “Effective Date” means September 30, 2007.
          1.7 “Executive Beneficiary” means the beneficiary designated by the
Executive pursuant to Article 4.1.
          1.8 “Normal Retirement Age” means the Executive’s 65th birthday.
          1.9 “Normal Retirement Date” means the later of the Normal Retirement
Age or Termination of Employment.

 

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          1.10 “Plan Year” means a twelve (12) month period commencing on
January 1, 2007 and ending on December 31 of each year.
          1.11 “Termination for Cause” As defined in Article 5.
          1.12 “Termination of Employment” means that the Executive ceases to be
employed by the Bank, and actually separates from service to the Bank, for any
reason, voluntary or involuntary, other than by reason of a leave of absence
approved by the Bank.
ARTICLE 2
Benefits
          2.1 Normal Retirement Benefit. Upon Termination of Employment on or
after the Normal Retirement Age for reasons other than death, the Bank shall pay
to the Executive the benefit described in this Section 2.1 in lieu of any other
benefit under this agreement.
               2.1.1 Amount of Benefit. The “Normal Retirement Annual Benefit”
to be paid to the Executive under this Section 2.1 is One Hundred Fifty Thousand
Dollars ($150,000.00). The Bank’s Board of Directors, in its sole discretion,
may increase the annual benefit under this section 2.1.1; however any increase
shall require the recalculation of Schedule A attached hereto.
               2.1.2 Payment of Benefit. The Bank shall pay the annual benefit
to the Executive in twelve (12) equal monthly installments payable on the first
day of each month commencing with the month following the Executive’s Normal
Retirement Date. The annual benefit shall be paid to the Executive for life. In
the event Executive is a “specified employee,” as defined in Section 409A of the
Code, at Termination of Employment, payments made under this Section shall
commence on the date which is six (6) months after the date of Executive’s
Termination of Employment.
               2.1.3 Benefit Increases. Commencing on the first anniversary of
the first benefit payment, and continuing on each subsequent anniversary, the
Bank’s Board of Directors, in its sole discretion, may increase the Normal
Retirement Benefit.
               2.1.4 Deferred Compensation Account. Solely for purposes of
determining the benefits set forth in Sections 2.2, 2.3, and 3.2, the Bank shall
calculate a Deferred Compensation Account. The amount of the Deferred
Compensation Account shall be an amount determined to be the present value of
the benefit under this Section 2.1 based on the then designated deferred
compensation rate and the life expectancy of the Executive on the day in which
any benefit under any of Sections 2.2, 2.3, or 3.2 becomes vested, as determined
by tables in IRS Publication 590.
          2.2 Early Termination Benefit. Upon Early Termination, the Bank shall
pay to the Executive the benefit described in this Section 2.2 in lieu of any
other benefit under this agreement.
               2.2.1 Amount of Benefit. The benefit to be paid to the Executive
under this Section 2.2 is the Early Termination Lump Sum set forth on
Schedule A, or the amount accrued in the Deferred Compensation Account on the
early termination date, whichever is greater. The Bank’s Board of Directors, in
its sole discretion, may, at any time, increase the benefit under this
Section 2.2.1; however, any such increase shall require a recalculation of
Schedule A.
               2.2.2 Payment of Benefit. The Bank shall pay this benefit to the
Executive in a lump sum within sixty (60) days following Early Termination. In
the event Executive at any time becomes a “specified employee,” as defined in
Section 409A of the Code, the lump sum payment made under this Section shall be
made on the date which is six (6) months after the date of Executive’s
Termination of Employment. Executive may elect to receive the benefit under this
Section 2.2.2 in sixty equal monthly installments, so long as such election is
made in writing at the time that this agreement is executed and attached to this
Agreement with the Early Termination Lump Sum set forth on Schedule A.
          2.3 Disability Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, the Bank shall pay to the Executive
the benefit described in this Section 2.3 in lieu of any other benefit under
this Agreement.

 

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               2.3.1 Amount of Benefit. The benefit under this Section 2.3 is
the Disability Annual Benefit set forth in Schedule A for the Plan Year, or an
annuity (assuming the then current deferred compensation rate) with the value of
the amount accrued in the Deferred Compensation Account upon disability,
whichever is greater. The Bank’s Board of Directors, in its sole discretion,
may, at any time, increase the benefit under this Section 2.3.1; however, any
such increase shall require the recalculation of Schedule A.
               2.3.2 Payment of Benefit. The Bank shall pay this annual benefit
to the Executive in twelve (12) monthly installments payable on the first day of
each month commencing with the month following the Executive’s termination of
employment due to disability. The annual benefit shall be paid to the Executive
for life.
          2.4 Change in Control Benefit. Upon a Change in Control, the Bank
shall pay to the Executive the benefit described in this Section 2.4 in lieu of
any other benefits under this Agreement.
               2.4.1 Amount of Benefit. The benefit under this Section 2.4 is
the Change of Control Annual Benefit set forth in Schedule A.
               2.4.2 Payment of Benefit. The Bank shall pay this annual benefit
to the Executive in twelve (12) monthly installments payable on the first day of
each month commencing with the month following the Executive’s Normal Retirement
Age. The annual benefit shall be paid to the Executive for life.
               2.4.3 Excess Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Bank shall not pay any benefit under this
Agreement to the extent the benefit would create an excise tax under the excess
parachute rules of Section 280G of the code.
ARTICLE 3
Death Benefits
          3.1 Death during Active Service. If the Executive dies while in the
active service of the Bank, the Bank shall pay to the Executive Beneficiary the
Normal Retirement Annual Benefit for a period of twenty years in lieu of any
other benefit under this Agreement. The Normal Retirement Annual Benefit shall
be paid to the Executive Beneficiary in twelve (12) equal monthly installments
payable on the first day of each month commencing with the month following the
Executive’s Death, for a period of twenty years.
               3.1.1 Amount of Benefit. The annual benefit under this
Section 3.1 is the Normal Retirement Benefit amount described in Section 2.1.1.
               3.1.2 Payment of Benefit. The Bank shall pay the annual benefit
to the Executive’s beneficiary in twelve (12) equal monthly installments payable
on the first day of each month commencing with the month following the
Executive’s death. The annual benefit shall be paid to the Executive’s
Beneficiary for a period of twenty years.
          3.2 Death during Payment of a Lifetime Benefit. If the Executive dies
after any lifetime benefit payments have commenced under this Agreement but
before the value of the Deferred Compensation Account is fully paid, the Bank
shall pay all remaining benefits to the Executive Beneficiary at the same time
and in the same amounts they would have been paid to the Executive had the
Executive lived to his full life expectancy, as determined by tables in IRS
Publication 590, but not less than twenty years.

 

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          3.3 Death After Termination of Employment But Before Payment of a
Lifetime Benefit Commences. If the Executive is entitled to a lifetime benefit
under this Agreement, but dies prior to the commencement of payments of such
benefit, the Bank shall pay the same benefit to the Executive Beneficiary that
the Executive would have received had he lived to his full life expectancy, as
determined by tables in IRS Publication 590, but not less than 20 years. Such
benefits shall commence on the first day of the month following the date of the
Executive’s death.
ARTICLE 4
Beneficiaries
          4.1 Beneficiary Designations. The Executive shall designate an
Executive Beneficiary by filing a written beneficiary designation with the Bank.
The Executive may revoke or modify the designation at any time by filing a new
designation. However, designations will only be effective if signed by the
Executive and received by the Bank during the Executive’s lifetime. The
Executive’s beneficiary designation shall be deemed automatically revoked if the
Executive Beneficiary predeceases the Executive, or if the Executive names a
spouse as Executive Beneficiary and the marriage is subsequently dissolved. If
the Executive dies without a valid Executive Beneficiary, all payments which
would have been paid to Executive’s Beneficiary shall be made to the Executive’s
estate.
          4.2 Facility of Payment. If a benefit is payable to a minor, to a
person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Bank, in its discretion, may pay such
benefit to the guardian, legal representative or person having the care or
custody of such minor, incapacitated person or incapable person.
ARTICLE 5
General Limitations

5.1   Termination for Cause. Notwithstanding any provisions of this Agreement to
the contrary, the Bank shall not pay any benefit under this Agreement if the
Bank terminates the Executive’s employment for:

  •   Willful breach of, habitual neglect of, willful failure to perform, or
inability to perform, Executive duties and obligations as President and Chief
Executive Officer.     •   Illegal conduct, constituting a crime involving moral
turpitude, conviction of a felony, or any conduct detrimental to the interests
of the Employer.     •   Physical or mental disability rendering Executive
incapable of performing his duties for a consecutive period of 180 days (during
which time Executive shall continue to receive his base salary and other
benefits, provided his accrued sick leave has first been exhausted), or by
death; or     •   Determination by Employer’s Board of Directors that the
continued employment of Executive is detrimental to the best interests of the
Employer, or for any reason whatsoever as determined by Employer’s Board of
Directors and in the sole and absolute discretion of the Employer’s Board of
Directors.

          5.2 Suicide or Misstatement. The Bank shall not pay any benefit under
this Agreement if the Executive commits suicide within three (3) years after the
date of September 30, 2007. In addition, the Bank shall not pay any benefit
under this Agreement if the Executive has made any material misstatement of fact
on an employment application or resume provided to the Bank, or on any
application for any benefits provided by the Executive to the Bank.

 

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ARTICLE 6
Claims and Review Procedures
          6.1 Claims Procedure. The Bank shall notify any person or entity that
makes a claim under this Agreement (the “Claimant”) in writing, within ninety
(90) days of Claimant’s written application for benefits, of his or her
eligibility or non-eligibility for benefits under the Agreement. If the Bank
determines that the Claimant is not eligible for benefits or full benefits, the
notice shall set forth (1) the specific reasons for such denial, (2) a specific
reference to the provisions of the Agreement on which the denial is based, (3) a
description of any additional information or material necessary for the Claimant
to perfect his or her claim, and a description of why it is needed, (4) an
explanation of this Agreement’s claims review procedure and other appropriate
information as to the steps to be taken if the Claimant wishes to have the claim
reviewed, and (5) a time within which review must be requested. If the Bank
determines that there are special circumstances requiring additional time to
make a decision, the Bank shall notify the Claimant of the special circumstances
and the date by which a decision is expected to be made, and may extend the time
for up to an additional ninety (90) days.
          6.2 Review Procedure. If the Claimant is determined by the Bank not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different benefits, the Claimant shall have the opportunity to
have such claim reviewed by the Bank by filing a petition for review with the
Bank within sixty (60) days after receipt of the notice issued by the Bank. Said
petition shall state the specific reasons which the Claimant believes entitle
him or her to benefits or to greater or different benefits.
Within sixty (60) days after receipt by the Bank of the petition, the Bank shall
afford the Claimant (and counsel, if any) an opportunity to present his or her
position to the Bank verbally or in writing and the Claimant (or counsel) shall
have the right to review the pertinent documents. The Bank shall notify the
Claimant of its decision in writing within the sixty (60) day period, stating
the basis of its decision, written in a manner calculated to be understood by
the Claimant and referencing the specific provisions of the Agreement on which
the decision is based. If, because of the need for a hearing, the sixty (60) day
period is not sufficient, the decision may be deferred for up to another sixty
(60) days at the election of the Bank, but notice of this deferral shall be
given to the Claimant.
ARTICLE 7
General Terms
          7.2 Purpose. The Plan is intended to constitute an unfunded
arrangement maintained by the Bank primarily for the purpose of providing
deferred compensation plan for a select group of management or highly
compensated employees, as described in sections 201(2), 301(a)(3) and 401(a)(1)
of the Employee Retirement Income Security Act of 1974 (“ERISA”).
          7.3 Amendments and Termination. This Agreement may be amended or
terminated only by a written agreement signed by the Bank and the Executive.
Notwithstanding the preceding, the Bank may amend or terminate this Agreement at
any time upon notice to the Executive if, pursuant to legislative, judicial or
regulatory action, continuation of this Agreement without such amendment would:
(1) cause benefits to be taxable to the Executive prior to actual receipt; or
(ii) result in significant financial penalties or other significantly
detrimental ramifications to the Bank (other than the financial impact of paying
any provided benefits).
          7.4 Binding Effect. This Agreement shall bind the Executive and the
Bank, and their beneficiaries, survivors, executors, successors, administrative
and transferees.
          7.5 No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
employee of the Bank, nor does it limit or restrict the Bank’s right to
discharge the Executive. It also does not require the Executive to remain an
employee nor does it limit or restrict the Executive’s right to terminate
employment at any time.
          7.6 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.

 

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          7.7 Reorganization. The Bank shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Bank under
this Agreement or unless any such activity would constitute a Change of Control.
Upon the occurrence of such event, the term “Bank” as used in this Agreement
shall be deemed to refer to the successor or survivor company.
          7.8 Tax Withholding. The Bank shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
          7.9 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of California, except to the extent preempted by the laws
of the United States of America.
          7.10 Interpretation of Plan. To the extent not preempted by federal
law, the Plan shall be governed and construed under the laws of the state of
California (other than its choice of law rules) as in effect from time to time.
Notwithstanding any provision to the contrary, this Plan shall be interpreted
and construed to comply with Section 409A and the applicable provisions of
ERISA.
          7.11 Unfunded Arrangement. The Executive and the Executive Beneficiary
are general unsecured creditors of the Bank for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Bank to pay such
benefits.
The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Executive’s life is a general
asset of the Bank to which the Executive and Executive Beneficiary have no
preferred or secured claim.
          7.12 Entire Agreement. This Agreement constitutes the entire agreement
between the Bank and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
          7.13 Administration. The Bank shall have powers which are necessary to
administer this Agreement, including but not limited to:
               7.13.1 Establishing and revising the method of accounting for the
Agreement;
               7.13.2 Maintaining a record of benefit payments; and
               7.13.3 Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
          7.14 Named Fiduciary. The Bank shall be the named fiduciary and Plan
administrator under this Agreement. It may delegate to others certain aspects of
the management and operational responsibilities including the employment of
advisors and the delegation of ministerial duties to qualified individuals.
          7.15 Attorney’s Fees and Costs. If any action at law or in equity,
including arbitration, is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees,
costs, and expert witness fees, in addition to any other relief to which that
party may be entitled.

 

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               IN WITNESS WHEREOF, the Executive and the Bank have signed this
Agreement.

      EXECUTIVE   BANK OF COMMERCE HOLDINGS       By /s/ Patrick J. Moty   By
/s/ Kenneth R. Gifford, Jr.       PATRICK J. MOTY   KENNETH R. GIFFORD, JR.,    
Chairman     By /s/ David H. Scott           DAVID H. SCOTT, Secretary          
REDDING BANK OF COMMERCE           By /s/ Kenneth R. Gifford, Jr.          
KENNETH R. GIFFORD, JR.,
Chairman
By /s/ David H. Scott           DAVID H. SCOTT, Secretary

 

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BENEFICIARY DESIGNATION
PATRICK J. MOTY
I designate the following as beneficiary of any death benefits under this
Agreement:
Primary: Eva M. Moty
Contingent:                                                                    
                                  
I understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the named beneficiary predeceases me, or, if I
have named by spouse as beneficiary and our marriage is subsequently dissolved.
Signature: /s/ Patrick J. Moty
Date: September 27, 2007
Received this ___27___day of ___September                      2007.
By: Kenneth R. Gifford, Jr.
Title: Chairman

 

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Election of Payment
For Early Termination Benefit
PATRICK J. MOTY
I, Patrick J. Moty hereby elect to receive any Early Termination Benefit, as
described in Section 2.2 of the September 27, 2007 Salary Continuation
Agreement, in the following form:

o   A lump sum payment to be made after Early Termination, as provided in
Section 2.2   þ   In sixty (60) equal monthly installments, to begin sixty
(60) days after Early Termination, unless I become a “specified employee,” as
defined in Section 409A of the Code, then such installments shall begin six
(6) months after Early Termination.