Exhibit 10.6

 

Cathay Bank

Bonus Deferral Agreement

 

This Bonus Deferral Agreement (Agreement), dated effective as of November 23,
2004, between Dunson Cheng, Chairman, President, & CEO of Cathay General Bancorp
and Cathay Bank (the Executive), and Cathay General Bancorp and Cathay Bank
(collectively, the Company) constitutes the agreement between the Executive and
the Company for the deferral by the Executive of payment of that portion of the
Executive’s incentive bonus for 2004 in excess of $225,000 (Deferred Amount) to
January 1 of the first year following the Executive’s separation from service
from the Company.

 

I. In exchange for the agreement by the Executive to defer payment of the
Deferred Amount, the Company will compute interest beginning December 16, 2004,
at 7.0% per annum computed based on the actual number of days during each period
divided by the actual number of days for the full year. The Deferred Amount will
be increased at the end of each quarter by the interest so computed for the last
quarter. For December 31, 2004, the Deferred Amount will be increased by the
interest so computed for the December 16 to December 31, 2004, period. Beginning
on the tenth anniversary of the Agreement, the interest rate shall be adjusted
to 275 basis points over the then prevailing interest rate on a ten-year U. S.
Treasury note.

 

II. Executive agrees to allow the Company to amend the terms of the Agreement,
including further deferring the date of the payment of the Deferred Amount, and
take such other actions as may be necessary, to comply with Internal Revenue
Code Section 409A and related IRS guidance and Treasury regulations now and as
may be enacted in the future and to comply with any corresponding California
income tax law and regulations that may be in effect as of or enacted subsequent
to the date of this Agreement. However, any changes to the Deferred Amount and
Section I above require the consent of Executive.

 

III. The Company shall indemnify and reimburse to Executive an amount which
after payment of applicable Federal, payroll, and state income taxes by
Executive would be sufficient to pay any Federal and California income tax and
related interest and penalties that are incurred by Executive as a result of
failure to comply with Section 409A and related regulations of the Interest
Revenue Code and any corresponding California income tax law and regulations and
as a result of any reimbursement pursuant to the foregoing (“Indemnifiable
Claims”). Except as provided in the preceding sentence, the Company is not
providing any indemnification to the Executive for any normal or regular Federal
or state income taxes related to the Deferred Amount.

 

IV. Cathay General Bancorp (Bancorp) and Cathay Bank (Bank) shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of Bancorp
or Bank, by agreement in form and substance reasonably satisfactory to the
Executive, expressly to

--------------------------------------------------------------------------------

assume and agree to perform this Agreement in the same manner and to the same
extent that Bancorp or the Bank would be required to perform it if no such
succession had taken place. As used in this Agreement, the “Company” shall mean
the Bancorp and Bank as hereinbefore defined and any successor to their
respective business and/or assets as aforesaid that becomes bound by the terms
and provisions of this Agreement, by operation of law or otherwise.

 

V. This Agreement and all rights of the Executive hereunder shall inure to the
benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, legatees, and beneficiaries. If the Executive should die while any
amounts would still be payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive’s devisee, legatee, or other
designee or, if there be no such designee, to the Executive’s estate.

 

VI. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. If any of the provisions of this Agreement are determined
to be unlawful or otherwise unenforceable, in whole or in part, such
determination shall not affect the validity of the remainder of this Agreement,
and this Agreement shall be reformed to the extent necessary to carry out its
provisions to the greatest extent possible.

 

VII. This Agreement and all acts and transactions pursuant hereto and the rights
and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.

 

Executive   Cathay General Bancorp   Cathay Bank

/s/ DUNSON CHENG

--------------------------------------------------------------------------------

 

/s/ PETER WU

--------------------------------------------------------------------------------

 

/s/ PETER WU

--------------------------------------------------------------------------------

Dunson Cheng  

Peter Wu, Executive Vice

Chairman and COO

 

Peter Wu, Executive Vice

Chairman and COO

   

/s/ HENG CHEN

--------------------------------------------------------------------------------

 

/s/ HENG CHEN

--------------------------------------------------------------------------------

    Heng Chen, EVP & CFO   Heng Chen, EVP & CFO

11/24/04

--------------------------------------------------------------------------------

 

11/27/04

--------------------------------------------------------------------------------

 

11/27/04

--------------------------------------------------------------------------------

Date   Date   Date