Exhibit 10.7
Deferred Compensation Agreement dated as of June 25, 1996 between
Xxxxxxxx Federal Savings Bank and Xxxx X. Xxxxx
XXXXXXXX FEDERAL SAVINGS BANK
DEFERRED COMPENSATION AGREEMENT
XXXXXXXX FEDERAL SAVINGS BANK
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT is made this 25th day of June, 1996 by and between XXXXXXXX
FEDERAL SAVINGS BANK (the "Company"), and XXXX X. XXXXX (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide to the Executive a deferred compensation
opportunity. The Company will pay the benefits from its general assets.
AGREEMENT
The Executive and the Company agree as follows:
Article 1
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1 "Change of Control" means the transfer of 51% or more of the
Company's outstanding voting common stock followed within twelve (12)
months by the Executive's Termination of Employment for reasons other than
death, disability or retirement.
1.1.2 "Code" means the Internal Revenue Code of 1986, as amended.
References to a Code section shall be deemed to be to that section as it
now exists and to any successor provision.
1.1.3 "Compensation" means the total annual base salary payable to the
Executive.
1.1.4 "Disability" means, if the Executive is covered by a
Company-sponsored disability insurance policy, total disability as defined
in such policy without regard to any waiting period. If the Executive is
not covered by such a policy, Disability means the Executive suffering a
sickness, accident or injury which, in the judgment of a physician
satisfactory to the Company, prevents the Executive from performing
substantially all of the Executive's normal duties for the Company. As a
condition to any benefits, the Company
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may require the Executive to submit to such physical or mental evaluations
and tests as the Company's Board of Directors deems appropriate.
1.1.5 "Early Retirement Date" means the Executive attaining age
sixty-two (62).
1.1.6 "Election Form" means the Form attached as Exhibit 1.
1.1.7 "Normal Retirement Date" means the Executive attaining age
sixty-five (65).
1.1.8 "Termination of Employment" means the Executive's ceasing to be
employed by the Company for any reason whatsoever, voluntary or
involuntary, other than by reason of an approved leave of absence.
1.1.9 "Years of Service" means the total number of twelve-month
periods during which the Executive is employed on a full-time basis by the
Company, inclusive of any approved leaves of absence.
Article 2
Deferral Election
2.1 Initial Election. The Executive shall make an initial deferral election
under this Agreement by filing with the Company a signed Election Form within 30
days after the date of this Agreement. The Election Form shall set forth the
amount of Compensation to be deferred and the form of benefit payment. The
Election Form shall be effective to defer only Compensation earned after the
date the Election Form is received by the Company.
2.2 Election Changes
2.2.1 Generally. The Executive may modify the amount of Compensation
to be deferred by filing a subsequent signed Election Form with the
Company. The modified deferral shall not be effective until the calendar
year following the year in which the subsequent Election Form is received
by the Company. The Executive may not change the form of benefit payment
initially elected under Section 2.1.
2.2.2 Hardship. If an unforeseeable financial emergency arising from
the death of a family member, divorce, sickness, injury, catastrophe or
similar event outside the control of the Executive occurs, the Executive,
by written instructions to the Company may reduce future deferrals under
this Agreement or may cease deferrals under this Agreement.
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Article 3
Deferral Account
3.1 Establishing and Crediting. The Company shall establish a Deferral
Account on its books for the Executive, and shall credit to the Deferral Account
the following amounts:
3.1.1 Deferrals. The Compensation deferred by the Executive, as of the
time such amounts would have otherwise been paid to the Executive.
3.1.2 Interest. On the first day of each month and immediately prior
to the payment of any benefits, interest on the account balance since the
preceding credit under this Section 3.1.2, if any, at an annual rate,
compounded monthly, equal to the rate determined by the Company's Board of
Directors, in its sole discretion.
3.2 Statement of Accounts. The Company shall provide to the Executive,
within one hundred twenty (120) days after each anniversary of this Agreement, a
statement setting forth the Deferral Account balance.
3.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is not a
trust fund of any kind. The Executive is a general unsecured creditor of the
Company for the payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Executive's rights are not subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by the Executive's creditors.
Article 4
Lifetime Benefits
4.1 Normal Retirement Benefit. If the Executive terminates employment on or
after the Normal Retirement Date for reasons other than death, the Company shall
pay to the Executive the benefit described in this Section 4.1.
4.1.1 Amount of Benefit. The benefit under this Section 4.1 is the
Deferral Account balance at the Executive's Termination of Employment.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in the form elected by the Executive on the Election Form. The
Company shall continue to credit interest under Section 3.1.2.
4.2 Early Retirement Benefit. If the Executive terminates employment after
the Early Retirement Date but before the Normal Retirement Date, and for reasons
other than death or
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Disability, the Company shall pay to the Executive the benefit described in this
Section 4.2.
4.2.1 Amount of Benefit. The benefit under this Section 4.2 is the
Deferral Account balance at the Executive's Termination of Employment.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in the form elected by the Executive on the Election Form. The
Company shall continue to credit interest under Section 3.1.2.
4.3 Disability Benefit. If the Executive terminates employment for
Disability prior to the Normal Retirement Date, the Company shall pay to the
Executive the benefit described in this Section 4.3.
4.3.1 Amount of Benefit. The benefit under this Section 4.3 is the
Deferral Account balance at the Executive's Termination of Employment.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in the form elected by the Executive on the Election Form. The
Company shall continue to credit interest under Section 3.1.2.
4.4 Change of Control Benefit. Upon a Change of Control while the Executive
is in the active service of the Company, the Company shall pay to the Executive
the benefit described in this Section 4.4 in lieu of any other benefit under
this Agreement.
4.4.1 Amount of Benefit. The benefit under this Section 4.4 is the
Deferral Account balance at the date of the Executive's Termination of
Employment.
4.4.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in a lump sum within sixty (60) days after the Executive's
Termination of Employment.
4.5 Hardship Distribution. Upon the Company's determination (following
petition by the Executive) that the Executive has suffered an unforeseeable
financial emergency as described in Section 2.2.2, the Company shall distribute
to the Executive all or a portion of the Deferral Account balance as determined
by the Company, but in no event shall the distribution be greater than is
necessary to relieve the financial hardship.
Article 5
Death Benefits
5.1 Death During Active Service. If the Executive dies while in the active
service of the Company, the Company shall pay to the Executive's beneficiary the
benefit described in this Section 5.1.
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5.1.1 Amount of Benefit. The benefit under Section 5.1 is $16,194
annually in monthly installments for 20 years.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
beneficiary within thirty (30) days following the Executive's death. The
Company shall continue to credit interest under Section 3.1.2.
5.2 Death During Benefit Period. If the Executive dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Executive's
beneficiary at the same time and in the same amounts they would have been paid
to the Executive had the Executive survived.
Article 6
Beneficiaries
6.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Company. 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 accepted by
the Company during the Executive's lifetime. The Executive's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Executive, or if the Executive names a spouse as beneficiary and the
marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive's estate.
6.2 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 Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetency,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
Article 7
General Limitations
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement that is attributable to
the Company's matching contributions or the interest earned on such
contributions:
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7.1 Excess Parachute Payment. To the extent the benefit would be an excess
parachute payment under Section 280G of the Code.
7.2 Termination for Cause. If the Company terminates the Executive's
employment for:
7.2.1 Gross negligence or gross neglect of duties;
7.2.2 Commission of a felony or of a gross misdemeanor involving moral
turpitude; or
7.2.3 Fraud, disloyalty, dishonesty or willful violation of any law or
significant Company policy committed in connection with the Executive's
employment and resulting in an adverse effect on the Company.
7.3 Suicide. If the Executive commits suicide within two years after the
date of this Agreement, or if the Executive has made any material misstatement
of fact on any application for life insurance purchased by the Company.
Article 8
Claims and Review Procedures
8.1 Claims Procedure. The Company shall notify the Executive's beneficiary
in writing, within ninety (90) days of his or her written application for
benefits, of his or her eligibility or noneligibility for benefits under the
Agreement. If the Company determines that the beneficiary 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, and (4) an explanation of the Agreement's
claims review procedure and other appropriate information as to the steps to be
taken if the beneficiary wishes to have the claim reviewed. If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the beneficiary 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-day period.
8.2 Review Procedure. If the beneficiary is determined by the Company not
to be eligible for benefits, or if the beneficiary believes that he or she is
entitled to greater or different benefits, the beneficiary shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons which the
beneficiary believes entitle him or her to benefits or to greater or different
benefits. Within sixty (60) days after receipt by the Company of the petition,
the Company shall afford the beneficiary (and counsel, if any) an opportunity to
present his or her position to the Company orally or in writing, and the
beneficiary (or counsel) shall have the right to review the pertinent documents.
The Company shall notify the beneficiary of its decision in writing within the
sixty-day period, stating specifically the basis of its
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decision, written in a manner calculated to be understood by the beneficiary and
the specific provisions of the Agreement on which the decision is based. If,
because of the need for a hearing, the sixty-day period is not sufficient, the
decision may be deferred for up to another sixty-day period at the election of
the Company, but notice of this deferral shall be given to the beneficiary.
Article 9
Amendments and Termination
The Company may amend or terminate this Agreement at any time prior to the
Executive's Termination of Employment by written notice to the Executive. In no
event shall this Agreement be terminated without payment to the Executive of the
Deferral Account balance attributable to the Executive's deferrals and interest
credited on such amounts.
Article 10
Miscellaneous
10.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guaranty 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 Company, nor does it interfere with the Company's right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of OHIO, except to the extent preempted by the laws of the
United States of America.
10.6 Unfunded Arrangement. The Executive and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company 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 Company to which the Executive and beneficiary have no preferred or
secured claim.
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IN WITNESS WHEREOF, the Executive and a duly authorized Company officer have
signed this Agreement.
EXECUTIVE: COMPANY:
XXXXXXXX FEDERAL SAVINGS BANK
/s/ Xxxx X. Xxxxx By /s/ Xxxxxxx X. Xxxxxx
--------------------------------- ---------------------------------
XXXX X. XXXXX
Title President
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