EXHIBIT 10.3
INDEXED EXECUTIVE SALARY CONTINUATION PLAN
AGREEMENT
This Agreement, made and entered into this 28th day of March, 1995, by and
between The Commercial Savings Bank, a Bank organized and existing under the
laws of the State of Ohio, hereinafter referred to as "the Bank", and Xxxxxx
Xxxxxxx Xxxxxx, a Key Employee and the Executive of the Bank, hereinafter
referred to as "the Executive".
The Executive has been in the employ of the Bank for several years and has
now and for years past faithfully served the Bank. It is the consensus of the
Board of Directors of the bank (the Board) that the Executive's services have
been of exceptional merit, in excess of the compensation paid and an invaluable
contribution to the profits and position of the Bank in its field of activity.
The Board further believes that the Executive's experience, knowledge of
corporate affairs, reputation and industry contacts are of such value and his
continued services are so essential to the Bank's future growth and profits that
it would suffer severe financial loss should the Executive terminate his
services.
Accordingly, it is the desire of the Bank and the Executive to enter into
this Agreement under which the Bank will agree to make certain payments to the
Executive upon his retirement and, alternatively, to his beneficiary(ies) in the
event of his premature death while employed by the Bank.
It is the intent of the parties hereto that this Agreement be considered
an arrangement maintained primarily to provide supplemental retirement benefits
for the Executive, as a member of a select group of management or
highly-compensated employees of the Bank for purposes of the Employee Retirement
Security Act of 1974 (ERISA). The Executive is fully advised of the Bank's
financial status and has had substantial input in the design and operation of
this benefit plan.
Therefore, in consideration of the Executive's services performed in the
past and those to be performed in the future and based upon the mutual promises
and covenants herein contained, the Bank and the Executive, agree as follows:
I. DEFINITIONS
A. Effective Date:
The Effective Date of this Agreement shall be March 28, 1995.
B. Plan Year:
Any reference to "Plan Year" shall mean a calendar year from January
1 to December 31. In the year of implementation, the term "Plan
Year" shall mean the period from the effective date to December 31
of the year of the effective date.
C. Retirement Date:
Retirement Date shall mean retirement from service with the Bank
which becomes effective on the first day of the calendar month
following the month in which the Executive reaches his sixty-fifth
(65th) birthday or such later date as the Executive may actually
retire.
D. Termination of Service:
Termination of Service shall mean voluntary resignation of service
by the Executive or the Bank's discharge of the Executive without
cause [as defined in subparagraph III (D) hereinafter], prior to the
Normal Retirement Age [described in subparagraph I (J) hereinafter].
E. Pre-Retirement Account:
A Pre-Retirement Account shall be established as a liability reserve
account on the books of the Bank for the benefit of the Executive.
Prior to termination of service or the Executive's retirement, such
liability reserve account shall be increased or decreased each Plan
Year (including the Plan Year in which the Executive ceases to serve
on the Board) by an amount equal to the annual earnings or loss for
that Plan Year determined by the Index [described in subparagraph I
(G) hereinafter], less the Opportunity Cost for that Plan Year
[described in subparagraph I (H) hereinafter].
F. Index Retirement Benefit:
The Index Retirement Benefit for the Executive for any year shall be
equal to the excess of the annual earnings (if any) determined by
the Index [subparagraph I (G)] for that Plan Year over the
Opportunity Cost [subparagraph I (H)] for that Plan Year.
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G. Index:
The Index for any Plan Year shall be the aggregate annual after-tax
income from the life insurance contracts described hereinafter as
defined by FASB Technical Bulletin 85-4. This Index shall be applied
as if such insurance contracts were purchased on the effective date
hereof.
Insurance Company: Xxxxxxxxx Xxxxxxxx Life Insurance Company
Policy Form: Flexible Premium Adjustable Life Insurance
Policy Name: Universal Life
Insured's Age, Sex: 35, Male
Riders: None
Ratings: None
Option: Option A
Face Amount: $369,000
Premiums Paid: $95,000
No. of Premium Payments: One
Assumed Purchase Date: March 28, 1995
If such contracts of life insurance are actually purchased by the
Bank then the actual policies as of the dates they were purchased
shall be used in calculations under this Agreement. If such
contracts of life insurance are not purchased or are subsequently
surrendered or lapsed, then the Bank shall receive annual policy
illustrations that assume the above described policies were
purchased from the above named insurance company(ies) on the
Effective Date from which the increase in policy value will be used
to calculate the amount of the Index.
In either case, references to the life insurance contract are merely
for purposes of calculating a benefit. The Bank has no obligation to
purchase such life insurance and, if purchased, the Executive and
his beneficiary(ies) shall have no ownership interest in such policy
and shall always have no greater interest in the benefits under this
Agreement than that of an unsecured general creditor of the Bank.
H. Opportunity Cost:
The Opportunity Cost for any Plan Year shall be calculated by taking
the sum of the amount of premiums set forth in the Indexed policies
described above plus the amount of any benefits paid to the
Executive pursuant to this Agreement (Paragraph III hereinafter)
plus the amount of all previous years after-tax Opportunity Cost,
and multiplying that sum by the average after-tax yield on a 90-day
Treasury xxxx for the Plan Year.
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I. Change Of Control:
Change of control shall be deemed to be the cumulative transfer of
more than fifty percent (50%) of the voting stock of the Bank
holding company from the Effective Date of this Agreement. For the
purposes of this Agreement, transfers on account of deaths or gifts,
transfers between family members or transfers to a qualified
retirement plan maintained by the Bank shall not be considered in
determining whether there has been a change in control.
J. Normal Retirement Age:
Normal Retirement Age shall mean the date on which the Executive
attains age sixty-five (65).
II. EMPLOYMENT
No provision of this Agreement shall be deemed to restrict or limit any
existing employment agreement by and between the Bank and the Executive,
nor shall any conditions herein create specific employment rights to the
Executive nor limit the right of the Employer to discharge the Executive
with or without cause. In a similar fashion, no provision shall limit the
Executive's rights to voluntarily sever his employment at any time.
III. INDEX BENEFITS
The following benefits provided by the Bank to the Executive are in the
nature of a fringe benefit and shall in no event be construed to effect
nor limit the Executive's current or prospective salary increases, cash
bonuses or profit-sharing distributions or credits.
A. Retirement Benefits:
Should the Executive continue to be employed by the Bank until his
"Normal Retirement Age" defined in subparagraph I (J), he shall be
entitled to receive the balance in his Pre-Retirement Account [as
defined in subparagraph I (E)] in ten (10) equal annual installments
commencing thirty (30) days following the Executive's Retirement
Date. In addition to these payments, commencing with the Plan Year
in which the Executive attains his Retirement Date, the Index
Retirement Benefit [as defined in subparagraph I (F) above] for each
year shall be paid to the Executive until his death. However, in any
Plan Year the benefit payable under this Agreement, plus benefits
received from any qualified retirement plans, shall
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not exceed seventy percent (70%) of the Executive's final
compensation. For purposes of this agreement, "benefits received
from any qualified retirement plans" shall mean only that portion of
the qualified plan benefits that are attributable to Bank
contributions to the plan. Benefits attributable to contributions by
the Executive shall not be considered in the benefit calculation.
B. Termination of Service:
Subject to subparagraph III (D) hereinafter, should the Executive
suffer a termination of service [defined in subparagraph I (D)], he
shall be entitled to receive, upon attaining Normal Retirement Age
[subparagraph I (J)], the appropriate percentage from the following
table times the balance in the Pre-Retirement Account paid over ten
(10) years in equal installments commencing at the Retirement Date
[subparagraph I (C)]. In addition to these payments, the appropriate
percentage from the following table times the Index Retirement
Benefit for each year shall be paid to the Executive until his
death:
Vesting Schedule
-------------------------------------
Total Years of Vested
Service with the Bank Percentage
--------------------- ----------
0-5 0%
6 20%
7 40%
8 60%
9 80%
10 100%
C. Death:
Should the Executive die prior to having received the full balance
of the Pre-Retirement Account, the unpaid balance of the
Pre-Retirement Account shall be paid in a lump sum to the
beneficiary selected by the Executive and filed with the Bank. In
the absence of or a failure to designate a beneficiary, the unpaid
balance shall be paid in a lump sum to the personal representative
of the Executive's estate.
D. Discharge for Cause:
Should the Executive be discharged for cause at any time prior to
his Retirement Date, all Index Benefits under this Agreement
[subparagraphs III (A), (B) or (C)] shall be forfeited. The term
"for cause" shall mean
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gross negligence or gross neglect or the commission of a felony or
gross-misdemeanor involving moral turpitude, fraud, dishonesty or
willful violation of any law that results in any adverse effect on
the bank. If a dispute arises as to discharge "for cause", such
dispute shall be resolved by arbitration as set forth in this
Agreement.
E. Disability:
Upon total and permanent disability, the Executive shall become
immediately one hundred percent (100%) vested. The Executive shall
immediately begin receiving the benefits defined in subparagraph III
(A). Total and permanent disability shall be determined by the
Bank's board of directors. Should a dispute arise, it shall be
settled by arbitration as described in Section VII.
F. Death Benefit:
Except as set forth above, there is no death benefit provided under
this Agreement.
IV. RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement. The
Executive, his beneficiary(ies) or any successor in interest to him shall
be and remain simply a general creditor of the Bank in the same manner as
any other creditor having a general claim for matured and unpaid
compensation.
The Bank reserves the absolute right at its sole discretion to either fund
the obligations undertaken by this Agreement or to refrain from funding
the same and to determine the exact nature and method of such funding.
Should the Bank elect to fund this Agreement, in whole or in part, through
the purchase of life insurance, mutual funds, disability policies or
annuities, the Bank reserves the absolute right, in its sole discretion,
to terminate such funding at any time, in whole or in part. At no time
shall the Executive be deemed to have any lien or right, title or interest
in or to any specific funding investment or to any assets of the Bank.
If the Bank elects to invest in a life insurance, disability or annuity
policy upon the life of the Executive, then the Executive shall assist the
Bank by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
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V. CHANGE OF CONTROL
Upon a Change of Control [as defined in subparagraph I (I) herein], if the
Executive's employment is subsequently terminated then he shall receive
the benefits promised in this Agreement upon attaining Normal Retirement
Age, as if he had been continuously employed by the Bank until that time.
The Executive will also remain eligible for all promised death benefits in
this Agreement. In addition, no sale, merger or consolidation of the Bank
shall take place unless the new or surviving entity expressly acknowledges
the obligations under this Agreement and agrees to abide by its terms.
VI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
Neither the Executive, his widow nor any other beneficiary under
this Agreement shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise
encumber in advance any of the benefits payable hereunder nor shall
any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the
Executive or his beneficiary, nor be transferable by operation of
law in the event of bankruptcy, insolvency or otherwise. In the
event the Executive or any beneficiary attempts assignment,
commutation, hypothecation, transfer or disposal of the benefits
hereunder, the Bank's liabilities shall forthwith cease and
terminate.
B. Binding Obligation of Bank and any Successor in Interest:
The Bank expressly agrees that it shall not merge or consolidate
into or with another bank or sell substantially all of its assets to
another bank, firm or person until such bank, firm or person
expressly agrees, in writing, to assume and discharge the duties and
obligations of the Bank under this Agreement. This Agreement shall
be binding upon the parties hereto, their successors,
beneficiary(ies), heirs and personal representatives.
C. Revocation:
It is agreed by and between the parties hereto that, during the
lifetime of the Executive, this Agreement may be amended or revoked
at any time or times, in whole or in part, by the mutual written
assent of the Executive and the Bank.
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D. Gender:
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine,
feminine or neuter gender, whenever they should so apply.
E. Effect on Other Bank Benefit Plans:
Nothing contained in this Agreement shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit-sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Bank's existing or future compensation structure.
F. Headings:
Headings and subheadings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part of
this Agreement.
G. Applicable Law:
The validity and interpretation of this Agreement shall be governed
by the laws of the State of Ohio.
VII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this plan shall be
The Commercial Savings Bank until its' removal by the Board. As
Named Fiduciary and Administrator, The Commercial Savings Bank shall
be responsible for the management, control and administration of the
Salary Continuation Agreement as established herein. The Named
Fiduciary may delegate to others certain aspects of the management
and operation responsibilities of the plan including the employment
of advisors and the delegation of ministerial duties to qualified
individuals.
B. Claims Procedure and Arbitration:
In the event a dispute arises over benefits under this Agreement and
benefits are not paid to the Executive (or to his beneficiary in the
case of the Executive's death) and such claimants feel they are
entitled to receive such benefits, then a written claim must be made
to the Plan Administrator named above within ninety (90) days from
the date payments are refused.
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The Plan Administrator shall review the written claim and if the
claim is denied, in whole or in part, they shall provide in writing
within ninety (90) days of receipt of such claim their specific
reasons for such denial, reference to the provisions of this
Agreement upon which the denial is based and any additional material
or information necessary to perfect the claim. Such written notice
shall further indicate the additional steps to be taken by claimants
if a further review of the claim denial is desired. A claim shall be
deemed denied if the Plan Administrator fails to take any action
within the aforesaid ninety-day period.
If claimants desire a second review they shall notify the Plan
Administrator in writing within ninety (90) days of the first claim
denial. Claimants may review this Agreement or any documents
relating thereto and submit any written issues and comments they may
feel appropriate. In his sole discretion, the Plan Administrator
shall then review the second claim and provide a written decision
within ninety (90) days of receipt of such claim. This decision
shall likewise state the specific reasons for the decision and shall
include reference to specific provisions of this Agreement upon
which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Agreement or the meaning and effect of
the terms and conditions thereof, then claimants may submit the
dispute to a Board of Arbitration for final arbitration. Said Board
shall consist of one member selected by the claimant, one member
selected by the Bank, and the third member selected by the first two
members. The Board shall operate under any generally recognized set
of arbitration rules. The parties hereto agree that they and their
heirs, personal representatives, successors and assigns shall be
bound by the decision of such Board with respect to any controversy
properly submitted to it for determination.
Where a dispute arises as to the Bank's discharge of the Executive
"for cause", such dispute shall likewise be submitted to arbitration
as above described and the parties hereto agree to be bound by the
decision thereunder.
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IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully
read this Agreement and executed the original thereof on the 28th day of March,
1995 and that, upon execution, each has received a conforming copy.
THE COMMERCIAL SAVINGS BANK
/s/ Xxxxxxx X. Xx Xxx By: /s/ R. E. Xxxxxx Pres.
-------------------------- ----------------------------
Witness Title
/s/ Xxxxxxx X. Xx Xxx By: /s/ Xxxxxx Xxxxxxx Xxxxxx
-------------------------- -------------------------
Witness Xxxxxx Xxxxxxx Xxxxxx
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