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Exhibit 10.4
FORM OF DEFERRED COMPENSATION AGREEMENT
THIS DEFERRED COMPENSATION AGREEMENT dated this day of
, by and between Commerce National Bank, a national association
("Employer"); and ("Employee").
RECITALS
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WHEREAS, Employee has been employed by Employer beginning on
; and
WHEREAS, the services of Employee and Employee's experience and
knowledge of the affairs of Employer are extremely valuable to Employer; and
WHEREAS, Employer desires that Employee remain in its service,
wishes to continue to receive the benefit of Employee's knowledge and
experience, and is willing to offer Employee an incentive in the form of
deferred compensation.
AGREEMENT
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NOW, THEREFORE, the parties hereto agree as follows:
I. EMPLOYMENT DUTIES AND COMPENSATION.
Employee shall remain in the employ of Employer with Employee's
duties, compensation and terms of employment in that capacity to be such as may
be determined from time to time by Employer's President and Employer's Board of
Directors or Compensation Committee of the Board of Directors (collectively
referred to as the "Board") until such employment is terminated by either
Employer or Employee. In addition to Employee's compensation as determined by
the President, Employee shall further be entitled to such amounts as are
provided hereinafter.
II. DEFERRED COMPENSATION AMOUNT.
A. Employer may credit an amount of deferred compensation to the
account for Employee's benefit in such amounts and at such times as determined
in the sole discretion of the Board. Employer shall maintain the account on its
records designated as the Deferred Compensation Account for Employee. Employee
shall be informed in writing by employer of the amount of deferred compensation,
if any, and the time as of which such deferred compensation is credited to
Employee's Deferred Compensation Account. Any amounts of deferred compensation
credited to Employee's Deferred Compensation Account may be kept in cash or
invested and reinvested in mutual funds, stocks, bonds, securities, a policy or
policies of life insurance on Employee's life, or any other assets which
Employer is legally permitted to invest in, or such amounts may be used by
Employer in connection with the operation of its business, as may be determined
by the Board.
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B. As of the date of this agreement, such deferred compensation
amount shall be equal to the annual increase in the cash surrender value of the
life insurance policy number , issued by Northwestern Mutual Life Insurance
Company on Employee's life. This amount of deferred compensation may be amended
by action of the Board.
C. As an investment of Employee's Deferred Compensation Account,
the Board may direct Employer to purchase a policy of life insurance on the life
of the Employee. In the event that such a life insurance policy is purchased for
purposes of this Agreement, Employer shall be the applicant, owner and
beneficiary of the policy. Employer shall have all rights under the policy and
all incidents of ownership under the policy. Employer, at its option, may assign
all or a portion of the death benefits under the policy.
III. PAYMENT OF DEFERRED COMPENSATION AT AGE 65.
Upon Employee's attainment of age 65, Employer shall pay Employee
deferred compensation in ten (10) annual installments commencing on the date of
Employee's attainment of age 65, with the amount of such annual payment
determined to be the greater of the amount under A or B as follows:
A. An amount equal to one-tenth (1/10) of the amount
credited to Employee's Deferred Compensation Account plus
interest, if any, upon the date Employee attains age 65,
payable in such installments commencing upon Employee's
attainment of age 65 and upon the annual anniversary date
of Employee's 65th birthday for each of the succeeding
nine (9) years until all ten (10) annual installments
have been paid. The interest credited to the Employee's
Deferred Compensation Account shall be determined on the
first day of January of each year and shall be equal to
the interest rate paid by Commerce National Bank on a
five-year certificate of deposit.
B. An amount equal to the before tax equivalent of the
maximum level amount of loans and/or dividend surrenders
which Employer can take for a period of ten (10) years
from the cash value, if any, of any life insurance policy
purchased by Employer on Employee's life as an investment
for purposes of this Deferred Compensation Agreement. The
maximum level of loans and/or dividend surrenders shall
be determined on the date the Employee attains age 65
assuming that interest on the loans is added to principal
and that premiums due on the policy are also paid by
premium loan and/or dividend surrender. Payments to
Employee shall commence upon his attainment of age 65 and
shall be made annually on the anniversary of Employee's
birthday for each of the succeeding nine (9) years until
all ten (10) installments have been paid.
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Employee's right to payment of deferred compensation under this paragraph III
shall be determined solely with reference to Employee's attainment of age 65.
Employee's right to such payments shall not be affected in any way by Employee's
continued employment beyond attainment of age 65.
IV. PAYMENT OF DEFERRED COMPENSATION UPON TERMINATION OF EMPLOYMENT
PRIOR TO AGE 65.
Upon Employee's termination of employment after December 31, 2007
and prior to Employee's attainment of age 65, Employer may, in the sole
discretion of the Board, pay Employee deferred compensation in ten (10) annual
installments commencing on any date following the date of Employee's termination
of employment with Employer with the amount of such annual payment determined to
be the greater of the amounts under A or B as follows:
A. An amount equal to one tenth (1/10) of the amount
credited to Employee's Deferred Compensation Account plus
interest, if any, upon the date which the Board, in its
discretion, elects to commence payments under this
paragraph IV, payable in such installments commencing
upon any such date as may be elected by the Board to
commence payments and upon the annual anniversary of such
date for each of the succeeding nine (9) years until all
ten (10) annual installments have been paid. The interest
credited to the Employee's Deferred Compensation Account
shall be determined on the first day of January of each
year and shall be equal to the interest rate paid by
Commerce National Bank on a five-year certificate of
deposit.
B. An amount equal to the before tax equivalent of the
maximum level amount of loans and/or dividend surrenders
which Employer can take for a period of ten (10) years
from the cash value, if any, of any life insurance policy
purchased by Employer on Employee's life as an investment
for purposes of this Deferred Compensation Agreement. The
maximum level of loans and/or dividend surrenders shall
be determined on the date Employee terminates employment
with Employer assuming that interest on the loans is
added to principal and that premiums due on the policy
are also paid by premium loan and/or dividend surrender.
Payments to Employee shall commence on the date
determined by the Board and shall be made annually on the
anniversary of said date for each of the succeeding nine
(9) years until all ten (10) installments have been paid.
Payment of deferred compensation under this paragraph IV is subject to the sole,
absolute discretion of the Board. Employer is under no obligation to make any
payment to Employee unless Employee remains an employee of Employer on a full
time basis for a period of ten years from the date of this agreement.
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V. PAYMENT OF DEFERRED COMPENSATION IN EVENT OF EMPLOYEE'S TOTAL AND
PERMANENT DISABILITY.
In the event of Employee's total and permanent disability prior
to commencement of payments provided under paragraph III or IV, Employer shall
pay Employee the deferred compensation in the same amount and the same manner
and schedule as set forth in paragraph IV. Employee shall be deemed to have
incurred a total and permanent disability if Employee satisfies all requirements
and conditions to qualify as totally disabled as defined by Employer's group
long term disability insurance plan and policy.
VI. PAYMENT OF DEFERRED COMPENSATION IN EVENT OF EMPLOYEE'S DEATH
WHEN EMPLOYEE HAS COMMENCED RECEIVING PAYMENTS UNDER PARAGRAPHS
III, IV OR V.
In the event of Employee's death when Employee has commenced
receiving payments under Paragraph III, IV or V, Employer shall pay Employee's
designated beneficiary compensation in annual installments with the amount and
time of such annual payment determined pursuant to A or B as follows:
A. If Employee was receiving payments of deferred
compensation determined under paragraph III(A), IV(A) or
V was established pursuant to IV(A), then such payment
amounts shall be continued, on the payment dates as
determined for purposes of paragraph III, IV or V. The
annual payments shall be continued to Employee's
designated beneficiary for the balance of the ten (10)
year period determined for the Employee for purposes of
paragraph III, IV or V until all ten (10) annual
installments have been paid to either Employee or his
designated beneficiary.
B. If Employee was receiving deferred compensation under
paragraph III(B), IV(B) or V, if the payment amount under
paragraph V was established pursuant to paragraph IV(B),
then deferred compensation payments shall be continued to
the Employee's designated beneficiary for the Employee
for purposes of paragraph III, IV or V until all ten (10)
annual installments have been paid to either Employee or
his designated beneficiary.
VII. PAYMENT OF DEFERRED COMPENSATION IN EVENT OF EMPLOYEE'S DEATH
WHEN EMPLOYEE HAS NOT COMMENCED RECEIVING PAYMENTS UNDER
PARAGRAPHS III, IV, OR V.
In the event of Employee's death prior to commencement of payment
to him of any benefits under paragraph III, IV or V above, Employee's designated
beneficiary shall be entitled to receive the death benefit, if any, payable
under any life insurance policy which Employer may have purchased as an
investment for purposes of this Agreement,
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subject to the provisions of the Split-Dollar Life Insurance Agreement attached
hereto as Exhibit "A".
VIII. NO DUPLICATION OF DEFERRED COMPENSATION.
Deferred compensation shall not be paid to Employee, or to his
designated beneficiary, under more than one of the following paragraphs of this
Agreement: III, IV, V, VI or VII.
IX. DESIGNATED BENEFICIARY.
For purposes of paragraphs III, IV, V and VI of this Agreement,
the designated beneficiary shall be as specified in Exhibit "B" attached to this
Agreement. Employee may change the designated beneficiary by notice in writing
to Employer at any time. If the designated beneficiary shall have died, whether
prior to Employee's death or after commencement of payments to the designated
beneficiary, any remaining payments shall be paid to Employee's estate which
shall be deemed to be the Employee's designated beneficiary. For purposes of
paragraph VII of this Agreement, the designated beneficiary shall be the direct
or contingent beneficiaries specified by Employee in accordance with paragraph 2
of the Split-Dollar Life Insurance Agreement attached hereto as Exhibit "A".
X. PROHIBITION AGAINST ASSIGNMENT.
Except as hereinabove otherwise expressly provided, Employee
agrees on behalf of himself and on behalf of his personal representatives,
heirs, legatees, distributees and any other person or persons claiming any
benefits under him by virtue of this Agreement, that this Agreement and the
rights, interests and benefits hereunder shall not be assigned, transferred,
pledged or hypothecated in any way by Employee or any personal representative,
heir, legatee, distributee or other person claiming under Employee by virtue of
this Agreement and shall not be subject to execution, attachment or similar
process. Any attempted assignment, transfer, pledge, or hypothecation or other
disposition of this Agreement or of such rights, interests and benefits contrary
to the foregoing provisions, or the levy of any attachment or similar process
thereupon, shall be null and void and without effect and Employer shall have no
further liability hereunder.
XI. NOTICES AND ELECTIONS.
Any notice or election to be given hereunder shall be sent by
certified mail, return receipt requested, to Employer at its registered office
and to Employee at such address as is carried on the records of Employer. Either
party may change the address to which notices are to be addressed by notice in
writing given to the other in accordance with the terms hereof. The effective
date of any such notice shall be the date of mailing, as determined by postmark.
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XII. FUNDS
Nothing contained in this Agreement and no action taken pursuant
to the provisions of this Agreement shall create or be construed to create a
trust of any kind, a fund, or fiduciary relationship between Employer and
Employee, his designated beneficiary or any other person. Any funds, including
all investments and any life insurance policies, used to provide payment under
this Agreement shall be a part of the general funds and assets of Employer and
subject to the claims of general creditors and no person other than Employer
shall by virtue of the provisions of this Agreement have any right, interest or
title in such funds. To the extent that any person acquires a right to receive
payments from Employer under this Agreement, such right shall be not greater
than the right of any unsecured general creditor of Employer. Benefits provided
by this Agreement are separate from and unrelated to the proceeds or value of
any insurance policy purchased by Employer to fund this Agreement. Employee
shall not have any present right or interest in, nor any deferred claim to, or
beneficial ownership of, any insurance policy held by Employer to provide the
benefits under this Agreement.
XIII. EFFECT UPON EMPLOYMENT RELATIONSHIP.
Nothing in this Agreement shall be construed as granting Employee
the right to be continued in the employment of Employer, or as a limitation on
the right of Employer to terminate the employment of Employee at any time.
XIV. CHANGE IN CONTROL
Upon the occurrence of a change in control of Employer as
hereinafter defined, all amounts accumulated in Employee's Deferred Compensation
Account shall immediately vest and shall be immediately payable to Employee.
Employee, in his sole discretion, may elect to receive the transfer of the
ownership of the life insurance policy on his life as payment and total
satisfaction of all amounts due under this agreement.
For purposes of this agreement, the term "Change in Control" in
ownership of Employer shall mean and shall be deemed to have occurred if (i) any
person, as such term is used in Section 13 (d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), is or becomes the beneficial owner (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of Employer representing thirty percent (30%) or more of the combined
voting power of Employer's then outstanding securities, or (ii) there commences
a tender offer for securities of Employer which, if successful, would result in
any person becoming the beneficial owner (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly of securities of the Bank representing
thirty percent (30%) or more of the combined voting power of Employer's then
outstanding securities, or (iii) there is a consolidation or combination of
Employer with, or merger of Employer into or with, any other company and the
stockholders of Employer prior to such consolidation, combination or merger are
not beneficial owners (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of a company that, directly or indirectly
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owns one hundred percent (100%) of Employer, representing more than seventy
percent (70%) of the combined voting power of such controlling company, or (iv)
there is an acquisition of Employer or of all or substantially all of the assets
of Employer by another person, company or entity.
XV. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of
any successor of Employer and any such successor shall be deemed substituted for
Employer under the terms of this Agreement. As used in this Agreement, the term
"successor" shall include the person, firm, corporation, or other business
entity which at any time, whether by merger, purchase or otherwise, acquires all
or substantially all of the assets of business of Employer.
XVI. GOVERNING LAW.
This Agreement shall be interpreted, construed, enforced, and
performed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
COMMERCE NATIONAL BANK
BY:
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Xxxxxx X. XxXxxxxxx
Title: President
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EMPLOYEE:
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EXHIBIT "A"
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
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THIS AGREEMENT is entered into this ____ DAY OF ________, 199_,
by and between Commerce National Bank, a national association ("Employer"), and
_________________ ("Employee").
RECITALS
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WHEREAS, Employee is a valued employee of Employer and Employer
wishes to retain him in its employ, and
WHEREAS, Employer, as an inducement to such continued employment,
wishes to assist Employee with his personal life insurance program.
AGREEMENT
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NOW, THEREFORE, Employer and Employee agree as follows:
1. The life insurance policy with which this Agreement deals is
Policy Number ("Policy") issued by The Northwestern Mutual Life Insurance
Company ("Northwestern") on the life of Employee. Employer shall be the sole
owner of the Policy and the direct beneficiary of the greater of an amount of
the death proceeds equal to (a) the cash value of the Policy as of the date of
death of the Employee to which premiums have been paid, or (b) the aggregate
premiums paid to Northwestern by Employer with respect to the Policy. Any
indebtedness on the Policy will first be deducted from the proceeds payable to
Employer. Also, any collateral assignment made by the Employer will be deducted
from the proceeds payable to it.
2. Employee shall have the right to designate and change the
direct and contingent beneficiaries of any remaining proceeds and to elect and
change a payment plan for such beneficiaries. Any assignment of the proceeds by
Employee shall apply only to said remaining proceeds.
3. The entire premium on the Policy shall be paid by Employer as
it becomes due.
4. Policy dividends shall be applied to purchase paid-up
additional insurance protection.
5. This Agreement may be terminated by either party hereto, with
or without the consent of the other, by giving notice of termination in writing
to the other party. This Agreement shall terminate automatically upon Employee's
attainment of age 65 or upon termination of Employee's employment with Employer
for any reason whatsoever other than the Employee's death.
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6. This Agreement shall bind Employer and its successors and
assigns, Employee and his heirs, executors, administrators and assigns, and any
Policy beneficiary.
7. The following provisions are part of this Agreement and are
intended to meet the requirements of the Employee Retirement Income Security Act
of 1974:
(a) The Employer is hereby designated as the "named
fiduciary" under this Agreement. The named fiduciary shall have authority to
control and manage the operation and administration of this Agreement, and it
shall be responsible for establishing and carrying out a funding policy and
method consistent with the objectives of this Agreement.
(b) The Employer shall make all determinations concerning
rights to benefits under this Agreement. Any decision by the Employer denying a
claim by Employee or any other beneficiary for benefits under this Agreement
shall be stated in writing and delivered or mailed to Employee or such other
beneficiary. Such decision shall set forth the specific reasons for the denial,
written to the best of the Employer's ability in a manner that may be understood
without legal or actuarial counsel. In addition, the Employer shall afford a
reasonable opportunity to Employee or such other beneficiary for a full and fair
review of the decision denying such claim.
IN WITNESS WHEREOF, the parties have executed this agreement on
the date first above written.
In the presence of: COMMERCE NATIONAL BANK
By:
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Xxxxxx X. XxXxxxxxx
Title: President
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EMPLOYEE:
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EXHIBIT "B"
TO
DEFERRED COMPENSATION AGREEMENT
BETWEEN
COMMERCE NATIONAL BANK
AND
_________________
My Beneficiary is:
Date: DECEMBER 31, 1997
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Witnesses:
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