Exhibit 10.4
FIRST INDIANA CORPORATION
SUPPLEMENTAL BENEFIT PLAN
PLAN AGREEMENT
THIS AGREEMENT is made as of the ____ day of _______________, 2004, by and
between First Indiana Corporation (hereinafter referred to as the "Employer")
and __________________, (hereinafter referred to as the "Employee").
WITNESSETH:
WHEREAS, the Employer maintains a Supplemental Benefit Plan (the "Plan");
WHEREAS, the Employer has designated the Employee to participate in the
Plan, and the Employee has elected to so participate;
WHEREAS, the parties desire to amend and restate their earlier agreement
regarding such participation in order to clarify certain terms and conditions
thereof.
IT IS THEREFORE AGREED:
1. The Employee shall be eligible to receive any and all benefits to which he
is entitled under the terms of the Plan.
2. In addition to any death benefit payable to the Employee's beneficiary
under Section 4.6 of the Plan, the Employee's beneficiary shall be
entitled to a special lump sum death benefit equal to 300% of the
Employee's highest annual rate of Total Salary paid by the Employer or its
affiliates. Such death benefit shall be paid as of the Employee's death
(at any time, whether while employed by the Employer or its affiliates or
thereafter) and shall be grossed up for federal, state and local income
taxes at the highest applicable marginal rate in effect at the time of the
Employee's death.
3. In lieu of the form of base retirement benefit provided for in Section 4.1
of the Plan, the form of the Employee's base retirement benefit shall be a
monthly amount, payable for a period of 15 years certain and life
thereafter, commencing on the Employee's termination of employment, or
upon the Employee's attainment of age 65, whichever is later. In lieu of
the monthly amount provided for in Section 4.1 of the Plan, the monthly
amount of the Employee's base retirement benefit shall be the greater of:
(a) the monthly amount payable as a straight-life annuity under
Section 4.1 of the Plan, or
(b) a monthly amount equal to the excess of:
(i) one-twelfth of 80% of the sum of:
(A) the Employee's highest annual rate of Total Salary
paid by the Employer or its affiliates and
(B) the greater of: (I) 37.5% of the Employee's
highest annual rate of Total Salary paid by the
Employer or its affiliates, or (II) the Employee's
High-Three Average Bonus, over
(ii) the sum of:
(A) 100% of the Employee's monthly primary Social
Security benefit payable at age 65 (determined
without regard to whether or when such benefits
actually commence), and
(B) 100% of the Employee's monthly benefit from the DB
Pension Plan payable at the time of his
termination of employment (determined as though
such benefit were paid as a straight life annuity
and as though no portion of such benefit had
become payable or been paid prior to such
termination).
4. Individualized Retirement Benefit. The Employee's retirement benefit shall
not be paid in the form provided for in Section 4.2 of the Plan but
instead shall be paid as a fixed-term variable annuity. The term of such
annuity shall begin on the date of the Employee's termination of
employment and shall end on the later of: (i) the last December 31
occurring within five years after such termination, or (ii) the last
December 31 occurring within the Employee's remaining life expectancy,
determined as of such termination, based on the life expectancy tables
then used for purposes of determining actuarial equivalence under the DB
Pension Plan. Distributions shall be made annually, with the first such
distribution being made as of the December 31 next following the
Employee's termination of employment, and with subsequent distributions
being made as of each December 31 thereafter, until the benefit has been
distributed fully. The amount of each distribution shall be determined as
though an amount equal to the lump sum actuarial equivalent of the
Employee's base retirement benefit (payable in the form and monthly amount
determined in accordance with Section 3 of this Agreement, were set aside
on the date of the Employee's termination of employment and then were
invested at the Employee's direction, with each distribution being
calculated as a fraction of such hypothetical investment fund, the
numerator of which is one, and the denominator of which is the excess of
the total number of distributions to be made over the number of
distributions previously made, and with each distribution being deducted
from the balance of the fund on the date as of which it is made. The
amounts of such distributions shall be determined not only with regard to
the earnings, gains and losses of such
2
hypothetical investment fund but also with regard to the brokerage
commissions and transaction costs incurred in the investment thereof.
[For example, if the Employee terminates employment on December 15,
2004, when he's 79 years old and has a life expectancy of 8.8 years,
his benefit will be paid in 9 installments, the first as of December
31, 2004, in an amount equal to one-ninth of the hypothetical
investment fund, and the last as of December 31, 2012, in an amount
equal to the remaining balance of the fund. If the value of the fund
on December 31, 2004, adjusted for investment increases and
decreases for the period subsequent to December 15, 2004, is
$3,000,000, the distribution to be made as of December 31, 2004,
will be $333,333. If the value of the fund on December 31, 2005, is
$2,813,333 (reflecting a $333,333 deduction for the distribution
made as of December 31, 2004, and a $146,667 addition representing
the net investment increase for the period subsequent to December
31, 2004), the distribution to be made as of December 31, 2005, will
be $351,667.]
The Employee or his beneficiary may direct the investment of the hypothetical
investment fund. All such directions, and all changes in such directions, shall
be made in writing to the Company. The Employee or his beneficiary may not
direct the investment of the hypothetical investment fund in any asset which
cannot be liquidated readily or which does not have a readily ascertainable fair
market value. If or to the extent the Employee or his beneficiary fails to
direct the investment of the hypothetical investment fund, it shall be deemed to
be invested in such money fund as the Committee from time to time shall
designate. It is contemplated that the Employer, in order to hedge part or all
of its liability for payment of the Employee's retirement benefit, may establish
an actual investment account and invest the same in such a manner as to mirror
the hypothetical investment fund. The right of the Employee and his beneficiary
to direct the investment of the hypothetical investment fund shall be subject to
such reasonable rules and procedures as the Committee may adopt to enable the
Employer to hedge its liability in this manner.
5. Arbitration. In the event of any disputes, differences, controversies or
claims arising out of, or in connection with, the Employee's rights under
the Plan or this Agreement, other than a dispute in which the sole relief
sought is an equitable remedy, such as a temporary restraining order or a
permanent or temporary injunction, the parties shall be required to have
the dispute, controversy, difference or claim settled through binding
arbitration pursuant to the American Arbitration Association's rules of
Commercial Arbitration which are then in effect The location of all
arbitration proceedings shall be Indianapolis, Indiana. One arbitrator
shall be selected by the parties and shall be a current or former
executive officer (vice president or higher) of a publicly-traded
corporation. In the event the parties are unable to mutually agree upon a
person to act as the arbitrator, or in the event a mutually-agreed upon
arbitrator shall fail to accept the appointment by the parties, the
parties shall jointly request from the American Arbitration Association a
list of the
3
names of five persons qualified to act as an arbitrator under this clause.
The selection of the final arbitrator then shall be achieved by each party
alternately striking a name, with the Employer going first, until one name
remains. In the event the parties mutually agree that the five names
submitted by the American Arbitration Association are unsatisfactory, they
jointly may request a second list of five names from the American
Arbitration Association and final selection shall be achieved through the
procedure set out herein. The decision of the arbitrator shall be final
and binding upon both parties, and any award entered by the arbitrator
shall be final, binding and non-appealable, and judgment may be entered
thereon by either party in accordance with the applicable law in any court
of competent jurisdiction. The arbitrator shall not have authority to
modify any provision of the Plan or this Agreement nor to award a remedy
for any difference, dispute, controversy or claim arising under the Plan
or this Agreement other than a benefit specifically provided under or by
virtue of the Plan or this Agreement. The Employer shall be responsible
for all of the reasonable expenses of the American Arbitration
Association, the arbitrator and the conduct of the selection and the
arbitration procedures set forth in this section, including reasonable
attorneys' fees and expenses incurred by either party which are associated
with the arbitration procedure through the time the final arbitration
decision or award is rendered. This arbitration provision shall be
specifically enforceable.
6. Limitation on Payments.
4
(a) Notwithstanding anything contained herein to the contrary, prior to
the payment of any amounts pursuant to the Plan or this Agreement,
an independent national accounting firm designated by the Employer
(the "Accounting Firm") shall compute whether there would be payable
to the Employee any "excess parachute payments," within the meaning
of section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), taking into account the total "parachute payments,"
within the meaning of section 280G of the Code, payable or to be
provided to the Employee, whether by the Employer or any of its
affiliates or by any successor to the Employer or any such
affiliate, and whether under the Plan or this Agreement or under any
other plan, practice or agreement. If there would be any excess
parachute payments, the Accounting Firm will compute the net
after-tax proceeds to the Employee, taking into account the excise
tax imposed by section 4999 of the Code, if (i) such parachute
payments were reduced to the point that the total thereof would not
exceed three times the "base amount" as defined in section 280G of
the Code, less One Dollar ($1.00), or (ii) such parachute payments
were not reduced. If not reducing such parachute payments would
result in a greater after-tax amount to the Employee, such parachute
payments shall not be reduced. If reducing such parachute payments
would result in a greater after-tax amount to the Employee, they
shall be reduced to such lesser amount. If such parachute payments
must be reduced, the Employee shall direct which of the payments are
to be reduced and the manner in which each is to be limited or
modified. The determination by the Accounting Firm shall be binding
upon the Employer and the Employee subject to the application of
subsection (c) of this section.
(b) As a result of various incentive or other plans, the Employee may be
entitled to receive various parachute payments over a period of
several years. In such event, the Accounting Firm may need to update
its calculations under subsection (a) of this section one or more
times. In the event that all or a portion of a parachute payment is
not made due to the limitations of this Section 6, the Employer
shall not be relieved of liability for such amount but such
parachute payment shall be deferred and included in calculations
with respect to subsequent parachute payments.
(c) As a result of uncertainty in the application of section 280G of the
Code at the time of determinations by the Accounting Firm hereunder,
uncertainties in the valuation of future payments, and deferrals
pursuant to Section 6(a), it is possible that parachute payments
will have been made by the Employer which should not have been made
(an "Overpayment") or that additional parachute payments which will
not have been made by the Employer could have been made (an
"Underpayment"), consistent in each case with the other provisions
of this Section 6. In the event that the Accounting Firm, based upon
the assertion of a deficiency by the Internal Revenue Service
against the Employer or the Employee which the
5
Accounting Firm believes has a high probability of success,
determines that an Overpayment has been made, such Overpayment shall
be treated for all purposes as a loan to the Employee which the
Employee shall repay to the Employer, together with interest at the
applicable federal rate provided for in section 7872(f)(2)(A) of the
Code; provided, however, that no amount shall be payable by the
Employee to the Employer if and to the extent that such payment
would not reduce the amount which is subject to taxation under
section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, such Underpayment
shall promptly be paid or transferred by the Employer to or for the
benefit of the Employee, together with interest at the applicable
federal rate provided for in section 7872(f)(2)(A) of the Code.
(d) All fees, costs and expenses (including, but not limited to, the
cost of retaining experts) of the Accounting Firm shall be borne by
the Employer and the Employer shall pay such fees, costs and
expenses as they become due. In performing the computations required
hereunder, the Accounting Firm shall assume that all parachute
payments to be made to the Employee will be subject to federal and
state income tax at the maximum rate in effect at the time the
determination is made unless the Employee provides the Accounting
Firm with evidence that it is more probable than not that one or
more parachute payments will be taxable at a lower rate, or lower
rates, in which case the Accounting Firm shall assume that such
parachute payments will be taxed at the lower rate or rates. taxes
will be paid for state and federal purposes at the highest possible
marginal tax rates which could be applicable to the Employee in the
year of receipt of the payments, unless the Employee agrees
otherwise.
(e) In the event this Agreement is subject to section 18(k) of the
Federal Deposit Insurance Act (the "FDIA") at the time any payment
is to be made by the Employer to the Employee pursuant to this
Agreement or otherwise, such payment will be subject to, and
conditioned upon, its compliance with section 18(k) of the FDIA and
any regulations promulgated thereunder.
7. The Employee once was covered under the First Indiana Bank Supplemental
Benefit Plan (the "Prior Plan"). The benefits provided under this
Agreement and the Plan to which this Agreement relates include and are in
lieu of the benefits the Employee accrued under the Prior Plan. (As
between the Employer and its wholly owned subsidiary, First Indiana Bank,
N.A. (the "Bank"), the Bank shall be and remain primarily liable, and the
Employer shall be liable only secondarily, for the payment to the Employee
or his beneficiaries of the portion of his total benefit that he accrued
under the Prior Plan.)
IN WITNESS WHEREOF, this Agreement has been made as of the date herein
above written.
6
Employer:
By: _________________________
Xxxxx XxXxxxxx
Vice Chairman & CEO
First Indiana Corporation
EMPLOYEE:
_____________________________
Name
_____________________________
Street Address or P. O. Box
_____________________________
City, State, Zip
7
