EXHIBIT 10.6
HERITAGE BANK
SUPPLEMENTAL RETIREMENT AGREEMENT
THIS AGREEMENT is made this 25th day of October, 1999 by and between
HERITAGE BANK, a Montana corporation located in Great Falls, Montana (the
"Company"), and XXXXX X. XXXXX (the "Executive"). This agreement is effective
November 1, 1999 for vesting and accrual computation purposes.
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. 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.
1.1.2 "CODE" means the Internal Revenue Code of 1986, as amended.
1.1.3 "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 may require the Executive to
submit to such physical or mental evaluations and tests as the Company's
Board of Directors deems appropriate.
1.1.4 "NORMAL RETIREMENT AGE" means the Executive's 65th birthday.
1.1.5 "NORMAL RETIREMENT DATE" means the later of the Normal
Retirement Age or the date of the Executive's Termination of Employment.
1.1.6 "PLAN YEAR" means the plan's accounting year of twelve
consecutive months commencing on the effective date of this Agreement
and ending on each anniversary date thereafter.
1.1.7 "TERMINATION OF EMPLOYMENT" Means the Executive ceasing to
be employed by the Company for any reason whatsoever, voluntary or
involuntary, other than by reason of an approved leave of absence.
ARTICLE 2
LIFETIME BENEFITS
2.1 NORMAL RETIREMENT BENEFIT. If the Executive terminates employment on
or after the Normal Retirement Age for reasons other than death, the Company
shall pay to the Executive the benefit described in this Section 2.1.
2.1.1. AMOUNT OF BENEFIT. The benefit under this Section 2.1 is
either a lump sum payment of the amount on Schedule A, or at the election
of the Executive, an annuity with a term acceptable to the Executive,
shall be purchased using all available accrued amounts. The payment or
annuity purchase shall begin or be made within 60 days from the date of
retirement.
2.2 EARLY TERMINATION BENEFIT. If the Executive terminates employment
before the Normal Retirement Age for reasons other than death, Disability or
Change of Control, the Company shall pay to the Executive the benefit described
in this Section 2.2.
2.2.1. AMOUNT OF BENEFIT. The amount of the benefit shall be the
vested amount accrued on the books of the employer, in accordance with
Schedule A, attached. The benefit shall be the accrued balance at the
date of Termination of Employment.
2.2.2 PAYMENT OF BENEFIT. The payment shall be in a lump sum, made
within 60 days of Termination of Employment.
2.3 DISABILITY BENEFIT. If the Executive terminates employment for
Disability prior to the Normal Retirement Age, the Company shall pay to the
Executive the benefit described in this Section 2.3.
2.3.1 AMOUNT OF BENEFIT. The amount of the benefit shall be the
vested amount accrued on the books of the employer, in accordance with
Schedule A, attached. The employee will be considered 100% vested upon a
determination of full or partial disability.
2.3.2 PAYMENT OF BENEFIT. The payment shall be made in a lump sum
within 60 days of Termination of Employment as a result of disability.
2.4 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 2.4 in lieu of any other benefit
under this Agreement.
2.4.1 AMOUNT OF BENEFIT. The amount of the benefit shall be the
vested amount accrued on the books of the employer, in accordance with
Schedule A, attached. The employee will be considered 100% vested upon a
change in control.
2.4.2 PAYMENT OF BENEFIT. The payment shall be made in a lump sum
within 60 days of Termination of Employment as a result of a change in
control.
2.5 VESTING OF BENEFIT. The Executive shall vest 10% for every Plan Year
he is employed and 100% vested after 10 Plan Years. The effective date for
vesting is January 1, 1997.
ARTICLE 3
DEATH BENEFITS
3.1 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 3.1.
3.1.1 AMOUNT OF BENEFIT. The amount of the benefit shall be the
vested amount accrued on the books of the employer, in accordance with
Schedule A, attached. The Executive shall become fully vested if death is
prior to the normal retirement date.
3.1.2 PAYMENT OF BENEFIT. The payment shall be made in a lump sum
within 60 days of death.
ARTICLE 4
BENEFICIARIES
4.1 BENEFICIARY DESIGNATIONS. The Executive shall designate a beneficiary
by filing a written designation with the Company (See Schedule B). 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.
4.2 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 incompetence,
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 5
GENERAL LIMITATIONS
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement:
5.1 EXCESS PARACHUTE PAYMENT. To the extent the benefit would be an
excess parachute payment under Section 28OG of the Code.
5.2 TERMINATION FOR CAUSE. If the Company terminates the Executive's
employment for:
5.2.1 Gross negligence or gross neglect of duties;
5.2.2 Commission of a felony or of a gross misdemeanor involving
moral turpitude;
or
5.2.3 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.
ARTICLE 6
CLAIMS AND REVIEW PROCEDURES
6.1 CLAIMS PROCEDURE. The Company shall notify the Executive, the
Executive's beneficiary, or any other party who claims a right to an interest
under the Agreement (the "Claimant") in writing, within sixty (60) days of his
or her written application for benefits, of his or her eligibility or
ineligibility for benefits under the Agreement. If the Company determines that
the Claimant 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 Claimant 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 Claimant 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.
ARTICLE 7
AMENDMENTS AND TERMINATION
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive except that the Company, in its sole
discretion, may amend or terminate this Agreement at any time if, pursuant to
legislative, judicial or regulatory action, continuation of the Agreement would
(i) cause benefits to be taxable to the Executive prior to actual receipt, or
(ii) result in significant financial penalties or other significantly
detrimental ramifications to the Company (other than the financial impact of
paying the benefits). In the event of any termination, the Executive shall be
treated as if the date of termination of the Agreement were his Termination of
Employment under Section 2.2.
ARTICLE 8
MISCELLANEOUS
8.1 BINDING EFFECT. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
8.2 NO GUARANTEE 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.
8.3 NON-TRANSFERABILITY. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 TAX WITHHOLDING. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
8.5 APPLICABLE LAW. The Agreement and all rights hereunder shall be
governed by the laws of the State of Montana, except to the extent preempted by
the laws of the United States of America.
8.6 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.
8.7 REORGANIZATION. The Company shall merge or consolidate into or with
another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
8.8 ENTIRE AGREEMENT. This Agreement is the entire agreement between the
parties and it contains all of the covenants and agreements between the
Executive and the Company.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
HERITAGE BANK
/s/ Xxxxx X. Xxxxx /s/ Xxxxx X. Xxxxx
______________________________ ________________________________
EXECUTIVE BY
Pres
________________________________
TITLE
10/25/99
________________________________
DATE
/s/ Xxxx X. Xxxxx
________________________________
WITNESS
SCHEDULE A
Supplemental Retirement Agreement
By and between Xxxxx Xxxxx and Heritage Bank
Dated October 25, 1999
Benefit Accrual
Plan Year Annual Total Accrued
Accrual Benefit
1 5,823 5,823
2 6,277 12,100
3 6,767 18,867
4 7,295 26,162
5 7,864 34,025
6 8,477 42,502
7 9,138 51,640
8 9,851 61,491
9 10,619 72,111
10 11,448 83,558
11 12,341 95,899
12 13,303 109,202
13 14,341 123,543
14 15,459 139,002
15 16,665 155,667
16 17,965 173,632
17 19,366 192,999
18 20,877 213,875
19 22,505 236,381
20 24,261 260,641
21 26,153 286,794
22 28,193 314,987
Schedule B
Designation of Beneficiary
Supplemental Retirement Agreement
By and between Xxxxx Xxxxx and Heritage Bank
Beneficiary Designation:
/s/ Xxxxxx X. Xxxxx Primary
________________________________________________________________________________
/s/ Xxxxxxx X. Xxxxx }
________________________________}_______________________________________________
} Secondary - contingent
} each at 50%
/s/ Xxxxx X. Xxxxx }
________________________________________________________________________________
Signed: /s/ Xxxxx X. Xxxxx Date: 10/25/99
-------------------------------------- ---------------
This Beneficiary Designation only refers to that Supplemental Retirement
Agreement between Xxxxx Xxxxx and Heritage Bank signed on 10/25, 1999.
