Exhibit 10(25)
CONTINGENT EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
This Executive Supplemental Retirement Income Agreement (the
"Agreement"), effective as of the 1st day of December, 1996, formalizes the
understanding by and between First Federal Savings Bank of Xxxxxx (the "Bank"),
a federally chartered savings bank, and Xxxxxx X. Xxxxx, hereinafter referred to
as "Executive."
WITNESSETH:
WHEREAS, the Executive is employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore performed
for it by such Executive and wishes to encourage continued employment; and
WHEREAS, the Bank wishes to provide the Executive with retirement
benefits to which he would otherwise be entitled under the Bank's tax-qualified
pension plan but for the Executives' Termination of Service followed by a Change
in Control; and
WHEREAS, the Bank and the Executive wish to provide the terms and
conditions upon which the Bank shall pay such additional compensation to the
Executive subsequent to his Termination of Service followed by a Change in
Control; and
WHEREAS, the Bank and the Executive intend this Agreement to be
considered an unfunded arrangement, maintained primarily to provide supplemental
retirement income for such Executive, a member of a select group of management
or a highly compensated employee of the Bank, for tax purposes and for purposes
of the Employee Retirement Income Security Act of 1974, as amended; and
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WHEREAS, the Bank has adopted this Agreement which controls all issues
relating to the Benefit as described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the Bank and the Executive agree as follows:
SECTION I
DEFINITIONS
When used herein, the following words and phrases shall have the
meanings below unless the contact clearly indicates otherwise:
1.1 "Accrued Benefit" means any portion of the Benefit which is required to
be expensed and accrued under generally accepted accounting principles
(GAAP) by any appropriate method which the Bank's Board of Directors
may require in the exercise of its sole discretion.
1.2 "Act" means the Employee Retirement Security Act of 1974, as amended
from time to time.
1.3 "Bank" means First Federal Savings Bank of Xxxxxx and any successor
thereto.
1.4 "Beneficiary" means the person or persons (and their heirs) designated
as Beneficiary in Exhibit A of this Agreement to whom the deceased
Executive's benefits are payable. If no Beneficiary is so designated,
then the Executive's Spouse, if living, will be deemed the Beneficiary.
If the Executive's Spouse is not living, then the Children of the
Executive will be deemed the Beneficiaries and will take on a per
stirpes basis. If there are no Children, then the Estate of the
Executive will be deemed the Beneficiary.
1.5 "Benefit Age" means the Executive's sixty-fifth (65th) birthday.
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1.6 "Benefit Eligibility Date" means the date on which the Executive is
entitled to receive any benefit(s) pursuant to Subsection 2.1 or 2.2 of
this Agreement. It shall be the first day of the month following the
month in which the Executive attains his Benefit Age.
1.7 "Cause" means personal dishonesty, willful misconduct, willful
malfeasance, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
law, rule, regulation (other than traffic violations or similar
offenses), or final cease-and-desist order, material breach of any
provision of this Agreement, or gross negligence in matters of material
importance to the Bank.
1.8 "Change in Control" of the Bank shall mean and include the following:
(1) a Change in Control of a nature that would be required to be
reported in response to Item 1 (a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx"); or
(2) a change in control of the Bank within the meaning of 12
C.F.R. 574.4; or
(3) a Change in Control at such time as
(i) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule l3d-3 under
the Exchange Act), directly or indirectly, of
securities of the Bank representing Twenty (20.0%)
Percent or more of the combined voting power of the'
Bank's outstanding securities ordinarily having the
right to vote at the election of Directors, except
for any stock purchased by the Bank's Employee Stock
Ownership Plan and/or trust; or
(ii) individuals who constitute the board of directors on
the date hereof (the "Incumbent Board") cease for any
reason to constitute at least a majority thereof,
provided that any person becoming a director
subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose
nomination for election
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by the Bank's shareholders was approved by the Bank's
nominating committee which is comprised of members of
the Incumbent Board, shall be, for purposes of this
clause (ii), considered as though he were a member of
the Incumbent board; or
(iii) merger, consolidation, or sale of all or
substantially all of the assets of the Bank occurs;
or
(iv) a proxy statement is issued soliciting proxies from
the stockholders of the Bank by someone other than
the current management of the Bank, seeking
stockholder approval of a plan of reorganization,
merger, or consolidation of the Bank with one or more
corporations as a result of which the outstanding
shares of the class of the Bank's securities are
exchanged for or converted into cash or property or
securities not issued by the Bank.
1.9 "Children" means all natural and adopted children of the Executive, and
issue of any predeceased child or children.
1.10 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
1.11 "Effective Date" of this Agreement shall be December 1, 1996.
1.12 "Estate" means the estate of the Executive.
1.13 "Benefit" means an annual amount equal to what the Executive would have
been entitled to under the Bank's qualified pension plan but for the
Executive's Termination of Service followed by a Change in Control.
1.14 "Interest Factor" means monthly compounding, discounting, or
annuitizing as applicable, at Seven and 89/100th's Percent (7.89%) per
annum.
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1.15 "Payout Period" means the time frame during which certain benefits
payable hereunder shall be distributed. Payments shall be made in equal
monthly installments commencing on the first day of the month following
the occurrence of the event which triggers distribution and continuing
for a period of one hundred eighty (180) months.
1.16 "Spouse" means the individual to whom the Executive is legally married
at the time of the Executive's death.
SECTION II
BENEFITS
2.1 Benefit - Termination Other than for Cause. If the Executive's
Termination of Service is prior to his reaching his Benefit Age, for
any reason other than for (i) Cause (which is covered in subsection
2.3) or (ii) related to a Change in Control (which is covered in
Subsection 2.2), the Executive (or his Beneficiary) shall be entitled
to a stream of monthly installments based on the Executive's Benefit.
(a) If, after such Termination of Service, the Executive dies
prior to attaining his Benefit Age, the stream of monthly
installments payable to the Beneficiary shall commence within
thirty (30) days of the Executive's death.
(b) If, after such termination, the Executive lives until
attaining his Benefit Age, the stream of monthly installments
payable to the Executive shall commence on the Executive's
Benefit Eligibility Date. In the event the Executive dies
prior to completion of all such monthly installments, the Bank
shall pay to the Executive's Beneficiary a continuation of the
monthly installments for the remainder of the Payout Period.
2.2 Termination of Service Related to a Change in Control.
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(a) If the Executive's Termination of Service (as defined in this
Subsection) is related to a Change in Control, the Executive
shall be entitled to receive his Benefit upon attainment of
his Benefit Age, payment of which shall commence on his
benefit Eligibility Date. In the event the Executive dies at
any time after attaining his Benefit Age, but prior to
completion of all such payments due and owing hereunder, the
Bank shall pay to the Executive's Beneficiary a continuation
of the monthly installments for the remainder of the Payout
Period.
(b) For purposes of this Subsection, "Termination of Service"
shall include the following:
If, at any time following said Change in Control, (i)
the employment of the Executive is involuntarily
terminated by the Bank, or (ii) voluntarily
terminated by the Executive after: (a) a material
change in the Executive's function, duties, or
responsibilities, which change would cause the
Executive's position to become one of lesser
responsibility, importance, or scope from the
position the Executive held at the time of the Change
in Control, (b) a relocation of the Executive's
principal place of employment by more than thirty
(30) miles from its location prior to the Change in
Control, or (c) a material reduction in the benefits
and perquisites to the Executive from those being
provided at the time of the Change in Control.
(c) Should the Executive die after being terminated following a
Change in Control, but prior to commencement of the Excess
Benefit, his Beneficiary shall be entitled to receive the
Survivor's Benefit, payment of which shall commence within
thirty (30) days following the Executive's death.
2.3 Termination for Cause. If the Executive is terminated for Cause, all
benefits under this Agreement shall be forfeited and this Agreement shall become
null and void.
2.4 Non-Competition During and After Employment. In consideration of the
agreements of the Bank contained herein and of the payments to be made by the
Bank pursuant hereto, the Executive
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hereby agrees that, so long as he remains employed by the Bank, he will devote
substantially all of his time, skill, diligence and attention to the business of
the Bank, and will not actively engage, either directly or indirectly, in any
business or other activity which is or may be deemed to be in any way
competitive with or adverse to the best interests of the business of the Bank.
SECTION III
BENEFICIARY DESIGNATION
The Executive shall make an initial designation of primary and
secondary Beneficiaries upon execution of this Agreement and shall have the
right to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit to this Agreement, a
written designation of primary and secondary Beneficiaries. Any Beneficiary
designation made subsequent to execution of this Agreement shall become
effective only when receipt thereof is acknowledged in writing by the
Administrator.
SECTION IV
EXECUTIVE'S RIGHT TO ASSETS
The rights of the Executive, any Beneficiary, or other person claiming
through the Executive under this Agreement, shall be solely those of an
unsecured general creditor of the Bank. The Executive, the Beneficiary, or any
other person claiming through the Executive, shall only have the right to
receive from the Bank those payments so specified under this Agreement. The
Executive agrees that he, his Beneficiary or any other person claiming through
him shall have no rights or interests whatsoever in any asset of the bank,
including any insurance policies or contracts which the Bank may possess or
obtain to informally fund this Agreement. Any asset used or acquired by the Bank
in connection with the liabilities it has assumed under this Agreement, unless
expressly provided herein, shall not be deemed to be held under any trust for
the benefit of the Executive or his Beneficiaries, nor shall any asset be
considered security for the performance of the obligations
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of the Bank. Any such asset shall be and remain, a general, unpledged, and
unrestricted asset of the Bank.
SECTION V
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 Beneficiaries or any successor in interest to him shall be and
remain simply a general unsecured 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 in its sole discretion to either purchase
assets to meet its obligations undertaken by this Agreement or to refrain from
the same and to determine the extent, nature, and method of such asset
purchases. Should the Bank decide to purchase assets such as life insurance,
mutual funds, disability policies or annuities, the Bank reserves the absolute
right, in its sole discretion, to terminate such assets at any time, in whole or
In part. At no time shall the Executive be deemed to have any lien, right, title
or interest in or to any specific 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 examination and by supplying such additional
information necessary to obtain such insurance or annuities.
SECTION VI
ALIENABILITY AND ASSIGNMENT PROHIBITION
Neither the Executive nor any Beneficiary under this Agreement shall
have any power or right to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify or otherwise encumber
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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,
communication, hypothecation, transfer or disposal of the benefits hereunder,
the Bank's liabilities shall forthwith cease and terminate.
SECTION VII
ACT PROVISIONS
7.1 Named Fiduciary and Administrator. The Bank shall be the Named
Fiduciary and Administrator (the "Administrator") of this Agreement. As
Administrator, the Bank shall be responsible for the management,
control and administration of the Agreement as established herein. The
Administrator may delegate to others certain aspects of the management
and operational responsibilities of the Agreement, including the
employment of advisors and the delegation of ministerial duties to
qualified individuals.
7.2 Claims Procedure and Arbitration. In the event that benefits under this
Agreement 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 Administrator within sixty (60) days from the date payments are
refused. The Bank and its Board of Directors 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 writing by the Bank
and its Board of Directors shall further indicate the additional steps
which must be undertaken by claimants if an additional review of the
claim denial is desired.
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If claimants desire a second review, they shall notify the
Administrator in writing within sixty (60) days of the first claim
denial. Claimants may review this Agreement or any documents relating
thereto and submit any issues and comments, in writing, they may feel
appropriate. In its sole discretion, the Administrator shall then
review the second claim and provide a written decision within sixty
(60) days of receipt of such claim. This decision shall 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 of
Arbitration 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 of Arbitration shall operate under any generally
recognized set of arbitration rules. The parties hereto agree that
they, their heirs, personal representatives, successors and assigns
shall be bound by the decision of such Board of Arbitration with
respect to any controversy properly submitted to it for determination.
SECTION VIII
MISCELLANEOUS
8.1 No Effect on Employment Rights. Nothing contained herein will confer
upon the Executive the right to be retained in the service of the Bank
nor limit the right of the Bank to discharge or otherwise deal with the
Executive without regard to the existence of the Agreement. Pursuant to
12 C.F.R. ss. 563.39(b), the following conditions shall apply to this
agreement:
(1) The Bank's Board of Directors may terminate the Executive at
any time, but any termination by the Bank's Board of directors
other than termination for Cause shall not prejudice the
Executive's vested right to compensation or other benefits
under the contract. As provided in Section 2.3, the Executive
shall forfeit his right to all
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benefits provided for in the Agreement in the event he is
terminated for Cause. He shall have no right to receive
additional compensation or other benefits for any period after
termination for Cause.
(2) If the Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a
notice served under Section 8(e)(3) or (g)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1) the
Bank's obligations under the contract shall be suspended
(except vested rights) as of the date of termination of
service unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Bank may in its
discretion (i) pay the Executive all or part of the
compensation withheld while its contract obligations were
suspended and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
(3) If the Executive is terminated and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an
order issued under Section 8(e)(4) or (g)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(e)(4) or (g)(1), all
non-vested obligations of the Bank under the contract shall
terminate as of the effective date of the order.
(4) If the Bank is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act), all non-vested obligations
under the contract shall terminate as of the date of default.
(5) All non-vested obligations under the contract shall be
terminated, except to the extent determined that continuation
of the contract is necessary for the continued operation of
the Bank.
(i) by the Director [of the Office of Thrift Supervision
or any successor agency] or his designee at the time
the Federal Deposit Insurance corporation or the
Resolution Trust Corporation enters into an agreement
to provide assistance to or on behalf of the Bank
under the authority contained in ss.13(c) of the
Federal Deposit Insurance Act; or
(ii) by the Director [of the Office of Thrift Supervision
or any successor agency] or his designee, at the time
the Director or his designee approves a
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supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined
by the Director to be in an unsafe or unsound
condition.
Any rights of the parties that have already vested, (i.e., the
Executive's Accrued Benefit), however, shall not be affected
by such action.
8.2 State Law. The Agreement is established under, and will be construed
according to, the laws of the State of Indiana, to the extent such laws
are not preempted by the Act and valid regulations published
thereunder.
8.3 Severability. In the event that any of the provisions of this agreement
or portion thereof, are held to be inoperative or invalid by any court
of competent jurisdiction, then: (1) insofar as is reasonable, effect
will be given to the intent manifested in the provisions held invalid
or inoperative, and (2) the validity and enforceability of the
remaining provisions will not be affected thereby.
8.4 Incapacity of Recipient. In the event the Executive is declared
incompetent and a conservator or other person legally charged with the
care of his person or Estate is appointed, any benefits under the
agreement to which such Executive is entitled shall be paid to such
conservator or other person legally charged with the care of his person
or Estate.
8.5 Unclaimed Benefit. The Executive shall keep the Bank informed of his
current address and the current address of his beneficiaries. If the
location of the Executive is not made known to the Bank within three
(3) years after the date on which any payment of the Excess Benefit may
first be made, payment may be made as though the Executive had died at
the end of the three (3) year period. If, within one (l) additional
year after such three (3) year period has elapsed, or, within three (3)
years after the actual death of the Executive, whichever comes first,
the Bank is unable to locate any Beneficiary of the Executive, the Bank
may fully discharge its obligation by payment to the Estate.
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8.6 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Agreement, no individual acting as an employee or
agent of the Bank, or as a member of the board of directors shall be
personally liable to the Executive or any other person for any claim,
loss, liability or expense incurred in connection with the Agreement.
8.7 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.
8.8 Effect on Other Corporate Benefit Agreements. 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
agreement constituting a part of the Bank's existing or future
compensation structure.
8.9 Inurement. This Agreement shall be binding upon and shall inure to the
benefit of the Bank, its successors and assigns, and the Executive, his
successors, heirs, executors, administrators, and Beneficiaries.
8.10 Tax Withholding. The Bank may withhold from any benefits payable under
this Agreement all federal, state, city, or other taxes as shall be
required pursuant to any law or governmental regulation then in effect.
8.11 Headings. Headings and sub-headings in this agreement are inserted for
reference and convenience only and shall not be deemed a part of this
Agreement.
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SECTION IX
AMENDMENT/REVOCATION
This Agreement shall not be amended, modified or revoked at any time,
in whole or part, without the mutual written consent of the Executive and the
Bank, and such mutual written consent shall be required even if the Executive is
no longer employed by the Bank.
SECTION X
EXECUTION
10.1 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and any
previous agreements or understandings between the parties hereto
regarding the subject matter hereof are merged into and superseded by
the Agreement.
10.2 This Agreement shall be executed in triplicate, each copy of which,
when so executed and delivered, shall be an original, but all three
copies shall together constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed
on this 1st day of December, 1996.
FIRST FEDERAL SAVINGS BANK OF XXXXXX
By: /s/ Xxxx Xxxxxx
By: /s/ Xxxxxx X. Xxxxx
Executive - Xxxxxx X. Xxxxx
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