FIRST FEDERAL BANK, A F.S.B. EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME AGREEMENT
Exhibit
10.18
FIRST
FEDERAL BANK, A F.S.B.
THIS EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT (the “AGREEMENT”), made and entered into this
1st
day of October 1996, by and between FIRST FEDERAL BANK, A F.S.B., a banking
corporation organized and existing under the laws of the state of Indiana
(hereinafter referred to as “Bank”) and Xxxxxxx X. Xxxx, a key employee and
executive (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 the Executive and wishes to
encourage continued employment; and
WHEREAS, the Executive wishes
to be assured that he will be entitled to a certain amount of additional
compensation for some definite period of time from and after his retirement from
active service with the Bank or other termination of his employment and wishes
to provide his beneficiary with benefits from and after his death;
and
WHEREAS, the parties hereto
wish to provide the terms and conditions upon which the Bank shall pay such
additional compensation to the Executive after his retirement or other
termination of his employment and/or death benefits to his beneficiary after his
death; and
WHEREAS, the parties hereto
intend that this Agreement be considered an unfunded arrangement, maintained
primarily to provide supplemental retirement income for the Executive, a member
of a select group of management or highly compensated employees of the Bank, for
purposes of the Employee Retirement Income Security Act of 1975, as amended;
and
WHEREAS, the Bank has adopted
this Executive Supplemental Retirement Income Agreement which controls all
issues relating to the Supplemental Retirement Income Benefit as described
herein; and
NOW, THEREFORE, in
consideration of the mutual promises herein contained, the parties hereto agree
to the following terms and conditions:
SECTION
I
DEFINITIONS
When used herein, the following words
shall have the meanings below unless the context clearly indicates
otherwise:
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1.1
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“Accrued Benefit” means
that portion of the Supplemental Retirement Income Benefit which is
required to be expensed and accrued under generally accepted accounting
principals by any appropriate methodology which the Board may require in
the exercise of its sole discretion. Such Accrued Benefit shall
be annuitized and shall be paid to the Executive in one hundred eighty
(180) equal monthly installments. The interest factor used to
annuitize the Accrued Benefit shall be equal to the average cost of
deposits of the Bank (as determined by the Board) for the calendar year
immediately preceding the date on which the Accrued Benefit is
annuitized.
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1.2
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“Act” means the Employee
Retirement Income Security Act of 1974, as now in effect and as it may be
amended from time to time.
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1.3
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“Bank” means FIRST
FEDERAL BANK, A F.S.B. and any successor
thereto.
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1.4
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“Beneficiary” means the
person, persons (and their heirs) or other entity designated as
Beneficiary in writing to the Bank to whom the benefit(s), the deceased
Executive would have received had he lived, is (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 Beneficiary and take on a per
stirped basis. If there are no living Children, then the Estate
of the Executive will be deemed the
Beneficiary.
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1.5
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“Board” means the Board
of Directors of the Bank.
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1.6
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“Cause” means 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. Cause shall be determined by the Board
in its sole discretion within the parameters of this
Section.
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1.7
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“Children” means the
Executive’s children, both natural and adopted, then living at the time
payments are due the Children under this
Agreement.
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1.8
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“Code” means the
Internal Revenue Code of 1986 as now in effect and as amended from time to
time.
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1.9
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“Early Retirement Date”
means retirement from service, upon meeting certain conditions as
specified in this Agreement, which is effective prior to the Normal
Retirement Date.
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1.10
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“Effective Date” shall
be the effective date of this Agreement, October 1,
1996.
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2
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1.11
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“Estate” means the
estate (including, when applicable, any irrevocable trust governing the
transfer of non-probate assets) of the
Executive.
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1.12
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“Normal Retirement Date”
means the first day of the month coincident with or next following
the Executive’s sixty-fifth (65th)
birthday.
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1.13
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“Permanently and Totally
Disabled” means the Executive has, for at least six (6) months,
been unable to perform the services incident to his position with the Bank
as a result of accidental bodily injury or sickness and that the status is
likely to continue for an indefinite period, as reasonably determined
subsequent to the expiration of the six (6) month period by a duly
licensed physician selected in good faith by the
Bank.
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1.14
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“Postponed Retirement Date”
means the first day of the month coincident with or next following
the Executive’s termination of employment with the Bank after his Normal
Retirement Date.
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1.15
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“Spouse” means the
individual to whom the Executive is legally married at the time of the
Executive’s death.
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1.16
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“Suicide” means the act
of intentionally killing oneself.
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1.17
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“Supplemental Retirement Income
Benefit” means an annual amount equal to Twenty-Six Thousand Three
Hundred Forty Dollars ($26,340). This total shall be divided by
twelve (12) and paid in equal monthly installments for a period of one
hundred eighty (180) months.
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1.18
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“Survivor’s Benefit”
means Twenty-Six Thousand Three Hundred Forty Dollars ($26,340) per
year to be paid in one hundred eighty (180) equal monthly
installments.
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1.19
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“Vested” means the
non-forfeitable portion of the benefit to which the Executive is
entitled.
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1.20
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“Vested Accrued Benefit”
means that portion of the Executive’s Accrued Benefit in which he
is vested. It is computed by multiplying the Accrued Benefit by
the vesting percentage specified in Subsection 3.5. Such Vested
Accrued Benefit shall be paid to the Executive in one hundred eighty (180)
equal monthly installments.
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1.21
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“Years of Service” means
the total number of complete years of employment (including employment
before the Effective Date and authorized leaves of
absence).
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3
SECTION
II
PRE-RETIREMENT AND POST
RETIREMENT DEATH BENEFITS
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2.1
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Death Prior to
Termination of Employment. It the Executive dies prior
to termination of employment with the Bank, his Beneficiary shall be
entitled to be paid the Survivor’s Benefit, commencing within thirty (30)
days of the Executive’s death.
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2.2
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Death After
Termination of Employment. In the event of the
Executive’s death after his termination of employment, the Executive’s
Beneficiary shall be paid a monthly benefit for a period of one hundred
eighty (180) months, commencing within thirty (30) days of the Executive’s
death and the benefit payment shall be determined as
follows:
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(a) Voluntary or Involuntary
Termination of Employment Prior to Normal Retirement Date. In
the event the Executive’s death occurs after his voluntary termination of
employment with the Bank but before his Normal Retirement Date, the Executive’s
Beneficiary shall be entitled to be paid the Executive’s Vested Accrued Benefit
in one hundred eighty (180) equal monthly installments. If the
Executive dies while he is receiving benefits, the Executive’s Beneficiary shall
be entitled to receive those benefits which the Executive would have been paid
had he lived the entire distribution period.
In the
event the Executive’s death follows his involuntary termination (not for Cause
by the Board), the Executive’s Beneficiary shall be entitled to receive the
Executive’s Supplemental Retirement Income Benefit, with payments commencing
within thirty (30) days of the Executive’s death. In the event the
Executive dies while he is receiving his supplemental retirement income
benefits, the Executive’s Beneficiary shall be entitled to receive the balance
of payments that the Executive would have received had he lived.
(b) Termination of Service at
Normal Retirement Age. In the event of the Executive’s death
following the termination of service on or after his Normal Retirement Date, the
Executive’s Beneficiary shall be paid those benefits which the Executive would
have been paid had he lived for the entire retirement distribution
period. Benefits shall be paid to the Executive’s Beneficiary in the
same manner they would have been paid to the Executive had he lived; that is, a
total of one hundred eighty (180) equal monthly installments shall be paid to
the Executive and/or his Beneficiary.
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2.3
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Death by Reason of
Suicide. In the event the Executive dies by reason of
suicide within two (2) years of the date of execution of this Agreement,
the Bank shall be under no obligation to provide any benefits to the
Executive’s Beneficiary.
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2.4
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Additional Death
Benefit – Burial Expenses. In addition to the
above-described death benefits, upon his death, the Executive’s
Beneficiary shall be entitled to receive a one-time lump sum death benefit
in the amount of Ten Thousand ($10,000.00) Dollars; provided, however,
that if the Executive terminates his employment with the Bank before July
1, 1998 for reasons other than his death or due to his becoming
Permanently and Totally Disable, the one-time lump sum death benefit
otherwise provided in this Section shall not be
payable.
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4
SECTION
III
SUPPLEMENTAL RETIREMENT
INCOME BENEFIT
AND DISABILITY
BENEFIT
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3.1
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Normal Retirement
Benefit. If the Executive retires on his Normal
Retirement Date, the Bank shall commence payment of the Supplemental
Retirement Income Benefit. Such payments shall commence on the
first day of the month next following the Executive’s retirement date and
shall be payable monthly thereafter until all payments have been
made.
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3.2
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Early Retirement
Benefit. If the Executive terminates his employment with
the Bank on or after reaching age sixty (60) and if he remains in
continuous service from the date of this Agreement through his employment
termination date, the Executive shall be entitled to receive the
Supplemental Retirement Income Benefit specified in Subsection 1.17,
reduced by six (6) percent per year for each year (or fraction thereof)
that the Early Retirement Date precedes the Normal Retirement
Date. Payment of this early retirement benefit shall commence
with thirty (30) days after Executive’s Early Retirement
Date.
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3.3
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Postponed Retirement
Benefit. If the Executive continues his employment with
the Bank beyond his Normal Retirement Date, the postponed retirement
benefit of the Executive shall be the Supplemental Retirement Income
Benefit as set forth in Subsection 1.17. However, the Board, in
the exercise of its sole discretion, may, but is not required to, increase
benefits if retirement is postponed past the Normal Retirement
Date. The postponed retirement benefit shall not commence until
the Postponed Retirement Date.
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3.4
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Disability. If
the Executive becomes Permanently and Totally Disabled prior to reaching
his retirement, while covered by the provisions of this Agreement, the
Executive shall be entitled to his Accrued Benefit at the time he becomes
Permanently and Totally Disabled. Payments shall begin within
thirty (30) days after the Executive becomes Permanently and Totally
Disabled.
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At the
Executive’s death, if the total amount of disability payments received under the
provisions of this Subsection is less than the total amount of payments that
would have been received under the Survivor’s Benefit section (has it applied
instead), the Bank shall pay the Executive’s Beneficiary a lump sum payment to
make the total benefits equal to the amount allowable under the Survivor’s
Benefit section. Such a lump sum payment would be in full
satisfaction of the Bank’s obligations under this Agreement.
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3.5
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Vesting. Vested
Accrued Benefits, as described in Subsection 1.20, shall be determined
according to the following
schedule:
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Percentage
of
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Total
Benefit
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Years of Service
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Vested
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Less
than 5 years
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0 | % | ||
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5
years or more
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100 | % | ||
5
SECTION
IV
EXECUTIVE’S RIGHT TO
ASSETS
The rights of the Executive, any
Beneficiary of the Executive, or any 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 of the Executive, or any
other person claiming through the Executive, shall only have the right to
receive from the Bank those payments which are 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, except as expressly provided, shall not be deemed
to be held under any trust for the benefit of the Executive or his
Beneficiaries, nor shall it be considered security for the performance of the
obligations of the Bank. It 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 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 the Agreement or to refrain from funding the same and to determine
the extent, nature, and method of such informal 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 nor 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 examination and 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
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.
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SECTION
VII
TERMINATION OF
EMPLOYMENT
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7.1
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Termination of Service
Prior to Retirement Date. If, prior to Executive’s Early
Retirement Date, the Executive is terminated without Cause by the Bank,
the Bank shall pay to the Executive an amount equal to the Executive’s
Supplemental Retirement Income Benefit, commencing within thirty (30) days
of the Executive’s Normal Retirement Date. However, it the
Executive’s termination of employment with the Bank before his Early
Retirement Date is voluntary, he shall only be entitled to his Vested
Accrued Benefit existing at the date of termination. Payment of
the Vested Accrued Benefit shall commence within thirty (30) days after
his attainment of his Normal Retirement
Date.
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7.2
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Termination of Service
for Cause. Should the Executive’s employment by the Bank
be terminated for Cause before his Normal Retirement Date, his Benefits,
including any death benefits, under this Agreement shall be forfeited and
this Agreement shall become null and
void.
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7.3
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Termination or
Suspension Resulting from Regulatory Actions. Pursuant
to 12 C.F.R. § 563.39 (b), the following conditions shall apply to this
Agreement:
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(1) The
Board may terminate the Executive’s employment at any time, but any termination
by the Board other than termination for Cause, shall not prejudice the
Executive’s right to compensation or other benefits under the
contract. The Executive’s shall have no right to receive 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 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 removed and/or permanently prohibited from participating in the
conduct of the Bank’s affairs by an order issued under Section 8 (3) (4) or (g)
(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818 (e) (4) or (g) (1)),
all obligations of the Bank under the contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
(4) If the
Bank is in default (as defined in Section 3 (x) (1) of the Federal Deposit
Insurance Act), all obligations under the contract shall terminate as of the
date of default, but this paragraph shall not affect any vested rights of the
contracting parties.
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(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 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 § 13 (c)
of the Federal Deposit Insurance Act; or
(ii) by the
Director or his designee, at the time the Director or his designee approves a
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, however, shall not be affected
by such action.
SECTION
VIII
ACT
PROVISIONS
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8.1
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Named Fiduciary and
Administrator. The Bank shall be the named fiduciary and
administrator of this Agreement. As administrator, the Bank
shall be responsible for the management, control and administration of the
Agreement as established herein. It may delegate to others
certain aspects of the management and operation responsibilities of the
Agreement including the employment of advisors and the delegation of
ministerial duties to qualified
individuals.
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8.2
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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 Bank within sixty (60) days from the date payments are
refused. The Bank shall review the written claim and, if the
claim is denied, in whole or in part, they shall provide in writing within
sixty (60) 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.
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If
claimants desire a second review, they shall notify the Bank in writing within
sixty (60) days of the first claim denial. Claimants may review the
Agreement or any documents relating thereto and submit any written issues and
comments they may feel appropriate. In its sole discretion, the Bank
shall then review the second claim and provide a written decision within sixty
(60) 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 the Agreement upon which the decision is
based. If claimants disagree with the decision of the Bank, nothing
herein shall serve to preclude them from seeking any and all remedies available
at law.
8
SECTION
IX
MISCELLANEOUS
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9.1
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No Effect on
Employment Rights. Nothing contained herein shall 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 this
Agreement.
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9.2
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Disclosure. Each
Executive shall receive a copy of his Agreement and the Bank will make
available, upon request, a copy of the rules and regulations that govern
this type of Agreement.
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9.3
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State
Law. The Agreement is established under, and will be
construed according to, the laws of the State of Indiana, to the extent
that such laws are not preempted by the Act and valid regulations
published thereunder.
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9.4
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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.
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9.5
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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 of his 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
his Estate.
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9.6
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Recovery of Estate
Taxes. If the Executive’s gross Estate for federal
estate tax purposes includes any amount determined by reference to and on
account of this Executive Supplemental Retirement Income Agreement, and if
the Beneficiary is other than the Executive’s Estate, then the Executive’s
Estate shall be entitled to recover from the Beneficiary receiving such
benefit under the terms of the Deferred Compensation Benefit an amount by
which the total estate tax due by the Executive’s Estate, exceeds the
total estate tax which would have been payable if the value of such
benefit had not been included in the Executive’s gross Estate. If there is
more than on person receiving such benefit, the right of recovery shall be
against each such person in proportion to the benefits received by each
such person. In the event any Beneficiary has a liability
hereunder, such Beneficiary may petition the Bank for a lump sum payment
in an amount not to exceed the Beneficiary’s liability
hereunder.
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9.7
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Unclaimed
Benefit. The Executive shall keep the Bank informed of
his current address and the current address of his
Beneficiaries. The Bank shall not be obligated to search for
the whereabouts of any person. If within three years after the
actual death of the Executive the Bank is unable to locate any Beneficiary
of the Executive, then the Bank may fully discharge its obligation by
payment to the Estate.
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9
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9.8
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Limitations on
Liability. Notwithstanding any of the preceding
provisions of the Agreement and except for the benefits otherwise payable
under this Agreement, neither the Bank, nor any individual acting as an
employee or agent of the Bank or as a member of the Board shall be liable
to the Executive or any other person for any claim, loss, liability or
expense incurred in connection with the
Agreement.
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9.9
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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.
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9.10
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Affect 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.
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9.11
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Headings. Heading
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
X
NON-COMPETITION
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10.1
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Non-Compete
Clause. The Executive expressly agrees that, as
consideration for the agreements of the Bank contained herein and as a
condition to the performance by the Bank of its obligations hereunder,
throughout the entire period beginning at the time of termination of
employment until the final payment is made to Executive, as provided
herein, he will not, without the prior written consent of the Board,
engage in, become interested, directly or indirectly, as a sole
proprietor, as a partner in a partnership, or as a 5% or greater
shareholder in a corporation, nor become associated with, in the capacity
of an employee, director, officer, principal, agent, trustee or in any
other capacity whatsoever, any enterprise conducted in the trading area of
the business of the Bank which may be deemed to be competitive with any
business earned on by the Bank as of the date of the termination of the
Executive’s employment or his
retirement.
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10.2
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Breach. In
the event of any breach by the Executive of the agreements and covenants
contained herein, the Board shall direct that any unpaid balance of any
payments to the Executive under this Agreement be suspended, and shall
thereupon notify the Executive of such suspensions, in
writing. Thereupon, if the Board shall determine that said
breach by the Executive has continued for a period of one (1) month
following notification of such suspension, all rights of the Executive and
his Beneficiaries under this Agreement, including rights to further
payments hereunder, shall thereupon
terminate.
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10
SECTION
XI
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 consent shall be required
even if the Executive is no longer employed by the Bank.
ARTICLE
XII
EXECUTION
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12.1
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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 this
Agreement.
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12.2
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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.
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IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed on this 2 day of January,
1997.
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By/s/Xxxxxxx X. Xxxx
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Xxxxxxx
X. Xxxx, Executive
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FIRST
FEDERAL BANK, A F.S.B.
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By/s/Xxxxx X. Xxxxxxxx
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Xxxxx
X. Xxxxxxxx
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President
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(Title)
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11
German
American Bancorp
FIRST
AMENDMENT
TO
THE
DATED
OCTOBER 1, 1996
FOR
XXXXXXX
X. XXXX
THIS FIRST AMENDMENT is adopted this
30th
day of December, 2008, effective as of January 1, 2005, by and between German
American Bancorp (“GABC”) (the successor to First American Bank f/k/a First
Federal Bank, a banking corporation located in Vincennes, Indiana (the “Bank”)),
and Xxxxxxx X. Xxxx (the “Executive”).
The Bank and the Executive executed the
Executive Supplemental Retirement Income Agreement effective as of October 1,
1996 (the “Agreement”). This amendment shall apply to all amounts
deferred or vested under the Agreement after 2004, and any earnings with respect
to such amounts. The amendment shall not apply to any amount deferred
and vested as of December 31, 2004, or any earnings credited under the Agreement
with respect to such amounts (“Grandfathered Amounts”). Such
Grandfathered Amounts shall continue to be governed by the terms and conditions
of the Agreement in effect prior to January 1, 2005, and without regard to this
amendment to the extent necessary to preserve the exemption of Grandfathered
Amounts from the application of Code Section 409A. The Agreement
shall be deemed two agreements, one for Grandfathered Amounts and one for
Non-Grandfathered Amounts.
The undersigned hereby amend the
Agreement for the purpose of bringing the Agreement into compliance with Section
409A of the Internal Revenue Code. Therefore, the following changes
shall be made:
Section 1.13 of the Agreement shall be
deleted in its entirety and replaced by the following:
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1.13
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“Permanently and Totally
Disabled” means the Executive: (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than twelve
(12) months; or (ii) is, by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12)
months, receiving income replacement benefits for a period of not less
than three (3) months under an accident and health plan covering employees
of GABC. Medical determination of Disability may be made by
either the Social Security Administration or by the provider of an
accident or health plan covering employees of GABC. Upon the
request of the plan administrator, the Executive must submit proof to the
plan administrator of the Social Security Administration’s or the
provider’s determination.
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12
German
American Bancorp
The following Sections 1.14a shall be
added to the Agreement immediately following Section 1.14:
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1.14a
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“Specified Employee”
means any individual who, at any time during the twelve (12) month
period ending on the identification date (as determined by GABC or its
delegate), is a specified employee under Section 409A of the Code, as
determined by GABC (or its delegate). The determination of
“specified employees,” including the number and identity of persons
considered “specified employees” and identification date, shall be made by
GABC (or its delegate) in accordance with the provisions of Sections
416(i) and 409A of the Code.
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The following Sections 1.18a shall be
added to the Agreement immediately following Section 1.18:
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1.18a
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“Termination of
Employment” means a “separation from service” with the meaning of
section 409A of the Code and the guidance
thereunder.
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Section 3.2 of the Agreement shall be
deleted in its entirety and replaced by the following:
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3.2
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Early Retirement
Benefit. If the Executive remains in continuous service
to the GABC from the date of this Agreement through Termination of
Employment, then upon Termination of Employment on or after reaching age
sixty (60) and before the Normal Retirement Date, then the Executive shall
be entitled to receive the Supplemental Retirement Income Benefit reduced
by six percent (6%) per year for each year (or fraction thereof) that the
Early Retirement Date precedes the Normal Retirement
Date. Payment shall commence on the first day of the month next
following Termination of Employment and shall continue monthly until all
payments have been made.
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Section
3.3 of the Agreement shall be deleted in its entirety and replaced by the
following:
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3.3
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Postponed Retirement
Benefit. If the Executive remains in continuous service
to GABC after the Normal Retirement Date, the postponed retirement benefit
shall be the Supplemental Retirement Income Benefit. Prior to
Termination of Employment, the Board, in its sole discretion, may, but is
not required to, increase the postponed retirement benefit if retirement
is postponed past the Normal Retirement Date. Payment shall
commence on the first day of the month next following Termination of
Employment and shall continue monthly until all payments have been
made.
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The
following Sections 3.6, 3.7 and 3.8 shall be added to the Agreement immediately
following Section 3.5:
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3.6
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Restriction on Timing
of Distributions. Notwithstanding any provision of this
Agreement to the contrary, if the Executive is considered a Specified
Employee at Termination of Employment, the provisions of this Section 3.6
shall govern all distributions hereunder. Benefit distributions
that are made due to a Termination of Employment occurring while the
Executive is a Specified Employee shall not be made during the first six
(6) months following Termination of Employment, rather any distribution
which would otherwise be paid to the Executive during such period shall be
accumulated and paid to the Executive in a lump sum on the first day of
the seventh month following the Termination of Employment. All
subsequent distributions shall be paid in the manner
specified.
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13
German
American Bancorp
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3.7
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Distributions Upon
Income Inclusion Under Section 409A of the Code. If any
amount is required to be included in income by the Executive prior to
receipt due to a failure of this Agreement to meet the requirements of
Code Section 409A and related Treasury guidance or Regulations, the
Executive may petition the Plan Administrator for a distribution of that
portion the Accrued Benefit that is required to be included in the
Executive’s income. Upon the grant of such a petition, which
grant shall not be unreasonably withheld, GABC shall distribute to the
Executive immediately available funds in an amount equal to the portion of
the Accrued Benefit required to be included in income as a result of the
failure of this Agreement to meet the requirement of Code Section 409A and
related Treasury guidance or Regulations, within ninety (90) days of the
date when the Executive’s petition is granted. Such a
distribution shall affect and reduce the Executive’s benefits to be paid
under this Agreement.
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3.8
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Change in Form or
Timing of Distributions. All changes in the form or
timing of distributions hereunder must comply with the requirements of
Code Section 409A, which generally provide that such
changes:
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(a)
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may
not accelerate the time or schedule of any distribution, except as
provided in Section 409A of the Code and the regulations
thereunder;
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(b)
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must,
for benefits distributable under Sections 3.1, 3.2, 3.3 and 7.1, delay the
commencement of distributions for a minimum of five (5) years from the
date the first distribution was originally scheduled to be made; and
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(c)
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must
take effect not less than twelve (12) months after the election is
made.
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Section
7.1 of the Agreement shall be deleted in its entirety and shall be replaced by
the following:
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7.1
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Termination of
Employment Prior to Age Sixty. If, prior to age sixty
(60), the Executive is terminated without Cause by GABC, GABC shall pay to
the Executive an amount equal to the Executive’s Supplemental Retirement
Income Benefit, commencing within thirty (30) days of the Executive’s
Normal Retirement Date. However, if the Executive’s Termination
of Employment with GABC before age sixty (60) is voluntary, he shall only
be entitled to his Vested Accrued Benefit existing at the Termination of
Employment. Payment of the Vested Accrued Benefit shall
commence within thirty (30) days after his attainment of Normal Retirement
Date.
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14
German
American Bancorp
Section 9.6 of the Agreement shall be
deleted in its entirety and shall be replaced by the following:
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9.6
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Compliance with
Section 409A.
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(a) The
parties hereto intend that all benefits and payments to be made to the Executive
hereunder will be provided or paid to him in compliance with al applicable
provisions of section 409A of the Code and the regulations issued thereunder,
and the rulings, notices and other guidance issued by the Internal Revenue
Services interpreting the same, and this Agreement shall be construed and
administered in accordance with such intent. The parties also agree
that this Agreement may be modified, as reasonably requested by either party, to
the extent necessary to comply with all applicable requirements of, and to avoid
the imposition of any additional tax, interest and penalties under, the section
409A of the Code in connection with, the benefits and payments to be provided or
paid to the Executive hereunder. Any such modification shall maintain
the original intent and benefit to GABC and the Executive of the applicable
provision of this Agreement, to the maximum extent possible without violating
section 409A of the Code.
(b) All
payments to be made upon a termination of employment under this Agreement may
only be made upon a “separation from service” under section 409A of the
Code. For purposes of section 409A of the Code, the right to receive
a series of installment payments under this Agreement shall be treated as a
right to a series of separate payments. Further, for purposes of the
limitations on nonqualified deferred compensation under section 409A of the
Code, each payment of compensation under this Agreement shall be treated as a
separate payment. In no event may the Executive, directly or
indirectly, designate the calendar year of a payment.
Section
XI of the Agreement shall be deleted in its entirety and replaced by the
following:
Section
XI
Amendments and
Termination
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11.1
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Amendments. This
Agreement may be amended only by a written agreement signed by GABC and
the Executive. However, GABC may unilaterally amend this
Agreement to conform with written directives to GABC from its auditors or
banking regulators or to comply with legislative changes or tax law,
including without limitation Section 409A of the Code and any and all
Treasury regulations and guidance promulgated
thereunder.
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11.2
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Plan Termination
Generally. GABC and the Executive may terminate this
Agreement at any time. The benefit hereunder shall be the
Accrued Benefit as of the date the Agreement is
terminated. Except as provided in Section 11.3, the termination
of this Agreement shall not cause a distribution of benefits under this
Agreement. Rather, after such termination benefit distributions
will be made at the earliest distribution event permitted under Section
II, Section III and Section
VII.
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15
German
American Bancorp
Executive
Supplemental Retirement Income Agreement
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11.3
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Plan Terminations
Under Section 409A. Notwithstanding anything to the
contrary in Section 11.2, if this Agreement terminates in the following
circumstances:
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(a)
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Within
thirty (30) days before or twelve (12) months after a change in the
ownership or effective control of GABC, or in the ownership of a
substantial portion of the assets of GABC as described in Section
409A(2)(A)(v) of the Code, provided that all distributions are made no
later than twelve (12) months following such termination of the Agreement
and further provided that all GABC’s arrangements which are substantially
similar to the Agreement are terminated so the Executive and all
participants in the similar arrangements are required to receive all
amounts of compensation deferred under the terminated arrangements within
twelve (12) months of the termination of the
arrangements;
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(b)
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Upon
GABC’s dissolution or with the approval of a bankruptcy court provided
that the amounts deferred under the Agreement are included in the
Executive’s gross income in the latest of (i) the calendar year in which
the Agreement terminates; (ii) the calendar year in which the amount is no
longer subject to a substantial risk of forfeiture; or (iii) the first
calendar year in which the distribution is administratively practical;
or
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(c)
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Upon
GABC’s termination of this and all other non-account balance plans (as
referenced in Section 409A of the Code or the regulations thereunder),
provided that all distributions are made no earlier than twelve (12)
months and no later than twenty-four (24) months following such
termination, and GABC does not adopt any new non-account balance plans for
a minimum of five (5) years following the date of such termination (or
such lesser period permitted under Code Section
409A);
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GABC may
distribute the Accrued Benefit, determined as of the date of the termination of
the Agreement, to the Executive in a lump sum subject to the above
terms.
IN WITNESS OF THE ABOVE, GABC
and the Executive hereby consent to this First Amendment.
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Executive:
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German
American Bancorp
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By/s/Xxxxxxx X. Xxxx
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By/s/Xxxx X.
Xxxxxxxxx
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Xxxxxxx
X. Xxxx
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Title
President/CEO
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16
