FIRST INDIANA CORPORATION
SUPPLEMENTAL BENEFIT PLAN
PLAN AGREEMENT
THIS AGREEMENT is made as of the first day of May, 1997, by
and between First Indiana Corporation (hereinafter referred to as
the "Employer") and Xxxxxx X. XxXxxxxx, (hereinafter referred to
as the "Employee").
WITNESSETH:
WHEREAS, the Board of Directors of the Employer has
determined that it is desirable and in the best interest of the
Employer to adopt a Supplemental Benefit Plan;
WHEREAS, the Board of Directors at its meeting on April 16,
1997, approved and adopted such a plan; and
WHEREAS, the Board of Directors at said meeting authorized
the officers of the Employer to do any and all things necessary
or desirable to put said Supplemental Benefit Plan in effect; and
WHEREAS, the Employee has been selected to become a
participant of said Plan, and the Employee elects to so
participate.
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.
1 (10k page 96)
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).
2 (10k page 97)
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 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 denominator of which is the total number of
distributions to be made, and the numerator of which is one
more than 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.
[For example, if the Employee terminates employment on
November 7, 1999, when he's 74 years old and has a life
expectancy of 11.2 years, his benefit will be paid in
13 installments, the first as of December 31, 1999, in
an amount equal to one-thirteenth of the hypothetical
investment fund, and the last as of December 31, 2011,
in an amount equal to the remaining balance of the
fund. If the value of the fund on December 31, 1999,
adjusted for investment increases and decreases for the
period subsequent to November 7, 1999, is $1,300,000,
the distribution to be made as of December 31, 1999,
will be $100,000. if the value of the fund on December
31, 2000, is $1,272,000 (reflecting a $100,000
deduction for the distribution made as of December 31,
3 (10k page 98)
1999, and a $72,000 addition representing the net
investment increase for the period subsequent to
December 31, 1999), the distribution to be made as of
December 31, 2000, will be $106,000.]
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
4 (10k page 99)
accept the appointment by the parties, the parties shall
jointly request from the American Arbitration Association a
list of the 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.
(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
5 (10k page 100)
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 and uncertainties in
the valuation of future payments, and deferrals pursuant
to Section 6(a), it is possible that parachute payments
6 (10k page 101)
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 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
7 (10k page 102)
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. Prior to the effective date of this Agreement, the Employee
was covered and receiving benefits 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 or are in lieu of the benefits provided to
the Employee under the Prior Plan. (As between the Employer
and its wholly owned subsidiary, First Indiana Bank (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 retirement
benefits, death benefits and special death benefits that
accrued and became vested prior to the effective date
hereof.)
IN WITNESS WHEREOF, this Agreement has been made as of the date
herein above written.
Employer:
By: /s/ Xxxx X. Xxxxxx, Xx.
Xxxx X. Xxxxxx, Xx.
President
First Indiana Corporation
8 (10k page 103)
EMPLOYEE:
/s/ Xxxxxx X. XxXxxxxx
Xxxxxx X. XxXxxxxx
000 Xxxxx Xxxxxxxxxxxx Xx., Xxxxx 0000
---------------------------------------
Street Address or P. X. Xxx
Xxxxxxxxxxxx, 00000
_____________________________
City, State, Zip
9 (10k page 104)
