DEFERRED COMPENSATION AND
SPLIT-DOLLAR INSURANCE AGREEMENT
Effective the 13th day of November, 1990, West Suburban Bank, a banking
organization organized and existing under the laws of the State of Illinois,
hereinafter referred to as "Corporation" and __________________, a Key
Employee and Executive of the Corporation, hereinafter referred to as
"Executive," entered into a Deferred Compensation Agreement. By the terms
thereof, the Corporation and the Executive reserved the right to modify or
amend that agreement. By execution hereof, the Corporation and Executive
hereby amend and restate that agreement in its entirety.
The Executive has been in the employ of the Corporation for several years,
and has now and for years past faithfully served the Corporation. It is the
consensus of the Board of Directors of the Corporation that Executive's
services have been of exceptional merit, in excess of the compensation paid
and an invaluable contribution to the profits and position of the Corporation
in its field of activity.
It is the mutual desire of the Corporation and the Executive that Executive
remain in the employ of the Corporation, and to establish a program to
provide supplemental employment benefits and pre-retirement death benefits
for the Executive. Accordingly, it is the desire of the Corporation and the
Executive to enter into this Agreement under which the Corporation will agree
to make certain payments to Executive upon his employment termination and,
alternatively, to his beneficiaries in the event of his death while employed
by the Corporation.
Therefore, in consideration of Executive's services performed in the past and
those to be performed in the future, and based upon the mutual promises and
covenants herein contained, the Corporation and Executive agree as follows:
I. ARTICLE ONE - DEFINITIONS
A. EFFECTIVE DATE. The effective date of this Agreement shall be May 1,
1997.
B. EMPLOYMENT AGREEMENT. The Employment Agreement entered into between
Executive and the Corporation dated May 1, 1997, as amended.
II. ARTICLE TWO - EMPLOYMENT
a) Employment shall be in accordance with the terms of the Employment
Agreement.
III. ARTICLE THREE - DEFERRED COMPENSATION
A. The Corporation shall set aside and accrue to the benefit of
Executive the sum of the following no later than December 31 of each
year subject to the terms set forth in this Agreement:
1. A base of Twenty-five Thousand Dollars ($25,000) per year; and
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2. Such additional annual deferred compensation as determined by the
Board of Directors.
3. In the event Executive becomes entitled to receive benefits
under Article Five of this Agreement, he shall be entitled to a
pro-rata portion of his base benefit based upon his completed
calendar months of employment for the year of employment
termination and any additional annual deferred compensation
determined by the Board of Directors.
B. The sum of the above annual set aside, plus each prior year's set
aside, shall be referred to as Executive's Deferred Compensation
Account ("EDC Account"). The EDC Account shall bear annual interest
equal to the one year treasury note constant maturity interest rate
published by the Federal Home Loan Bank in effect on January 1 of
each year (constant one year U.S. Treasury Index per FRB H15).
C. The Corporation may purchase life insurance to fund all or part of
the above EDC Account and Executive shall execute all reasonable
insurance applications to facilitate such purchase provided,
however, Executive shall have no right, title or interest in such
insurance or in the EDC Account, unless otherwise provided by the
Corporation.
IV. ARTICLE FOUR - SPLIT-DOLLAR-LIFE INSURANCE
A. If the Executive is insurable, the Corporation shall purchase life
insurance on the life of Executive with a minimum death benefit of
$_____________ to fund its obligations under this Agreement in the
event of the death of Executive before termination of employment.
B. All premiums due on such insurance shall be paid by the Corporation.
However, Executive shall be responsible for the income taxes
incurred each year on the value of the "economic benefit" of the
life insurance protection for federal income tax purposes.
C. All dividends attributable to such life insurance will be applied to
reduce premiums.
D. The Corporation shall have all ownership rights under such life
insurance, except Executive shall have the right to designate the
beneficiary thereunder.
E. The amount receivable by the Corporation upon termination of such
life insurance shall be:
1. Upon termination of this Agreement or the death of Executive,
the Corporation's share shall be an amount equal to the greater
of the aggregate premiums paid by the Corporation or the cash
value.
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2. Upon surrender of such life insurance, the Corporation's share
shall be an amount equal to the cash value.
3. For purposes of this Agreement, "aggregate premiums" shall mean
all premiums paid by the Corporation. Such premiums shall be
reduced by any indebtedness and any accrued unpaid interest
incurred by the Corporation on the life insurance and by the
amount of any policy dividends used to reduce or offset such
premiums. "Cash value" shall mean the guaranteed cash value of
the life insurance plus the cash value of any dividend additions
as of the date to which premiums have been paid plus any
dividend credits outstanding, and reduced by any indebtedness
and any accrued unpaid interest incurred by the Corporation on
the life insurance.
F. Upon Executive's death, the Corporation and Executive's beneficiary
shall execute such forms and furnish such other documents or
information as are required to receive payment under the life
insurance.
V. ARTICLE FIVE - BENEFITS
a) The following benefits provided by the Corporation to Executive shall
be available under this Agreement:
A. Executive shall be entitled to receive the accrued balance in his
EDC Account upon any termination of his employment other than upon
death. Such amount shall be paid in the number of annual
installments elected by Executive. The Board of Directors of the
Corporation may at any time accelerate the payment of any
outstanding balance.
B. Upon any termination of employment other than upon death, Executive
may elect to acquire any life insurance maintained by the
Corporation under Article Four. In the event of such an election,
any amount receivable under Section A above shall be reduced by the
cash value of such insurance, as defined under Article Four.
C. In the event of Executive's death before termination of employment,
the beneficiary named by Executive shall receive the death benefit
payable under any life insurance purchased by the Corporation, less
an amount equal to the greater of the aggregate premiums paid by the
Corporation for or the cash value of such insurance, each as defined
under Article Four, such benefit payment to be in full satisfaction
of any amounts due under this Agreement. Notwithstanding the
preceding sentence, in the event the death benefit receivable by the
beneficiary is less than the accrued balance in the EDC Account of
Executive, the beneficiary shall receive an additional amount equal
to the difference between the EDC Account balance and the death
benefit receivable.
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VI. ARTICLE SIX - RESTRICTIONS UPON DEFERRED COMPENSATION FUNDING
The Corporation shall have no obligation to set aside, earmark or
entrust any fund or money with which to pay its deferred
compensation obligations under this Agreement. Executive, his
beneficiaries or any successor in interest to him shall be and
remain simply a general creditor of the Corporation in the same
manner as any other creditor having a general claim for matured and
unpaid compensation.
The Corporation reserves the absolute right in its sole discretion
to either fund the deferred compensation obligations undertaken by
this Agreement or to refrain from funding the same and to determine
the extent, nature and method of such funding.
Should Corporation elect to fund its deferred compensation obligation
under this Agreement, in whole or in part, through the purchase of
life insurance, mutual funds, disability policies or annuities, the
Corporation reserves the absolute right, in its sole discretion, to
terminate such funding at any time, in whole or in part. At no time
shall Executive be deemed to have any lien or right, title or
interest in or to any specific funding investment or to any assets
of the Corporation.
If Corporation elects to invest in a life insurance, disability, or
annuity policy upon the life of Executive, then Executive shall
assist the Corporation by freely submitting to a physical exam and
supplying such additional information necessary to obtain such
insurance or annuities.
VII. ARTICLE SEVEN - MISCELLANEOUS
A. ALIENABILITY AND ASSIGNMENT PROHIBITION. Neither Executive, his
surviving spouse nor any other 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. In the event Executive or
any beneficiary attempts assignment, commutation, hypothecation,
transfer or disposal of the benefits hereunder, the Corporation's
liabilities shall forthwith cease and terminate.
B. BINDING OBLIGATION OF CORPORATION AND ANY SUCCESSOR IN INTEREST.
Corporation expressly agrees that it shall not merge or consolidate
into or with another corporation or sell substantially all of its
assets to another corporation, firm or person until such
corporation, firm or person expressly agrees, in writing, to assume
and discharge the duties and obligations of the Corporation under
this Agreement. This Agreement shall be binding upon the parties
hereto, their successors, beneficiaries, heirs and personal
representatives.
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C. REVOCATION. It is agreed by and between the parties hereto that,
during the lifetime of the Executive, this Agreement may be amended
or revoked at any time or times, in whole or in part, by the mutual
written assent of the Executive and the Corporation.
D. TERMINATION. It is agreed by and between the parties hereto that
the annual set aside under this Agreement may be terminated by the
Corporation at the end of the then current term of the Employment
Agreement in the event of the non-extension or termination thereof.
E. 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.
F. EFFECT ON OTHER CORPORATION BENEFIT PLANS. 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 plan constituting a part of
Corporation's existing or future compensation structure.
G. HEADINGS. Headings and subheadings in this Agreement are inserted
for reference and convenience only and shall not be deemed a part of
this Agreement.
H. APPLICABLE LAW. The validity and interpretation of this Agreement
shall be governed by the laws of the State of Illinois.
VIII. ARTICLE EIGHT - ERISA PROVISIONS
A. NAMED FIDUCIARY AND PLAN ADMINISTRATOR. The "Named Fiduciary and
Plan Administrator" of this Agreement shall be Xxxxx X. Xxxx until
his resignation or removal by the Board of Directors of the
Corporation. As Named Fiduciary and Plan Administrator, Xxxxx X.
Xxxx shall be responsible for the management, control and
administration of this Agreement as established herein. He may
delegate to others certain aspects of the management and operation
responsibilities of the plan including the employment of advisors
and the delegation of ministerial duties to qualified individuals.
B. CLAIMS PROCEDURE. In the event that benefits under this Plan
Agreement are not paid to the Executive (or to his beneficiary in
the case of Executive's death) and such claimants feel they are
entitled to receive such benefits, then a written claim must be made
to the Named Fiduciary and Administrator named above within sixty
(60) days from the date payments are refused. The Plan Fiduciary
and Administrator and the corporation shall review the written claim
and, if the claim is denied in whole or in part, they shall provide,
in writing and within ninety (90) days of receipt of such claim,
their specific reasons for such denial
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and 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. A claim shall be deemed denied if the
Plan Fiduciary and Administrator fails to take any action within the
aforesaid ninety (90) day period.
If claimants desire a second review, they shall notify the Plan
Fiduciary and Administrator in writing within sixty (60) days of the
first claim denial. Claimants may review the Plan Agreement or any
documents relating thereto and submit any written issues and
comments they may feel appropriate. In its sole discretion, the Plan
Fiduciary and Administrator 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 Plan Agreement upon which the decision is based.
C. ARBITRATION. If claimants continue to dispute any benefit denial
after the second review, the claimants may submit the dispute to
arbitration. Such arbitration shall be conducted by a single
arbitrator sitting in a location selected by Executive within fifty
(50) miles of the main office of Corporation, in accordance with the
rules of the American Arbitration Association (the "AAA") then in
effect. The arbitrator shall be selected by the parties from a list
of arbitrators provided by the AAA, provided that no arbitrator
shall be related to or affiliated with either of the parties. No
later than ten (10) days after the list of proposed arbitrators is
received by the parties, the parties, or their respective
representatives, shall meet at a mutually convenient location or
telephonically. At that meeting, the party who sought arbitration
shall eliminate one (1) proposed arbitrator and then the other party
shall eliminate one (1) proposed arbitrator. The parties shall
continue to eliminate names from the list of proposed arbitrators in
this manner until a single proposed arbitrator remains. This
remaining arbitrator shall arbitrate the dispute. Each party shall
submit, in writing, the specific requested action or decision it
wishes to take, or make, with respect to the matter in dispute, and
the arbitrator shall be obligated to choose one (1) party's specific
requested action or decision, without being permitted to effectuate
any compromise position. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific
performance of his right to be paid through the date of termination
during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
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IN WITNESS WHEREOF, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the ______ day of May, 1997
and that, upon execution, each has received a confirming copy.
____________________________________ ___________________________________
(WITNESS) ___________________________________
WEST SUBURBAN BANK
____________________________________ By:_______________________________
(WITNESS) Its:______________________________
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DEFERRED COMPENSATION AND
SPLIT-DOLLAR INSURANCE AGREEMENT
DEFERRAL ELECTION
TO: The Board of Directors of West Suburban Bank
In accordance with the provisions of the Deferred Compensation and Split-Dollar
Insurance Agreement, I hereby elect to have the amounts deferred under the
Agreement paid to me in _____ (INSERT A NUMBER ONE (1) THROUGH TEN (10)) annual
installments. I understand that I cannot modify the manner of payment election
made by me any later than twelve (12) months before my anticipated date of
employment termination.
________________________________________ ___________________________
Date
WEST SUBURBAN BANK
By:_______________________________________ _____________________________
Its:______________________________________ Date
DEFERRED COMPENSATION AND
SPLIT-DOLLAR INSURANCE AGREEMENT
DESIGNATION OF BENEFICIARIES
TO: The Board of Directors of West Suburban Bank
In accordance with the provisions of the Deferred Compensation and Split-Dollar
Insurance Agreement, I hereby revoke any prior designations and designate the
following beneficiary* to receive the benefits under the Agreement upon my
death:
Name: _______________________________________________________________
Address: _______________________________________________________________
_______________________________________________________________
________________________________________ _______________________________
Date
* If more than one beneficiary is to be designated, separately list the
beneficiaries and specify the percentage of each distribution to be received by
each beneficiary.
