EXHIBIT 10.6
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of January, 1995, by and
between United Community Bancshares, Inc. a corporation organized and existing
under the laws of the State of Minnesota, (hereinafter called the Corporation),
and Xxxxxx X. Xxxxxx (hereinafter called the Executive).
W I T N E S S E T H:
WHEREAS, the Executive is in the employ of the Corporation serving as its
Executive Vice President; and
WHEREAS, the experience of the Executive, his knowledge of the affairs of the
Corporation, his reputation and contacts in the industry are so valuable that
assurance of his continued service is essential for the future growth and
profits of the Corporation and it is in the best interests of the Corporation to
arrange terms of continued employment for the Executive so as to reasonably
assure his remaining in the Corporation's employment during his lifetime or
until the age of retirement; and
WHEREAS, the Executive is willing to continue in the employ of the Corporation
provided the Corporation agrees to pay him or his beneficiaries certain benefits
in accordance with the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the services to be performed in the future
as well as the mutual promises and covenants herein contained, it is agreed as
follows:
ARTICLE 1.
1.1) EMPLOYMENT - The Corporation agrees to employ the Executive in such
capacity as the Corporation may from time to time determine. The Executive will
continue in the employ of the Corporation in such capacity and with such duties
and responsibilities as may be assigned to him, and with such compensation as
may be determined from time to time by the Board of Directors of the
Corporation.
1.2) FULL EFFORTS - The Executive agrees to devote his full time and attention
exclusively to the business and affairs of the Corporation, except during
vacation periods, and to use his best efforts to furnish faithful and
satisfactory services to the Corporation.
1.3) FRINGE BENEFIT - The salary continuation benefits provided by this
Agreement are granted by the Corporation as a fringe benefit to the Executive
and are not part of any salary reduction plan or any arrangement deferring a
bonus or a salary increase. The Executive has no option to take any current
payment or bonus in lieu of these salary continuation benefits.
ARTICLE 2.
2.1) RETIREMENT - If the Executive shall continue in the employment of the
Corporation until he attains the age of sixty-five (65), he may retire from
active daily employment as of the first day of the month next following
attainment of age sixty-five (65) or upon such later date as may be mutually
agreed upon by the Executive and the Corporation.
2.2) PAYMENT - The Corporation agrees that upon such retirement it will pay to
the Executive the annual sum of Forty thousand Dollars ($40,000), payable
monthly on the first day of each month following such retirement until he
attains the age of seventy-eight (78); subject to the conditions and limitations
hereinafter set forth. It is the intent of the Corporation to adjust the above
stated income amount from time to time, to reflect fifty (50) percent of the
Executive's then current salary. However, the Corporation is not obligated
hereunder to make any such adjustment.
2.3) DEATH BENEFIT - The Corporation agrees that if the Executive shall so
retire, but shall die before receiving the full amount of monthly payments to
which he is entitled hereunder, it will continue to make such monthly payments
to the Executive's designated Beneficiary for the remaining period. If the
Executive is not survived by any designated beneficiary, said payments shall be
made to the duly qualified personal representative, executor or administrator of
his estate.
ARTICLE 3.
3.1) CONSULTING - It is mutually agreed that during the thirteen (13) year
period following retirement from active daily employment upon attainment of age
sixty-five (65) or such later date as may be mutually agreed upon, the Executive
shall, at the option and request of the Corporation, be available at reasonable
times and places as may be mutually agreed upon, to render services to the
senior executives of the Corporation at its offices in an advisory or consulting
capacity.
3.2) INFORMED - The Executive will keep himself informed concerning the affairs
of the Corporation through reports which the Corporation will supply, and such
other means as may be agreed upon. The Executive shall not be required to travel
from whatever place he may be then living or staying for the purposes of such
consultation unless all expense incurred by him shall be paid by the
Corporation.
3.3) DISABILITY - Breach of this condition shall not be considered to have
occurred if the Executive is unable to consult because of his mental or physical
disability.
3.4) NOT EMPLOYEE - In furnishing such consultative services, the Executive
shall not be an employee of the Corporation, but shall act in the capacity of an
independent contractor.
3.5) NO COMPETITION - In the event the Corporation exercises its option to have
the Executive perform consulting services as provided in paragraph 3.1 hereof
then during the said thirteen (13) year period following retirement from active
daily employment, the Executive shall not become the owner of, nor engage,
directly or indirectly, in any business which is substantially similar to or
competes with the business of the Corporation, either as proprietor, partners,
stockholder, officer, director, employee or otherwise, within an area of one
hundred (100) miles from the City of Minneapolis, Minnesota, unless the
Corporation has first consented in writing thereto.
3.6) FORFEITURE - The payments provided under Article 2 are conditioned upon the
Executive fulfilling the foregoing requirements of the Article 3 and, in the
event the Executive shall at any time materially breach the foregoing
requirement, the Board of Directors of the Corporation may, by a Resolution, at
any regular or special meeting, suspend or eliminate payment during the period
of such breach. What constitutes a material breach shall be within the sole
determination of the Board of Directors.
3.7) TERMINATION OF PAYMENTS - In the event the Board of Directors by such a
Resolution terminates further payments to the Executive as provided in this
Article 3, all amounts then remaining unpaid under this Agreement shall be
forfeited and the Corporation shall have no further liability to the Executive
or any other persons hereunder.
ARTICLE 4.
4.1) DEATH PRIOR TO RETIREMENT - In the event the Executive should die while
actively employed by the Corporation at any time after the date of this
Agreement but prior to his attaining the age of sixty-five (65) years, the
Corporation will pay the annual sum of Forty thousand Dollars ($40,000) per
year, to the Executive's designated Beneficiary in equal monthly installments
for a period of one hundred twenty (120) months. If the Executive is not
survived by any designated beneficiary, said payments shall be made to the duly
qualified personal representative, executor or administrator of his estate. The
said monthly payments shall begin the first day of the month following the month
of the decease of the Executive. The Corporation's obligation to make payments
under this paragraph is contingent upon the Corporation receiving the insurance
benefits payable as a result of the Executive's death.
4.2) DISABILITY PRIOR TO RETIREMENT - In the event the Executive should become
disabled while actively employed by the Corporation at any time after the date
of this Agreement but prior to his attaining the age of sixty-five (65) years,
the Executive will be considered to be one hundred percent (100%) vested in the
amount set forth in Schedule A attached hereto and made a part hereof. Said
amount shall be paid to the Executive in a lump sum within three (3) months of
the determination of disability. Said payment shall be in lieu of any other
retirement or death benefit under this Agreement. For purposes of this
paragraph, the definition of the term "disability" shall be the same as required
for eligibility for disability payments under the Social Security Act.
ARTICLE 5.
5.1) VOLUNTARY TERMINATION OF SERVICE OR DISCHARGE - In the event that the
employment of the Executive shall be terminated, either voluntarily or
involuntarily, as a result of any illegal or fraudulent actions or any voluntary
actions determined to be detrimental to the interests of the Corporation, which
determination shall be made in the sole discretion of the Board of Directors,
prior to his attaining the age of sixty-five (65) years, this Agreement shall
terminate upon the date of such termination of employment and no benefits or
payments of any land shall be made hereunder.
5.2) OTHER TERMINATION OF SERVICE - The Corporation reserves the right to
terminate the employment of the Executive at any time prior to retirement. In
the event that the employment of the Executive shall terminate prior to his
attaining age sixty-five (65), other than for reasons stated in Section 5.1
hereof, or by reason of his disability or his death, then this Agreement shall
terminate upon the date of such termination of employment. Provided, however,
that the Executive shall be entitled to the following benefits under the
following circumstances:
(01) If the Executive has been employed by the Corporation for a period of
at least three (3) continuous years, the Executive will be considered to be
vested in thirty percent (30%) of the amount set out in Schedule A attached
hereto and made a part hereof and shall become vested in an additional ten
percent (10%) of said amount for each succeeding year thereafter until he
becomes one hundred percent (100%) vested. If the Executive's employment is
terminated under the provisions of this Section 5.2, the Corporation will
pay the Executive's vested amount upon such terms and conditions and
commencing at such time as the Corporation shall determine, but in no event
commencing later than age sixty-five (65).
(02) Anything to the contrary notwithstanding, if the Executive is not
fully vested in the amount to which he is entitled under this plan, he will
become fully vested in said amount in the event of a transfer in the
controlling ownership or sale of the Corporation or its parent corporation
and shall be entitled to the full amount set forth in Schedule A, upon the
terms and conditions hereof, if termination of employment thereafter occurs
under this Section 5.2.
ARTICLE 6.
6.1) TERMINATION OF AGREEMENT BY REASON OF CHANGES IN LAW - The Corporation
is entering into this Agreement upon the assumption that certain existing tax
laws will continue in effect in substantially their current form. In the
event of any changes in federal law relating to and allowing the tax-free
accumulation of earnings within a life insurance policy, the income tax-free
payment of proceeds from life insurance policies or the deduction from income
of interest payments on certificates of deposit issued by banking
institutions, the Corporation shall have an option to terminate or modify
this Agreement. Provided, however, that the Executive shall be entitled to at
least the same amount as he would have been entitled to under Section 4.2
relating to disability. The payment of said amount shall be made upon such
terms and conditions and at such time as the Corporation shall determine, but
in no event commencing later that age sixty-five (65).
ARTICLE 7.
7.1) ALIENABILITY - Neither the Executive, his 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, judgements, alimony or separate maintenance, owed by the
Executive or his beneficiary or any of them, or be transferable by operation
of law in the event of bankruptcy, insolvency or otherwise. In the event the
Executive or any beneficiary attempts assignment, commutation, hypothecation,
transfer, or disposal of the benefit hereunder, the Corporation's liabilities
shall forthwith cease and terminate.
ARTICLE 8.
8.1) PARTICIPATION IN OTHER PLANS - Nothing contained in this Agreement shall be
construed to alter, abridge, or in any manner affect the rights and privileges
of the Executive to participate in and be covered by any pension, profit
sharing, group insurance, bonus or similar employee plans which the Corporation
may now or hereafter have.
ARTICLE 9.
9.1) FUNDING - The Corporation reserves the absolute right, at its sole and
exclusive discretion, either to fund the obligations of the Corporation
undertaken by this Agreement or to refrain from funding the same, and to
determine the extent, nature, and method of such funding. Should the
Corporation elect to fund this Agreement, in whole or in part, through the
medium of life insurance or annuities, or both, the Corporation shall be the
owner and beneficiary of the policy. The Corporation reserves the absolute
right, in its sole discretion, to terminate such life insurance or annuities,
as well as any other funding program, at any time, in whole or in part. At no
time shall the Executive be deemed to have any right, title, or interest in
or to any specified assets or assets of the Corporation, including but not by
way of restriction, any insurance or annuity contract or contracts or the
proceeds therefrom.
9.2) UNSECURED - Any such policy shall not in anyway be security for the
performance of the obligations of this Agreement. It shall be, and remain, a
general, unpledged, unrestricted asset of the Corporation.
9.3) COOPERATION - If the Corporation purchases a life insurance or annuity
policy on the life of the Executive, he agrees to sign any papers that may be
required for that purpose and to undergo any medical examination or tests which
may be necessary.
9.4) RIGHT AS CREDITOR - This Agreement shall not be construed as giving the
Executive or his beneficiary any greater rights than those of any other
unsecured creditor of the Corporation.
ARTICLE 10.
10.1) REORGANIZATION - The Corporation shall not merge or consolidate into or
with another corporation, or reorganize, or sell substantially all of its
assets to another corporation, firm, or person unless and until such
succeeding or continuing corporation, firm, or person agrees to assume and
discharge the obligations of the Corporation under this Agreement. Upon the
occurrence of such event, the term "Corporation" as used in this Agreement
shall be deemed to refer to such successor or survivor corporation.
ARTICLE 11.
11.1) BENEFITS AND BURDENS - This Agreement shall be binding upon and inure to
the benefit of the Executive and his personal representatives, and the
Corporation and any successor organization which shall succeed to substantially
all of its assets and business.
ARTICLE 12.
12.1) NOT A CONTRACT OF EMPLOYMENT - This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Executive, or restrict the right of the Executive to terminate his employment.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be duly
executed by its President and its corporate seal affixed, duly attested by its
Secretary, and the Executive has hereunto set his hand and seal at Minneapolis,
Minnesota the day and year first above written.
BANK:
By: /s/
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Its: Co-Chairman
By: /s/
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Its: Executive Vice President
EXECUTIVE:
/s/
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