Exhibit 10.5
DIRECTOR INDEXED FEE CONTINUATION PLAN
AGREEMENT
This Agreement, made and entered into this 23rd day of July, 1996, by
and between Eufaula Bank and Trust, a Bank organized and existing under the laws
of the State of Alabama, hereinafter referred to as "the Bank," and Xxxxx X.
Xxxxxxx, a Director of the Bank, hereinafter referred to as "the Director".
The Director is a member of the Board of Directors and faithfully serves
the Bank. It is the consensus of the Board of Directors of the Bank (the Board)
that the Director's services have been of exceptional merit, in excess of the
compensation paid and an invaluable contribution to the profits and position of
the Bank in its field of activity. The Board further believes that the
Director's experience, knowledge of corporate affairs, reputation and industry
contacts are of such value and his continued services are so essential to the
Bank's future growth and profits that it would suffer severe financial loss
should the Director terminate his services.
Accordingly, it is the desire of the Bank and the Director to enter into
this Agreement under which the Bank will agree to make certain payments to the
Director upon his retirement and, alternatively, to his beneficiary(ies) in the
event of his premature death while serving on the Board of the Bank.
The Bank currently has a deferred compensation plan for the benefit of
certain directors. It is the desire of the Bank and the Director that this
Agreement replace and supersede the current agreement and any and all other
benefit agreements dated prior to the effective date hereof.
It is the intent of the parties hereto that this Agreement be considered
an arrangement maintained primarily to provide supplemental retirement benefits
for the Director for purposes of the Employee Retirement Security Act of 1974
(ERISA). The Director is fully advised of the Bank's financial status, and has
had substantial input in the design and operation of this benefit plan.
Therefore, in consideration of the Director's services now performed and
those to be performed in the future and based upon the mutual promises and
covenants herein contained, the Bank and the Director, agree as follows:
1. DEFINITIONS
A. Effective Date:
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The effective date of this Agreement shall be July 23, 1996.
B. Plan Year:
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Any reference to "year" shall mean a calendar year from January 1 to
December 31. In the year of implementation, the term "year" shall mean
the period from the effective date to December 31 of the year of the
effective date.
C. Retirement Date:
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The Retirement Date shall mean retirement from service with the Bank
which becomes effective on the first day of the calendar month following
the month in which the Director reaches his 65th birthday or such later
date as the Director may actually retire.
D. Termination of Service:
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Termination of Service shall mean voluntary resignation of service by
the Director or the Bank's discharge of the Director, prior to the
Retirement Date (described in subparagraph I (C) herein above).
E. Pre-Retirement Account:
----------------------
A Pre-Retirement Account shall be established as a liability reserve
account on the books of the Bank for the benefit of the Director. Prior
to the Director's Retirement Date [as defined in subparagraph I (C)],
such liability reserve account shall be increased or decreased each year
by an amount equal to the annual earnings or loss for the year
determined by the Index (described in subparagraph I (G) hereinafter),
less the Cost of Funds Expense for that year (described in subparagraph
I (H) hereinafter).
F. Index Retirement Benefit:
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The Index Retirement Benefit for the Director for any year shall be
equal to the excess of the annual earnings (if any) determined by the
Index [as defined in subparagraph I (G)] for that year over the Cost of
Funds Expense [as defined in subparagraph I(H)] for that year.
G. Index
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The Index for any year shall be the aggregate annual after-tax income
from the life insurance contracts described hereinafter as defined by
FASB Technical Bulletin 85-4. This Index shall be applied as if such
insurance contracts were purchased on the effective date hereof.
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Insurance Company: Xxxxxxxxx Xxxxxxxx Life Insurance Company
Policy Form: Flexible Premium Adjustable Life Insurance
Policy Name: Executive Security Plan III
Insured's Age and Sex: 44, Female
Riders: None
Ratings: None
Option: A
Face Amount: $354,000
Premiums Paid: $16,600
Number of Premiums Paid: Twenty One
Assumed Purchase Date: July 23, 1996
If such contracts of life insurance are actually purchased by the Bank then
the actual policies as of the dates they were purchased shall be used in
calculations under this Agreement. If such contracts of life insurance are
not purchased or are subsequently surrendered or lapsed, then the Bank shall
receive annual policy illustrations that assume the above described policies
were purchased from the above named insurance company(ies) on the effective
date from which the increase in policy value will be used to calculate the
amount of the Index.
In either case, references to the life insurance contract are merely for
purposes of calculating a benefit. The Bank has no obligation to purchase
such life insurance and, if purchased, the Director and his beneficiary(ies)
shall have no ownership interest in such policy and shall always have no
greater interest in the benefits under this Agreement than that of an
unsecured general creditor of the Bank.
H. Cost of Funds Expense:
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The Cost of Funds Expense for any year shall be calculated by taking the sum
of the amount of premiums set forth in the Indexed policies described above
plus the amount of any after-tax benefits paid to the Director pursuant to
this Agreement (Paragraph II hereinafter) plus the amount of all previous
years after-tax Costs of Funds Expense, and multiplying that sum by the
average after-tax Cost of Funds of the Bank's third quarter Call Report for
the Plan Year as filed with the Federal Reserve or other primary federal
regulator.
I. Change Of Control:
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Change of control shall be deemed to be the cumulative transfer of more than
fifty percent (50%) of the voting stock of the Bank Holding Company from the
effective date of this Agreement. For the purposes of this Agreement,
transfers on account of deaths or gifts, transfers between
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family members or transfers to a qualified retirement plan
maintained by the Bank shall not be considered in determining
whether there has been a change in control.
J. Prior Agreements:
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This Agreement represents the entire understanding of the parties
and all benefit agreements dated prior to the effective date hereof
are hereby superseded.
II. INDEX BENEFITS
The following benefits provided by the Bank to the Director are in the
nature of a fringe benefit and shall in no event be construed to effect
nor limit the Director's current or prospective salary increases, cash
bonuses or profit-sharing distributions or credits.
A. Retirement Benefits:
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Should the Director continue to serve on the Board of the Bank
until the "Retirement Date" [as defined in subparagraph I (C)], he
shall be entitled to receive the balance in his Pre-Retirement
Account [as defined in subparagraph I (E)] in fifteen (15) equal
annual installments commencing thirty (30) days following the
Director's retirement date. In addition to the these payments, the
Index Retirement Benefits (as defined in subparagraph I (F) above)
for each year following the Director's retirement date shall be
paid to the Director until his death.
B. Termination of Service:
----------------------
Should the Director suffer a Termination of Service prior to the
Retirement Date [as defined in subparagraph I (C)], he shall be
entitled to receive twenty percent (20%) times years of service
with the Bank [to a maximum of one hundred percent (100%)] from the
Effective Date hereof [as defined in subparagraph I (A)] times the
balance in the Pre-Retirement Account paid over fifteen (15) years
in equal installments commencing at the Retirement Date [as defined
in subparagraph I (C)]. In addition to these payments, twenty
percent (20%) times years of service with the Bank [to a maximum of
one hundred percent (100%)] from the Effective Date hereof [as
defined in subparagraph I (A)] times the Index Retirement Benefit
[as defined in subparagraph I (F)] for each year shall be paid to
the Director until his death.
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C. Death:
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Should the Director die prior to having received that portion of
the Pre-Retirement Account he was entitled to pursuant to
subparagraph A or B herein above, as the case may be, the unpaid
balance of the Pre-Retirement Account (defined in subparagraph I
(E)] shall be paid in a lump sum to the beneficiary selected by
the Director and filed with the Bank. In the absence of or a
failure to designate a beneficiary, the unpaid balance shall be
paid in a lump sum to the personal representative of the
Director's estate.
D. Discharge for Cause:
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Should the Director be discharged for cause, all Index Benefits
under this Agreement [subparagraphs II (A), (B) or (C)] shall be
forfeited. The term "for cause" shall mean gross negligence or
gross neglect or the commission of a felony or gross-misdemeanor
involving moral turpitude, fraud, dishonesty or willful violation
of any law that results in any adverse effect on the Bank. If a
dispute arises as to discharge "for cause", such dispute shall be
resolved by arbitration as set forth in this Agreement.
E. Death Benefit:
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Except as set forth above, there is no death benefit provided
under this Agreement.
III. DEFERRAL BENEFITS
A. Benefit Amount:
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The Director may elect to defer up to one hundred percent (100%)
of his base salary each year for five years from the effective
date hereof. The Bank shall establish a Deferred Compensation
Account in the name of the Director, and credit that account with
the deferrals. The Bank shall also credit interest to the Deferred
Compensation Account balance on December 31st of each year. The
interest rate credited shall be equal to the one year treasury
rate as of the crediting date to a minimum of eight percent (8%).
B. Election:
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The Director will make his election to defer by filing with the
Bank a written statement setting forth the amount and timing of
the deferrals. This statement must be filed prior to having earned
the deferred income.
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C. Benefit Payment:
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The balance of the Director's Deferred Compensation Account shall be
payable to the Director at the time his service with the Bank is
terminated by retirement or otherwise. Should the Director die while
there is a balance in his Deferred Compensation Account [as defined in
subparagraph III (A)], such balance shall be paid pursuant to
subparagraph II (C) herein above.
IV. 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
Director, his beneficiary(ies) 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 this Agreement or to refrain from funding the
same and to determine the exact nature and method of such 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
Director be deemed to have any lien or 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 Director, then the Director shall assist the
Bank by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
V. CHANGE OF CONTROL
Upon a Change of Control (as defined in subparagraph I (I) herein), if the
Director's service on the Board of the Bank is subsequently terminated then
he shall receive the benefits promised in this Agreement upon attaining his
Retirement Date [as defined in subparagraph I (C)], as if he had
continuously served on the Board of the Bank until his Retirement Date. The
Director will also remain eligible for all promised death benefits in this
Agreement. In addition, no sale, merger or consolidation of the Bank shall
take place unless the new or surviving entity expressly acknowledges the
obligations under this Agreement and agrees to abide by its terms.
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VI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
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Neither the Director, his widow 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 Director
or his beneficiary, nor be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise. In the event the
Director or any beneficiary attempts assignment, commutation,
hypothecation, transfer or disposal of the benefits hereunder, the
Bank's liabilities shall forthwith cease and terminate.
B. Binding Obligation of Bank and any Successor in Interest:
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The Bank expressly agrees that it shall not merge or consolidate into
or with another bank or sell substantially all of its assets to
another bank, firm or person until such bank, firm or person
expressly agrees, in writing, to assume and discharge the duties and
obligations of the Bank under this Agreement. This Agreement shall be
binding upon the parties hereto, their successors, beneficiary(ies),
heirs and personal representatives.
C. Revocation:
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It is agreed by and between the parties hereto that, during the
lifetime of the Director, this Agreement may be amended or revoked at
any time or times, in whole or in part, by the mutual written assent
of the Director and the Bank.
D. Gender.
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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.
E. Effect on Other Bank Benefit Plans:
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Nothing contained in this Agreement shall affect the right of the
Director 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 the Bank's
existing or future compensation structure.
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F. Headings:
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Headings and subheadings in this Agreement are inserted for reference
and convenience only and shall not be deemed a part of this
Agreement.
G. Applicable Law:
--------------
The validity and interpretation of this Agreement shall be governed
by the laws of the State of Alabama.
VII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
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The "Named Fiduciary and Plan Administrator" of this plan shall be
Eufaula Bank and Trust Company until its resignation or removal by
the Board. As Named Fiduciary and Administrator, Eufaula Bank and
Trust Company shall be responsible for the management, control and
administration of the Salary Continuation Agreement as established
herein. The Named Fiduciary 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 and Arbitration:
--------------------------------
In the event a dispute arises over benefits under this Agreement and
benefits are not paid to the Director (or to his beneficiary in the
case of the Director'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 ninety
(90) days from the date payments are refused. The Plan Fiduciary and
Administrator and the Bank shall review the written claim and if the
claim is denied, in whole or in part, they shall provide in writing
within ninety (90) days of receipt of such claim their specific
reasons for such denial, reference to the provisions of this
Agreement upon which the denial is based and any additional material
or information necessary to perfect the claim. Such 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-day period.
If claimants desire a second review they shall notify the Plan
Fiduciary and Administrator in writing within ninety (90) days of the
first claim denial. Claimants may review this Agreement or any
documents relating thereto.
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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 ninety (90) 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 this Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based
completed performance of this Agreement of the meaning and
effect of the terms and conditions thereof, then claimants may
submit the dispute to a Board of Arbitration for final
arbitration. Said Board shall consist of one member selected by
the claimant, one member selected by the Bank, and the third
member selected by the first two members. The Board shall
operate under any generally recognized set of arbitration rules.
The parties hereto agree that they and their heirs, personal
representatives, successors and assigns shall be bound by the
decision of such Board with respect to any controversy properly
submitted to it for determination.
Where a dispute arises as to the Bank's discharge of the
Directors "for cause", such dispute shall likewise be submitted
to arbitration as above described and the parties hereto agree
to be bound by the decision thereunder.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the 23rd day
of July, 1996 and that, upon execution, each has received a conforming copy.
EUFAULA BANK AND TRUST COMPANY
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxx VP/Exp.
---------------------------- -------------------------------
Witness Title
/s/ Xxxxxx X. Xxxxx /s/ Xxxxx X. Xxxxxxx
---------------------------- -------------------------------
Witness Xxxxx X. Xxxxxxx
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LIFE INSURANCE
ENDORSEMENT METHOD SPLIT DOLLAR PLAN
AGREEMENT
Insurer: Xxxxxxxxx Xxxxxxxx Life Insurance Company
Policy Number: 0010164910
Bank: Eufaula Bank and Trust Company
Insured: Xxxxx X. Xxxxxxx
Relationship of Insured to Bank Director
The respective rights and duties of the Bank and the Insured in the subject
policy shall be as defined in the following:
I. DEFINITIONS
Refer to the policy contract for the definition of all terms in this
Agreement.
II. POLICY TITLE AND OWNERSHIP
Title and ownership shall reside in the Bank for its use and for the use
of the Insured all in accordance with this Agreement. The Bank alone may,
to the extent of its interest, exercise the right to borrow or withdraw on
the policy cash values. Where the Bank and the Insured (or assignee, with
the consent of the Insured) mutually agree to exercise the right to
increase the coverage under the subject split dollar policy, then, in such
event, the rights, duties and benefits of the parties to such increased
coverage shall continue to be subject to the terms of this Agreement.
III. BENEFICIARY DESIGNATION RIGHTS
The Insured (or assignee) shall have the right and power to designate a
beneficiary or beneficiaries to receive his share of the proceeds payable
upon the death of the Insured and to elect and change a payment option for
such beneficiary, subject to any right or interest the Bank may have in
such proceeds, as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
The Bank shall pay an amount equal to the planned premiums and any other
premium payments that might become necessary to keep the policy in
force.
V. TAXABLE BENEFIT
Annually the Insured will receive a taxable benefit equal to the assumed
cost of insurance as required by the Internal Revenue Service. The Bank
(or its administrator) will report to the Employee the amount of imputed
income received each year on Form W-2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraph VII herein, the division of the death proceeds of
the policy is as follows:
A. The Insured's beneficiary(ies), designated in accordance with
Paragraph III, shall be entitled to an amount equal to eighty
percent (80%) of the net at risk insurance portion of the proceeds.
The net at risk insurance portion is the total proceeds less the
cash value of the policy.
B. The Bank shall be entitled to the remainder of such proceeds.
C. The Bank and the Insured (or assignees) shall share in any interest
due on the death proceeds on a pro rata basis as the proceeds due
each respectively bears to the total proceeds. excluding any such
interest.
VII. DIVISION OF THE CASH SURRENDER VALUE OF THE POLICY
The Bank shall at all times be entitled to an amount equal to the
policy's cash value, as that term is defined in the policy contract,
less any policy loans and unpaid interest or cash withdrawals previously
incurred by the Bank and any applicable surrender charges. Such cash
value shall be determined as of the date of surrender or death as the
case may be.
VIII. PREMIUM WAIVER
If the policy contains a premium waiver provision, such waived amounts
shall be considered for all purposes of this Agreement as having been
paid by the Bank.
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IX. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's right and interest in any endowment proceeds or annuity benefits, on
expiration of the deferment period, shall be determined under the
provisions of this Agreement by regarding such endowment proceeds or the
commuted value of such annuity benefits as the policy's cash value. Such
endowment proceeds or annuity benefits shall be considered to be like death
proceeds for the purposes of division under this Agreement.
X. TERMINATION OF AGREEMENT
This Agreement shall terminate at the option of the Bank following thirty
(30) days written notice to the Insured upon the happening of any one of
the following:
1. The Insured shall be in violation of the terms and conditions of that
certain Executive Indexed Salary/Director Indexed Fee Continuation
Plan Agreement dated the 23rd, day of July, 1996 or
2. The Insured shall leave the service of the Bank (voluntary or
involuntarily) prior to five years from the date hereof, or
3. The Insured shall be discharged form service with the Bank for cause.
The term "for cause" shall mean gross negligence or gross neglect or
the commission of a felony or gross negligence involving moral
turpitude, fraud, dishonesty or willful violation of any law that
results in any adverse effect on the Bank.
Upon such termination, the Insured (or assignee) shall have ninety (90) day
option to receive from the Bank an absolute assignment of the policy in
consideration of a cash payment to the Bank, whereupon this Agreement shall
terminate. Such cash payment shall be the greater of:
1. The Bank's share of the cash value of the policy on the date of such
assignment, as defined in this Agreement.
2. The amount of the premiums which have been paid by the Bank prior to
the date of such assignment.
Should the Insured (or assignee) fail to exercise this option within the
prescribed ninety (90) day period, the Insured (or assignee) agrees that
all of his rights, interest and claims in the policy shall terminate as of
the date of the termination of this Agreement.
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Except as provided above, this Agreement shall terminate upon
distribution of the death benefit proceeds in accordance with Paragraph
VI above.
XI. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS
The Insured may not, without the written consent of the Bank, assign to
any individual, trust or other organization, any right, title or
interest in the subject policy nor any rights, options, privileges or
duties created under this Agreement.
XII. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank, their heirs,
successors, personal representatives and assigns.
XIII. NAMED FIDUCIARY AND PLAN ADMINISTRATOR
Eufaula Bank and Trust Company is hereby designated the "Named
Fiduciary" until resignation or removal by the board of directors. As
Named Fiduciary, the Bank shall be responsible for the management,
control, and administration of this Split Dollar Plan as established
herein. The Named Fiduciary may allocate to others certain aspects of
the management and operation responsibilities of the plan, including the
employment of advisors and the delegation of any ministerial duties to
qualified individuals.
XIV. FUNDING POLICY
The funding policy for this Split Dollar Plan shall be to maintain the
subject policy in force by paying, when due, all premiums required.
XV. CLAIMS PROCEDURE FOR LIFE INSURANCE POLICY AND SPLIT DOLLAR PLAN
Claim forms or claim information as to the subject policy can be
obtained by contacting The Benefit Marketing Group, Inc. (770-952-1529).
When the Named Fiduciary has a claim which may be covered under the
provisions described in the insurance policy, he should contact the
office named above and they will either complete a claim form and
forward it to an authorized representative of the Insurer or advise the
named Fiduciary what further requirements are necessary. The Insurer
will evaluate and make a decision as to payment. If the claim is
payable, a benefit check will be issued to the Named Fiduciary.
In the event that a claim is not eligible under the policy, the Insurer
will notify the Named Fiduciary of the denial pursuant to the
requirements under the terms of the policy. If the Named Fiduciary is
dissatisfied with the denial of the claim and wishes to contest such
claim denial, he should contact the office named above and
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they will assist in making inquiry to the Insurer. All objections to the
Insurer's actions should be in writing and submitted to the office named
above for transmittal to the Insurer.
XVI. GENDER
Whenever in this Agreement words are use 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.
XVII. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement, but will
respect the rights of the parties as herein developed upon receiving an
executed copy of this Agreement. Payment or other performance in
accordance with the policy provisions shall fully discharge the Insurer
for any and all liability.
Executed at Eufaula, Alabama this 23rd day of July, 1996.
EUFAULA BANK AND TRUST COMPANY
/s/ Xxxxxxx X. Xxxxxx By: [SIGNATURE APPEARS HERE] [VP/?]
--------------------------- -------------------------------------
Witness Title
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxx
--------------------------- -------------------------------------
Witness Xxxxx X. Xxxxxxx
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BENEFICIARY DESIGNATION FORM
PRIMARY DESIGNATION:
Name Relationship
---- ------------
[SIGNATURE APPEARS HERE] Son - equally or the survivor
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[SIGNATURE APPEARS HERE] Son - equally or the survivor
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CONTINGENT DESIGNATION:
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/s/ Xxxxx X. Xxxxxxx 10/28/96
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Xxxxx X. Xxxxxxx Date
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