Exhibit 10.6
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
AGREEMENT
This Agreement, made and entered into this 19/th/ day of August, 1999,
by and between Enfield Federal Savings & Loan Association, a Bank organized and
existing under the laws of the State of Connecticut, hereinafter referred to as
the "Bank," and Xxxxx X'Xxxxxx, a Key Employee and the Executive of the Bank,
hereinafter referred to as the "Executive."
The Executive is in the employ of the Bank and is now faithfully
serving the Bank. It is the consensus of the Board of Directors of the Bank (the
"Board") that the Executive'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 Executive terminate his services.
Accordingly, it is the desire of the Bank and the Executive to enter
into this Agreement under which the Bank will agree to make certain payments to
the Executive upon the Executive's retirement and, alternatively, to the
Executive's beneficiary(ies) in the event of Executive's death.
It is the intent of the parties hereto that this Agreement be
considered an arrangement maintained primarily to provide supplemental
retirement benefits for the Executive, as 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 1974 ("ERISA"). The Executive 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 Executive's services and based upon
the mutual promises and covenants herein contained, the Bank and the Executive,
agree as follows:
I. DEFINITIONS
A. Effective Date:
--------------
The Effective Date of this Agreement shall be July 19, 1999.
B. Plan Year:
---------
Any reference to "Plan Year" shall mean a calendar year from
January 1 to December 31. In the year of implementation, the
term "Plan Year" shall mean the period from the effective date
to December 31 of the year of the effective date.
C. Retirement Date:
---------------
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 Executive reaches the
Executive's sixty-fifth (65/th/) birthday or such later date as
the Executive may actually retire.
D. Termination of Service:
----------------------
Termination of Service shall mean either: i) Voluntary
resignation of service by the Executive; or ii) the Bank's
discharge of the Executive without cause ("cause" defined in
Subparagraph III (D) hereinafter), prior to the Normal
Retirement Age (described in Subparagraph I (I) hereinafter).
E. Index Retirement Benefit:
------------------------
The Index Retirement Benefit for the Executive for any year
shall be equal to the excess of the annual earnings (if any)
determined by the Index [Subparagraph I (F)] for that Plan
Year less the Opportunity Cost [Subparagraph I (G)] for that
Plan Year.
F. Index:
-----
The Index for any Plan 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.
Insurance Company: Xxxxxxxxx Xxxxxxxx Life
Policy Form: Flexible Premium Adjustable Life
Policy Name: Executive Security Plan IV
Insured's Age and Sex: 53, Male
Riders: None
Ratings: According to the health of the insured
Option: Level Death Benefit
Face Amount: $1,876,000
Premiums Paid: $800,000
Number of Premium Payments: One
Assumed Purchase Date: July 19, 1999
Insurance Company: Lincoln Benefit Life
Policy Form: Flexible Premium Adjustable Life
Policy Name: Ultra Achiever
Insured's Age and Sex: 52, Male
Riders: None
Ratings: According to the health of the insured
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Option: Level Death Benefit
Face Amount: $4,432,108
Premiums Paid: $1,250,000
Number of Premium Payments: One
Assumed Purchase Date: July 19, 1999
Insurance Company: Southland Life
Policy Form: Flexible Premium Adjustable Life
Policy Name: Max UL
Insured's Age and Sex: 53, Male
Riders: None
Ratings: According to the health of the insured
Option: Level Death Benefit
Face Amount: $2,025,367
Premiums Paid: $800,000
Number of Premium Payments: One
Assumed Purchase Date: July 19, 1999
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 Executive and the Executive's 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.
G. Opportunity Cost:
----------------
The Opportunity Cost for any Plan Year shall be calculated by
taking the sum of the amount of premiums set forth in the
Indexed policies described in Exhibit A plus the amount of any
after-tax benefits paid to the Executive pursuant to the Plan
(Paragraph II hereinafter) plus the amount of all previous
years after-tax Opportunity Cost, and multiplying that sum by
the average annualized after-tax yield of a one-year Treasury
xxxx for the Plan Year.
H. Mutual to Stock Conversion or a Change in Control:
-------------------------------------------------
Mutual to Stock Conversion shall mean the conversion of
the Bank from a mutual savings bank to an entity which
issues stock and is owned by its shareholders. Such
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Mutual to Stock Conversion shall be deemed to be a Change in
Control for purposes of this Agreement.
I. Normal Retirement Age:
---------------------
Normal Retirement Age shall mean the date on which the
Executive attains age sixty-five (65).
J. Benefits Accounting:
-------------------
The Bank shall account for the benefit provided herein using
the regulatory accounting principles of the Bank's primary
federal regulator. The Bank shall establish an accrued
liability retirement account for the Executive into which
appropriate reserves shall be accrued.
II. EMPLOYMENT
The Bank agrees to employ the Executive in such capacity as the Bank
may from time to time determine. The Executive will continue in the
employ of the Bank 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
Bank.
No provision of this Agreement shall be deemed to restrict or limit any
existing employment agreement by and between the Bank and the
Executive, nor shall any conditions herein create specific employment
rights to the Executive nor limit the right of the Employer to
discharge the Executive with or without cause. In a similar fashion, no
provision shall limit the Executive's rights to voluntarily sever his
employment at any time.
III. BENEFITS
A. Retirement Benefits:
-------------------
Should the Executive continue to be employed by the Bank until
"Normal Retirement Age" defined in Subparagraph I (I), the
Executive shall be entitled to receive an annual benefit equal
to one hundred seventy-two thousand, seven hundred ninety-six
and no/100ths dollars ($172,796.00) in equal monthly
installments (1/12th of the annual benefit) for a period of
one hundred eighty (180) months. Said payments to commence
thirty (30) days following the Executive's Retirement Date.
Upon completion of the aforestated payments and commencing
subsequent thereto, the Index Retirement Benefit [Subparagraph
I (E)] shall be paid to the Executive until his death at which
time said benefit shall cease.
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B. Termination of Service:
----------------------
(i) Voluntary Resignation of Service:
--------------------------------
Subject to Subparagraph III (D) hereinafter, should
the Executive voluntarily resign from the Bank
[Subparagraph I (D)(i)], the Executive shall be
entitled to receive the balance of the accrued
liability retirement account [Subparagraph I (J)] as
of the date of said termination in equal monthly
installments (1/12th of the annual benefit) for a
period one hundred eighty (180) months commencing at
the Normal Retirement Age [Subparagraph I (I)]. Upon
completion of the aforestated payments and commencing
subsequent thereto, the Index Retirement Benefit for
each year shall be paid to the Executive until the
Executive's death at which time said benefit shall
cease.
(ii) The Bank's Discharge of the Executive:
-------------------------------------
Subject to Subparagraph III (D), should the Executive
be discharged from the Bank [Subparagraph I (D)(ii)],
the Executive shall be entitled to receive one
hundred seventy-two thousand, seven hundred
ninety-six and no/100ths dollars ($172,796.00) paid
to the Executive in equal monthly installments
(1/12th of the annual benefit) for a period of one
hundred eighty (180) months commencing at the Normal
Retirement Age [Subparagraph I (I)]. Upon completion
of the aforestated payments and commencing subsequent
thereto, the Index Retirement Benefit for each year
shall be paid to the Executive until the Executive's
death at which time said benefit shall cease.
C. Death:
-----
(i) Post-Retirement and Post-Termination of Service:
-----------------------------------------------
Should the Executive die after commencement of
benefit payments or prior to having received the
total amount of payments the Executive may be
entitled to receive as set forth in Subparagraphs III
(A) and (B) hereinabove, the remaining installments
or a lump sum of the present value of the remaining
installments, at the discretion of the Bank, shall be
paid to the individual or individuals designated in
writing by the Executive and filed with the Bank. In
the absence of any effective designation of a
beneficiary, any such amounts becoming due and
payable upon the death of the Executive shall be
payable to the duly qualified executor or
administrator of the Executive's estate. Said payment
shall be made on the first day of the second month
following the decease of the Executive.
If, upon death, the Executive shall have received the
total annual benefit as provided herein, then no
further benefit shall be due hereunder. In any event,
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upon the death of the Executive, the Executive's
beneficiary shall not be entitled to receive any
Index Retirement Benefit and no death benefit shall
be payable hereunder if the Executive dies on or
before the 19/th/ day of July, 2001.
(ii) Pre-Retirement Benefit:
----------------------
In the event the Executive should die while actively
serving the Bank at any time after the date of this
Agreement or after termination of employment for
reasons other than discharge for cause [Subparagraph
III (D)] but prior to the Executive attaining the age
of sixty-five (65), and, in either case, prior to
commencement of benefits, the Bank will pay an annual
benefit equal to one hundred seventy-two thousand,
seven hundred ninety-six and no/100ths dollars
($172,796.00) in either, at the discretion of the
Bank, equal monthly installments (1/12 of the annual
benefit) for a period of one hundred and eighty (180)
months, or a lump sum of the present value of the
annual benefit, to such individual or individuals as
the Executive may have designated in writing and
filed with the Bank. In the absence of any effective
designation of beneficiary, any such amounts becoming
due and payable upon the death of the Executive shall
be payable to the duly qualified executor or
administrator of the Executive's estate. Said payment
shall be made on the fist day of the second month
following the decease of the Executive. The
Executive's beneficiary(ies) shall not be entitled to
any Index Retirement Benefit hereunder. Provided,
however, that anything hereinabove to the contrary
notwithstanding, no death benefit shall be payable
hereunder if the Executive dies on or before the
19/th/ day of July, 2001.
D. Discharge for Cause:
-------------------
Should the Executive be discharged for cause at any time, all
Benefits under this Agreement shall be forfeited. The term
"for cause" shall mean the conviction of a felony or gross
misdemeanor involving moral turpitude, fraud, dishonesty or
willful violation of a law that results in an 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:
-------------
Except as set forth above, there is no death benefit provided
under this Agreement.
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 Executive, the Executive's beneficiary(ies) or any successor in
interest to the Executive shall be and remain simply a
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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 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 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 exam and supplying such
additional information necessary to obtain such insurance or annuities.
V. MUTUAL TO STOCK CONVERSION OR CHANGE IN CONTROL
Upon a Mutual to Stock Conversion or a Change in Control (as defined in
Subparagraph I (H) herein), if the Executive subsequently suffers a
Termination of Service [Subparagraph I (D)], then the Executive shall
receive the benefits promised in Subparagraph III (A) of this Agreement
upon attaining Normal Retirement Age [Subparagraph I (I)], as if the
Executive had been employed by the Bank until Normal Retirement Age.
The Executive will also remain eligible for all promised death benefits
in this Agreement. In addition, no sale, merger, consolidation or
conversion 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.
VI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
---------------------------------------
Neither the 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 the
Executive's beneficiary(ies), nor 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 benefits hereunder, the Bank's liabilities shall
forthwith cease and terminate.
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B. Binding Obligation of Bank and any Successor in Interest:
--------------------------------------------------------
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:
----------
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 Bank.
D. 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.
E. Effect on Other Bank 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 the Bank's existing or future
compensation structure.
F. Headings:
--------
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 Connecticut.
H. Fringe Benefits:
---------------
The benefits provided by this Agreement are granted by the
Bank as a fringe benefit to the Executive and are not part of
any salary reduction plan or an arrangement deferring a bonus
or a salary increase, and shall in no event be construed to
affect nor limit the Executive's current or prospective salary
increases, cash bonuses, or profit-sharing distribution or
credits. The Executive has no option to take any current
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payment or bonus in lieu of these benefits except as may be
set forth hereinafter.
I. Present Value:
-------------
All present value calculations under this Agreement shall be
based on the following interest rate and mortality table:
Interest Rate: The interest rate of 30-year Treasury
securities published by the Board of
Directors of the Federal Reserve System for
the month immediately preceding the month
in which the present value is determined.
Mortality Table: The mortality table prescribed by the
Secretary of Treasury pursuant to Section
417(e)(3)(A)(ii)(I) of the Internal Revenue
Code of 1986, as amended.
VII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
--------------------------------------
The "Named Fiduciary and Plan Administrator" of this Plan
shall be Enfield Federal Savings & Loan Association until its
removal by the Board. As Named Fiduciary and Administrator,
the Bank shall be responsible for the management, control and
administration of the Plan 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 Procedures and Arbitration:
---------------------------------
In the event a dispute arises over benefits under this
Agreement and benefits 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 Plan Administrator
named above within ninety (90) days from the date payments are
refused. The Plan Administrator 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 Administrator fails to take any action
within the aforesaid ninety-day period.
If claimants desire a second review they shall notify the Plan
Administrator in writing within ninety (90) days of the first
claim denial. Claimants may review this
9
Agreement or any documents relating thereto and submit any
written issues and comments they may feel appropriate. In its
sole discretion, the Plan 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 upon
completed performance of this Agreement or 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 or
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 the Bank's discharge of the
Executive "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.
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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 19/th/ day of
August, 1999 and that, upon execution, each has received a conforming copy.
ENFIELD FEDERAL SAVINGS
& LOAN ASSOCIATION
Enfield, Connecticut
/s/ Xxxxxxx X. Xxxx
---------------------------------
Secretary & Treasurer - Title
/s/ Xxxxx X. X'Xxxxxx
---------------------------------
Xxxxx X. X'Xxxxxx
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AMENDMENT TO THE EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
Effective February 11, 2001, the Executive Supplemental Retirement Plan
shall be, and hereby is, amended as follows:
First Change
Section 1(H) of the Plan is deleted in its entirety and replaced with
the following new Section 1(H):
"H. Change in Control
For purposes of this Plan a "Change in Control" shall occur:
(i) at such time as any "person" (as the term is used in
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended ("Exchange Act")) is or
becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or
indirectly, of voting securities of the Company
representing 20% or more of the Bank's outstanding
voting securities or the right to acquire such
securities, except for any voting securities
purchased by any employee benefit plan of the Bank;
(ii) at such time as individuals who constitute the Board
of Directors on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election
was approved by a vote of at least three-quarters of
the directors constituting the Incumbent Board (or
members who were nominated by the Incumbent Board),
or whose nomination for election by the Bank's
stockholders was approved by a Nominating Committee
solely composed of members which are Incumbent Board
members (or members nominated by the Incumbent
Board), shall be, for purposes of this clause (iii),
considered as though he or she were a member of the
Incumbent Board;
(iii) at such time as a reorganization, merger,
consolidation, or similar transaction occurs or is
effectuated as a result of which 60% of shares of the
common stock of the resulting entity are owned by
persons who were not stockholders of the Bank
immediately prior to the consummation of the
transaction;
(iv) at such time as substantially all of the assets of
the Bank are sold or otherwise transferred to another
corporation or other entity that is not controlled by
the Bank.
Notwithstanding anything in this Plan to the contrary, in no event shall the
conversion of the Bank from mutual to stock form (including without limitation,
through the formation of a stock holding company) or the reorganization of the
Bank into the mutual holding company form of organization constitute a "Change
in Control" for purposes of this Plan.
Second Change
The first sentence in Section V of the Plan is amended to delete the
reference to a Mutual to Stock Conversion.