Exhibit 10.5
HOME FEDERAL SAVINGS & LOAN ASSOCIATION
AMENDED AND RESTATED
DIRECTOR DEFERRED INCENTIVE AGREEMENT
THIS DIRECTOR DEFERRED INCENTIVE AGREEMENT (the "Agreement") is adopted
this _________ day of _________________, 20__, by and between HOME FEDERAL
SAVINGS & LOAN ASSOCIATION, a nationally-chartered savings and loan association
located in Nampa, Idaho (the "Bank"), and _____________ (the "Director").
On _____________, the Bank and the Director entered into the Home
Federal Savings & Loan Association Director Deferred Incentive Agreement (the
"Prior Agreement"). This Agreement amends and restates the Prior Agreement, and
any amendments thereto, in its entirety.
The purpose of this Agreement is to encourage the Director to remain a
member of the Bank's Board of Directors, to make a provision for deferred
incentive compensation, and to allow the Director to defer payment of all or
some of the other compensation received by the Director for service on the
Bank's Board of Directors. The Bank will pay the benefits from its general
assets.
The Bank and the Director agree as provided herein.
Article 1
Definitions
Whenever used in this Agreement, the following words and phrases shall
have the meanings specified:
1.1 "Beneficiary" means each designated person, or the estate of the
deceased Director, entitled to benefits, if any, upon the death of the
Director determined pursuant to Article 7.
1.2 "Beneficiary Designation Form" means the form established from time to
time by the Plan Administrator that the Director completes, signs and
returns to the Plan Administrator to designate one or more
Beneficiaries.
1.3 "Code" means the Internal Revenue Code of 1986, as amended.
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1.4 "Deferral Account" means the Bank's accounting of the incentive awards,
if any, determined under Article 2, plus Director Deferrals, if any,
plus accrued interest.
1.5 "Director Deferrals" means the amount of Fees which the Director elects
to defer according to this Agreement.
1.6 "Effective Date" means ___________________.
1.7 "Election Form" means the form attached hereto as Exhibit A.
1.8 "Extraordinary Items" means those items recognized by Generally
Accepted Accounting Principles as extraordinary that substantially
affect shareholder equity and/or the Bank's assets. Examples of such
items include but are not limited to stock redemptions, mergers,
acquisitions, stock splits and other items of that nature.
1.9 "Fees" means the total directors fees payable to the Director during a
Plan Year.
1.10 "Plan Administrator" means the plan administrator described in Article
11.
1.11 "Plan Year" means the Bank's fiscal year ending on each September 30,
except that the first Plan Year shall be a short plan year commencing
on the Effective Date and ending on the next following September 30.
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1.12 "Return On Assets (ROA)" means the Bank's after-tax net income at the
end of the most recent fiscal year, before payment of any common stock
dividends and adjusted for Extraordinary Items, divided by the Bank's
average assets for the same fiscal year, as determined by the Bank's
independent auditor based upon certified financial statements for the
pertinent year.
1.13 "Return on Equity (XXX)" means the Bank's after-tax net income at the
end of the most recent fiscal year, before payment of any common stock
dividends and adjusted for Extraordinary Items, divided by the Bank's
average equity for the same fiscal year, as determined by the Bank's
independent auditor based upon certified financial statements for the
pertinent year.
1.14 "Rollover Amount" means the amounts in the Deferral Account balance as
of the date this Agreement is adopted.
1.15 "Termination of Service" means the Director ceases to be a member of
the Bank's Board of Directors for any reason whatsoever, other than by
reason of a leave of absence approved by the Bank.
Article 2
Incentive
2.1 Incentive Award. The Bank's ROA and XXX for the most recent completed
Plan Year shall determine the Director's Incentive Award Percentage, in
accordance with the following chart:
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RETURN ON ASSETS INCENTIVE AWARD PERCENTAGE FOR PLAN YEARS ENDING AFTER 2003
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1.36 and up 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60
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1.32 56 56 56 56 56 56 56 56 56 56 56 56 56 56 60
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1.27 52 52 52 52 52 52 52 52 52 52 52 52 52 56 60
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1.23 48 48 48 48 48 48 48 48 48 48 48 48 52 56 60
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1.18 44 44 44 44 44 44 44 44 44 44 44 48 52 56 60
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1.14 40 40 40 40 40 40 40 40 40 40 44 48 52 56 60
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1.11 36 36 36 36 36 36 36 36 36 40 44 48 52 56 60
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1.09 32 32 32 32 32 32 32 32 36 40 44 48 52 56 60
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1.06 28 28 28 28 28 28 28 32 36 40 44 48 52 56 60
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1.04 24 24 24 24 24 24 28 32 36 40 44 48 52 56 60
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1.01 20 20 20 20 20 24 28 32 36 40 44 48 52 56 60
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0.99 16 16 16 16 20 24 28 32 36 40 44 48 52 56 60
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0.96 12 12 12 16 20 24 28 32 36 40 44 48 52 56 60
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0.94 8 8 12 16 20 24 28 32 36 40 44 48 52 56 60
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0.91 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60
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10.45 10.72 11.00 11.27 11.54 11.81 12.08 12.36 12.63 12.90 13.38 13.85 14.33 14.80 15.28
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RETURN ON EQUITY
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The above chart is subject to change at the sole discretion of the
Bank's Board of Directors, and such change shall be prospective and not
effective until the Plan Year immediately following such change.
The Incentive Award is calculated annually by taking the Director's
Fees for the Plan Year for which the ROA and XXX were calculated times
the Incentive Award Percentage. For example, if the Bank's XXX is 15.6%
and ROA is 1.31% and the Director's fees were $10,000 for the Plan Year
ended September 30, 200X, the Incentive Award for 200X would be $6,000
($10,000 X 60%).
2.2 Incentive Deferral. As of December 31 of each year while this Agreement
is in effect, the Bank shall declare the Incentive Award for the most
recently completed Plan Year in the form of compensation and credit
such amount to the Deferral Account.
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Article 3
Director Deferrals
3.1 Initial Election. In addition to the Incentive Award Deferral under
Article 2, the Director may make an initial deferral election under
this Agreement by filing with the Plan Administrator a signed Election
Form within thirty (30) days after the date this Agreement is first
executed. The Election Form shall set forth the Director Deferrals and
shall be effective to defer only Fees earned after the date the
election form is received by the Plan Administrator.
3.2 Election Changes.
3.2.1 Generally. The Director may modify the amount of Fees to be
deferred by filing a subsequent signed Election Form with the
Plan Administrator. The modified Election Form shall not be
effective until the calendar year following the year in which
such Election Form is received by the Plan Administrator.
3.2.2 Hardship. If an unforeseeable emergency arising from the death
of a family member, divorce, sickness, injury, catastrophe or
similar event outside the control of the Director occurs, the
Director, by written instructions to the Plan Administrator,
may immediately reduce future deferrals under this Agreement.
Provided, however, that if legislation and related regulations
are enacted that provide for a specific definition and
procedure for unforeseeable emergencies, such legislation and
regulations shall automatically upon enactment apply to this
Agreement.
Article 4
Deferral Account
4.1 Establishing and Crediting. The Bank shall establish a Deferral Account
on its books for the Director, and shall credit to the Deferral Account
the following amounts:
4.1.1 Rollover Amount. The Rollover Amount from the Prior Agreement,
determined as of the date this Agreement is adopted.
4.1.2 Incentive Deferrals. The Incentive Awards, if any, determined
under Article 2.
4.1.3 Director Deferrals. The Director Deferrals, if any, determined
under Article 3, as of the date they
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would have otherwise been paid to the Director.
4.1.4 Interest. On September 30 of each Plan Year and immediately
prior to the payment of any benefits, unless otherwise stated,
interest shall be credited to the account balance since the
preceding credit under this Section 4.1.4, if any, at an
annual rate equal to the XXX for such Plan Year, compounded
monthly.
The Deferral Account shall be debited to reflect any withdrawals or
distributions.
4.2 Statement of Accounts. The Bank shall provide to the Director, within
ninety (90) days after the end of each Plan Year, a statement setting
forth the Deferral Account balance as of the end of the preceding Plan
Year.
4.3 Accounting Device Only. The Deferral Account is solely a device for
measuring amounts to be paid, if any, under this Agreement. The
Deferral Account is not a trust fund of any kind. The Director is a
general unsecured creditor of the Bank for the payment of benefits. The
benefits represent the mere Bank promise to pay such benefits. The
Director's rights are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by the Director's creditors.
Article 5
Benefits During Lifetime
5.1 Termination of Service. Upon Termination of Service for reasons other
than death, the Bank shall pay to the Director the benefit described in
this Section 5.1 in lieu of any other benefits under this Article.
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5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the
total Deferral Account balance as of the Director's
Termination of Service.
5.1.2 Payment of Benefit. The Bank shall pay the benefit to the
Director in one hundred twenty (120) consecutive equal monthly
installments commencing on the first day of the month
following the Director's Termination of Service. The Bank
shall continue to credit interest at an annual rate of seven
and one-half percent (7.5%), compounded monthly, on the
remaining total Deferral Account balance during the
installment period.
5.2 Hardship Distribution. If an unforeseeable emergency arising from the
death of a family member, divorce, sickness, injury, catastrophe or
similar event outside the control of the Director or Beneficiary
occurs, the Bank, following petition by the Director or the Beneficiary
and in its sole discretion, may distribute to the Director or
Beneficiary all or a portion of the Deferral Account balance need to
address the unforeseeable emergency. In no event shall the distribution
be greater than is necessary to relieve the financial hardship, plus
the amount of income taxes on such distribution. Provided, however,
that if legislation and related regulations are enacted that provide
for a specific definition and procedure for unforeseeable emergencies,
such legislation and regulations shall automatically upon enactment
apply to this Agreement.
Article 6
Death Benefits
6.1 Death During Active Service. If the Director dies while in the active
service of the Bank, the Bank shall pay to the Beneficiary the benefit
described in this Section 6.1 in lieu of the benefits of Article 5.
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6.1.1 Amount of Benefit. The benefit under Section 6.1 is the
greater of (a) the total Deferral Account balance as of the
date of the Director's death, or (b) _________________
($_______). Provided, however, that if the Director commits
suicide the benefit under this Section 6.1 is the total
Deferral Account balance as of the date of the Director's
death.
6.1.2 Payment of Benefit. The Bank shall pay the benefit to the
Beneficiary in one hundred twenty (120) consecutive equal
monthly installments commencing within sixty (60) days
following the Director's death and continuing on the first of
each month thereafter. The Bank shall continue to credit
interest at an annual rate of seven and one-half percent
(7.5%), compounded monthly, on the remaining Deferral Account
balance during the installment period.
6.2 Death During Payment of a Benefit. If the Director dies after any
benefit payments have commenced under Article 5 of this Agreement but
before receiving all such payments, the Bank shall pay the remaining
benefits to the Beneficiary at the same time and in the same amounts
they would have been paid to the Director had the Director survived.
Article 7
Beneficiaries
7.1 Beneficiary Designation. The Director shall have the right, at any
time, to designate a Beneficiary(ies) to receive any benefits payable
under this Agreement upon the death of the Director. The Beneficiary
designated under this Agreement may be the same as or different from
the beneficiary designation under any other benefit plan of the Bank in
which the Director participates.
7.2 Beneficiary Designation: Change. The Director shall designate a
Beneficiary by completing and signing the Beneficiary Designation Form,
and delivering it to the Plan Administrator or its designated agent.
The Director's
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Beneficiary designation shall be deemed automatically revoked if the
Beneficiary predeceases the Director or if the Director names a spouse
as Beneficiary and the marriage is subsequently dissolved. The Director
shall have the right to change a Beneficiary by completing, signing and
otherwise complying with the terms of the Beneficiary Designation Form
and the Plan Administrator's rules and procedures, as in effect from
time to time. Upon the acceptance by the Plan Administrator of a new
Beneficiary Designation Form, all Beneficiary designations previously
filed shall be cancelled. The Plan Administrator shall be entitled to
rely on the last Beneficiary Designation Form filed by the Director and
accepted by the Plan Administrator prior to the Director's death.
7.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted and
acknowledged in writing by the Plan Administrator or its designated
agent.
7.4 No Beneficiary Designation. If the Director dies without a valid
beneficiary designation, or if all designated Beneficiaries predecease
the Director, then the Director's spouse shall be the designated
Beneficiary. If the Director has no surviving spouse, the benefits
shall be made to the personal representative of the Director's estate.
7.5 Facility of Payment. If the Plan Administrator determines in its
discretion that a benefit is to be paid to a minor, to a person
declared incompetent, or to a person incapable of handling the
disposition of that person's property, the Plan Administrator may
direct payment of such benefit to the guardian, legal representative or
person having the care or custody of such minor, incompetent person or
incapable person. The Plan Administrator may require proof of
incompetence, minority or guardianship as it may deem appropriate prior
to distribution of the benefit. Any payment of a benefit shall be a
payment for the account of the Director and the Director's Beneficiary,
as the case may be, and shall be a complete discharge of any liability
under the Agreement for such payment amount.
Article 8
General Limitations
8.1 Misstatement. Notwithstanding any provision of this Agreement to the
contrary, the Bank shall not pay any benefit under this Agreement if
the Director has made any material misstatement of fact on any
application for life insurance owned by the Bank on the Director's
life.
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Article 9
Claims and Review Procedures
9.1 Claims Procedure. A Director or Beneficiary ("claimant") who has not
received benefits under this Agreement that he or she believes should
be paid shall make a claim for such benefits as follows:
9.1.1 Initiation - Written Claim. The claimant initiates a claim by
submitting to the Plan Administrator a written claim for the
benefits.
9.1.2 Timing of Plan Administrator Response. The Plan Administrator
shall respond to such claimant within ninety (90) days after
receiving the claim. If the Plan Administrator determines that
special circumstances require additional time for processing
the claim, the Plan Administrator can extend the response
period by an additional ninety (90) days by notifying the
claimant in writing, prior to the end of the initial ninety
(90) day period that an additional period is required. The
notice of extension must set forth the special circumstances
and the date by which the Plan Administrator expects to render
its decision.
9.1.3 Notice of Decision. If the Plan Administrator denies part or
all of the claim, the Plan Administrator shall notify the
claimant in writing of such denial. The Plan Administrator
shall write the notification in a manner calculated to be
understood by the claimant. The notification shall set forth:
(a) The specific reasons for the denial,
(b) A reference to the specific provisions of this
Agreement on which the denial is based,
(c) A description of any additional information or
material necessary for the claimant to perfect the
claim and an explanation of why it is needed, and
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(d) An explanation of this Agreement's review procedures
and the time limits applicable to such procedures.
9.2 Review Procedure. If the Plan Administrator denies part or all of the
claim, the claimant shall have the opportunity for a full and fair
review by the Plan Administrator of the denial, as follows:
9.2.1 Initiation - Written Request. To initiate the review, the
claimant, within 60 days after receiving the Plan
Administrator's notice of denial, must file with the Plan
Administrator a written request for review.
9.2.2 Additional Submissions - Information Access. The claimant
shall then have the opportunity to submit written comments,
documents, records and other information relating to the
claim. The Plan Administrator shall also provide the claimant,
upon request and free of charge, reasonable access to, and
copies of, all documents, records and other information
relevant to the claimant's claim for benefits.
9.2.3 Considerations on Review. In considering the review, the Plan
Administrator shall take into account all materials and
information the claimant submits relating to the claim,
without regard to whether such information was submitted or
considered in the initial benefit determination.
9.2.4 Timing of Plan Administrator Response. The Plan Administrator
shall respond in writing to such claimant within 60 days after
receiving the request for review. If the Plan Administrator
determines that special circumstances require additional time
for processing the claim, the Plan Administrator can extend
the response period by an additional 60 days by notifying the
claimant in writing, prior to the end of the initial 60-day
period that an additional period is required. The notice of
extension must set forth the special circumstances and the
date by which the Plan Administrator expects to render its
decision.
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9.2.5 Notice of Decision. The Plan Administrator shall notify the
claimant in writing of its decision on review. The Plan
Administrator shall write the notification in a manner
calculated to be understood by the claimant. The notification
shall set forth:
(a) The specific reasons for the denial,
(b) A reference to the specific provisions of this
Agreement on which the denial is based, and
(c) A statement that the claimant is entitled to receive,
upon request and free of charge, reasonable access
to, and copies of, all documents, records and other
information relevant to the claimant's claim for
benefits.
Article 10
Amendments and Termination
10.1 Generally. This Agreement may be amended or terminated only by a
written agreement signed by the Bank and the Director.
10.2 Exceptions. Notwithstanding Section 10.1, the Bank's Board of Directors
may amend or terminate the Agreement at any time if, pursuant to
legislative, judicial or regulatory action, continuation of the
Agreement would (i) cause benefits to be taxable to the Director prior
to actual receipt, or (ii) result in significant financial penalties or
other significantly detrimental ramifications to the Bank (other than
the financial impact of paying the benefits). In no event shall this
Agreement be terminated under this section without payment to the
Director of the Deferral Account in a lump sum within sixty (60) days
of such termination.
10.3 No amendment under Section 10.2 shall reduce or otherwise restrict the
Director's Deferral Account balance as of the date of such amendment.
In the event of any termination under Section 10.2, the Bank shall pay
to the Director the portion of the Deferral Account attributed to the
Director's Deferrals and interest credited on such amounts, determined
as if the date of such termination, in a lump sum within (30) days of
such termination.
Article 11
Administration of Agreement
11.1 Plan Administrator Duties. This Agreement shall be administered by a
Plan Administrator which shall consist of the Board, or such committee
or person(s) as the
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Board shall appoint. The Director may be a member of the Plan
Administrator. The Plan Administrator shall also have the discretion
and authority to (i) make, amend, interpret and enforce all appropriate
rules and regulations for the administration of this Agreement and (ii)
decide or resolve any and all questions including interpretations of
this Agreement, as may arise in connection with the Agreement.
11.2 Agents. In the administration of this Agreement, the Plan Administrator
may employ agents and delegate to them such administrative duties as it
sees fit, (including acting through a duly appointed representative),
and may from time to time consult with counsel who may be counsel to
the Bank.
11.3 Binding Effect of Decisions. The decision or action of the Plan
Administrator with respect to any question arising out of or in
connection with the administration, interpretation and application of
the Agreement and the rules and regulations promulgated hereunder shall
be final and conclusive and binding upon all persons having any
interest in the Agreement.
11.4 Indemnity of Plan Administrator. The Bank shall indemnify and hold
harmless the members of the Plan Administrator against any and all
claims, losses, damages, expenses or liabilities arising from any
action or failure to act with respect to this Agreement, except in the
case of willful misconduct by the Plan Administrator or any of its
members.
11.5 Bank Information. To enable the Plan Administrator to perform its
functions, the Bank shall supply full and timely information to the
Plan Administrator on all matters relating to the Director's Fee, to
the date and circumstances of the death or Termination of Service of
the Director, and such other pertinent information as the Plan
Administrator may reasonably require.
Article 12
Miscellaneous
12.1 Binding Effect. This Agreement shall bind the Director and the Bank,
and their beneficiaries, survivors, executors, successors,
administrators and transferees.
12.2 No Guarantee of Service. This Agreement is not a contract for services.
It does not give the Director the right to remain a director of the
Bank, nor does it interfere with the association's members' right to
replace the Director. It also does not require the Director to remain a
director nor interfere with the Director's right to terminate services
at any time.
12.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
12.4 Tax Withholding. The Bank shall withhold any taxes that, in its
reasonable
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judgment, are required to be withheld from the benefits provided under
this Agreement. The Director acknowledges that the Bank's sole
liability regarding taxes is to forward any amounts withheld to the
appropriate taxing authority(ies).
12.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of Idaho, except to the extent
preempted by the laws of the United States of America.
12.6 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors. Any insurance on
the Director's life is a general asset of the Bank to which the
Director and beneficiary have no preferred or secured claim.
12.7 Reorganization. The Bank shall not merge or consolidate into or with
another company, or reorganize, or sell substantially all of its assets
to another company, firm, or person unless such succeeding or
continuing company, firm, or person agrees to assume and discharge the
obligations of the Bank under this Agreement. Upon the occurrence of
such event, the term "Bank" as used in this Agreement shall be deemed
to refer to the successor or survivor company.
12.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Bank and the Director as to the subject matter hereof. No
rights are granted to the Director by virtue of this Agreement other
than those specifically set forth herein.
12.9 Interpretation. Wherever the fulfillment of the intent and purpose of
this Agreement requires, and the context will permit, the use of the
masculine gender includes the feminine and use of the singular includes
the plural.
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12.10 Alternative Action. In the event it shall become impossible for the
Bank or the Plan Administrator to perform any act required by this
Agreement, the Bank or Plan Administrator may in its discretion perform
such alternative act as most nearly carries out the intent and purpose
of this Agreement and is in the best interests of the Bank.
12.11 Headings. Article and section headings are for convenient reference
only and shall not control or affect the meaning or construction of any
of its provisions.
12.12 Validity. In case any provision of this Agreement shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect
the remaining parts hereof, but this Agreement shall be construed and
enforced as if such illegal and invalid provision has never been
inserted herein.
12.13 Notice. Any notice or filing required or permitted to be given to the
Bank or Plan Administrator under this Agreement shall be sufficient if
in writing and hand-delivered, or sent by registered or certified mail,
to the address below:
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Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the
receipt for registration or certification.
Any notice or filing required or permitted to be given to the Director
under this Agreement shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the
Director.
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IN WITNESS WHEREOF, the Director and a duly authorized representative
of the Bank have signed this Agreement.
DIRECTOR: BANK:
HOME FEDERAL SAVINGS & LOAN ASSOCIATION
By:
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---------------------------- Title:
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