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EXHIBIT 10(ii)
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
AGREEMENT
This Agreement, made and entered into this 29th day of April, 1999, by and
between The Xxxxxxx Colonial Bank, a Bank organized and existing under the laws
of the State of Ohio, hereinafter referred to as "the Bank," and (Executive
Officer)1, a Key Employee and the Executive of the Bank, hereinafter referred to
as "the Executive."
The Executive has been in the employ of the Bank for several years and has
now and for years past faithfully served the Bank. It is the consensus of the
Board of Directors of the bank (the Board) that the Executive's services have
been of exceptional merit, in excess of the compensation paid and an invaluable
contribution to the profits and position of the Bank in its field of activity.
The Board further believes 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 the
Executive's 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 retirement and, alternatively, to the Executive's
beneficiary(ies) in the event of premature death while employed by the Bank.
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, and to be considered a non-qualified benefit plan for
purposes of the Employee Retirement 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 performed in the
past and those to be performed in the future 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 April 29, 1999.
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B. PLAN YEAR:
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:
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 his
sixty-fifth (65th) birthday or such later date as the Executive
may actually retire.
D. EARLY RETIREMENT DATE:
Early Retirement Date shall mean a retirement from service which
is effective prior to the Normal Retirement Date stated above,
provided the Executive has attained age sixty-two (62).
E. TERMINATION OF SERVICE:
Termination of Service shall mean either: (i) a voluntary
resignation of service by the Executive; or (ii) the Bank's
discharge of the Executive without cause ["cause" defined in
Subparagraph III (E) hereinafter], prior to the Normal
Retirement Age [described in Subparagraph I (K) hereinafter].
F. 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
Executive. Prior to termination of service or the Executive's
Retirement, such liability reserve account shall be increased
each year by an amount equal to the annual earnings, if any, for
the year determined by the Index (described in Subparagraph I
(H) hereinafter), less the Opportunity Cost for that year
(described in Subparagraph I (I) hereinafter).
G. 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 (H)] for that year over
the Opportunity Cost [Subparagraph I (I)], for that year.
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H. INDEX:
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.
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 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.
I. 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 hereinabove plus the amount of any
after-tax benefits paid to any Executive pursuant to the Plan
(Paragraph III 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 two-year Treasury
note for the Plan Year.
J. CHANGE OF CONTROL
Change of Control shall be deemed to be the cumulative transfer
of more than fifty percent (50%) of the voting stock of the Bank
or Croghan Bancshares, Inc. from the effective date of this
Agreement. For the purposes of this Agreement, transfers on
account of deaths or gifts, transfers between family members or
transfers to a qualified retirement plan maintained by the Bank
or Croghan Bancshares, Inc. shall not be considered in
determining whether there has been a change in control.
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K. NORMAL RETIREMENT AGE:
Normal Retirement Age shall mean the date on which the Executive
attains age sixty-five (65).
II. EMPLOYMENT
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. INDEX BENEFITS
The following benefits provided by the Bank to the Executive are in the
nature of a fringe benefit and shall in no event be construed to effect
nor limit the Executive's current or prospective salary increases, cash
bonuses or profit-sharing distributions or credits.
A. RETIREMENT BENEFITS:
Should the Executive continue to be employed by the Bank until
the "Normal Retirement Age" defined in Subparagraph I (K), he
shall be entitled to receive the balance in the Pre-Retirement
Account [as defined in Subparagraph I (F)] in ten (10) equal
annual installments commencing thirty (30) days following the
Executive's retirement. In addition to these payments, the Index
Retirement Benefit (as defined in Subparagraph I (G) above) for
each year shall be paid to the Executive until death.
B. EARLY RETIREMENT:
Should the Executive elect Early Retirement subsequent to the
Early Retirement Date [defined in Subparagraph I (D)], the
Executive shall be entitled to receive the balance in the
Pre-Retirement Account paid over ten (10) years in equal
installments commencing at said Early Retirement Date. In
addition to these payments and commencing when the Executive
attains Normal Retirement Age [Subparagraph I (K)], the Index
Retirement Benefit for each year shall be paid to the Executive
until death.
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C. TERMINATION OF SERVICE:
(I) VOLUNTARY RESIGNATION OF SERVICE
Should the Executive voluntarily resign from service at
the Bank prior to attaining age sixty-five (65)
[Subparagraph I (E)(i)], then the Executive shall
forfeit all benefits under this Agreement.
(II) DISCHARGE WITHOUT CAUSE
Subject to Subparagraph III (E) hereinafter, should the
Executive suffer a Termination of Service as defined in
Subparagraph I (E)(ii) [i.e. the Bank's discharge of the
Executive without cause prior to attaining age
sixty-five (65)], the Executive shall be entitled to
receive the following percentage of the balance in the
Pre-Retirement Account paid over ten (10) years in equal
installments commencing at the Normal Retirement Age
[Subparagraph I (K)]. In addition to these payments and
commencing in the Plan Year in which the Executive
attains Normal Retirement Age, the following percentage
of the Index Retirement Benefit for each year shall be
paid to the Executive until death. The percentage
hereinbelow corresponds to the number of full years the
Executive has been employed by the Bank from the date of
first employment:
Total Years
of Employment
With the Bank Vested
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0-5 0%
6-10 20% per year
(to a maximum of
100%)
D. DEATH:
Should the Executive die prior to having received that portion
of the Pre-Retirement Account to which the Executive may be
entitled pursuant to this Agreement the unpaid balance of the
Pre-Retirement Account shall be paid in a lump sum to the
beneficiary selected by the Executive 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 Executive's estate.
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E. 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 gross negligence or gross neglect or the
commission of a felony or of a 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.
F. DISABILITY BENEFIT:
In the event the Executive becomes disabled prior to Termination
of Service, and the Executive's service is terminated because of
such disability, the Executive shall immediately begin receiving
the benefits in Subparagraph III (A) above. Such benefit shall
begin without regard to Executive's Normal Retirement Age and
the Executive shall be one hundred percent (100%) vested in the
entire benefit amount. For the purposes of this Agreement,
disability shall have the same definition and criteria as the
Bank's long-term disability program. If a change in control
occurs or the Bank discontinues its long-term disability
program, disability shall have the same definition as described
in the last long-term disability program prior to said
discontinuance or change of control.
G. 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 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.
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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. CHANGE OF CONTROL
Upon a Change of Control (as defined in Subparagraph I (J) herein), if
the Executive's employment is subsequently terminated, except for
cause, then he shall receive the benefits promised in this Agreement
upon attaining age sixty-two (62), as if the Executive had been
continuously employed by the Bank until said age sixty-two (62). The
Executive 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.
VI. COVENANT NOT TO COMPETE
1. COVENANT NOT TO COMPETE. In recognition of the value provided by
the Executive Supplemental Retirement Plan which the Executive and
the Bank agree is good and sufficient consideration for the
promises made herein, Executive agrees that the following
covenants are necessary for the protection of the Bank, do not
impose undue hardship on the Executive and are not injurious to
the public. Therefore, the Executive agrees that, in the event the
Executive elects to accept the supplemental retirement benefit
under the early retirement clause [Subparagraphs I(D) and III(B)],
then for a period of three years or until the Executive attains
age 65, whichever comes first.
(a) Executive will not accept employment, serve as a consultant or
independent Contractor, have any ownership or equity position
(except that Executive may own not more than 2% of the
outstanding stock of any publicly traded company without
violating this covenant), serve as a director or officer,
assist or act in concert with any bank or financial services
provider having an office or branch office located within
thirty (30) miles of any office or branch office of the Bank.
(b) Executive acknowledges that, within the course of the
Executive's employment, the Executive has and will acquire
knowledge of trade secrets and confidential information about
the business of the Bank and the customers whom it serves and
that the release of such knowledge would result in economic
and other harm to the Bank. The Executive will not disclose or
make use of any of the Bank's trade secrets or confidential
information concerning the Bank's customers, information
obtained from customers, information concerning the operations
of the Bank or its marketing efforts and any other information
which the Executive held as
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secret or confidential or was directed by the Bank to hold as
secret or confidential during the term of the Executive's
employment. This covenant shall be continuing without regard
to any period of time specified above. Upon the termination of
employment with the Bank for any reason, the Executive will
return to the Bank all materials in whatever format they may
exist including electronic media, which constitute or relate
to the confidential or trade secret information described
above.
(c) The Executive will not solicit any employee of the Bank to
leave his or her employment with the Bank or assist or
recommend to any third party that an employee of the Bank be
solicited to leave the employment of the Bank nor will the
Executive hire or recommend the hiring of any employee of the
Bank who seeks employment with the Executive or any company
other than the Bank with which the Executive is employed or
with which the Executive has any relationship in the future.
(d) The Executive agrees that each of the forgoing covenants is a
separate and distinct covenant, independent of the others, and
that the illegality or invalidity of any one or more of them
or any part of any one or more of them shall not render the
others illegal or invalid, and that, if the invalidity or
unenforceability is due to the unreasonableness of the time or
geographical area covered by the covenant, then the covenant
shall nevertheless be enforced to the maximum extent permitted
by law and effective for such period of time and for such area
as may be determined to be reasonable by a court of competent
jurisdiction, and the Executive agrees that the scope may be
jurisdictionally modified accordingly in any proceeding
brought to enforce such covenant.
(e) The Executive acknowledges and agrees that the above covenants
are of the essence of this Agreement and shall be construed as
independent of any other provision of this Agreement, and the
existence of any claim or cause of action of the Executive
against the Bank, whether predicated on the Agreement or
otherwise, shall not constitute a defense to the enforcement
by the Bank of any of the covenants.
2. ENFORCEMENT. The Executive acknowledges and agrees that, if
the Executive breaches any of the covenants not to compete as
set forth herein, the Bank shall have the right, in addition
to any other rights provided herein, or that it may have in
law or equity, to seek and obtain from any court of competent
jurisdiction relief by way of injunction. The Executive
acknowledges and agrees that if the Executive breaches any of
the covenants, the Bank will suffer irreparable harm and will
have no adequate remedy at law although the Bank may be
entitled to damages for the breach in addition to injunctive
relief. If it is determined by a court of competent
jurisdiction that the Executive has breached the covenant to
compete as set forth herein, then this
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Agreement shall immediately terminate and the Executive shall
forfeit all benefits provided herein.
VII. MISCELLANEOUS
A. ALIENABILITY AND ASSIGNMENT PROHIBITION:
Neither the Executive, nor the Executive's 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 the
Executive's beneficiary, 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.
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
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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 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 Ohio.
H. SEVERABILITY:
The invalidity or unenforceability of any provision of this
Agreement, whether in whole or in part, shall not in any way
affect the validity or enforceability of any other provision
of this Agreement. Any invalid or unenforceable provision
shall be deemed severable to the extent of any such invalidity
or unenforceability.
VIII. ERISA PROVISION
A. NAMED FIDUCIARY AND PLAN ADMINISTRATOR:
The "Named Fiduciary and Plan Administrator" of this plan
shall be The Xxxxxxx Colonial Bank until its resignation or
removal by the Board. As Named Fiduciary and Administrator,
the Bank shall be responsible for the management, control and
administration of the Executive Supplemental Retirement Plan
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 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 Named Fiduciary and
Administrator named above within sixty (60) days from the date
payments are refused. The Names 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 sixty (60) 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
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additional material of 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 Named Fiduciary and Administrator fails to take any
action within the aforesaid sixty-day period.
If claimants desire a second review they shall notify the
Named Fiduciary and Administrator in writing within sixty (60)
days of the first claim denial. Claimants may review this
Agreement or any documents relating thereto and submit any
written issues and comments they may feel appropriate. In its
sole discretion, the Named Fiduciary and Administrator shall
then review the second claim and provide a written decision
within sixty (60) days of receipt of such claim. This decision
shall likewise state the specific reasons for the decision and
shall include reference to specific provisions of this
Agreement upon which the decision is based.
If claimants continue to dispute the benefit based upon
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
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.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the 29th day
of April, 1999 and that, upon execution, each has received a conforming copy.
THE XXXXXXX COLONIAL BANK
Fremont, Ohio
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Witness Bank Officer Title
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Witness (Executive Officer)(1)
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(1) On April 29, 1999 the following Executive Officers of the
Corporation and/or the Bank entered into Executive
Supplemental Retirement Plan Agreements with the Bank, all of
which Agreements have substantially identical terms: Xxxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxx, Xxxxx X. Xxxx,
Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx.
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