EXHIBIT 10.(iv)
MONROE COUNTY BANK
AGREEMENT FOR SUPPLEMENTAL DEATH
OR RETIREMENT BENEFITS
AGREEMENT, effective January 1, 1988 by and between Monroe County Bank,
an Indiana state banking institution ("Bank), and David D. Baer ("Employee").
W I T N E S S E T H:
WHEREAS, the Bank desires to guarantee Employee increased death or
retirement benefits in order to retain Employee as an officer and employee of
the Bank for the financial benefit and the long-range growth and welfare of the
Bank, and
WHEREAS, the parties wish to enter into an agreement with respect to
the aforementioned benefits without committing either party to continuation of
the employment arrangement or otherwise affecting any terms of Employee's
employment except as expressly set forth herein.
NOW, THEREFORE, for mutual consideration the parties agree:
ARTICLE I
Definitions
Section 1.01. "Agreement" shall mean this Agreement for Supplemental
Death or Retirement Benefits.
Section 1.02. "Board" shall mean the Board of Directors of Bank.
Section 1.03. "Change in Control" shall mean an event involving the
Corporation or Bank of a nature that would be required to be reported to the
appropriate Federal Banking Agency pursuant to the Change in the Bank Control
Act of 1978, as amended (12 U.S.C. Section 1817(j)), 12 U.S.C. Section1828(c),
or the Bank Holding Company Act (12 U.S.C. Section1841 et seq.) and
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regulations issued thereunder, or an event which would create a presumption of
control of Bank or Corporation pursuant to any of such regulations.
Section 1.04. "Committee" shall mean the Executive Committee of the
Board of Bank. If there is no such Executive Committee the term "Committee"
shall mean the Board.
Section 1.05. "Corporation" shall mean Monroe Bancorp, an Indiana
corporation and the bank holding corporation owning all of the issued and
outstanding stock of the Bank.
Section 1.06. "Disability" shall mean a physical or mental condition
which renders Employee unable to perform the duties associated with any gainful
occupation for which he is reasonably fitted by training, education or
experience.
Section 1.07. "Pre-Retirement Disability" shall mean Disability which
occurs prior to Employee's Normal Retirement Date, Early Involuntary Retirement
or Early Voluntary Retirement.
Section 1.08. "Early Involuntary Retirement" shall mean the termination
of Employee's employment with the Bank prior to his Normal Retirement Date due
to (1) any reason other than his death or his Disability prior to Employee's
Normal Retirement Date during the two (2) year period following a Change of
Control of Bank or Corporation, or (2) a substantial change in Employee's
employment conditions which in the opinion of a psychologist or physician
requires Employee to terminate his employment in order to preserve his health
and well-being or (3) any reason if the Bank terminates Employee's employment
with the Bank.
Section 1.09. "Early Involuntary Retirement Date" shall mean the first
day of the month following the month in which Employee's Early Involuntary
Retirement Occurs.
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Section 1.10. "Early Voluntary Retirement" shall mean Employee's
termination of Employee's employment with the Bank prior to his Normal
Retirement Date for any reason other than his Early Involuntary Retirement,
Death or Disability.
Section 1.11. "Early Voluntary Retirement Date" shall mean the first
day of the month following the month in which Employee's Early Voluntary
Retirement occurs.
Section 1.12. "Event of Eligibility" means that event which under
Section 2.01 herein will entitle Employee or his designated beneficiary to
receive supplemental retirement or death benefits, respectively, hereunder.
Section 1.13. "Normal Retirement Date" shall mean the first day of the
month following the month in which Employee attains sixty-five (65) years of
age.
Section 1.14. "Plan Administrator" shall mean the Committee.
ARTICLE II
Supplemental Death or Retirement Benefits
Section 2.01. Event of Eligibility. Subject to the provisions of
Section 2.05, Employee or his designated beneficiary shall receive supplemental
retirement or death benefits, respectively, in the manner and time as provided
below upon the occurrence of the first of the following events:
(a) Normal Retirement. The attainment by Employee as an employee
of Bank of his Normal Retirement Date.
(b) Death. The death of Employee prior to his Normal Retirement
Date.
(c) Pre-Retirement Disability. Employee sustaining
Pre-Retirement Disability.
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(d) Early Involuntary Retirement. Employee's Early Involuntary
Retirement as an employee of Bank as of Employee's Early
Involuntary Retirement Date.
(e) Early Voluntary Retirement. Employee's Early Voluntary
Retirement as an employee of Bank as of Employee's Early
Voluntary Retirement Date.
Section 2.02. Supplemental Retirement Income Benefit.
(a) Upon the occurrence of an Event of Eligibility because of (1)
Normal Retirement or (2) Pre-Retirement Disability followed by
Employee attaining the age of sixty-five (65) years prior to
death, Bank shall pay an annual supplemental retirement income
of Fifty Thousand Dollars ($50,000).
(b) Such annual supplemental retirement income shall be paid to
Employee or his designated beneficiary for a period of fifteen
(15) years in one-hundred and eighty (180) equal monthly
payments with the first payment to commence on Employee's
Normal Retirement Date and shall continue to be paid to
Employee or his designated beneficiary on the first day of
each consecutive month thereafter for the succeeding
one-hundred and seventy-nine (179) months.
Section 2.03. Supplemental Early Involuntary Retirement Income
Benefit.
(a) Upon the occurrence of an Event of Eligibility because of
Early Involuntary Retirement, Bank shall pay an annual
supplemental retirement income of Fifty Thousand Dollars
($50,000) less Four Hundred and Fifty Dollars ($450) for
each month that Employee's Early Involuntary Retirement
Date precedes his Normal Retirement Date.
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(b) Such annual supplemental early involuntary retirement income
shall be paid to Employee or his designated beneficiary for a
period of fifteen (15) years in one-hundred and eighty (180)
equal monthly payments with the first payment to commence on
Employee's Early Involuntary Retirement Date and shall
continue to be paid to Employee or his designated beneficiary
on the first day of each consecutive month thereafter for the
succeeding one--hundred and seventy--nine (179) months.
(c) Notwithstanding the above provisions of Subsections 2.03 (a)
and (b), if Employee's Early Voluntary Retirement is the
result of a Change in Control of Bank, then each of the
required one-hundred and eighty (180) equal monthly payments
to Employee or his designated beneficiary shall be further
reduced by that amount, if any, of such payments which
represents the forfeited tax benefit to Bank attributable to
each such payment.
(1) The term "forfeited tax benefit to Bank" as used in
this Subsection 2.03 (c) shall mean the tax cost to
Bank attributable to that portion, if any, of each
monthly payment hereunder to Employee or his
designated beneficiary which constitutes a parachute
payment.
(2) The term "tax cost to Bank" as used in this
Subsection 2.03 (c) shall mean the tax reduction
which the Bank would have obtained related to that
portion, if any, of each monthly payment hereunder to
Employee or his designated beneficiary which would
constitute a parachute payment assuming that (A) all
monthly payments were made in an amount and
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when required hereunder without consideration of
Subsection 2.03 (c), and (B) the Bank received a tax
reduction equal to the tax on the portion of each
payment which constituted a parachute payment by
applying the highest federal income tax rate
potentially applicable to Bank as actually in effect
at the time of the required monthly payment.
(3) The term "parachute payment" as used in this
Subsection 2.03 (c) shall mean that portion, if any,
of each monthly payment required hereunder without
consideration of Subsection 2.03 (c) to be paid to
Employee or his designated beneficiary which would
cause the present value of all such monthly payments
and any other payments to Employee or his designated
beneficiary to exceed three (3.0) times Employee's
annualized includable compensation paid to him or his
designated beneficiary by the Corporation and the
Bank for the five (5) most recent taxable years
ending before the date on which the Change in Control
occurs. The definition, interpretation and
calculation of the dollar amount described as a
parachute payment in the immediately preceding
sentence shall be in a manner consistent with and as
required by the provisions of section 280G of the
Internal Revenue Code of 1986, as amended ("Code"),
and the regulations and rulings of the Internal
Revenue Service promulgated thereunder. The sole
purpose of the reduction imposed by this Subsection
2.03 (c) is to reduce the amount payable by Bank
pursuant to Section 2.03 to compensate Bank for the
loss of the federal income tax deduction related to
the amount of each payment
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which is characterized as a "parachute payment" under
section 280G of the Code based upon the assumed
federal tax rates and payments expressed above. The
parties hereto agree that any dispute as to the
amount of the reduction required under this
Subsection 2.03 (c) shall be resolved by an opinion
of competent counsel selected by and acceptable to
such parties. Counsel's fee for the opinion required
herein shall be paid by the Bank.
Section 2.04. Supplemental Early Voluntary Retirement Income Benefit.
(a) Upon the occurrence of an Event of Eligibility because of
Early Voluntary Retirement, Bank shall pay an annual
supplemental retirement income as follows:
(1) Forty Thousand Dollars ($40,000) if Employee's Early
Voluntary Retirement Date follows his attainment of
the age of sixty-four (64) years and precedes his
attainment of the Normal Retirement Date;
(2) Thirty Thousand Dollars ($30,000) if Employee's Early
Voluntary Retirement Date follows his attainment of
the age of sixty-three (63) years and precedes his
attainment of the age of sixty-four (64) years;
(3) Twenty Thousand Dollars ($20,000) if Employee's Early
Voluntary Retirement Date follows his attainment of
the age of sixty-two (62) years and precedes his
attainment of the age of sixty-three (63) years;
(4) Ten Thousand Dollars ($10,000) if Employee's Early
Voluntary Retirement Date follows his attainment of
the age of sixty-one (61) years and precedes his
attainment of the age of sixty-two (62) years; and
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(5) No annual payment if Employee's Early Voluntary
Retirement Date precedes his attainment of the age of
sixty-one (61) years.
(b) Such annual supplemental early voluntary retirement income
shall be paid to Employee or his designated beneficiary for a
period of fifteen (15) years in one-hundred and eighty (180)
equal monthly payments with the first payment to commence on
Employee's Early Voluntary Retirement Date and shall continue
to be paid to Employee or his designated beneficiary on the
first day of each consecutive month thereafter for the
succeeding one-hundred and seventy-nine (179) months.
Section 2.05. Supplemental Death Benefit Income.
(a) Upon the occurrence of an Event of Eligibility because of
Employee's death prior to his Normal Retirement Date, Early
Involuntary Retirement Date, Early Voluntary Retirement Date
or because of his Pre-Retirement Disability followed by
Employee's death prior to his attaining the age of
sixty-five (65) years, Bank shall pay Employee's designated
beneficiary an annual supplemental death benefit equal to
the greater of (1) Thirty Thousand Dollars ($30,000) for a
fifteen (15) year period or (2) Employee's supplemental early
retirement income benefit (described in Section 2.03 of this
Agreement) calculated as though Employee involuntarily
retired from employment with Bank on his date of death.
(b) The annual supplemental death benefit determined in (a) of
this Section shall be paid to Employee's designated
beneficiary for a period of fifteen (15) years in one-hundred
and eighty (180) equal monthly payments with the first payment
to
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commence on the first day of the month following Employee's
death and shall continue to be paid to Employee's designated
beneficiary on the first day of each consecutive month
thereafter for the succeeding one--hundred and seventy--nine
(179) months.
Section 2.06. Payment Upon Death. Upon the execution of this Agreement,
Employee may designate a beneficiary and contingent beneficiaries to receive the
death or retirement benefits hereunder in the event of Employee's death.
Designated contingent beneficiaries shall receive the payments and benefits
hereunder in the order stated in the written designation in the event of the
death of the designated primary beneficiary. The Employee may change the
beneficiary or contingent beneficiary at any time by delivering to the Committee
a duly executed change of beneficiary form in the form prescribed by the
Committee. The Committee shall pay over benefits according to Employee's
beneficiary designation upon proof of identity or authority, without further
liability to any party as a result of said payment. Beneficiaries may be changed
without notice to or consent of any prior or future beneficiaries. In the case
of Employee's failure to designate a beneficiary, or the death of a designated
beneficiary without a designated contingent beneficiary, such benefits shall be
paid to the first of the following persons who survive Employee: (1) Employee's
spouse; (2) Employee's surviving children and children of Employee's deceased
children all of whom shall be paid such benefits in equal shares by way of
representation; and (3) the personal representative of Employee's estate. The
person or persons entitled to such payments designated in the preceeding
sentence shall each be deemed a "designated beneficiary" for the purposes of
this Agreement.
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ARTICLE III
Administration
Section 3.01. The books and records to be maintained for the purposes
of this Agreement shall be maintained by the officers and employees of the Bank
at its expense and subject to the supervision and control of the Committee. All
expenses of administering this Agreement shall be paid by the Bank.
Section 3.02. To the extent permitted by law, the right of Employee or
any beneficiary to benefit or payment hereunder shall not be subject in any
manner to attachment or other legal process for the debts of Employee or his
designated beneficiary; and any such benefit or payment shall not be subject to
anticipation, alienation, sale, transfer assignment or encumbrance.
Section 3.03. No member of the Board or of the Committee and no officer
or employee of the Bank shall be personally liable to any person for any action
taken or omitted in connection with the administration of this Agreement unless
attributable to his own fraud or willful misconduct.
ARTICLE IV
Funding
Section 4.01. Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Bank and
Employee, his designated beneficiary or any other person. Any funds which may be
invested under the provisions of this Agreement shall continue for all purposes
to be a part of the general funds of the Bank and no person other than the Bank
shall by virtue of the provisions of this Agreement have any interest in such
funds. To the extent
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that any person acquires a right to receive payments from the Bank under this
Agreement, such right shall be no greater than the right of any unsecured
general creditor of the Bank.
ARTICLE V
Incapacity of Employee or his Designated Beneficiary
Section 5.01. If the Committee shall determine that any person to whom
any payment is payable under this Agreement is unable to care for his affairs
because of illness or accident, or is a minor, any payment due (unless a prior
claim therefor shall have been made by a duly appointed guardian, committee or
other legal representative) may be paid to the spouse, a child, a parent, or a
brother or sister, or to any person deemed by the Committee to have incurred
expense for such person otherwise entitled to payment, in such manner and
proportions as the Committee may determine. Any such payment shall be a complete
discharge of the liabilities of the Bank under this Agreement.
ARTICLE VI
Claims Procedure
Section 6.01. Claims Procedure. All payments hereunder shall be due and
paid at the times specified. However, in the event a substantial question arises
relating to the propriety of such payments the Committee may decide whether any
person is entitled to such payments hereunder and may approve or deny all claims
made for such payments. If a claim is wholly or partially denied, notice of the
decision shall be furnished to the claimant no later than thirty (30) days after
receipt of the claim by the Committee. Such notice shall be in writing, setting
forth in a manner calculated to be understood by the claimant, without legal or
actuarial counsel:
(a) the specific reason or reasons for denial;
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(b) specific reference to the provisions of this Agreement on
which the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation why such material or information is
necessary; and
(d) an explanation of the Agreement's claim review procedure.
Upon denial of a claim, or discontinuance of benefit, in whole or in part, a
claimant shall have the opportunity to:
(a) request a review upon written application to the Committee;
(b) review pertinent documents; and
(c) submit issues and comments in writing.
Such request for review shall be made to the Committee and shall be made no
later than seventy-five (75) days after denial. The Committee shall appoint a
person or persons to review the claim. Such reviewer shall render a decision in
writing not later than sixty (60) days after the Committee's receipt of a
request for review, unless special circumstances require an extension of time
for processing, in which case a decision shall be rendered as soon as possible,
but not later than one hundred twenty (120) days after receipt of the request
for review. The decision after review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant and including specific references to the pertinent
provisions of this Agreement on which the decision is based. A copy of the
written decision shall be sent to the claimant promptly after it is rendered.
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Section 6.02. Other Remedies. Nothing herein shall be construed to
preclude Employee or a claimant from pursuing all available legal remedies to
enforce this Agreement.
Section 6.03. Attorney Fees and Expenses. If a claimant or Employee
successfully pursues a claim under section 6.01 hereunder, successfully settles
his or her claim against the Bank prior to the rendering of a judgment by a
court of competent jurisdiction or obtains a final judgment substantially in his
or her favor against the Bank in such a court, all reasonable legal fees and
expenses incurred by the claimant related to that portion of the claimant's
claim which was resolved, settled or adjudged in claimant's favor shall be paid
by Bank to claimant.
ARTICLE VII
Miscellaneous
Section 7.01. Neither Employee nor any other person shall have any
claim or right to be granted a payment or other benefit under this Agreement
prior to the occurrence of an Event of Eligibility.
Section 7.02. Nothing contained herein shall be construed as conferring
upon Employee the right to continue in the employ of the Bank as an executive
officer or in any other capacity.
Section 7.03. Any supplemental retirement or death benefit payable
under this Agreement shall not be deemed salary or other compensation to
Employee for the purpose of computing benefits to which he may be entitled under
any pension plan or other arrangement of the Bank for the benefit of its
employees.
Section 7.04. This Agreement shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors and assigns of the
parties. Notwithstanding the foregoing, the right to receive payment hereunder
is hereby expressly declared to be personal, nonassignable
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and nontransferrable except by will or intestacy, if applicable, and any
attempted assignment or transfer of such rights contrary to the provisions
hereof shall be null and void and of no effect.
Section 7.05. If any of the provisions of this Agreement shall be held
invalid, the remainder of this Agreement shall not be affected thereby.
Section 7.06. This instrument contains the entire Agreement between the
parties, and shall be governed by the laws of the State of Indiana.
Section 7.07. The rights and obligations of the parties hereto shall be
in addition to any rights and obligations contained in any other agreement
between such parties, and nothing contained herein shall be construed to limit
Employee's rights under any such other agreement.
Section 7.08. The parties agree that this Agreement will not result in
any adverse income tax consequences to Employee prior to him or his designated
beneficiary becoming entitled to receive supplemental retirement or death
benefits hereunder; however, if Employee is finally determined by any taxing
authority to be taxable upon any prospective benefits under this Agreement in a
year prior to the year he becomes entitled to or receives such benefits, then
Bank shall pay Employee a bonus in an amount which will compensate Employee for
the federal and state income taxes and any interest and penalty thereon which he
incurs on (1) the taxable income he is required to report on his income tax
returns by reason of such prospective benefits under this Agreement, and (2) the
bonus described in this sentence. For purposes of the preceding sentence, the
taxes incurred by the Employee shall be based upon his marginal federal and
state income tax rates for the year in which he is determined to be taxable on
such prospective benefits hereunder. Employee shall be entitled to such bonus
for each year which he is determined to be taxable on such prospective benefits
hereunder, which bonus shall be paid to Employee within a
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reasonable time after Employee provides Bank evidence satisfactory to the Bank
of the determination of his taxability upon prospective benefits and his
applicable marginal tax rates. Any contrary provision in this Agreement
notwithstanding, nothing in this Agreement shall be construed to obligate Bank
to compensate Employee or his designated beneficiary for any income tax
consequences resulting from becoming entitled to or receiving supplemental death
or retirement benefits hereunder.
ARTICLE VIII
Amendment of Agreement
Section 8.01. This Agreement may only be amended by a written amendment
executed by the parties hereto or, if Employee is deceased, the party designated
to receive the benefits hereof may likewise agree to amendments. No notice of
such amendment shall be required to be given to any other beneficiary or
contingent beneficiary herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.
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David D. Baer
MONROE COUNTY BANK
BY MEMBERS OF ITS EXECUTIVE COMMITTEE
OTHER THAN DAVID D. BAER
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Paul W. Mobley
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Richard P. Rechter
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Dr. Joseph F. Milan
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