SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
__________________ TO _________________
Commission file number: 0-21108
MARION CAPITAL HOLDINGS, INC.
-----------------------------
(Exact name of registrant specified in its charter)
Indiana 35-1872393
- -------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 West Third Street
P.O. Box 367
Marion, Indiana 46952
(Address of principal executive offices,
including Zip Code)
(765) 664-0556
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the Registrant's common stock, without par value,
outstanding as of May 9, 2000 was 1,356,739.
<PAGE>
Marion Capital Holdings, Inc.
Form 10-Q
Index
Page No.
Forward Looking Statements.....................................................1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements...............................................2
Consolidated Condensed Statement of Financial Condition as of
March 31, 2000 and June 30, 1999.................................2
Consolidated Condensed Statement of Income for the three-month
and nine-month periods ended March 31, 2000 and 1999.............3
Consolidated Condensed Statement of Shareholders' Equity
for the nine months ended March 31, 2000 and 1999................4
Consolidated Condensed Statement of
Cash Flows for the nine months
ended March 31, 2000 and 1999....................................5
Notes to Consolidated Financial Statements.......................7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................9
Item 3. Quantitative and Qualitative Disclosures About Market Risk........14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................17
Item 6. Exhibits and Reports on Form 8-K..................................17
SIGNATURES....................................................................18
<PAGE>
FORWARD LOOKING STATEMENTS
Except for historical information contained herein, the discussion in this Form
10-Q quarterly report includes certain forward-looking statements based upon
management expectations. Factors which could cause future results to differ from
these expectations include the following: general economic conditions,
legislative and regulatory initiatives, monetary and fiscal policies of the
federal government, deposit flows, the costs of funds, general market rates of
interest, interest rates on competing investments, demand for loan products,
demand for financial services, changes in accounting policies or guidelines, and
changes in the quality or composition of the Company's loan and investment
portfolios.
The Company does not undertake and specifically disclaims any obligation to
update any forward- looking statements to reflect the occurrence of anticipated
or unanticipated events or circumstances after the date of such statements.
1
<PAGE>
MARION CAPITAL HOLDINGS, INC.
AND WHOLLY-OWNED SUBSIDIARY
FIRST FEDERAL SAVINGS BANK OF MARION
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
ASSETS
<S> <C> <C>
Cash $2,493,816 $2,225,804
Short-term interest bearing deposits 4,443,199 6,626,884
-------------------------------------------
Total cash and cash equivalents 6,937,015 8,852,688
Investment securities available for sale 2,972,274 3,020,000
Loans held for sale 357,400 326,901
Loans receivable, net of allowance for loan losses
of $2,246,114 and $2,271,701 164,377,586 165,797,406
Real estate owned, net 205,099 0
Premises and equipment 1,741,498 2,008,157
Stock in Federal Home Loan Bank (at cost which
approximates market) 1,654,900 1,163,600
Investment in limited partnerships 4,177,675 4,712,675
Investment in other affiliate 650,000 650,000
Core deposit intangibles and goodwill 625,235 698,580
Cash value of life insurance 11,322,018 5,887,166
Other assets 4,172,820 3,984,316
-------------------------------------------
Total assets $199,193,520 $197,101,489
===========================================
LIABILITIES
Deposits $129,474,282 $142,087,269
Advances from FHLB 29,526,490 15,533,732
Other borrowings 2,825,560 3,240,344
Advances by borrowers for taxes and
insurance 375,585 201,919
Other liabilities 5,379,508 4,294,658
-------------------------------------------
Total liabilities 167,581,425 165,357,922
SHAREHOLDERS' EQUITY
Preferred stock:
Authorized and unissued -- 2,000,000 shares
Common stock, without par value:
Authorized -- 5,000,000 shares
Issued and outstanding -- 1,356,739 and
1,424,550 shares 8,025,048 8,001,048
Retained earnings 23,595,404 23,728,895
Accumulated other comprehensive income (loss) (8,357) 13,624
-------------------------------------------
Total shareholders' equity 31,612,095 31,743,567
-------------------------------------------
Total liabilities and shareholders' equity $199,193,520 $197,101,489
===========================================
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
MARION CAPITAL HOLDINGS, INC.
AND WHOLLY-OWNED SUBSIDIARY
FIRST FEDERAL SAVINGS BANK OF MARION
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
2000 1999 2000 1999
Interest income
<S> <C> <C> <C> <C>
Loans $3,518,509 $3,624,006 $10,584,006 $10,971,215
Interest-bearing deposits 49,401 52,533 172,091 123,964
Investment securities 46,004 47,824 142,659 182,230
Other interest and dividend income 30,869 22,377 78,806 68,212
-------------------------------------------------------------------------------------
Total interest income 3,644,783 3,746,740 10,977,562 11,345,621
Interest expense
Deposits 1,542,469 1,651,935 4,762,044 5,068,533
Advances from FHLB 422,126 220,991 988,093 686,323
-------------------------------------------------------------------------------------
Total interest expense 1,964,595 1,872,926 5,750,137 5,754,856
Net interest income 1,680,188 1,873,814 5,227,425 5,590,765
Provision for losses on loans 0 1,400 458,027 17,589
-------------------------------------------------------------------------------------
Net interest income after provision 1,680,188 1,872,414 4,769,398 5,573,176
Other income
Net loan servicing fees 19,150 23,057 61,193 62,463
Annuity and other commissions 42,236 52,743 129,410 98,263
Losses from limited
partnerships (183,000) (35,000) (535,000) (140,500)
Life insurance income and
death benefits 106,204 39,750 904,654 142,250
Gain on sale of branch office 0 0 231,626 0
Other income 119,795 87,110 350,550 261,262
-------------------------------------------------------------------------------------
Total other income 104,385 167,660 1,142,433 423,738
-------------------------------------------------------------------------------------
Other expenses
Salaries and employee benefits 688,046 724,474 2,110,841 2,003,670
Occupancy expense 64,821 69,688 196,081 199,516
Equipment expense 35,652 34,549 105,720 96,849
Deposit insurance expense 18,906 32,855 83,860 99,703
Real estate operations, net 21,483 (1,628) 139,301 (2,875)
Data processing expense 85,529 77,498 236,176 228,632
Advertising 16,392 20,641 52,870 89,944
Amortization of core deposit
intangibles and goodwill 23,446 25,249 73,345 78,755
Other expenses 217,275 204,046 682,881 608,255
-------------------------------------------------------------------------------------
Total other expenses 1,171,550 1,187,372 3,681,075 3,402,449
-------------------------------------------------------------------------------------
Income before income taxes 613,023 852,702 2,230,756 2,594,465
Income tax expense 72,058 328,751 164,738 968,845
-------------------------------------------------------------------------------------
Net income $540,965 $523,951 $2,066,018 $1,625,620
=====================================================================================
Per share
Basic earnings per share $0.40 $0.35 $1.49 $1.04
Diluted earnings per share $0.40 $0.35 $1.48 $1.02
Dividends $0.22 $0.22 $0.66 $0.66
</TABLE>
See notes to consolidated condensed financial statements.
2
<PAGE>
MARION CAPITAL HOLDINGS, INC.
AND WHOLLY-OWNED SUBSIDIARY
FIRST FEDERAL SAVINGS BANK OF MARION
CONSOLIDATED CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Total
Shareholders'
Equity
--------------------------------
<S> <C> <C>
Balances, July, 1 1999 and 1998 $31,743,567 $37,656,627
Comprehensive income
Net income 2,066,018 1,625,620
Other comprehensive income, net of tax
Unrealized gains (losses) on securities (21,981) 926
--------------------------------
Comprehensive income 2,044,037 1,626,546
Exercise of stock options 24,000 61,901
Repurchase of common stock (1,308,413) (5,311,296)
Tax benefit of stock options excercised 20,351 106,982
Cash dividends (911,447) (1,032,250)
--------------------------------
Balances, March 31, 2000 and 1999 $31,612,095 $33,108,510
================================
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
MARION CAPITAL HOLDINGS, INC.
AND WHOLLY-OWNED SUBSIDIARY
FIRST FEDERAL SAVINGS BANK OF MARION
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
OPERATING ACTIVITIES 2000 1999
------------------- -------------------
<S> <C> <C>
Net Income $2,066,018 $1,625,620
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 458,027 17,589
Losses from limited partnerships 535,000 140,500
Amortization of net loan origination fees (149,610) (196,806)
Net amortization of investment securities'
premiums and discounts (29,603) 817
Amortization of core deposits and goodwill 73,345 25,249
Depreciation 144,350 135,101
Deferred income tax (389,339) 14,825
Gain on sale of branch office (231,626) 0
Gain on sale of loans (10,478) (20,840)
Origination of loans for sale (1,078,252) (6,743,872)
Proceeds from sale of loans 1,058,231 7,479,681
Change in:
Interest receivable 38,272 174,463
Interest payable and other liabilities 1,145,033 581,521
Cash value of insurance (904,654) (142,250)
Prepaid expense and other assets 197,331 34,584
------------------- -------------------
Net cash provided by operating activities 2,922,045 3,126,182
------------------- -------------------
INVESTING ACTIVITIES
Proceeds from maturity of investment securities
held to maturity 1,000,000 2,000,000
Purchase of investment securities available
for sale (959,070) 0
Payments on mortgage-backed securities 0 2,917
Net changes in loans 819,642 (850,747)
Proceeds from real estate owned sales 79,294
Purchase of FHLB stock (491,300)
Purchases of premises and equipment (36,974) (194,124)
Proceeds from life insurance 1,419,803 0
Premiums paid on life insurance (5,950,000) 0
Net cash disbursed in sale of branch office (8,593,288) 0
------------------- -------------------
Net cash (used) by investing activities (12,711,893) 958,046
------------------- -------------------
(CONTINUED)
FINANCING ACTIVITIES
Net change in:
Interest-bearing demand and savings deposits (2,091,090) (1,563,053)
Certificates of deposit (1,590,515) 6,099,053
Proceeds from FHLB advances 19,200,000 8,909,000
Repayment of FHLB advances (5,207,242) (7,412,002)
Repayment of other borrowings (414,784) (394,062)
Net change in advances by borrowers for taxes
and insurance 173,666 225,190
Proceeds from exercise of stock options 24,000 61,901
Repurchase of common stock (1,308,413) (5,311,296)
Dividends paid (911,447) (1,032,250)
------------------- -------------------
Net cash provided (used) by financing activities 7,874,175 (417,519)
------------------- -------------------
Net change in cash and cash equivalents (1,915,673) 4,081,611
Cash and Cash Equivalents, Beginning of Period 8,852,688 5,134,764
------------------- -------------------
Cash and Cash Equivalents, End of Period $6,937,015 $9,216,375
=================== ===================
ADDITIONAL CASH FLOWS AND
SUPPLEMENTARY INFORMATION
Interest paid $4,992,817 $5,014,576
Income tax paid 579,032 585,000
Loans to finance the sale of real estate owned 50,260 8,500
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
MARION CAPITAL HOLDINGS, INC.
AND WHOLLY-OWNED SUBSIDIARY
FIRST FEDERAL SAVINGS BANK OF MARION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A: Basis of Presentation
The unaudited interim consolidated condensed financial statements include the
accounts of Marion Capital Holdings, Inc. (the "Company") and its subsidiary
First Federal Savings Bank of Marion (the "Bank").
The unaudited interim consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the financial statements reflect all adjustments, comprising only
normal recurring accruals, necessary to present fairly the Company's financial
position as of March 31, 2000, results of operations for the three-month and
nine-month periods ended March 31, 2000 and 1999, and cash flows for the nine
month periods ended March 31, 2000 and 1999.
NOTE B: Dividends and Earnings Per Share
On February 22, 2000, the Board of Directors declared a quarterly cash dividend
of $.22 per share. This dividend was paid on March 15, 2000 to shareholders of
record as of March 6, 2000.
Earnings per share (EPS) were computed as follows:
<TABLE>
<CAPTION>
Three Months End Three Months Ended
March 31, 2000 March 31, 1999
------------------------------------- -----------------------------------
Weighted Weighted
Average Per Share Average Per Share
Income Shares Amount Income Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share
Income available to
common shareholders $540,965 1,356,257 $.40 $523,951 1,493,227 $.35
========= ====
Effect of dilutive securities
Stock Options 5,813 17,432
--------- --------- -------- ---------
Diluted earnings per share
Income available to
common shareholders and
assumed conversions $540,965 1,362,070 $.40 $523,951 1,510,659 $.35
======== ========= ==== ========= ========= ====
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
March 31, 2000 March 31, 1999
------------------------------------- -----------------------------------
Weighted Weighted
Average Per Share Average Per Share
Income Shares Amount Income Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share
Income available to
common shareholders $2,066,018 1,385,383 $1.49 $1,625,620 1,568,802 $1.04
===== =====
Effect of dilutive securities
Stock Options 7,252 22,198
---------- --------- ----------- ---------
Diluted earnings per share
Income available to
common shareholders and
assumed conversions $2,066,018 1,392,635 $1.48 $1,625,620 1,591,000 $1.02
========== ========= ===== =========== ========= =====
</TABLE>
NOTE C: Reporting Comprehensive Income
The Company adopted Statement of financial Accounting Standards No. 130,
Reporting Comprehensive Income. Comprehensive income includes unrealized
gains(losses) on securities available for sale, net of tax. Accumulated other
comprehensive income and income tax on such income reported are as follows:
Nine Months Ended
March 31
------------------------
2000 1999
-------- --------
Accumulated other comprehensive income
Balance, July 1 $ 13,624 $ 30,332
Net unrealized gains(losses) (21,981) 926
-------- --------
Balance, September 30 $ 8,357 $ 31,258
======== ========
Income tax expense(benefit)
Unrealized holding gains(losses) $(14,417) $ 607
======== ========
8
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The Company's total assets were $199.2 million at March 31, 2000 compared to
$197.1 million at June 30, 1999. Cash and cash equivalents decreased $1.9
million and investment securities remained relatively unchanged from June 30,
1999 to March 31, 2000. Net loans receivable, including loans held for sale,
were $164.7 million at March 31, 2000, a decrease of $1.4 million, or .8%, from
June 30, 1999.
For the nine months ended March 31, 2000, cash value of life insurance increased
by $5.4 million as the result of the Company purchasing life insurance on key
directors and a key employee in connection with new supplemental retirement
agreements. Effective February 1, 2000, these agreements were designed to
provide benefits at retirement age as set forth in the agreements.
Deposits decreased to $129.5 million at March 31, 2000 compared to $142.1
million at June 30, 1999, an 8.9% decrease. This $12.6 million decrease was
primarily the result of the Company selling its Decatur branch deposits on
September 3, 1999, to another financial institution. The deposits sold amounted
to $9.0 million. Passbook and transaction accounts decreased by $3.8 million and
certificate of deposit accounts decreased by $8.8 million.
Federal Home Loan Bank advances increased by $14.0 million to $29.5 million at
March 31, 2000, compared to $15.5 million at June 30, 1999, a 90.1% increase.
Advances were used primarily to fund the sale of the Decatur branch and to
purchase life insurance on key directors and employees.
Shareholders' equity was $31.6 million at March 31, 2000, compared to $31.7
million at June 30, 1999. During the nine months ended March 31, 2000, the
Company repurchased 70,700 shares of common stock in the open market at a cost
of $1.3 million, or an average price of $18.51 per share. These repurchases
primarily account for the reduction in the number of shares outstanding to
1,356,739 at March 31, 2000.
Results of Operations Comparison of Three Months Ended March 31, 2000 and March
31, 1999
Net income for the three months ended March 31, 2000 of $540,965 was a 3.2%
increase from the three months ended March 31, 1999, of $523,951. Net interest
income for the quarter ended March 31, 2000, equaled $1,680,188, a decrease of
10.3% from the quarter ended March 31, 1999, of $1,873,814.
No provision for losses on loans was made for the three months ended March 31,
2000, compared to a $1,400 provision in the same period last year. No loan loss
provision was made during the quarter ending March 31, 2000, as the Company
believes that the loan loss reserves are adequate after reviewing non-performing
loans within its portfolio.
Total other income decreased by $63,275 for the three months ended March 31,
2000, compared to the same period in the prior year. This decrease is primarily
attributable to increased operating losses from investments in limited
partnerships of $148,000 offset by an increase in life insurance income of
$66,454.
9
<PAGE>
Total other expenses decreased by $15,822, or 1.3% for the three months ended
March 31, 2000, compared to the same period in the prior year. Real estate
operations expense increased $23,111 as a result of an increase in the number of
property foreclosures. Salaries and employee benefits for the quarter ended
March 31, 2000, decreased by $36,428 from the quarter ended March 31, 1999.
Deposit insurance expense decreased by $13,949 as the result of lower premiums
from the prior period. Other increases reflect normal operating cost increases.
The income tax expense for the three months ended March 31, 2000, amounted to
$72,058, compared to tax expense of $328,751 for the three months ended March
31, 1999. The Company's effective tax rate for the three months ended March 31,
2000, was 12%, compared to 39% tax rate for the comparable period in 1999. The
decrease in income taxes is due from the nontaxable proceeds from key man
insurance and the increase in federal tax credits from the limited partnerships.
A recent investment has generated new tax credits beginning in July 1999.
Results of Operations Comparison of Nine Months Ended March 31, 2000 and March
31, 1999.
Net income for the nine months ended March 31, 2000, was $2,066,018 compared
with $1,625,620 for the nine months ended March 31, 1999, an increase of
$440,398, or 27.1%. Interest income for the nine months ended March 31, 2000,
decreased $368,059, or 3.2%, compared to the same period in the prior year,
while interest expense for the nine months ended March 31, 2000, decreased
$4,719, or 0.1%, compared to the same period in the prior year. As a result, net
interest income for the nine months ended March 31, 2000, amounted to
$5,227,425, a decrease of $363,340, or 6.5%, compared to the same period in the
prior year. Earnings for the nine months ended March 31, 2000, included an
additional $360,000 in federal income tax credits as compared to the nine months
ended March 31, 1999. Also, for the nine months ended March 31,2000, death
benefit proceeds from key man insurance resulted in additional income of
$767,000. This increase in tax credits and the nontaxable proceeds from key man
life insurance had the effect of decreasing the effective tax rate of the
Company from approximately 37% for the nine months ended March 31, 1999, to 7%
for the nine months ended March 31, 2000.
A $458,027 provision for losses on loans for the nine months ended March 31,
2000, was made compared to a $17,589 provision reported in the same period last
year. The increased provision for the nine months ended March 31, 2000, compared
to the prior period was made as a result of the Company's ongoing evaluation of
its impaired loans and their net realizable value; and a review of recent
charge-offs reflecting a higher loss ratio than in previous years.
Total other income increased by $718,695 for the nine months ended March 31,
2000, compared to the same period in the prior year. This increase is
attributable to increased income from loan servicing fees, annuity and other
commissions, and other income of approximately $119,000 over income reported in
the prior period. Also, life insurance income and death benefits increased by
$762,404 over the prior period and gain on the sale of a branch amounted to
$231,626. Also, for the nine months ended March 31, 2000, the Company charged
off an additional $100,000 on one of its limited partnership investments in
excess of normal operating losses. Recent financial reports indicate a decline
in net income produced by the partnership which thus reflects a lower residual
value of the investment.
10
<PAGE>
Total other expenses increased by $278,626 or 8.2% for the nine months ended
March 31, 2000, compared to the same period in the prior year. Salaries and
employee benefits increased $107,171, or 5.3% primarily due to funding
additional benefits associated with key man death benefits. Real estate
operating expense increased by $142,176 for the nine months ended March 31,
2000, compared to the same period in the prior year as a result of a
nonrecurring estimated loss of $100,000 related to real estate operations.
Income tax expense for the nine months ended March 31, 2000, amounted to
$164,738, a decrease of $804,107 from the nine months ended March 31, 1999,
resulting in a decrease in the effective tax rate from 37% for the nine months
ended March 31, 1999 to 7% for the nine months ended March 31, 2000. This change
in effective tax rate is the result of nontaxable proceeds from key man life
insurance and an increase in federal income tax credits as previously described
above.
Allowance for loan losses amounted to $2.2 million at March 31, 2000, which was
relatively unchanged from June 30, 1999, after adjusting for charge-offs and
recoveries. Management considered the allowances for loan and real estate losses
at March 31, 2000, to be adequate to cover estimated losses inherent in those
portfolios at that date, and its consideration included probable losses that
could be reasonably estimated. Such belief is based upon an analysis of loans
currently outstanding, real estate owned, past loss experience, current economic
conditions and other factors and estimates which are subject to change over
time. The following table illustrates the changes affecting the allowance for
loan losses for the nine months ended March 31, 2000.
Allowance For Allowance For Total
Loan Losses REO Loses Allowance
----------- --------- ---------
Balances at July 1, 1999.... $2,271,701 $ 0 $ 2,271,701
Provision for losses........ 458,027 0 471,977
Recoveries.................. 3,381 13,950 3,381
Loans and REO charged off... (486,995) (0) ( 486,995)
----------- --------- ----------
Balances at March 31, 2000.. $2,246,114 $ 13,950 $2,260,064
========== ========= ==========
The loan loss reserves to total loans at March 31, 2000 equaled 1.35% of total
loans outstanding, the same percentage of total loans outstanding at June 30,
1999. Total non-performing assets decreased during the nine months ended March
31, 2000, from $3.3 million at June 30, 1999 to $2.2 million at March 31, 2000.
Non-performing assets at March 31, 2000 consisted of loans delinquent greater
than 90 days of $1,965,000 and real estate owned of $205,000.
Total non-performing loans totaled 1.18% of total loans outstanding at March 31,
2000, compared to 1.98% of total loans at June 30, 1999.
11
<PAGE>
The following table further depicts the amounts and categories of the Bank's
non-performing assets.
March 31, June 30,
2000 1999
------- -------
(Dollars in Thousands)
Accruing loans delinquent
more than 90 days ........... $ -- $ --
Non-accruing loans:
Residential ................. 486 1,108
Multi-family ................ -- 462
Commercial real estate ...... 1,299 1,585
Commercial loans ............ 152 153
Consumer .................... 28 21
Troubled debt restructurings .... -- --
------ ------
Total non-performing loans ... 1,965 3,329
Repossessed assets, net ......... 205 2
------ ------
Total non-performing assets.. $2,170 $3,331
====== ======
Non-performing loans to
total loans ................. 1.18% 1.98%
Non-performing assets to
total assets ................ 1.09% 1.69%
Average Balances and Interest
The following table presents for the periods indicated the monthly average
balances of the Company's interest-earning assets and interest-bearing
liabilities, the interest earned or paid on such amounts, and the average yields
earned and rates paid. Such yields and costs are determined by dividing income
or expense by the average balance of assets or liabilities for the periods
presented.
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------------------------------------------------------
2000 1999
---------------------------------- --------------------------------
(Dollars in thousands)
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Total interest-
earnings assets............ $176,598 $3,645 8.26% $175,724 $3,747 8.54%
Total interest-
bearing liabilities........ 157,251 965 5.00% 153,192 1,873 4.89%
------ -----
Net interest income/
Interest rate spread......... $1,680 3.26% $1,874 3.64%
====== ======
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended March 31
------------------------------------------------------------------------
2000 1999
----------------------------------- --------------------------------
(Dollars in thousands)
Average Average Average Average
Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
Total interest-
earnings assets............ $177,188 $10,978 8.26% $176,260 $11,346 8.58%
Total interest-
bearing liabilities........ 155,879 5,750 4.92% 150,421 5,755 5.10%
------- -----
Net interest income/
Interest rate spread......... $5,228 3.34% $5,591 3.48%
====== ======
</TABLE>
Shareholders' Equity
Shareholders' equity at March 31, 2000, was $31,612,095, a decrease of $131,472
from June 30, 1999. The Company's equity to asset ratio was 15.87% at March 31,
2000 compared to 16.11% at June 30, 1999. There are five capital categories
defined in the regulations, ranging from well capitalized to critically
undercapitalized. Classification of a bank in any of the undercapitalized
categories can result in actions by regulators that could have a material effect
on a bank's operations. At March 31, 2000, the Bank is categorized as well
capitalized and met all subject capital adequacy requirements. There are no
conditions or events since March 31, 2000, that management believes have changed
the Bank's classification.
Capital ratios at March 31, 2000, are as follows:
<TABLE>
<CAPTION>
Required
for Adequate To Be Well
Actual Capitalized
----------------- ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
Total risk-based capital
(to risk-weighted assets) $27,790 19.5% $11,340 8.0% $14,185 10.0%
Tier I risk based capital
(to risk-weighted assets) 26,719 18.8% 11,348 8.0% 14,185 10.0%
Core capital
(to adjusted tangible assets) 26,719 13.9% 5,734 3.0% 11,468 6.0%
Core capital
(to adjusted total assets) 26,719 13.9% 5,734 3.0% 9,557 5.0%
</TABLE>
13
<PAGE>
Liquidity and Capital Resources
The standard measure of liquidity for savings associations is the ratio of cash
and eligible investments to a certain percentage of net withdrawable savings
accounts and borrowings due within one year. The minimum required ratio is
currently set by the Office of Thrift Supervision regulation at 5%. At March 31,
2000, the Bank's liquidity ratio was 8.0%.
Other
The Securities and Exchange Commission maintains a Web site that contains
reports, proxy information statements, and other information regarding
registrants that file electronically with the Commission, including the Company.
The address is (http://www.sec.gov).
Item 3: Quantitative and Qualitative Disclosure About Market Risk
The Bank is subject to interest rate risk to the degree that its
interest-bearing liabilities, primarily deposits with short- and medium-term
maturities, mature or reprice at different rates than our interest-earning
assets. Although having liabilities that mature or reprice less frequently on
average than assets will be beneficial in times of rising interest rates, such
an asset/liability structure will result in lower net income during periods of
declining interest rates, unless offset by other factors.
The Bank protects against problems arising in a falling interest rate
environment by requiring interest rate minimums on its residential and
commercial real estate adjustable-rate mortgages and against problems arising in
a rising interest rate environment by having in excess of 86% of its mortgage
loans with adjustable rate features. Management believes that these minimums,
which establish floors below which the loan interest rate cannot decline, will
continue to reduce its interest rate vulnerability in a declining interest rate
environment. For the loans which do not adjust because of the interest rate
minimums, there is an increased risk of prepayment.
The Bank believes it is critical to manage the relationship between interest
rates and the effect on its net portfolio value ("NPV"). This approach
calculates the difference between the present value of expected cash flows from
assets and the present value of expected cash flows from liabilities, as well as
cash flows from off-balance sheet contracts. The Bank manages assets and
liabilities within the context of the marketplace, regulatory limitations and
within its limits on the amount of change in NPV which is acceptable given
certain interest rate changes.
The OTS issued a regulation, which uses a net market value methodology to
measure the interest rate risk exposure of savings associations. Under this OTS
regulation, an institution's "normal" level of interest rate risk in the event
of an assumed change in interest rates is a decrease in the institution's NPV in
an amount not exceeding 2% of the present value of its assets. Savings
associations with over $300 million in assets or less than a 12% risk-based
capital ratio are required to file OTS Schedule CMR. Data from Schedule CMR is
used by the OTS to calculate changes in NPV (and the related "Normal" level of
interest rate risk) based upon certain interest rate changes (discussed below).
Associations which do not meet either of the filing requirements are not
required to file OTS Schedule CMR, but may do so voluntarily. As the Bank does
not meet either of these requirements, it is not required to file Schedule
14
<PAGE>
CMR, although it does so voluntarily. Under the regulation, associations which
must file are required to take a deduction (the interest rate risk capital
component) from their total capital available to calculate their risk based
capital requirement of their interest rate exposure is greater than "normal".
The amount of that deduction is one-half of the difference between (a) the
institution's actual calculated exposure to a 200 basis point interest rate
increase or decrease (whichever results in the greater pro forma decrease in
NPV) and (b) its "normal" level of exposure which is 2% of the present value of
its assets.
Presented below, as of March 31, 2000, is an analysis performed by the OTS of
the Bank's interest rate risk as measured by changes in NPV for instantaneous
and sustained parallel shifts in the yield curve, in 100 basis point increments,
up and down 300 basis points. At March 31, 2000, 2% of the present value of the
Bank's assets was approximately $3.8 million. Because the interest rate risk of
a 200 basis point increase in market rates (which was greater than the interest
rate risk of a 200 basis point decrease) was $1.4 million at March 31, 2000, the
Bank would not have been required to make a deduction from its total capital
available to calculate its risk based capital requirement if it had been subject
to the OTS's reporting requirements under this methodology.
March 31, 2000
Net Portfolio Value NPV as % of PV of Assets
Change
In Rates $ Amount $Change %Change NPV Ratio Change
- --------------------------------------------------------------------------------
(Dollars in Thousands)
+300 bp 29,506 -2,726 -8% 15.78% -76 bp
+200 bp 30,800 -1,432 -4% 16.22% -33 bp
+100 bp 31,748 -483 -1% 16.48% -6 bp
0 bp 32,231 16.54%
- -100 bp 32,236 -95 0% 16.34% -20 bp
- -200 bp 31,615 -617 -2% 15.97% -57 bp
- -300 bp 31,233 -998 -3% 15.65% -89 bp
15
<PAGE>
March 31, 1999
Net Portfolio Value NPV as % of PV of Assets
Change
In Rates $ Amount $Change %Change NPV Ratio Change
- --------------------------------------------------------------------------------
(Dollars in Thousands)
+300 bp 31,673 -296 -1% 16.89% +30 bp
+200 bp 32,374 -405 1% 17.06% +147 bp
+100 bp 32,455 -486 2% 16.96% +36 bp
0 bp 31,969 16.59%
- -100 bp 31,436 -533 -2% 16.21% -38 bp
- -200 bp 31,216 -752 -2% 15.97% -62 bp
- -300 bp 31,292 -677 -2% 15.85% -74 bp
As with any method of measuring interest rate risk, certain shortcomings are
inherent in the methods of analysis presented above. For example, although
certain assets and liabilities may have similar maturities or periods to
repricing, they may react in different degrees to changes in market interest
rates. Also, the interest rates on certain types of assets and liabilities may
fluctuate in advance of changes in market interest rates, while interest rates
on other types may lag behind changes in market rates. Additionally, certain
assets, such as adjustable rate loans, have features which restrict changes in
interest rates on a short-term basis and over the life of the asset. Most of the
Bank's adjustable rate loans have interest rate minimums of 6.00% for
residential loans and 8.50% for commercial real estate loans. Currently,
originations of residential adjustable rate mortgages have interest rate
minimums of 7.50%. Further, in the event of a change in interest rates, expected
rates of prepayments on loans and early withdrawals from certificates could
likely deviate significantly from those assumed in calculating the table.
Finally, the ability of many borrowers to service their debt may decrease in the
event of an interest rate increase although the Bank does underwrite these
mortgages at approximately 2.0% above the origination rate. The Company
considers all of these factors in monitoring its exposure to interest rate risk.
16
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Company nor the Bank were, during the three-month period ended March
31, 2000, or are, as of the date hereof, involved in any legal proceeding of a
material nature. From time to time, the Bank is a party to legal proceedings
wherein it enforces its security interests in connection with its mortgage
loans.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
3(1) The Articles of Incorporation of the Registrant are
incorporated by reference to Exhibit 3(1) to the Registration
Statement on Form S-1 (Registration No. 33-55052).
3(2) The Code of By-Laws of the Registrant is incorporated by
reference to Exhibit 3(2) to the Registration Statement on
Form S-1 (Registration No. 33-55052).
10(1) Second Restated Executive Supplemental Retirement Income
Agreement between the Bank and Jackie Noble dated February 29,
2000
10(2) Second Restated Executive Supplemental Retirement Income
Agreement between the Bank and Nora Kuntz dated February 29,
2000
10(3) Second Restated Executive Supplemental Retirement Income
Agreement between the Bank and John M. Dalton dated February
29, 2000
10(4) Second Restated Executive Supplemental Retirement Income
Agreement between the Bank and Larry G. Phillips dated
February 29, 2000
10(5) Executive Shareholder Benefit Agreement for Steve Banks dated
February 1, 2000
10(6) Directors Shareholder Benefit Plan Agreement dated February 1,
2000
10(7) Second Amendment to the Excess Benefit Agreement between the
Bank and John M. Dalton dated March 10, 2000
27 Financial Data Schedule
b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter ended
March 31, 2000.
17
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARION CAPITAL HOLDINGS, INC.
Date: May 11, 2000 By: /s/ Steven L. Banks
-------------------
Steven L. Banks, President
Date: May 11, 2000 By: /s/ Larry G. Phillips
----------------------
Larry G. Phillips, Vice President,
Secretary and Treasurer
18
SECOND RESTATED
EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
JACKIE NOBLE
FIRST FEDERAL SAVINGS BANK
Marion, Indiana
February 29, 2000
Financial Institution Consulting Corporation
700 Colonial Road, Suite 260
Memphis, Tennessee 38117
WATS: 1-800-873-0089
FAX: (901) 684-7414
(901) 684-7400
1
<PAGE>
SECOND RESTATED EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
JACKIE NOBLE
This Second Restated Executive Supplemental Retirement Income Agreement
(the "Agreement"), effective as of the 29th day of February, 2000, formalizes
the understanding by and between FIRST FEDERAL SAVINGS BANK (the "Bank"), a
federally chartered stock savings bank, and JACKIE NOBLE (hereinafter referred
to as "Executive"). Any reference herein to the "Holding Company" shall mean
Marion Capital Holdings, Inc.
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore performed
by such Executive and wishes to encourage continued employment; and
WHEREAS, the Executive wishes to be assured that he will be entitled to
a certain amount of additional compensation for some definite period of time
from and after retirement from active service with the Bank or other termination
of employment and wishes to provide his beneficiaries with benefits from and
after death; and
WHEREAS, the Bank and the Executive wish to provide the terms and
conditions upon which the Bank shall pay such additional compensation to the
Executive after retirement or other termination of employment and/or death
benefits to his beneficiaries after death; and
WHEREAS, the Bank and the Executive intend this Agreement to be
considered an unfunded arrangement, maintained primarily to provide supplemental
retirement income for such Executive, a member of a select group of management
or highly compensated employees of the Bank, for tax purposes and for purposes
of the Employee Retirement Income Security Act of 1974, as amended; and
<PAGE>
WHEREAS, the Bank has previously adopted the Restated Executive
Supplemental Retirement Income Agreement dated December 1, 1996 and intends this
Second Restated Executive Supplemental Retirement Income Agreement to control
all issues relating to Supplemental Retirement Income Benefits as described
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the Bank and the Executive agree as follows:
SECTION I
DEFINITIONS
When used herein, the following words and phrases shall have the
meanings below unless the context clearly indicates otherwise:
1.1 "Accrued Benefit" means that portion of the Supplemental Retirement
Income Benefit which is required to be expensed and accrued under
generally accepted accounting principles (GAAP) by any appropriate
method which the Bank's Board of Directors may require in the exercise
of its sole discretion.
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.3 "Bank" means FIRST FEDERAL SAVINGS BANK and any successor thereto.
1.4 "Beneficiary" means the person or persons (and their heirs) designated
in writing to the Bank to whom the deceased Executive's benefits are
payable. If no Beneficiary is so designated, then the Executive's
Spouse, if living, will be deemed the Beneficiary. If the Executive's
Spouse is not living, then the Children of the Executive will be deemed
the Beneficiaries and will take on a per stirpes basis. If there are no
living Children, then the Estate of the Executive will be deemed the
Beneficiary.
2
<PAGE>
1.5 "Benefit Age" shall be the birthday on which the Executive becomes
eligible to receive the maximum Supplemental Retirement Income Benefit
under the Plan.
1.6 "Benefit Eligibility Date" shall be the date on which an Executive is
entitled to receive the maximum Supplemental Retirement Income Benefit
available under the Plan. It shall be the 1st day of the month
following the month in which the Executive attains the age sixty-five
(65).
1.7 "Cause" means personal dishonesty, willful misconduct, willful
malfeasance, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
law, rule, regulation (other than traffic violations or similar
offenses), or final cease-and-desist order, material breach of any
provision of this Agreement, or gross negligence in matters of material
importance to the Bank.
1.8 "Change in Control" shall mean and include the following with respect
to the Bank or the Holding Company:
(1) a Change in Control of a nature that would be required to be
reported in response to Item I (a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or
(2) a change in control of the Bank within the meaning of 12
C.F.R. 574.4; or
(3) a Change in Control at such time as
(i) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of
securities of the Bank representing Twenty Five
Percent (25.0%) or more of the combined voting power
of the Bank's outstanding securities ordinarily
having the right to vote at the election of
directors, except for any stock purchased by the
Bank's Employee Stock Ownership Plan and/or trust; or
3
<PAGE>
(ii) 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 comprising the Incumbent Board, or whose
nomination for election by the Bank's stockholders
was approved by the Bank's nominating committee which
is comprised of members of the Incumbent Board, shall
be, for purposes of this clause (ii), considered as
though he were a member of the Incumbent Board; or
(iii) merger, consolidation, or sale of all or
substantially all of the assets of the Bank occurs;
or
(iv) a proxy statement is issued soliciting proxies from
the stockholders of the Bank by someone other than
the current management of the Bank, seeking
stockholder approval of a plan of reorganization,
merger, or consolidation of the Bank with one or more
corporations as a result of which the outstanding
shares of the class of the Bank's securities are
exchanged for or converted into cash or property or
securities not issued by the Bank.
The term "person" includes an individual, a group acting in concert, a
corporation, a partnership, an association, a joint venture, a pool, a
joint stock company, a trust, an unincorporated organization or similar
company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities. The term "acquire" means
obtaining ownership, control, power to vote or sole power of
disposition of stock, directly or indirectly or through one or more
transactions or subsidiaries, through purchase, assignment, transfer,
exchange, succession or other means, including (1) an increase in
percentage ownership resulting from a redemption, repurchase, reverse
stock split or a similar transaction involving other securities of the
same class; and (2) the acquisition of stock by a group of persons
and/or companies acting in concert which shall be deemed to occur upon
the formation of such group, provided that an investment
4
<PAGE>
advisor shall not be deemed to acquire the voting stock of its advisee
if the advisor (a) votes the stock only upon instruction from the
beneficial owner and (b) does not provide the beneficial owner with
advice concerning the voting of such stock. The term "security"
includes nontransferable subscription rights issued pursuant to a plan
of conversion, as well as a "security," as defined in 15 U.S.C. ss.
78c(2)(1`); and the term "acting in concert" means (1) knowing
participation in a joint activity or interdependent conscious parallel
action towards a common goal whether or not pursuant to an express
agreement, or (2) a combination or pooling of voting or other interests
in the securities of an issuer for a common purpose pursuant to any
contract, understanding, relationship, agreement or other arrangement,
whether written or otherwise. Further, acting in concert with any
person or company shall also be deemed to be acting in concert with any
person or company that is acting in concert with such other person or
company.
Notwithstanding the above definitions, the Board, in its absolute
discretion, may make a finding that a Change in Control of the Bank has
taken place without the occurrence of any or all of the events
enumerated above.
1.9 "Children" means the Executive's children, or the issue of any deceased
Children, then living at the time payments are due the Children under
this Agreement. The term "Children" shall include both natural and
adopted Children.
1.10 "Disability Benefit" means the monthly benefit payable to the Executive
following a determination, in accordance with Subsection 3.2, that he
is no longer able, properly and satisfactorily, to perform his duties
as Executive.
1.11 "Effective Date" of this Agreement shall be February 29, 2000.
1.12 "Estate" means the estate of the Executive.
5
<PAGE>
1.13 "Holding Company" means Marion Capital Holdings, Inc.
1.14 "Interest Factor" means monthly compounding or discounting, as
applicable, at 7.89% percent per annum.
1.15 "Payout Period" means the time frame during which certain benefits
payable hereunder shall be distributed. Payments shall be made in equal
monthly installments commencing within thirty (30) days following the
occurrence of the event which triggers distribution and continuing for
One Hundred Eighty (180) months. For purposes of the Survivor's Benefit
payable hereunder, the Payout Period shall be One Hundred Eighty (180)
consecutive months.
1.16 "Plan Year" shall mean the calendar year.
1.17 "Spouse" means the individual to whom the Executive is legally married
at the time of the Executive's death.
1.18 "Supplemental Retirement Income Benefit" means an annual amount (before
taking into account federal and state income taxes), payable in monthly
installments throughout the Payout Period. The Supplemental Retirement
Income Benefit payable to the Executive shall be $41,000.
1.19 "Survivor's Benefit" means $41,000 payable to the Beneficiary in
monthly installments throughout the Payout Period, subject to
Subsection 2.1.
6
<PAGE>
SECTION II
PRE RETIREMENT AND POST RETIREMENT DEATH BENEFITS
2.1 Death Prior to Termination of Employment. If Executive dies prior to
termination of employment with the Bank (but before commencement of
payment of the Supplemental Retirement Income Benefit to Executive),
his Beneficiary shall be entitled to the Survivor's Benefit. The first
installment shall begin within thirty (30) days after the date of death
of Executive and each succeeding installment shall be paid on the next
succeeding month thereof during the Payout Period.
2.2 Death Subsequent to Retirement. In the event of Executive's death while
receiving monthly benefits under this Agreement (including early
retirement pursuant to Section 3.1) or after retirement but before
commencement of payment of the Supplemental Retirement Income Benefit
to Executive then the unpaid balance of such monthly payments remaining
to be paid at that time shall continue to be paid monthly for the
remainder of the Payout Period to Executive's Beneficiary.
2.3 Death After Voluntary Termination of Employment Prior to Benefit Age.
In the event of Executive's death following a voluntary termination of
employment with the Bank prior to his Benefit Age, for any reason other
than Cause, following a Change in Control, or an election of early
retirement pursuant to Section 3.1, the Executive's Beneficiary shall
be entitled to his Accrued Benefit determined as of the date of death
and annuitized using the Interest Factor commencing within thirty (30)
days and payable in monthly installments over the Payout Period.
2.4 Death After Involuntary Termination of Employment Prior to Benefit Age.
In the event of Executive's death following an involuntary termination
of employment with the Bank prior to attaining age fifty-five (55), for
any reason other than Cause or following a Change in Control, the
Executive's Beneficiary shall be entitled to the
7
<PAGE>
Accrued Benefit determined as of the date of death and annuitized using
the Interest Factor commencing within thirty (30) days and payable in
monthly installments over the Payout Period.
SECTION III
SUPPLEMENTAL RETIREMENT INCOME BENEFITS
AND DISABILITY BENEFITS
3.1 Retirement Benefit. If the Executive is in service with the Bank until
reaching his Benefit Age, the Executive shall be entitled to the
Supplemental Retirement Income Benefit. Such benefit shall commence on
the Executive's Benefit Eligibility Date and shall be payable in
monthly installments throughout the Payout Period.
The Executive may, upon proper notice, reduce his Benefit Age so long
as his Benefit Age, as modified, is not less than age fifty-five (55).
The Executive must give notice in writing at least twelve (12) months
prior to attaining his new Benefit Age, provided that such notice is
given no later than the calendar year prior to attainment of the new
Benefit Age. If the Executive makes such an election, the Executive
shall be entitled to the annuitized value of the Accrued Benefit (using
the Interest Factor) payable in monthly installments over the Payout
Period commencing within thirty (30) days of the Executive's attainment
of the new Benefit Age. In the event that the Executive dies after
having given notice of electing to retire at the new Benefit Age but
before leaving the service of the Bank or attaining the new Benefit
Age, the Executive's Beneficiary shall be entitled to the benefit the
Executive would otherwise have received had he lived until the new
Benefit Age.
3.2 Disability Benefit. Notwithstanding any other provision hereof, if
requested by the Executive and approved by the Board of Directors
(which approval shall not be unreasonably withheld), the Executive
shall be entitled to receive the Disability Benefit
8
<PAGE>
hereunder, in any case in which it is determined by a duly licensed
physician selected by the Bank, that the Executive is no longer able,
properly and satisfactorily, to perform his regular duties as an
Executive, because of ill health, accident, disability or general
inability due to age. If Board of Director approval is obtained, the
Executive may elect to begin receiving the Disability Benefit in lieu
of his Supplemental Retirement Income Benefit. The Disability Benefit
shall not begin more than thirty (30) days following the
above-mentioned disability determination. The Disability Benefit shall
be the Supplemental Retirement Income Benefit reduced by three per cent
(3%) per year for each year that the disability precedes the
Executive's Benefit Age and shall be payable in monthly installments
over the Payout Period. Such benefit shall be further reduced by any
disability benefit payments received by the Executive from any policy
whose premiums were paid by the Bank. Such payments shall cease on the
earliest occurrence of:
(1) return to active employment, or
(2) a determination by a physician of the Bank's choice
that the Executive is no longer disabled as defined
in the Section.
In the event the Executive dies at any time after becoming disabled but
prior to commencement or completion of all payments due and owing
hereunder, the Bank shall pay to the Executive's Beneficiary a
continuation of the monthly installments for the remainder of the
Payout Period.
3.3 Voluntary Termination of Employment. If the Executive's employment with
the Bank is voluntarily terminated prior to his Benefit Age, for any
reason other than for Cause, the Executive's death, disability or
Change in Control, the Executive (or his Beneficiary) shall be entitled
to his Accrued Benefit as of the date of such termination, increased
monthly using the Interest Factor from the date of termination until
the Executive's Benefit Age and annuitized at the Executive's Benefit
Age into monthly installments using the Interest Factor and payable
over the Payout Period.
9
<PAGE>
3.4 Involuntary Termination of Employment. In the event the Executive is
involuntarily terminated for any reason other than willful misconduct
or a following a Change in Control prior to reaching his Benefit Age,
then the Executive will immediately become entitled to receive benefits
set forth hereunder upon reaching age fifty-five (55), that being
annualized compensation of $41,000 a year for a period of 15 years.
Payments are to be made monthly for a total of 180 payments.
3.5 Termination of Service Related to a Change in Control.
If a Change in Control occurs at the Bank, and thereafter the
Executive's employment is terminated, voluntarily or involuntarily, the
Executive shall be entitled to receive benefits provided in this
Subsection 3.5.
(a) Executive lives until Benefit Age. If after such termination
Executive lives until his Benefit Age the secular trust provided in
Subsection 9.14 shall be annuitized using the Interest Factor into
monthly installments and shall be payable to the Executive over the
Payout Period. Such payments shall commence on the Executive's Benefit
Eligibility Date. The Executive may at any time during the Payout
Period request in writing to receive the unpaid balance of his secular
trust in a lump sum payment. Such lump sum payment shall be payable
within thirty (30) days of such notice.
(b) Executive dies prior to Benefit Age. If after such termination the
Executive dies prior to attaining his Benefit Age the secular trust
provided in Subsection 9.14 shall be annuitized using the Interest
Factor into monthly installments and shall be payable to the
Executive's Beneficiary over the Payout Period. Such payments shall
commence within thirty (30) days of the date the secular trustee
receives notice of the Executive's death. The Executive's Beneficiary
may at any time request in writing to receive the unpaid balance of the
secular trust in a lump sum payment. Such lump sum payment shall be
payable within thirty (30) days of such notice.
10
<PAGE>
3.6 Termination for Cause. If the Executive is terminated for Cause, all
benefits under this Agreement shall be forfeited and this Agreement
shall become null and void.
3.7 Non-Competition During and After Employment.
(a) In consideration of the agreements of the Bank
contained herein and of the payments to be made by
the Bank pursuant hereto, the Executive hereby agrees
that, so long as he remains employed by the Bank, he
will devote substantially all of his time, skill,
diligence and attention to the business of the Bank,
and will not actively engage, either directly or
indirectly, in any business or other activity which
is or may be deemed to be in any way competitive with
or adverse to the best interests of the business of
the Bank.
(b) The Executive expressly agrees that, as consideration
for the covenants of the Bank contained herein and as
a condition to the performance by the Bank of its
obligations hereunder, from and after any voluntary
or involuntary termination of service, other than a
termination of service pursuant to Subsection 3.5,
and continuing throughout the entire Payout Period,
as provided herein, he will not, without the prior
written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole
proprietor, as a partner in a partnership, or as a
substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee,
director, officer, principal, agent, trustee or in
any other capacity whatsoever, any enterprise
conducted in the trading area of the business of the
Bank which enterprise is, or may be deemed to be,
competitive with any business carried on by the Bank
as of the date of the termination of the Executive's
employment or his retirement.
(c) In the event of a termination of the Executive's
service related to a Change in Control pursuant to
Subsection 3.5, paragraph (b) of this Subsection 3.7
shall cease to be a condition to the performance by
the Bank of its obligations under this Agreement.
11
<PAGE>
3.8 Breach. In the event of any breach by the Executive of the agreements
and covenants contained herein, the Board of Directors of the Bank
shall direct that any unpaid balance of any payments to the Executive
under this Agreement be suspended, and shall thereupon notify the
Executive of such suspensions, in writing. Thereupon, if the Board of
Directors of the Bank shall determine that said breach by the Executive
has continued for a period of one (1) month following notification of
such suspension, all rights of the Executive and his Beneficiaries
under this Agreement, including rights to further payments hereunder,
shall thereupon terminate.
3.9 Additional Death Benefit - Burial Expense. In addition to the
above-described death benefits, upon the Executive's death, the
Executive's Beneficiary shall be entitled to receive a one-time lump
sum death benefit in the amount of Ten Thousand ($10,000.00) Dollars.
This benefit shall be provided specifically for the purpose of
providing payment for burial and/or funeral expenses of the Executive.
Such death benefit shall be payable within thirty (30) days of the
Executive's death. The Executive's Beneficiary shall not be entitled to
such benefit if the Executive is terminated for Cause.
SECTION IV
BENEFICIARY DESIGNATION
The Executive shall make an initial designation of primary and
secondary Beneficiaries upon execution of the Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Agreement,
a written designation of primary and secondary Beneficiaries. Any Beneficiary
designation made subsequent to execution of the Agreement shall become effective
only when receipt thereof is acknowledged in writing by the Administrator.
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SECTION V
EXECUTIVE'S RIGHT TO ASSETS
The rights of the Executive, any Beneficiary, or any other person
claiming through the Executive under this Agreement, shall be solely those of an
unsecured general creditor of the Bank. The Executive, the Beneficiary, or any
other person claiming through the Executive, shall only have the right to
receive from the Bank those payments so specified under this Agreement. The
Executive agrees that he, his Beneficiary, or any other person claiming through
him shall have no rights or interests whatsoever in any asset of the Bank,
including any insurance policies or contracts which the Bank may possess or
obtain to informally fund this Agreement. Any asset used or acquired by the Bank
in connection with the liabilities it has assumed under this Agreement, unless
expressly provided herein, shall not be deemed to be held under any trust for
the benefit of the Executive or his Beneficiaries, nor shall any asset be
considered security for the performance of the obligations of the Bank. Any such
asset shall be and remain, a general, unpledged, and unrestricted asset of the
Bank.
SECTION VI
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, his Beneficiaries or any successor in interest to him shall be and
remain simply a general unsecured 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 in its sole discretion to either purchase
assets to meet its obligations undertaken by this Agreement or to refrain from
the same and to determine the extent, nature, and method of such asset
purchases. Should the Bank decide to purchase assets such as life insurance,
mutual funds, disability policies or annuities, the Bank reserves the absolute
right, in its sole discretion, to terminate such assets at any time, in whole or
in part. At no time shall the Executive be deemed to have any lien, right, title
or interest in or to any specific investment or to any assets of the Bank. If
the Bank elects to invest in a life insurance, disability or annuity policy
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upon the life of the Executive, then the Executive shall assist the Bank by
freely submitting to a physical examination and by supplying such additional
information necessary to obtain such insurance or annuities.
SECTION VII
ALIENABILITY AND ASSIGNMENT PROHIBITION
Neither the Executive nor any 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 his 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, communication, hypothecation, transfer or
disposal of the benefits hereunder, the Bank's liabilities shall forthwith cease
and terminate.
SECTION VIII
ACT PROVISIONS
8.1 Named Fiduciary and Administrator. The Bank shall be the Named
Fiduciary and Administrator (the "Administrator") of this Agreement. As
Administrator, the Bank shall be responsible for the management,
control and administration of the Agreement as established herein. The
Administrator may delegate to others certain aspects of the management
and operational responsibilities of the Agreement, including the
employment of advisors and the delegation of ministerial duties to
qualified individuals.
8.2 Claims Procedure and Arbitration. In the event that benefits under this
Agreement 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
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be made to the Administrator within sixty (60) days from the date
payments are refused. The Bank and its Board of Directors 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
writing by the Bank and its Board of Directors shall further indicate
the additional steps which must be undertaken by claimants if an
additional review of the claim denial is desired.
If claimants desire a second review, they shall notify the
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 issues and comments, in writing, they may feel
appropriate. In its sole discretion, the Administrator shall then
review the second claim and provide a written decision within sixty
(60) days of receipt of such claim. This decision shall 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 mediation, administered by the American Arbitration Association
("AAA") (or a mediator selected by the parties) in accordance with the
AAA's Commercial Mediation Rules. If mediation is not successful in
resolving the dispute, it shall be settled by arbitration administered
by the AAA under its Commercial Arbitration Rules, and judgment on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
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SECTION IX
MISCELLANEOUS
9.1 No Effect on Employment Rights. Nothing contained herein will confer
upon the Executive the right to be retained in the service of the Bank
nor limit the right of the Bank to discharge or otherwise deal with the
Executive without regard to the existence of the Agreement.
9.2 State Law. The Agreement is established under, and will be construed
according to, the laws of the State of Indiana, to the extent such laws
are not preempted by the Act and valid regulations published
thereunder.
9.3 Severability. In the event that any of the provisions of this Agreement
or portion thereof, are held to be inoperative or invalid by any court
of competent jurisdiction, then: (1) insofar as is reasonable, effect
will be given to the intent manifested in the provisions held invalid
or inoperative, and (2) the validity and enforceability of the
remaining provisions will not be affected thereby.
9.4 Incapacity of Recipient. In the event the Executive is declared
incompetent and a conservator or other person legally charged with the
care of his person or Estate is appointed, any benefits under the
Agreement to which such Executive is entitled shall be paid to such
conservator or other person legally charged with the care of his person
or Estate.
9.5 Unclaimed Benefit. The Executive shall keep the Bank informed of his
current address and the current address of his Beneficiaries. The Bank
shall not be obligated to search for the whereabouts of any person. If
the location of the Executive is not made known to the Bank as of the
date upon which any payment of any benefits may first be made, the Bank
shall delay payment of the Executive's
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benefit payment(s) until the location of the Executive is made known to
the Bank; however, the Bank shall only be obligated to hold such
benefit payment(s) for the Executive until the expiration of thirty-six
(36) months. Upon expiration of the thirty-six (36) month period, the
Bank may discharge its obligation by payment to the Executive's
Beneficiary. If the location of the Executive's Beneficiary is not made
known to the Bank by the end of an additional two (2) month period
following expiration of the thirty-six (36) month period, the Bank may
discharge its obligation by payment to the Executive's Estate. If there
is no Estate in existence at such time or if such fact cannot be
determined by the Bank, the Executive and his Beneficiary(ies) shall
thereupon forfeit any rights to the balance, if any, of any benefits
provided for such Executive and/or Beneficiary under this Agreement.
9.6 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Agreement, no individual acting as an employee or
agent of the Bank, or as a member of the Board of Directors shall be
personally liable to the Executive or any other person for any claim,
loss, liability or expense incurred in connection with the Agreement.
9.7 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.
9.8 Effect on Other Corporate Benefit Agreements. 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
agreement constituting a part of the Bank's existing or future
compensation structure.
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9.9 Suicide. Notwithstanding anything to the contrary in this Agreement,
the benefits otherwise provided herein shall not be payable and this
Agreement shall become null and void if the Executive's death results
from suicide, whether sane or insane, within twenty-four (24) months
after the execution of his Agreement.
9.10 Inurement. This Agreement shall be binding upon and shall inure to the
benefit of the Bank, its successors and assigns, and the Executive, his
successors, heirs, executors, administrators, and Beneficiaries.
9.11 Tax Withholding. The Bank may withhold from any benefits payable under
this Agreement all federal, state, city, or other taxes as shall be
required pursuant to any law or governmental regulation then in effect.
9.12 Headings. Headings and sub-headings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part of this
Agreement.
9.13 Rabbi Trust. The Bank intends to incorporate this Agreement into the
First Federal Savings Bank of Marion Rabbi Trust for the Executive
Supplemental Retirement Income Plans and Excess Benefit Plans, dated
December 1, 1996, into which the Bank intends to contribute assets
which shall be held therein, subject to the claims of the Bank's
creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed
assets are paid to the Executives and their Beneficiaries in such
manner and at such times as specified in this Agreement. It is the
intention of the Bank to make contributions to the rabbi trust to
provide the Bank with a source of funds to assist it in meeting the
liabilities of this Agreement. The rabbi trust and any assets held
therein shall conform to the terms of the rabbi trust agreement which
has been established in conjunction with this Agreement. To the extent
the language in this Agreement is modified by the language in the rabbi
trust agreement, the rabbi trust agreement shall supersede this
Agreement. Any contributions to the rabbi trust shall be made during
each year of the Plan in
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accordance with the rabbi trust agreement. The amount of such
contribution(s) shall be equal to the full present value of all benefit
accruals under this Plan, if any, less: (i) previous contributions made
on behalf of the Executive to the rabbi trust, and (ii) earnings to
date on all such previous contributions.
9.14 Secular Trust. A secular trust called the Jackie Noble Grantor Trust
shall be established in the event of a Change in Control, into which
the Bank shall make a contribution only in such event. If the Executive
dies prior to this contribution being made, then the Executive's
Beneficiary is entitled to the Survivor's Benefit beginning within
thirty (30) days payable over the Payout Period. The contribution shall
be the full present value, using an appropriate discount rate, of the
retirement benefit specified in Subsection 1.18; provided, however, in
no event shall the contribution be less than an amount which is
sufficient to provide the Executive with after-tax benefits (assuming a
constant tax rate equal to the rate in effect as of the date of the
Change in Control) beginning at his Benefit Age equal in amount to that
benefit which would have been payable to the Executive if no secular
trust had been implemented and the benefit obligation had been accrued
under APB Opinion No. 12, as amended by FAS 106. In the event that such
contribution is made to the secular trust, Executive, at his sole
discretion, shall have the right to receive the funds at such time and
in such manner as can be supported by the contributed amount.
SECTION X
AMENDMENT/REVOCATION
This Agreement shall not be amended, modified or revoked at any
time, in whole or part, without the mutual written consent of the Executive and
the Bank, and such mutual consent shall be required even if the Executive is no
longer employed by the Bank.
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SECTION XI
EXECUTION
11.1 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and any
previous agreements or understandings between the parties hereto
regarding the subject matter hereof are merged into and superseded by
this Agreement.
11.2 This Agreement shall be executed in triplicate, each copy of which,
when so executed and delivered, shall be an original, but all three
copies shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the Bank and the Holding Company have caused this
Agreement to be executed on this 29th day of February, 2000.
WITNESS: FIRST FEDERAL SAVINGS BANK
/s/ William J. Landers By: /s/ Steven L. Banks
President
(Title)
WITNESS: EXECUTIVE
/s/ Larry G. Phillips /s/ Jackie Noble
- --------------------------- ---------------------------------
Jackie Noble
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SECOND RESTATED EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
BENEFICIARY DESIGNATION
The Executive, under the terms of the Second Restated Executive
Supplemental Retirement Income Agreement executed by the Bank and dated February
29, 2000 hereby designates the following Beneficiary to receive any guaranteed
payments or death benefits under such Agreement, following his death:
PRIMARY BENEFICIARY: ____________________________________
SECONDARY BENEFICIARY: ____________________________________
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: ______________________, 2000
- ---------------------------------- ------------------------------
(WITNESS) EXECUTIVE
Exhibit A
1
SECOND RESTATED
EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
NORA KUNTZ
FIRST FEDERAL SAVINGS BANK
Marion, Indiana
February 29, 2000
Financial Institution Consulting Corporation
700 Colonial Road, Suite 260
Memphis, Tennessee 38117
WATS: 1-800-873-0089
FAX: (901) 684-7414
(901) 684-7400
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SECOND RESTATED EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
NORA KUNTZ
This Second Restated Executive Supplemental Retirement Income Agreement
(the "Agreement"), effective as of the 29th day of February, 2000, formalizes
the understanding by and between FIRST FEDERAL SAVINGS BANK (the "Bank"), a
federally chartered stock savings bank, and NORA KUNTZ (hereinafter referred to
as "Executive"). Any reference herein to the "Holding Company" shall mean Marion
Capital Holdings, Inc.
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore performed
by such Executive and wishes to encourage continued employment; and
WHEREAS, the Executive wishes to be assured that he will be entitled to
a certain amount of additional compensation for some definite period of time
from and after retirement from active service with the Bank or other termination
of employment and wishes to provide his beneficiaries with benefits from and
after death; and
WHEREAS, the Bank and the Executive wish to provide the terms and
conditions upon which the Bank shall pay such additional compensation to the
Executive after retirement or other termination of employment and/or death
benefits to his beneficiaries after death; and
WHEREAS, the Bank and the Executive intend this Agreement to be
considered an unfunded arrangement, maintained primarily to provide supplemental
retirement income for such Executive, a member of a select group of management
or highly compensated employees of the Bank, for tax purposes and for purposes
of the Employee Retirement Income Security Act of 1974, as amended; and
<PAGE>
WHEREAS, the Bank has previously adopted the Restated Executive
Supplemental Retirement Income Agreement dated December 1, 1996 and intends this
Second Restated Executive Supplemental Retirement Income Agreement to control
all issues relating to Supplemental Retirement Income Benefits as described
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the Bank and the Executive agree as follows:
SECTION I
DEFINITIONS
When used herein, the following words and phrases shall have the
meanings below unless the context clearly indicates otherwise:
1.1 "Accrued Benefit" means that portion of the Supplemental Retirement
Income Benefit which is required to be expensed and accrued under
generally accepted accounting principles (GAAP) by any appropriate
method which the Bank's Board of Directors may require in the exercise
of its sole discretion.
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.3 "Bank" means FIRST FEDERAL SAVINGS BANK and any successor thereto.
1.4 "Beneficiary" means the person or persons (and their heirs) designated
in writing to the Bank to whom the deceased Executive's benefits are
payable. If no Beneficiary is so designated, then the Executive's
Spouse, if living, will be deemed the Beneficiary. If the Executive's
Spouse is not living, then the Children of the Executive will be deemed
the Beneficiaries and will take on a per stirpes basis. If there are no
living Children, then the Estate of the Executive will be deemed the
Beneficiary.
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1.5 "Benefit Age" shall be the birthday on which the Executive becomes
eligible to receive the maximum Supplemental Retirement Income Benefit
under the Plan.
1.6 "Benefit Eligibility Date" shall be the date on which an Executive is
entitled to receive the maximum Supplemental Retirement Income Benefit
available under the Plan. It shall be the 1st day of the month
following the month in which the Executive attains the age sixty-five
(65).
1.7 "Cause" means personal dishonesty, willful misconduct, willful
malfeasance, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
law, rule, regulation (other than traffic violations or similar
offenses), or final cease-and-desist order, material breach of any
provision of this Agreement, or gross negligence in matters of material
importance to the Bank.
1.8 "Change in Control" shall mean and include the following with respect
to the Bank or the Holding Company:
(1) a Change in Control of a nature that would be required to be
reported in response to Item I (a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or
(2) a change in control of the Bank within the meaning of 12
C.F.R. 574.4; or
(3) a Change in Control at such time as
(i) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of
securities of the Bank representing Twenty Five
Percent (25.0%) or more of the combined voting power
of the Bank's outstanding securities ordinarily
having the right to vote at the election of
directors, except for any stock purchased by the
Bank's Employee Stock Ownership Plan and/or trust; or
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(ii) 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 comprising the Incumbent Board, or whose
nomination for election by the Bank's stockholders
was approved by the Bank's nominating committee which
is comprised of members of the Incumbent Board, shall
be, for purposes of this clause (ii), considered as
though he were a member of the Incumbent Board; or
(iii) merger, consolidation, or sale of all or
substantially all of the assets of the Bank occurs;
or
(iv) a proxy statement is issued soliciting proxies from
the stockholders of the Bank by someone other than
the current management of the Bank, seeking
stockholder approval of a plan of reorganization,
merger, or consolidation of the Bank with one or more
corporations as a result of which the outstanding
shares of the class of the Bank's securities are
exchanged for or converted into cash or property or
securities not issued by the Bank.
The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint
venture, a pool, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or
any other group formed for the purpose of acquiring, holding or
disposing of securities. The term "acquire" means obtaining
ownership, control, power to vote or sole power of disposition of
stock, directly or indirectly or through one or more transactions
or subsidiaries, through purchase, assignment, transfer,
exchange, succession or other means, including (1) an increase in
percentage ownership resulting from a redemption, repurchase,
reverse stock split or a similar transaction involving other
securities of the same class; and (2) the acquisition of stock by
a group of persons and/or companies acting in concert which shall
be deemed to occur upon the formation of such group, provided
that an investment
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advisor shall not be deemed to acquire the voting stock of its
advisee if the advisor (a) votes the stock only upon instruction
from the beneficial owner and (b) does not provide the beneficial
owner with advice concerning the voting of such stock. The term
"security" includes nontransferable subscription rights issued
pursuant to a plan of conversion, as well as a "security," as
defined in 15 U.S.C. ss. 78c(2)(1`); and the term "acting in
concert" means (1) knowing participation in a joint activity or
interdependent conscious parallel action towards a common goal
whether or not pursuant to an express agreement, or (2) a
combination or pooling of voting or other interests in the
securities of an issuer for a common purpose pursuant to any
contract, understanding, relationship, agreement or other
arrangement, whether written or otherwise. Further, acting in
concert with any person or company shall also be deemed to be
acting in concert with any person or company that is acting in
concert with such other person or company.
Notwithstanding the above definitions, the Board, in its absolute
discretion, may make a finding that a Change in Control of the
Bank has taken place without the occurrence of any or all of the
events enumerated above.
1.9 "Children" means the Executive's children, or the issue of any deceased
Children, then living at the time payments are due the Children under
this Agreement. The term "Children" shall include both natural and
adopted Children.
1.10 "Disability Benefit" means the monthly benefit payable to the Executive
following a determination, in accordance with Subsection 3.2, that he
is no longer able, properly and satisfactorily, to perform his duties
as Executive.
1.11 "Effective Date" of this Agreement shall be February 29, 2000.
1.12 "Estate" means the estate of the Executive.
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1.13 "Holding Company" means Marion Capital Holdings, Inc.
1.14 "Interest Factor" means monthly compounding or discounting, as
applicable, at 7.89% percent per annum.
1.15 "Payout Period" means the time frame during which certain benefits
payable hereunder shall be distributed. Payments shall be made in equal
monthly installments commencing within thirty (30) days following the
occurrence of the event which triggers distribution and continuing for
One Hundred Eighty (180) months. For purposes of the Survivor's Benefit
payable hereunder, the Payout Period shall be One Hundred Eighty (180)
consecutive months.
1.16 "Plan Year" shall mean the calendar year.
1.17 "Spouse" means the individual to whom the Executive is legally married
at the time of the Executive's death.
1.18 "Supplemental Retirement Income Benefit" means an annual amount (before
taking into account federal and state income taxes), payable in monthly
installments throughout the Payout Period. The Supplemental Retirement
Income Benefit payable to the Executive shall be $38,000
1.19 "Survivor's Benefit" means $38,000 payable to the Beneficiary in
monthly installments throughout the Payout Period, subject to
Subsection 2.1.
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SECTION II
PRE RETIREMENT AND POST RETIREMENT DEATH BENEFITS
2.1 Death Prior to Termination of Employment. If Executive dies prior to
termination of employment with the Bank (but before commencement of
payment of the Supplemental Retirement Income Benefit to Executive),
his Beneficiary shall be entitled to the Survivor's Benefit. The first
installment shall begin within thirty (30) days after the date of death
of Executive and each succeeding installment shall be paid on the next
succeeding month thereof during the Payout Period.
2.2 Death Subsequent to Retirement. In the event of Executive's death while
receiving monthly benefits under this Agreement (including early
retirement pursuant to Section 3.1) or after retirement but before
commencement of payment of the Supplemental Retirement Income Benefit
to Executive then the unpaid balance of such monthly payments remaining
to be paid at that time shall continue to be paid monthly for the
remainder of the Payout Period to Executive's Beneficiary.
2.3 Death After Voluntary Termination of Employment Prior to Benefit Age.
In the event of Executive's death following a voluntary termination of
employment with the Bank prior to his Benefit Age, for any reason other
than Cause, following a Change in Control, or an election of early
retirement pursuant to Section 3.1, the Executive's Beneficiary shall
be entitled to his Accrued Benefit determined as of the date of death
and annuitized using the Interest Factor commencing within thirty (30)
days and payable in monthly installments over the Payout Period.
2.4 Death After Involuntary Termination of Employment Prior to Benefit Age.
In the event of Executive's death following an involuntary termination
of employment with the Bank prior to attaining age fifty-five (55), for
any reason other than Cause or following a Change in Control, the
Executive's Beneficiary shall be entitled to the
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Accrued Benefit determined as of the date of death and annuitized using
the Interest Factor commencing within thirty (30) days and payable in
monthly installments over the Payout Period.
SECTION III
SUPPLEMENTAL RETIREMENT INCOME BENEFITS
AND DISABILITY BENEFITS
3.1 Retirement Benefit. If the Executive is in service with the Bank until
reaching his Benefit Age, the Executive shall be entitled to the
Supplemental Retirement Income Benefit. Such benefit shall commence on
the Executive's Benefit Eligibility Date and shall be payable in
monthly installments throughout the Payout Period.
The Executive may, upon proper notice, reduce his Benefit Age so long
as his Benefit Age, as modified, is not less than age fifty-five (55).
The Executive must give notice in writing at least twelve (12) months
prior to attaining his new Benefit Age, provided that such notice is
given no later than the calendar year prior to attainment of the new
Benefit Age. If the Executive makes such an election, the Executive
shall be entitled to the annuitized value of the Accrued Benefit (using
the Interest Factor) payable in monthly installments over the Payout
Period commencing within thirty (30) days of the Executive's attainment
of the new Benefit Age. In the event that the Executive dies after
having given notice of electing to retire at the new Benefit Age but
before leaving the service of the Bank or attaining the new Benefit
Age, the Executive's Beneficiary shall be entitled to the benefit the
Executive would otherwise have received had he lived until the new
Benefit Age.
3.2 Disability Benefit. Notwithstanding any other provision hereof, if
requested by the Executive and approved by the Board of Directors
(which approval shall not be unreasonably withheld), the Executive
shall be entitled to receive the Disability Benefit
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<PAGE>
hereunder, in any case in which it is determined by a duly licensed
physician selected by the Bank, that the Executive is no longer able,
properly and satisfactorily, to perform his regular duties as an
Executive, because of ill health, accident, disability or general
inability due to age. If Board of Director approval is obtained, the
Executive may elect to begin receiving the Disability Benefit in lieu
of his Supplemental Retirement Income Benefit. The Disability Benefit
shall not begin more than thirty (30) days following the
above-mentioned disability determination. The Disability Benefit shall
be the Supplemental Retirement Income Benefit reduced by three per cent
(3%) per year for each year that the disability precedes the
Executive's Benefit Age and shall be payable in monthly installments
over the Payout Period. Such benefit shall be further reduced by any
disability benefit payments received by the Executive from any policy
whose premiums were paid by the Bank. Such payments shall cease on the
earliest occurrence of:
(1) return to active employment, or
(2) a determination by a physician of the Bank's choice that the
Executive is no longer disabled as defined in the Section.
In the event the Executive dies at any time after becoming disabled but
prior to commencement or completion of all payments due and owing
hereunder, the Bank shall pay to the Executive's Beneficiary a
continuation of the monthly installments for the remainder of the
Payout Period.
3.3 Voluntary Termination of Employment. If the Executive's employment with
the Bank is voluntarily terminated prior to his Benefit Age, for any
reason other than for Cause, the Executive's death, disability or
Change in Control, the Executive (or his Beneficiary) shall be entitled
to his Accrued Benefit as of the date of such termination, increased
monthly using the Interest Factor from the date of termination until
the Executive's Benefit Age and annuitized at the Executive's Benefit
Age into monthly installments using the Interest Factor and payable
over the Payout Period.
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3.4 Involuntary Termination of Employment. In the event the Executive is
involuntarily terminated for any reason other than willful misconduct
or a following a Change in Control prior to reaching his Benefit Age,
then the Executive will immediately become entitled to receive benefits
set forth hereunder upon reaching age fifty-five (55), that being
annualized compensation of $38,000 a year for a period of 15 years.
Payments are to be made monthly for a total of 180 payments.
3.5 Termination of Service Related to a Change in Control.
If a Change in Control occurs at the Bank, and thereafter the
Executive's employment is terminated, voluntarily or involuntarily, the
Executive shall be entitled to receive benefits provided in this
Subsection 3.5.
(a) Executive lives until Benefit Age. If after such termination
Executive lives until his Benefit Age the secular trust provided in
Subsection 9.14 shall be annuitized using the Interest Factor into
monthly installments and shall be payable to the Executive over the
Payout Period. Such payments shall commence on the Executive's Benefit
Eligibility Date. The Executive may at any time during the Payout
Period request in writing to receive the unpaid balance of his secular
trust in a lump sum payment. Such lump sum payment shall be payable
within thirty (30) days of such notice.
(b) Executive dies prior to Benefit Age. If after such termination the
Executive dies prior to attaining his Benefit Age the secular trust
provided in Subsection 9.14 shall be annuitized using the Interest
Factor into monthly installments and shall be payable to the
Executive's Beneficiary over the Payout Period. Such payments shall
commence within thirty (30) days of the date the secular trustee
receives notice of the Executive's death. The Executive's Beneficiary
may at any time request in writing to receive the unpaid balance of the
secular trust in a lump sum payment. Such lump sum payment shall be
payable within thirty (30) days of such notice.
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3.6 Termination for Cause. If the Executive is terminated for Cause, all
benefits under this Agreement shall be forfeited and this Agreement
shall become null and void.
3.7 Non-Competition During and After Employment.
(a) In consideration of the agreements of the Bank contained
herein and of the payments to be made by the Bank pursuant
hereto, the Executive hereby agrees that, so long as he
remains employed by the Bank, he will devote substantially all
of his time, skill, diligence and attention to the business of
the Bank, and will not actively engage, either directly or
indirectly, in any business or other activity which is or may
be deemed to be in any way competitive with or adverse to the
best interests of the business of the Bank.
(b) The Executive expressly agrees that, as consideration for the
covenants of the Bank contained herein and as a condition to
the performance by the Bank of its obligations hereunder, from
and after any voluntary or involuntary termination of service,
other than a termination of service pursuant to Subsection
3.5, and continuing throughout the entire Payout Period, as
provided herein, he will not, without the prior written
consent of the Bank, engage in, become interested, directly or
indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation,
nor become associated with, in the capacity of an employee,
director, officer, principal, agent, trustee or in any other
capacity whatsoever, any enterprise conducted in the trading
area of the business of the Bank which enterprise is, or may
be deemed to be, competitive with any business carried on by
the Bank as of the date of the termination of the Executive's
employment or his retirement.
(c) In the event of a termination of the Executive's service
related to a Change in Control pursuant to Subsection 3.5,
paragraph (b) of this Subsection 3.7 shall cease to be a
condition to the performance by the Bank of its obligations
under this Agreement.
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3.8 Breach. In the event of any breach by the Executive of the agreements
and covenants contained herein, the Board of Directors of the Bank
shall direct that any unpaid balance of any payments to the Executive
under this Agreement be suspended, and shall thereupon notify the
Executive of such suspensions, in writing. Thereupon, if the Board of
Directors of the Bank shall determine that said breach by the Executive
has continued for a period of one (1) month following notification of
such suspension, all rights of the Executive and his Beneficiaries
under this Agreement, including rights to further payments hereunder,
shall thereupon terminate.
3.9 Additional Death Benefit - Burial Expense. In addition to the
above-described death benefits, upon the Executive's death, the
Executive's Beneficiary shall be entitled to receive a one-time lump
sum death benefit in the amount of Ten Thousand ($10,000.00) Dollars.
This benefit shall be provided specifically for the purpose of
providing payment for burial and/or funeral expenses of the Executive.
Such death benefit shall be payable within thirty (30) days of the
Executive's death. The Executive's Beneficiary shall not be entitled to
such benefit if the Executive is terminated for Cause.
SECTION IV
BENEFICIARY DESIGNATION
The Executive shall make an initial designation of primary and
secondary Beneficiaries upon execution of the Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Agreement,
a written designation of primary and secondary Beneficiaries. Any Beneficiary
designation made subsequent to execution of the Agreement shall become effective
only when receipt thereof is acknowledged in writing by the Administrator.
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SECTION V
EXECUTIVE'S RIGHT TO ASSETS
The rights of the Executive, any Beneficiary, or any other person
claiming through the Executive under this Agreement, shall be solely those of an
unsecured general creditor of the Bank. The Executive, the Beneficiary, or any
other person claiming through the Executive, shall only have the right to
receive from the Bank those payments so specified under this Agreement. The
Executive agrees that he, his Beneficiary, or any other person claiming through
him shall have no rights or interests whatsoever in any asset of the Bank,
including any insurance policies or contracts which the Bank may possess or
obtain to informally fund this Agreement. Any asset used or acquired by the Bank
in connection with the liabilities it has assumed under this Agreement, unless
expressly provided herein, shall not be deemed to be held under any trust for
the benefit of the Executive or his Beneficiaries, nor shall any asset be
considered security for the performance of the obligations of the Bank. Any such
asset shall be and remain, a general, unpledged, and unrestricted asset of the
Bank.
SECTION VI
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, his Beneficiaries or any successor in interest to him shall be and
remain simply a general unsecured 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 in its sole discretion to either purchase
assets to meet its obligations undertaken by this Agreement or to refrain from
the same and to determine the extent, nature, and method of such asset
purchases. Should the Bank decide to purchase assets such as life insurance,
mutual funds, disability policies or annuities, the Bank reserves the absolute
right, in its sole discretion, to terminate such assets at any time, in whole or
in part. At no time shall the Executive be deemed to have any lien, right, title
or interest in or to any specific investment or to any assets of the Bank. If
the Bank elects to invest in a life insurance, disability or annuity policy
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upon the life of the Executive, then the Executive shall assist the Bank by
freely submitting to a physical examination and by supplying such additional
information necessary to obtain such insurance or annuities.
SECTION VII
ALIENABILITY AND ASSIGNMENT PROHIBITION
Neither the Executive nor any 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 his 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, communication, hypothecation, transfer or
disposal of the benefits hereunder, the Bank's liabilities shall forthwith cease
and terminate.
SECTION VIII
ACT PROVISIONS
8.1 Named Fiduciary and Administrator. The Bank shall be the Named
Fiduciary and Administrator (the "Administrator") of this Agreement. As
Administrator, the Bank shall be responsible for the management,
control and administration of the Agreement as established herein. The
Administrator may delegate to others certain aspects of the management
and operational responsibilities of the Agreement, including the
employment of advisors and the delegation of ministerial duties to
qualified individuals.
8.2 Claims Procedure and Arbitration. In the event that benefits under this
Agreement 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
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be made to the Administrator within sixty (60) days from the date
payments are refused. The Bank and its Board of Directors 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
writing by the Bank and its Board of Directors shall further indicate
the additional steps which must be undertaken by claimants if an
additional review of the claim denial is desired.
If claimants desire a second review, they shall notify the
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 issues and comments, in writing, they may feel
appropriate. In its sole discretion, the Administrator shall then
review the second claim and provide a written decision within sixty
(60) days of receipt of such claim. This decision shall 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 mediation, administered by the American Arbitration Association
("AAA") (or a mediator selected by the parties) in accordance with the
AAA's Commercial Mediation Rules. If mediation is not successful in
resolving the dispute, it shall be settled by arbitration administered
by the AAA under its Commercial Arbitration Rules, and judgment on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
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SECTION IX
MISCELLANEOUS
9.1 No Effect on Employment Rights. Nothing contained herein will confer
upon the Executive the right to be retained in the service of the Bank
nor limit the right of the Bank to discharge or otherwise deal with the
Executive without regard to the existence of the Agreement.
9.2 State Law. The Agreement is established under, and will be construed
according to, the laws of the State of Indiana, to the extent such laws
are not preempted by the Act and valid regulations published
thereunder.
9.3 Severability. In the event that any of the provisions of this Agreement
or portion thereof, are held to be inoperative or invalid by any court
of competent jurisdiction, then: (1) insofar as is reasonable, effect
will be given to the intent manifested in the provisions held invalid
or inoperative, and (2) the validity and enforceability of the
remaining provisions will not be affected thereby.
9.4 Incapacity of Recipient. In the event the Executive is declared
incompetent and a conservator or other person legally charged with the
care of his person or Estate is appointed, any benefits under the
Agreement to which such Executive is entitled shall be paid to such
conservator or other person legally charged with the care of his person
or Estate.
9.5 Unclaimed Benefit. The Executive shall keep the Bank informed of his
current address and the current address of his Beneficiaries. The Bank
shall not be obligated to search for the whereabouts of any person. If
the location of the Executive is not made known to the Bank as of the
date upon which any payment of any benefits may first be made, the Bank
shall delay payment of the Executive's
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benefit payment(s) until the location of the Executive is made known to
the Bank; however, the Bank shall only be obligated to hold such
benefit payment(s) for the Executive until the expiration of thirty-six
(36) months. Upon expiration of the thirty-six (36) month period, the
Bank may discharge its obligation by payment to the Executive's
Beneficiary. If the location of the Executive's Beneficiary is not made
known to the Bank by the end of an additional two (2) month period
following expiration of the thirty-six (36) month period, the Bank may
discharge its obligation by payment to the Executive's Estate. If there
is no Estate in existence at such time or if such fact cannot be
determined by the Bank, the Executive and his Beneficiary(ies) shall
thereupon forfeit any rights to the balance, if any, of any benefits
provided for such Executive and/or Beneficiary under this Agreement.
9.6 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Agreement, no individual acting as an employee or
agent of the Bank, or as a member of the Board of Directors shall be
personally liable to the Executive or any other person for any claim,
loss, liability or expense incurred in connection with the Agreement.
9.7 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.
9.8 Effect on Other Corporate Benefit Agreements. 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
agreement constituting a part of the Bank's existing or future
compensation structure.
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9.9 Suicide. Notwithstanding anything to the contrary in this Agreement,
the benefits otherwise provided herein shall not be payable and this
Agreement shall become null and void if the Executive's death results
from suicide, whether sane or insane, within twenty-four (24) months
after the execution of his Agreement.
9.10 Inurement. This Agreement shall be binding upon and shall inure to the
benefit of the Bank, its successors and assigns, and the Executive, his
successors, heirs, executors, administrators, and Beneficiaries.
9.11 Tax Withholding. The Bank may withhold from any benefits payable under
this Agreement all federal, state, city, or other taxes as shall be
required pursuant to any law or governmental regulation then in effect.
9.12 Headings. Headings and sub-headings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part of this
Agreement.
9.13 Rabbi Trust. The Bank intends to incorporate this Agreement into the
First Federal Savings Bank of Marion Rabbi Trust for the Executive
Supplemental Retirement Income Plans and Excess Benefit Plans, dated
December 1, 1996, into which the Bank intends to contribute assets
which shall be held therein, subject to the claims of the Bank's
creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed
assets are paid to the Executives and their Beneficiaries in such
manner and at such times as specified in this Agreement. It is the
intention of the Bank to make contributions to the rabbi trust to
provide the Bank with a source of funds to assist it in meeting the
liabilities of this Agreement. The rabbi trust and any assets held
therein shall conform to the terms of the rabbi trust agreement which
has been established in conjunction with this Agreement. To the extent
the language in this Agreement is modified by the language in the rabbi
trust agreement, the rabbi trust agreement shall supersede this
Agreement. Any contributions to the rabbi trust shall be made during
each year of the Plan in
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accordance with the rabbi trust agreement. The amount of such
contribution(s) shall be equal to the full present value of all benefit
accruals under this Plan, if any, less: (i) previous contributions made
on behalf of the Executive to the rabbi trust, and (ii) earnings to
date on all such previous contributions.
9.14 Secular Trust. A secular trust called the Nora Kuntz Grantor Trust
shall be established in the event of a Change in Control, into which
the Bank shall make a contribution only in such event. If the Executive
dies prior to this contribution being made, then the Executive's
Beneficiary is entitled to the Survivor's Benefit beginning within
thirty (30) days payable over the Payout Period. The contribution shall
be the full present value, using an appropriate discount rate, of the
retirement benefit specified in Subsection 1.18; provided, however, in
no event shall the contribution be less than an amount which is
sufficient to provide the Executive with after-tax benefits (assuming a
constant tax rate equal to the rate in effect as of the date of the
Change in Control) beginning at his Benefit Age equal in amount to that
benefit which would have been payable to the Executive if no secular
trust had been implemented and the benefit obligation had been accrued
under APB Opinion No. 12, as amended by FAS 106. In the event that such
contribution is made to the secular trust, Executive, at his sole
discretion, shall have the right to receive the funds at such time and
in such manner as can be supported by the contributed amount.
SECTION X
AMENDMENT/REVOCATION
This Agreement shall not be amended, modified or revoked at any time,
in whole or part, without the mutual written consent of the Executive and the
Bank, and such mutual consent shall be required even if the Executive is no
longer employed by the Bank.
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SECTION XI
EXECUTION
11.1 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and any
previous agreements or understandings between the parties hereto
regarding the subject matter hereof are merged into and superseded by
this Agreement.
11.2 This Agreement shall be executed in triplicate, each copy of which,
when so executed and delivered, shall be an original, but all three
copies shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the Bank and the Holding Company have caused this
Agreement to be executed on this 29th day of February, 2000.
WITNESS: FIRST FEDERAL SAVINGS BANK
/s/ William J. Landers By: /s/ Steven L. Banks
President
(Title)
WITNESS: EXECUTIVE
/s/ Larry G. Phillips /s/ Nora Kuntz
- --------------------------- -------------------------------
Nora Kuntz
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SECOND RESTATED EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
BENEFICIARY DESIGNATION
The Executive, under the terms of the Second Restated Executive
Supplemental Retirement Income Agreement executed by the Bank and dated February
29, 2000 hereby designates the following Beneficiary to receive any guaranteed
payments or death benefits under such Agreement, following his death:
PRIMARY BENEFICIARY: ___________________________________
SECONDARY BENEFICIARY: ___________________________________
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: ______________________, 2000
- ---------------------------------- ------------------------------
(WITNESS) EXECUTIVE
Exhibit A
SECOND RESTATED
EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
JOHN M. DALTON
FIRST FEDERAL SAVINGS BANK
Marion, Indiana
February 29, 2000
Financial Institution Consulting Corporation
700 Colonial Road, Suite 260
Memphis, Tennessee 38117
WATS: 1-800-873-0089
FAX: (901) 684-7414
(901) 684-7400
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SECOND RESTATED EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
JOHN M. DALTON
This Second Restated Executive Supplemental Retirement Income Agreement
(the "Agreement"), effective as of the 29th day of February, 2000, formalizes
the understanding by and between FIRST FEDERAL SAVINGS BANK (the "Bank"), a
federally chartered stock savings bank, and JOHN M. DALTON (hereinafter referred
to as "Executive"). Any reference herein to the "Holding Company" shall mean
Marion Capital Holdings, Inc.
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore performed
by such Executive and wishes to encourage continued employment; and
WHEREAS, the Executive wishes to be assured that he will be entitled to
a certain amount of additional compensation for some definite period of time
from and after retirement from active service with the Bank or other termination
of employment and wishes to provide his beneficiaries with benefits from and
after death; and
WHEREAS, the Bank and the Executive wish to provide the terms and
conditions upon which the Bank shall pay such additional compensation to the
Executive after retirement or other termination of employment and/or death
benefits to his beneficiaries after death; and
WHEREAS, the Bank and the Executive intend this Agreement to be
considered an unfunded arrangement, maintained primarily to provide supplemental
retirement income for such Executive, a member of a select group of management
or highly compensated employees of the Bank, for tax purposes and for purposes
of the Employee Retirement Income Security Act of 1974, as amended; and
<PAGE>
WHEREAS, the Bank has previously adopted the Restated Executive
Supplemental Retirement Income Agreement dated December 1, 1996 and intends this
Second Restated Executive Supplemental Retirement Income Agreement to control
all issues relating to Supplemental Retirement Income Benefits as described
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the Bank and the Executive agree as follows:
SECTION I
DEFINITIONS
When used herein, the following words and phrases shall have the
meanings below unless the context clearly indicates otherwise:
1.1 "Accrued Benefit" means that portion of the Supplemental Retirement
Income Benefit which is required to be expensed and accrued under
generally accepted accounting principles (GAAP) by any appropriate
method which the Bank's Board of Directors may require in the exercise
of its sole discretion.
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.3 "Bank" means FIRST FEDERAL SAVINGS BANK and any successor thereto.
1.4 "Beneficiary" means the person or persons (and their heirs) designated
in writing to the Bank to whom the deceased Executive's benefits are
payable. If no Beneficiary is so designated, then the Executive's
Spouse, if living, will be deemed the Beneficiary. If the Executive's
Spouse is not living, then the Children of the Executive will be deemed
the Beneficiaries and will take on a per stirpes basis. If there are no
living Children, then the Estate of the Executive will be deemed the
Beneficiary.
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1.5 "Benefit Age" shall be the birthday on which the Executive becomes
eligible to receive the maximum Supplemental Retirement Income Benefit
under the Plan.
1.6 "Benefit Eligibility Date" shall be the date on which an Executive is
entitled to receive the maximum Supplemental Retirement Income Benefit
available under the Plan. It shall be the 1st day of the month
following the month in which the Executive attains the age sixty-five
(65).
1.7 "Cause" means personal dishonesty, willful misconduct, willful
malfeasance, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
law, rule, regulation (other than traffic violations or similar
offenses), or final cease-and-desist order, material breach of any
provision of this Agreement, or gross negligence in matters of material
importance to the Bank.
1.8 "Change in Control" shall mean and include the following with respect
to the Bank or the Holding Company:
(1) a Change in Control of a nature that would be required to be
reported in response to Item I (a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or
(2) a change in control of the Bank within the meaning of 12
C.F.R. 574.4; or
(3) a Change in Control at such time as
(i) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of
securities of the Bank representing Twenty Five
Percent (25.0%) or more of the combined voting power
of the Bank's outstanding securities ordinarily
having the right to vote at the election of
directors, except for any stock purchased by the
Bank's Employee Stock Ownership Plan and/or trust; or
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(ii) 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 comprising the Incumbent Board, or whose
nomination for election by the Bank's stockholders
was approved by the Bank's nominating committee which
is comprised of members of the Incumbent Board, shall
be, for purposes of this clause (ii), considered as
though he were a member of the Incumbent Board; or
(iii) merger, consolidation, or sale of all or
substantially all of the assets of the Bank occurs;
or
(iv) a proxy statement is issued soliciting proxies from
the stockholders of the Bank by someone other than
the current management of the Bank, seeking
stockholder approval of a plan of reorganization,
merger, or consolidation of the Bank with one or more
corporations as a result of which the outstanding
shares of the class of the Bank's securities are
exchanged for or converted into cash or property or
securities not issued by the Bank.
The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint
venture, a pool, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or
any other group formed for the purpose of acquiring, holding or
disposing of securities. The term "acquire" means obtaining
ownership, control, power to vote or sole power of disposition of
stock, directly or indirectly or through one or more transactions
or subsidiaries, through purchase, assignment, transfer,
exchange, succession or other means, including (1) an increase in
percentage ownership resulting from a redemption, repurchase,
reverse stock split or a similar transaction involving other
securities of the same class; and (2) the acquisition of stock by
a group of persons and/or companies acting in concert which shall
be deemed to occur upon the formation of such group, provided
that an investment
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advisor shall not be deemed to acquire the voting stock of its
advisee if the advisor (a) votes the stock only upon instruction
from the beneficial owner and (b) does not provide the beneficial
owner with advice concerning the voting of such stock. The term
"security" includes nontransferable subscription rights issued
pursuant to a plan of conversion, as well as a "security," as
defined in 15 U.S.C. ss. 78c(2)(1`); and the term "acting in
concert" means (1) knowing participation in a joint activity or
interdependent conscious parallel action towards a common goal
whether or not pursuant to an express agreement, or (2) a
combination or pooling of voting or other interests in the
securities of an issuer for a common purpose pursuant to any
contract, understanding, relationship, agreement or other
arrangement, whether written or otherwise. Further, acting in
concert with any person or company shall also be deemed to be
acting in concert with any person or company that is acting in
concert with such other person or company.
Notwithstanding the above definitions, the Board, in its absolute
discretion, may make a finding that a Change in Control of the
Bank has taken place without the occurrence of any or all of the
events enumerated above.
1.9 "Children" means the Executive's children, or the issue of any deceased
Children, then living at the time payments are due the Children under
this Agreement. The term "Children" shall include both natural and
adopted Children.
1.10 "Disability Benefit" means the monthly benefit payable to the Executive
following a determination, in accordance with Subsection 3.2, that he
is no longer able, properly and satisfactorily, to perform his duties
as Executive.
1.11 "Effective Date" of this Agreement shall be February 29, 2000.
1.12 "Estate" means the estate of the Executive.
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1.13 "Holding Company" means Marion Capital Holdings, Inc.
1.14 "Interest Factor" means monthly compounding or discounting, as
applicable, at 7.89% percent per annum.
1.15 "Payout Period" means the time frame during which certain benefits
payable hereunder shall be distributed. Payments shall be made in equal
monthly installments commencing within thirty (30) days following the
occurrence of the event which triggers distribution and continuing for
One Hundred Eighty (180) months. For purposes of the Survivor's Benefit
payable hereunder, the Payout Period shall be One Hundred Eighty (180)
consecutive months.
1.16 "Plan Year" shall mean the calendar year.
1.17 "Spouse" means the individual to whom the Executive is legally married
at the time of the Executive's death.
1.18 "Supplemental Retirement Income Benefit" means an annual amount (before
taking into account federal and state income taxes), payable in monthly
installments throughout the Payout Period. The Supplemental Retirement
Income Benefit payable to the Executive shall be $99,000.
1.19 "Survivor's Benefit" means $99,000 payable to the Beneficiary in
monthly installments throughout the Payout Period, subject to
Subsection 2.1.
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SECTION II
PRE RETIREMENT AND POST RETIREMENT DEATH BENEFITS
2.1 Death Prior to Termination of Employment. If Executive dies prior to
termination of employment with the Bank (but before commencement of
payment of the Supplemental Retirement Income Benefit to Executive),
his Beneficiary shall be entitled to the Survivor's Benefit. The first
installment shall begin within thirty (30) days after the date of death
of Executive and each succeeding installment shall be paid on the next
succeeding month thereof during the Payout Period.
2.2 Death Subsequent to Retirement. In the event of Executive's death while
receiving monthly benefits under this Agreement (including early
retirement pursuant to Section 3.1) or after retirement but before
commencement of payment of the Supplemental Retirement Income Benefit
to Executive then the unpaid balance of such monthly payments remaining
to be paid at that time shall continue to be paid monthly for the
remainder of the Payout Period to Executive's Beneficiary.
2.3 Death After Voluntary Termination of Employment Prior to Benefit Age.
In the event of Executive's death following a voluntary termination of
employment with the Bank prior to his Benefit Age, for any reason other
than Cause, following a Change in Control, or an election of early
retirement pursuant to Section 3.1, the Executive's Beneficiary shall
be entitled to his Accrued Benefit determined as of the date of death
and annuitized using the Interest Factor commencing within thirty (30)
days and payable in monthly installments over the Payout Period.
2.4 Death After Involuntary Termination of Employment Prior to Benefit Age.
In the event of Executive's death following an involuntary termination
of employment with the Bank prior to attaining age fifty-five (55), for
any reason other than Cause or following a Change in Control, the
Executive's Beneficiary shall be entitled to the
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Accrued Benefit determined as of the date of death and annuitized using
the Interest Factor commencing within thirty (30) days and payable in
monthly installments over the Payout Period.
SECTION III
SUPPLEMENTAL RETIREMENT INCOME BENEFITS
AND DISABILITY BENEFITS
3.1 Retirement Benefit. If the Executive is in service with the Bank until
reaching his Benefit Age, the Executive shall be entitled to the
Supplemental Retirement Income Benefit. Such benefit shall commence on
the Executive's Benefit Eligibility Date and shall be payable in
monthly installments throughout the Payout Period.
The Executive may, upon proper notice, reduce his Benefit Age so long
as his Benefit Age, as modified, is not less than age fifty-five (55).
The Executive must give notice in writing at least twelve (12) months
prior to attaining his new Benefit Age, provided that such notice is
given no later than the calendar year prior to attainment of the new
Benefit Age. If the Executive makes such an election, the Executive
shall be entitled to the annuitized value of the Accrued Benefit (using
the Interest Factor) payable in monthly installments over the Payout
Period commencing within thirty (30) days of the Executive's attainment
of the new Benefit Age. In the event that the Executive dies after
having given notice of electing to retire at the new Benefit Age but
before leaving the service of the Bank or attaining the new Benefit
Age, the Executive's Beneficiary shall be entitled to the benefit the
Executive would otherwise have received had he lived until the new
Benefit Age.
3.2 Disability Benefit. Notwithstanding any other provision hereof, if
requested by the Executive and approved by the Board of Directors
(which approval shall not be unreasonably withheld), the Executive
shall be entitled to receive the Disability Benefit
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hereunder, in any case in which it is determined by a duly licensed
physician selected by the Bank, that the Executive is no longer able,
properly and satisfactorily, to perform his regular duties as an
Executive, because of ill health, accident, disability or general
inability due to age. If Board of Director approval is obtained, the
Executive may elect to begin receiving the Disability Benefit in lieu
of his Supplemental Retirement Income Benefit. The Disability Benefit
shall not begin more than thirty (30) days following the
above-mentioned disability determination. The Disability Benefit shall
be the Supplemental Retirement Income Benefit reduced by three per cent
(3%) per year for each year that the disability precedes the
Executive's Benefit Age and shall be payable in monthly installments
over the Payout Period. Such benefit shall be further reduced by any
disability benefit payments received by the Executive from any policy
whose premiums were paid by the Bank. Such payments shall cease on the
earliest occurrence of:
(1) return to active employment, or
(2) a determination by a physician of the Bank's choice
that the Executive is no longer disabled as defined
in the Section.
In the event the Executive dies at any time after becoming disabled but
prior to commencement or completion of all payments due and owing
hereunder, the Bank shall pay to the Executive's Beneficiary a
continuation of the monthly installments for the remainder of the
Payout Period.
3.3 Voluntary Termination of Employment. If the Executive's employment with
the Bank is voluntarily terminated prior to his Benefit Age, for any
reason other than for Cause, the Executive's death, disability or
Change in Control, the Executive (or his Beneficiary) shall be entitled
to his Accrued Benefit as of the date of such termination, increased
monthly using the Interest Factor from the date of termination until
the Executive's Benefit Age and annuitized at the Executive's Benefit
Age into monthly installments using the Interest Factor and payable
over the Payout Period.
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3.4 Involuntary Termination of Employment. In the event the Executive is
involuntarily terminated for any reason other than willful misconduct
or a following a Change in Control prior to reaching his Benefit Age,
then the Executive will immediately become entitled to receive benefits
set forth hereunder upon reaching age fifty-five (55), that being
annualized compensation of $99,000 a year for a period of 15 years.
Payments are to be made monthly for a total of 180 payments.
3.5 Termination of Service Related to a Change in Control. If a Change in
Control occurs at the Bank, and thereafter the Executive's employment
is terminated, voluntarily or involuntarily, the Executive shall be
entitled to receive benefits provided in this Subsection 3.5.
(a) Executive lives until Benefit Age. If after such
termination Executive lives until his Benefit Age the secular
trust provided in Subsection 9.14 shall be annuitized using
the Interest Factor into monthly installments and shall be
payable to the Executive over the Payout Period. Such payments
shall commence on the Executive's Benefit Eligibility Date.
The Executive may at any time during the Payout Period request
in writing to receive the unpaid balance of his secular trust
in a lump sum payment. Such lump sum payment shall be payable
within thirty (30) days of such notice.
(b) Executive dies prior to Benefit Age. If after such
termination the Executive dies prior to attaining his Benefit
Age the secular trust provided in Subsection 9.14 shall be
annuitized using the Interest Factor into monthly installments
and shall be payable to the Executive's Beneficiary over the
Payout Period. Such payments shall commence within thirty (30)
days of the date the secular trustee receives notice of the
Executive's death. The Executive's Beneficiary may at any time
request in writing to receive the unpaid balance of the
secular trust in a lump sum payment. Such lump sum payment
shall be payable within thirty (30) days of such notice.
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3.6 Termination for Cause. If the Executive is terminated for Cause, all
benefits under this Agreement shall be forfeited and this Agreement
shall become null and void.
3.7 Non-Competition During and After Employment.
(a) In consideration of the agreements of the Bank contained
herein and of the payments to be made by the Bank pursuant
hereto, the Executive hereby agrees that, so long as he
remains employed by the Bank, he will devote substantially all
of his time, skill, diligence and attention to the business of
the Bank, and will not actively engage, either directly or
indirectly, in any business or other activity which is or may
be deemed to be in any way competitive with or adverse to the
best interests of the business of the Bank.
(b) The Executive expressly agrees that, as consideration for the
covenants of the Bank contained herein and as a condition to
the performance by the Bank of its obligations hereunder, from
and after any voluntary or involuntary termination of service,
other than a termination of service pursuant to Subsection
3.5, and continuing throughout the entire Payout Period, as
provided herein, he will not, without the prior written
consent of the Bank, engage in, become interested, directly or
indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation,
nor become associated with, in the capacity of an employee,
director, officer, principal, agent, trustee or in any other
capacity whatsoever, any enterprise conducted in the trading
area of the business of the Bank which enterprise is, or may
be deemed to be, competitive with any business carried on by
the Bank as of the date of the termination of the Executive's
employment or his retirement.
(c) In the event of a termination of the Executive's service
related to a Change in Control pursuant to Subsection 3.5,
paragraph (b) of this Subsection 3.7 shall cease to be a
condition to the performance by the Bank of its obligations
under this Agreement.
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3.8 Breach. In the event of any breach by the Executive of the agreements
and covenants contained herein, the Board of Directors of the Bank
shall direct that any unpaid balance of any payments to the Executive
under this Agreement be suspended, and shall thereupon notify the
Executive of such suspensions, in writing. Thereupon, if the Board of
Directors of the Bank shall determine that said breach by the Executive
has continued for a period of one (1) month following notification of
such suspension, all rights of the Executive and his Beneficiaries
under this Agreement, including rights to further payments hereunder,
shall thereupon terminate.
3.9 Additional Death Benefit - Burial Expense. In addition to the
above-described death benefits, upon the Executive's death, the
Executive's Beneficiary shall be entitled to receive a one-time lump
sum death benefit in the amount of Ten Thousand ($10,000.00) Dollars.
This benefit shall be provided specifically for the purpose of
providing payment for burial and/or funeral expenses of the Executive.
Such death benefit shall be payable within thirty (30) days of the
Executive's death. The Executive's Beneficiary shall not be entitled to
such benefit if the Executive is terminated for Cause.
SECTION IV
BENEFICIARY DESIGNATION
The Executive shall make an initial designation of primary and
secondary Beneficiaries upon execution of the Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Agreement,
a written designation of primary and secondary Beneficiaries. Any Beneficiary
designation made subsequent to execution of the Agreement shall become effective
only when receipt thereof is acknowledged in writing by the Administrator.
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SECTION V
EXECUTIVE'S RIGHT TO ASSETS
The rights of the Executive, any Beneficiary, or any other person
claiming through the Executive under this Agreement, shall be solely those of an
unsecured general creditor of the Bank. The Executive, the Beneficiary, or any
other person claiming through the Executive, shall only have the right to
receive from the Bank those payments so specified under this Agreement. The
Executive agrees that he, his Beneficiary, or any other person claiming through
him shall have no rights or interests whatsoever in any asset of the Bank,
including any insurance policies or contracts which the Bank may possess or
obtain to informally fund this Agreement. Any asset used or acquired by the Bank
in connection with the liabilities it has assumed under this Agreement, unless
expressly provided herein, shall not be deemed to be held under any trust for
the benefit of the Executive or his Beneficiaries, nor shall any asset be
considered security for the performance of the obligations of the Bank. Any such
asset shall be and remain, a general, unpledged, and unrestricted asset of the
Bank.
SECTION VI
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, his Beneficiaries or any successor in interest to him shall be and
remain simply a general unsecured 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 in its sole discretion to either purchase
assets to meet its obligations undertaken by this Agreement or to refrain from
the same and to determine the extent, nature, and method of such asset
purchases. Should the Bank decide to purchase assets such as life insurance,
mutual funds, disability policies or annuities, the Bank reserves the absolute
right, in its sole discretion, to terminate such assets at any time, in whole or
in part. At no time shall the Executive be deemed to have any lien, right, title
or interest in or to any specific investment or to any assets of the Bank. If
the Bank elects to invest in a life insurance, disability or annuity policy
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upon the life of the Executive, then the Executive shall assist the Bank by
freely submitting to a physical examination and by supplying such additional
information necessary to obtain such insurance or annuities.
SECTION VII
ALIENABILITY AND ASSIGNMENT PROHIBITION
Neither the Executive nor any 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 his 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, communication, hypothecation, transfer or
disposal of the benefits hereunder, the Bank's liabilities shall forthwith cease
and terminate.
SECTION VIII
ACT PROVISIONS
8.1 Named Fiduciary and Administrator. The Bank shall be the Named
Fiduciary and Administrator (the "Administrator") of this Agreement. As
Administrator, the Bank shall be responsible for the management,
control and administration of the Agreement as established herein. The
Administrator may delegate to others certain aspects of the management
and operational responsibilities of the Agreement, including the
employment of advisors and the delegation of ministerial duties to
qualified individuals.
8.2 Claims Procedure and Arbitration. In the event that benefits under this
Agreement 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
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be made to the Administrator within sixty (60) days from the date
payments are refused. The Bank and its Board of Directors 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
writing by the Bank and its Board of Directors shall further indicate
the additional steps which must be undertaken by claimants if an
additional review of the claim denial is desired.
If claimants desire a second review, they shall notify the
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 issues and comments, in writing, they may feel
appropriate. In its sole discretion, the Administrator shall then
review the second claim and provide a written decision within sixty
(60) days of receipt of such claim. This decision shall 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 mediation, administered by the American Arbitration Association
("AAA") (or a mediator selected by the parties) in accordance with the
AAA's Commercial Mediation Rules. If mediation is not successful in
resolving the dispute, it shall be settled by arbitration administered
by the AAA under its Commercial Arbitration Rules, and judgment on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
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SECTION IX
MISCELLANEOUS
9.1 No Effect on Employment Rights. Nothing contained herein will confer
upon the Executive the right to be retained in the service of the Bank
nor limit the right of the Bank to discharge or otherwise deal with the
Executive without regard to the existence of the Agreement.
9.2 State Law. The Agreement is established under, and will be construed
according to, the laws of the State of Indiana, to the extent such laws
are not preempted by the Act and valid regulations published
thereunder.
9.3 Severability. In the event that any of the provisions of this Agreement
or portion thereof, are held to be inoperative or invalid by any court
of competent jurisdiction, then: (1) insofar as is reasonable, effect
will be given to the intent manifested in the provisions held invalid
or inoperative, and (2) the validity and enforceability of the
remaining provisions will not be affected thereby.
9.4 Incapacity of Recipient. In the event the Executive is declared
incompetent and a conservator or other person legally charged with the
care of his person or Estate is appointed, any benefits under the
Agreement to which such Executive is entitled shall be paid to such
conservator or other person legally charged with the care of his person
or Estate.
9.5 Unclaimed Benefit. The Executive shall keep the Bank informed of his
current address and the current address of his Beneficiaries. The Bank
shall not be obligated to search for the whereabouts of any person. If
the location of the Executive is not made known to the Bank as of the
date upon which any payment of any benefits may first be made, the Bank
shall delay payment of the Executive's
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benefit payment(s) until the location of the Executive is made known to
the Bank; however, the Bank shall only be obligated to hold such
benefit payment(s) for the Executive until the expiration of thirty-six
(36) months. Upon expiration of the thirty-six (36) month period, the
Bank may discharge its obligation by payment to the Executive's
Beneficiary. If the location of the Executive's Beneficiary is not made
known to the Bank by the end of an additional two (2) month period
following expiration of the thirty-six (36) month period, the Bank may
discharge its obligation by payment to the Executive's Estate. If there
is no Estate in existence at such time or if such fact cannot be
determined by the Bank, the Executive and his Beneficiary(ies) shall
thereupon forfeit any rights to the balance, if any, of any benefits
provided for such Executive and/or Beneficiary under this Agreement.
9.6 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Agreement, no individual acting as an employee or
agent of the Bank, or as a member of the Board of Directors shall be
personally liable to the Executive or any other person for any claim,
loss, liability or expense incurred in connection with the Agreement.
9.7 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.
9.8 Effect on Other Corporate Benefit Agreements. 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
agreement constituting a part of the Bank's existing or future
compensation structure.
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9.9 Suicide. Notwithstanding anything to the contrary in this Agreement,
the benefits otherwise provided herein shall not be payable and this
Agreement shall become null and void if the Executive's death results
from suicide, whether sane or insane, within twenty-four (24) months
after the execution of his Agreement.
9.10 Inurement. This Agreement shall be binding upon and shall inure to the
benefit of the Bank, its successors and assigns, and the Executive, his
successors, heirs, executors, administrators, and Beneficiaries.
9.11 Tax Withholding. The Bank may withhold from any benefits payable under
this Agreement all federal, state, city, or other taxes as shall be
required pursuant to any law or governmental regulation then in effect.
9.12 Headings. Headings and sub-headings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part of this
Agreement.
9.13 Rabbi Trust. The Bank intends to incorporate this Agreement into the
First Federal Savings Bank of Marion Rabbi Trust for the Executive
Supplemental Retirement Income Plans and Excess Benefit Plans, dated
December 1, 1996, into which the Bank intends to contribute assets
which shall be held therein, subject to the claims of the Bank's
creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed
assets are paid to the Executives and their Beneficiaries in such
manner and at such times as specified in this Agreement. It is the
intention of the Bank to make contributions to the rabbi trust to
provide the Bank with a source of funds to assist it in meeting the
liabilities of this Agreement. The rabbi trust and any assets held
therein shall conform to the terms of the rabbi trust agreement which
has been established in conjunction with this Agreement. To the extent
the language in this Agreement is modified by the language in the rabbi
trust agreement, the rabbi trust agreement shall supersede this
Agreement. Any contributions to the rabbi trust shall be made during
each year of the Plan in
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accordance with the rabbi trust agreement. The amount of such
contribution(s) shall be equal to the full present value of all benefit
accruals under this Plan, if any, less: (i) previous contributions made
on behalf of the Executive to the rabbi trust, and (ii) earnings to
date on all such previous contributions.
9.14 Secular Trust. A secular trust called the John Dalton Grantor Trust
shall be established in the event of a Change in Control, into which
the Bank shall make a contribution only in such event. If the Executive
dies prior to this contribution being made, then the Executive's
Beneficiary is entitled to the Survivor's Benefit beginning within
thirty (30) days payable over the Payout Period. The contribution shall
be the full present value, using an appropriate discount rate, of the
retirement benefit specified in Subsection 1.18; provided, however, in
no event shall the contribution be less than an amount which is
sufficient to provide the Executive with after-tax benefits (assuming a
constant tax rate equal to the rate in effect as of the date of the
Change in Control) beginning at his Benefit Age equal in amount to that
benefit which would have been payable to the Executive if no secular
trust had been implemented and the benefit obligation had been accrued
under APB Opinion No. 12, as amended by FAS 106. In the event that such
contribution is made to the secular trust, Executive, at his sole
discretion, shall have the right to receive the funds at such time and
in such manner as can be supported by the contributed amount.
SECTION X
AMENDMENT/REVOCATION
This Agreement shall not be amended, modified or revoked at any
time, in whole or part, without the mutual written consent of the Executive and
the Bank, and such mutual consent shall be required even if the Executive is no
longer employed by the Bank.
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SECTION XI
EXECUTION
11.1 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and any
previous agreements or understandings between the parties hereto
regarding the subject matter hereof are merged into and superseded by
this Agreement.
11.2 This Agreement shall be executed in triplicate, each copy of which,
when so executed and delivered, shall be an original, but all three
copies shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the Bank and the Holding Company have caused this
Agreement to be executed on this 29th day of February, 2000.
WITNESS: FIRST FEDERAL SAVINGS BANK
/s/ Jon R. Marler By: /s/ Larry G. Phillips
-------------------------------
(Title)
WITNESS: EXECUTIVE
/s/ Jon R. Marler /s/ John M. Dalton
- --------------------------- -------------------------------
John M. Dalton
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SECOND RESTATED EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
BENEFICIARY DESIGNATION
The Executive, under the terms of the Second Restated Executive
Supplemental Retirement Income Agreement executed by the Bank and dated February
29, 2000 hereby designates the following Beneficiary to receive any guaranteed
payments or death benefits under such Agreement, following his death:
PRIMARY BENEFICIARY: __________________________________
SECONDARY BENEFICIARY: __________________________________
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: ______________________, 2000
- ---------------------------------- ------------------------------
(WITNESS) EXECUTIVE
Exhibit A
SECOND RESTATED
EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
LARRY G. PHILLIPS
FIRST FEDERAL SAVINGS BANK
Marion, Indiana
February 29, 2000
Financial Institution Consulting Corporation
700 Colonial Road, Suite 260
Memphis, Tennessee 38117
WATS: 1-800-873-0089
FAX: (901) 684-7414
(901) 684-7400
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SECOND RESTATED EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
LARRY G. PHILLIPS
This Second Restated Executive Supplemental Retirement Income Agreement
(the "Agreement"), effective as of the 29th day of February, 2000, formalizes
the understanding by and between FIRST FEDERAL SAVINGS BANK (the "Bank"), a
federally chartered stock savings bank, and LARRY G. PHILLIPS (hereinafter
referred to as "Executive"). Any reference herein to the "Holding Company" shall
mean Marion Capital Holdings, Inc.
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore performed
by such Executive and wishes to encourage continued employment; and
WHEREAS, the Executive wishes to be assured that he will be entitled to
a certain amount of additional compensation for some definite period of time
from and after retirement from active service with the Bank or other termination
of employment and wishes to provide his beneficiaries with benefits from and
after death; and
WHEREAS, the Bank and the Executive wish to provide the terms and
conditions upon which the Bank shall pay such additional compensation to the
Executive after retirement or other termination of employment and/or death
benefits to his beneficiaries after death; and
WHEREAS, the Bank and the Executive intend this Agreement to be
considered an unfunded arrangement, maintained primarily to provide supplemental
retirement income for such Executive, a member of a select group of management
or highly compensated employees of the Bank, for tax purposes and for purposes
of the Employee Retirement Income Security Act of 1974, as amended; and
<PAGE>
WHEREAS, the Bank has previously adopted the Restated Executive
Supplemental Retirement Income Agreement dated December 1, 1996 and intends this
Second Restated Executive Supplemental Retirement Income Agreement to control
all issues relating to Supplemental Retirement Income Benefits as described
herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the Bank and the Executive agree as follows:
SECTION I
DEFINITIONS
When used herein, the following words and phrases shall have the
meanings below unless the context clearly indicates otherwise:
1.1 "Accrued Benefit" means that portion of the Supplemental Retirement
Income Benefit which is required to be expensed and accrued under
generally accepted accounting principles (GAAP) by any appropriate
method which the Bank's Board of Directors may require in the exercise
of its sole discretion.
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.3 "Bank" means FIRST FEDERAL SAVINGS BANK and any successor thereto.
1.4 "Beneficiary" means the person or persons (and their heirs) designated
in writing to the Bank to whom the deceased Executive's benefits are
payable. If no Beneficiary is so designated, then the Executive's
Spouse, if living, will be deemed the Beneficiary. If the Executive's
Spouse is not living, then the Children of the Executive will be deemed
the Beneficiaries and will take on a per stirpes basis. If there are no
living Children, then the Estate of the Executive will be deemed the
Beneficiary.
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1.5 "Benefit Age" shall be the birthday on which the Executive becomes
eligible to receive the maximum Supplemental Retirement Income Benefit
under the Plan.
1.6 "Benefit Eligibility Date" shall be the date on which an Executive is
entitled to receive the maximum Supplemental Retirement Income Benefit
available under the Plan. It shall be the 1st day of the month
following the month in which the Executive attains the age sixty-five
(65).
1.7 "Cause" means personal dishonesty, willful misconduct, willful
malfeasance, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
law, rule, regulation (other than traffic violations or similar
offenses), or final cease-and-desist order, material breach of any
provision of this Agreement, or gross negligence in matters of material
importance to the Bank.
1.8 "Change in Control" shall mean and include the following with respect
to the Bank or the Holding Company:
(1) a Change in Control of a nature that would be required to be
reported in response to Item I (a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or
(2) a change in control of the Bank within the meaning of 12
C.F.R. 574.4; or
(3) a Change in Control at such time as
(i) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of
securities of the Bank representing Twenty Five
Percent (25.0%) or more of the combined voting power
of the Bank's outstanding securities ordinarily
having the right to vote at the election of
directors, except for any stock purchased by the
Bank's Employee Stock Ownership Plan and/or trust; or
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(ii) 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 comprising the Incumbent Board, or whose
nomination for election by the Bank's stockholders
was approved by the Bank's nominating committee which
is comprised of members of the Incumbent Board, shall
be, for purposes of this clause (ii), considered as
though he were a member of the Incumbent Board; or
(iii) merger, consolidation, or sale of all or
substantially all of the assets of the Bank occurs;
or
(iv) a proxy statement is issued soliciting proxies from
the stockholders of the Bank by someone other than
the current management of the Bank, seeking
stockholder approval of a plan of reorganization,
merger, or consolidation of the Bank with one or more
corporations as a result of which the outstanding
shares of the class of the Bank's securities are
exchanged for or converted into cash or property or
securities not issued by the Bank.
The term "person" includes an individual, a group acting in
concert, a corporation, a partnership, an association, a joint
venture, a pool, a joint stock company, a trust, an
unincorporated organization or similar company, a syndicate or
any other group formed for the purpose of acquiring, holding or
disposing of securities. The term "acquire" means obtaining
ownership, control, power to vote or sole power of disposition of
stock, directly or indirectly or through one or more transactions
or subsidiaries, through purchase, assignment, transfer,
exchange, succession or other means, including (1) an increase in
percentage ownership resulting from a redemption, repurchase,
reverse stock split or a similar transaction involving other
securities of the same class; and (2) the acquisition of stock by
a group of persons and/or companies acting in concert which shall
be deemed to occur upon the formation of such group, provided
that an investment
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advisor shall not be deemed to acquire the voting stock of its advisee
if the advisor (a) votes the stock only upon instruction from the
beneficial owner and (b) does not provide the beneficial owner with
advice concerning the voting of such stock. The term "security"
includes nontransferable subscription rights issued pursuant to a plan
of conversion, as well as a "security," as defined in 15 U.S.C. ss.
78c(2)(1`); and the term "acting in concert" means (1) knowing
participation in a joint activity or interdependent conscious parallel
action towards a common goal whether or not pursuant to an express
agreement, or (2) a combination or pooling of voting or other interests
in the securities of an issuer for a common purpose pursuant to any
contract, understanding, relationship, agreement or other arrangement,
whether written or otherwise. Further, acting in concert with any
person or company shall also be deemed to be acting in concert with any
person or company that is acting in concert with such other person or
company.
Notwithstanding the above definitions, the Board, in its absolute
discretion, may make a finding that a Change in Control of the Bank has
taken place without the occurrence of any or all of the events
enumerated above.
1.9 "Children" means the Executive's children, or the issue of any deceased
Children, then living at the time payments are due the Children under
this Agreement. The term "Children" shall include both natural and
adopted Children.
1.10 "Disability Benefit" means the monthly benefit payable to the Executive
following a determination, in accordance with Subsection 3.2, that he
is no longer able, properly and satisfactorily, to perform his duties
as Executive.
1.11 "Effective Date" of this Agreement shall be February 29, 2000.
1.12 "Estate" means the estate of the Executive.
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1.13 "Holding Company" means Marion Capital Holdings, Inc.
1.14 "Interest Factor" means monthly compounding or discounting, as
applicable, at 7.89% percent per annum.
1.15 "Payout Period" means the time frame during which certain benefits
payable hereunder shall be distributed. Payments shall be made in equal
monthly installments commencing within thirty (30) days following the
occurrence of the event which triggers distribution and continuing for
One Hundred Eighty (180) months. For purposes of the Survivor's Benefit
payable hereunder, the Payout Period shall be One Hundred Eighty (180)
consecutive months.
1.16 "Plan Year" shall mean the calendar year.
1.17 "Spouse" means the individual to whom the Executive is legally married
at the time of the Executive's death.
1.18 "Supplemental Retirement Income Benefit" means an annual amount (before
taking into account federal and state income taxes), payable in monthly
installments throughout the Payout Period. The Supplemental Retirement
Income Benefit payable to the Executive shall be $106,782.
1.19 "Survivor's Benefit" means $106, 782 payable to the Beneficiary in
monthly installments throughout the Payout Period, subject to
Subsection 2.1.
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SECTION II
PRE RETIREMENT AND POST RETIREMENT DEATH BENEFITS
2.1 Death Prior to Termination of Employment. If Executive dies prior to
termination of employment with the Bank (but before commencement of
payment of the Supplemental Retirement Income Benefit to Executive),
his Beneficiary shall be entitled to the Survivor's Benefit. The first
installment shall begin within thirty (30) days after the date of death
of Executive and each succeeding installment shall be paid on the next
succeeding month thereof during the Payout Period.
2.2 Death Subsequent to Retirement. In the event of Executive's death while
receiving monthly benefits under this Agreement (including early
retirement pursuant to Section 3.1) or after retirement but before
commencement of payment of the Supplemental Retirement Income Benefit
to Executive then the unpaid balance of such monthly payments remaining
to be paid at that time shall continue to be paid monthly for the
remainder of the Payout Period to Executive's Beneficiary.
2.3 Death After Voluntary Termination of Employment Prior to Benefit Age.
In the event of Executive's death following a voluntary termination of
employment with the Bank prior to his Benefit Age, for any reason other
than Cause, following a Change in Control, or an election of early
retirement pursuant to Section 3.1, the Executive's Beneficiary shall
be entitled to his Accrued Benefit determined as of the date of death
and annuitized using the Interest Factor commencing within thirty (30)
days and payable in monthly installments over the Payout Period.
2.4 Death After Involuntary Termination of Employment Prior to Benefit Age.
In the event of Executive's death following an involuntary termination
of employment with the Bank prior to attaining age fifty-five (55), for
any reason other than Cause or following a Change in Control, the
Executive's Beneficiary shall be entitled to the
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Accrued Benefit determined as of the date of death and annuitized
using the Interest Factor commencing within thirty (30) days and
payable in monthly installments over the Payout Period.
SECTION III
SUPPLEMENTAL RETIREMENT INCOME BENEFITS
AND DISABILITY BENEFITS
3.1 Retirement Benefit. If the Executive is in service with the Bank until
reaching his Benefit Age, the Executive shall be entitled to the
Supplemental Retirement Income Benefit. Such benefit shall commence on
the Executive's Benefit Eligibility Date and shall be payable in
monthly installments throughout the Payout Period.
The Executive may, upon proper notice, reduce his Benefit Age so long
as his Benefit Age, as modified, is not less than age fifty-five (55).
The Executive must give notice in writing at least twelve (12) months
prior to attaining his new Benefit Age, provided that such notice is
given no later than the calendar year prior to attainment of the new
Benefit Age. If the Executive makes such an election, the Executive
shall be entitled to the annuitized value of the Accrued Benefit (using
the Interest Factor) payable in monthly installments over the Payout
Period commencing within thirty (30) days of the Executive's attainment
of the new Benefit Age. In the event that the Executive dies after
having given notice of electing to retire at the new Benefit Age but
before leaving the service of the Bank or attaining the new Benefit
Age, the Executive's Beneficiary shall be entitled to the benefit the
Executive would otherwise have received had he lived until the new
Benefit Age.
3.2 Disability Benefit. Notwithstanding any other provision hereof, if
requested by the Executive and approved by the Board of Directors
(which approval shall not be unreasonably withheld), the Executive
shall be entitled to receive the Disability Benefit
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hereunder, in any case in which it is determined by a duly licensed
physician selected by the Bank, that the Executive is no longer able,
properly and satisfactorily, to perform his regular duties as an
Executive, because of ill health, accident, disability or general
inability due to age. If Board of Director approval is obtained, the
Executive may elect to begin receiving the Disability Benefit in lieu
of his Supplemental Retirement Income Benefit. The Disability Benefit
shall not begin more than thirty (30) days following the
above-mentioned disability determination. The Disability Benefit shall
be the Supplemental Retirement Income Benefit reduced by three per cent
(3%) per year for each year that the disability precedes the
Executive's Benefit Age and shall be payable in monthly installments
over the Payout Period. Such benefit shall be further reduced by any
disability benefit payments received by the Executive from any policy
whose premiums were paid by the Bank. Such payments shall cease on the
earliest occurrence of:
(1) return to active employment, or
(2) a determination by a physician of the Bank's choice
that the Executive is no longer disabled as defined
in the Section.
In the event the Executive dies at any time after becoming disabled but
prior to commencement or completion of all payments due and owing
hereunder, the Bank shall pay to the Executive's Beneficiary a
continuation of the monthly installments for the remainder of the
Payout Period.
3.3 Voluntary Termination of Employment. If the Executive's employment with
the Bank is voluntarily terminated prior to his Benefit Age, for any
reason other than for Cause, the Executive's death, disability or
Change in Control, the Executive (or his Beneficiary) shall be entitled
to his Accrued Benefit as of the date of such termination, increased
monthly using the Interest Factor from the date of termination until
the Executive's Benefit Age and annuitized at the Executive's Benefit
Age into monthly installments using the Interest Factor and payable
over the Payout Period.
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3.4 Involuntary Termination of Employment. In the event the Executive is
involuntarily terminated for any reason other than willful misconduct
or a following a Change in Control prior to reaching his Benefit Age,
then the Executive will immediately become entitled to receive benefits
set forth hereunder upon reaching age fifty-five (55), that being
annualized compensation of $106,782 a year for a period of 15 years.
Payments are to be made monthly for a total of 180 payments.
3.5 Termination of Service Related to a Change in Control.
If a Change in Control occurs at the Bank, and thereafter the
Executive's employment is terminated, voluntarily or involuntarily, the
Executive shall be entitled to receive benefits provided in this
Subsection 3.5.
(a) Executive lives until Benefit Age. If after such termination
Executive lives until his Benefit Age the secular trust provided in
Subsection 9.14 shall be annuitized using the Interest Factor into
monthly installments and shall be payable to the Executive over the
Payout Period. Such payments shall commence on the Executive's Benefit
Eligibility Date. The Executive may at any time during the Payout
Period request in writing to receive the unpaid balance of his secular
trust in a lump sum payment. Such lump sum payment shall be payable
within thirty (30) days of such notice.
(b) Executive dies prior to Benefit Age. If after such termination the
Executive dies prior to attaining his Benefit Age the secular trust
provided in Subsection 9.14 shall be annuitized using the Interest
Factor into monthly installments and shall be payable to the
Executive's Beneficiary over the Payout Period. Such payments shall
commence within thirty (30) days of the date the secular trustee
receives notice of the Executive's death. The Executive's Beneficiary
may at any time request in writing to receive the unpaid balance of the
secular trust in a lump sum payment. Such lump sum payment shall be
payable within thirty (30) days of such notice.
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3.6 Termination for Cause. If the Executive is terminated for Cause, all
benefits under this Agreement shall be forfeited and this Agreement
shall become null and void.
3.7 Non-Competition During and After Employment.
(a) In consideration of the agreements of the Bank contained
herein and of the payments to be made by the Bank pursuant
hereto, the Executive hereby agrees that, so long as he
remains employed by the Bank, he will devote substantially all
of his time, skill, diligence and attention to the business of
the Bank, and will not actively engage, either directly or
indirectly, in any business or other activity which is or may
be deemed to be in any way competitive with or adverse to the
best interests of the business of the Bank.
(b) The Executive expressly agrees that, as consideration for the
covenants of the Bank contained herein and as a condition to
the performance by the Bank of its obligations hereunder, from
and after any voluntary or involuntary termination of service,
other than a termination of service pursuant to Subsection
3.5, and continuing throughout the entire Payout Period, as
provided herein, he will not, without the prior written
consent of the Bank, engage in, become interested, directly or
indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation,
nor become associated with, in the capacity of an employee,
director, officer, principal, agent, trustee or in any other
capacity whatsoever, any enterprise conducted in the trading
area of the business of the Bank which enterprise is, or may
be deemed to be, competitive with any business carried on by
the Bank as of the date of the termination of the Executive's
employment or his retirement.
(c) In the event of a termination of the Executive's service
related to a Change in Control pursuant to Subsection 3.5,
paragraph (b) of this Subsection 3.7 shall cease to be a
condition to the performance by the Bank of its obligations
under this Agreement.
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3.8 Breach. In the event of any breach by the Executive of the agreements
and covenants contained herein, the Board of Directors of the Bank
shall direct that any unpaid balance of any payments to the Executive
under this Agreement be suspended, and shall thereupon notify the
Executive of such suspensions, in writing. Thereupon, if the Board of
Directors of the Bank shall determine that said breach by the Executive
has continued for a period of one (1) month following notification of
such suspension, all rights of the Executive and his Beneficiaries
under this Agreement, including rights to further payments hereunder,
shall thereupon terminate.
3.9 Additional Death Benefit - Burial Expense. In addition to the
above-described death benefits, upon the Executive's death, the
Executive's Beneficiary shall be entitled to receive a one-time lump
sum death benefit in the amount of Ten Thousand ($10,000.00) Dollars.
This benefit shall be provided specifically for the purpose of
providing payment for burial and/or funeral expenses of the Executive.
Such death benefit shall be payable within thirty (30) days of the
Executive's death. The Executive's Beneficiary shall not be entitled to
such benefit if the Executive is terminated for Cause.
SECTION IV
BENEFICIARY DESIGNATION
The Executive shall make an initial designation of primary and
secondary Beneficiaries upon execution of the Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Agreement,
a written designation of primary and secondary Beneficiaries. Any Beneficiary
designation made subsequent to execution of the Agreement shall become effective
only when receipt thereof is acknowledged in writing by the Administrator.
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SECTION V
EXECUTIVE'S RIGHT TO ASSETS
The rights of the Executive, any Beneficiary, or any other person
claiming through the Executive under this Agreement, shall be solely those of an
unsecured general creditor of the Bank. The Executive, the Beneficiary, or any
other person claiming through the Executive, shall only have the right to
receive from the Bank those payments so specified under this Agreement. The
Executive agrees that he, his Beneficiary, or any other person claiming through
him shall have no rights or interests whatsoever in any asset of the Bank,
including any insurance policies or contracts which the Bank may possess or
obtain to informally fund this Agreement. Any asset used or acquired by the Bank
in connection with the liabilities it has assumed under this Agreement, unless
expressly provided herein, shall not be deemed to be held under any trust for
the benefit of the Executive or his Beneficiaries, nor shall any asset be
considered security for the performance of the obligations of the Bank. Any such
asset shall be and remain, a general, unpledged, and unrestricted asset of the
Bank.
SECTION VI
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, his Beneficiaries or any successor in interest to him shall be and
remain simply a general unsecured 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 in its sole discretion to either purchase
assets to meet its obligations undertaken by this Agreement or to refrain from
the same and to determine the extent, nature, and method of such asset
purchases. Should the Bank decide to purchase assets such as life insurance,
mutual funds, disability policies or annuities, the Bank reserves the absolute
right, in its sole discretion, to terminate such assets at any time, in whole or
in part. At no time shall the Executive be deemed to have any lien, right, title
or interest in or to any specific investment or to any assets of the Bank. If
the Bank elects to invest in a life insurance, disability or annuity policy
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upon the life of the Executive, then the Executive shall assist the Bank by
freely submitting to a physical examination and by supplying such additional
information necessary to obtain such insurance or annuities.
SECTION VII
ALIENABILITY AND ASSIGNMENT PROHIBITION
Neither the Executive nor any 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 his 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, communication, hypothecation, transfer or
disposal of the benefits hereunder, the Bank's liabilities shall forthwith cease
and terminate.
SECTION VIII
ACT PROVISIONS
8.1 Named Fiduciary and Administrator. The Bank shall be the Named
Fiduciary and Administrator (the "Administrator") of this Agreement. As
Administrator, the Bank shall be responsible for the management,
control and administration of the Agreement as established herein. The
Administrator may delegate to others certain aspects of the management
and operational responsibilities of the Agreement, including the
employment of advisors and the delegation of ministerial duties to
qualified individuals.
8.2 Claims Procedure and Arbitration. In the event that benefits under this
Agreement 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
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be made to the Administrator within sixty (60) days from the date
payments are refused. The Bank and its Board of Directors 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
writing by the Bank and its Board of Directors shall further indicate
the additional steps which must be undertaken by claimants if an
additional review of the claim denial is desired.
If claimants desire a second review, they shall notify the
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 issues and comments, in writing, they may feel
appropriate. In its sole discretion, the Administrator shall then
review the second claim and provide a written decision within sixty
(60) days of receipt of such claim. This decision shall 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 mediation, administered by the American Arbitration Association
("AAA") (or a mediator selected by the parties) in accordance with the
AAA's Commercial Mediation Rules. If mediation is not successful in
resolving the dispute, it shall be settled by arbitration administered
by the AAA under its Commercial Arbitration Rules, and judgment on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
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SECTION IX
MISCELLANEOUS
9.1 No Effect on Employment Rights. Nothing contained herein will confer
upon the Executive the right to be retained in the service of the Bank
nor limit the right of the Bank to discharge or otherwise deal with the
Executive without regard to the existence of the Agreement.
9.2 State Law. The Agreement is established under, and will be construed
according to, the laws of the State of Indiana, to the extent such laws
are not preempted by the Act and valid regulations published
thereunder.
9.3 Severability. In the event that any of the provisions of this Agreement
or portion thereof, are held to be inoperative or invalid by any court
of competent jurisdiction, then: (1) insofar as is reasonable, effect
will be given to the intent manifested in the provisions held invalid
or inoperative, and (2) the validity and enforceability of the
remaining provisions will not be affected thereby.
9.4 Incapacity of Recipient. In the event the Executive is declared
incompetent and a conservator or other person legally charged with the
care of his person or Estate is appointed, any benefits under the
Agreement to which such Executive is entitled shall be paid to such
conservator or other person legally charged with the care of his person
or Estate.
9.5 Unclaimed Benefit. The Executive shall keep the Bank informed of his
current address and the current address of his Beneficiaries. The Bank
shall not be obligated to search for the whereabouts of any person. If
the location of the Executive is not made known to the Bank as of the
date upon which any payment of any benefits may first be made, the Bank
shall delay payment of the Executive's
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benefit payment(s) until the location of the Executive is made known to
the Bank; however, the Bank shall only be obligated to hold such
benefit payment(s) for the Executive until the expiration of thirty-six
(36) months. Upon expiration of the thirty-six (36) month period, the
Bank may discharge its obligation by payment to the Executive's
Beneficiary. If the location of the Executive's Beneficiary is not made
known to the Bank by the end of an additional two (2) month period
following expiration of the thirty-six (36) month period, the Bank may
discharge its obligation by payment to the Executive's Estate. If there
is no Estate in existence at such time or if such fact cannot be
determined by the Bank, the Executive and his Beneficiary(ies) shall
thereupon forfeit any rights to the balance, if any, of any benefits
provided for such Executive and/or Beneficiary under this Agreement.
9.6 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Agreement, no individual acting as an employee or
agent of the Bank, or as a member of the Board of Directors shall be
personally liable to the Executive or any other person for any claim,
loss, liability or expense incurred in connection with the Agreement.
9.7 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.
9.8 Effect on Other Corporate Benefit Agreements. 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
agreement constituting a part of the Bank's existing or future
compensation structure.
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9.9 Suicide. Notwithstanding anything to the contrary in this Agreement,
the benefits otherwise provided herein shall not be payable and this
Agreement shall become null and void if the Executive's death results
from suicide, whether sane or insane, within twenty-four (24) months
after the execution of his Agreement.
9.10 Inurement. This Agreement shall be binding upon and shall inure to the
benefit of the Bank, its successors and assigns, and the Executive, his
successors, heirs, executors, administrators, and Beneficiaries.
9.11 Tax Withholding. The Bank may withhold from any benefits payable under
this Agreement all federal, state, city, or other taxes as shall be
required pursuant to any law or governmental regulation then in effect.
9.12 Headings. Headings and sub-headings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part of this
Agreement.
9.13 Rabbi Trust. The Bank intends to incorporate this Agreement into the
First Federal Savings Bank of Marion Rabbi Trust for the Executive
Supplemental Retirement Income Plans and Excess Benefit Plans, dated
December 1, 1996, into which the Bank intends to contribute assets
which shall be held therein, subject to the claims of the Bank's
creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed
assets are paid to the Executives and their Beneficiaries in such
manner and at such times as specified in this Agreement. It is the
intention of the Bank to make contributions to the rabbi trust to
provide the Bank with a source of funds to assist it in meeting the
liabilities of this Agreement. The rabbi trust and any assets held
therein shall conform to the terms of the rabbi trust agreement which
has been established in conjunction with this Agreement. To the extent
the language in this Agreement is modified by the language in the rabbi
trust agreement, the rabbi trust agreement shall supersede this
Agreement. Any contributions to the rabbi trust shall be made during
each year of the Plan in
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accordance with the rabbi trust agreement. The amount of such
contribution(s) shall be equal to the full present value of all
benefit accruals under this Plan, if any, less: (i) previous
contributions made on behalf of the Executive to the rabbi trust,
and (ii) earnings to date on all such previous contributions.
9.14 Secular Trust. A secular trust called the Larry Phillips Grantor
Trust shall be established in the event of a Change in Control,
into which the Bank shall make a contribution only in such event.
If the Executive dies prior to this contribution being made, then
the Executive's Beneficiary is entitled to the Survivor's Benefit
beginning within thirty (30) days payable over the Payout Period.
The contribution shall be the full present value, using an
appropriate discount rate, of the retirement benefit specified in
Subsection 1.18; provided, however, in no event shall the
contribution be less than an amount which is sufficient to
provide the Executive with after-tax benefits (assuming a
constant tax rate equal to the rate in effect as of the date of
the Change in Control) beginning at his Benefit Age equal in
amount to that benefit which would have been payable to the
Executive if no secular trust had been implemented and the
benefit obligation had been accrued under APB Opinion No. 12, as
amended by FAS 106. In the event that such contribution is made
to the secular trust, Executive, at his sole discretion, shall
have the right to receive the funds at such time and in such
manner as can be supported by the contributed amount.
SECTION X
AMENDMENT/REVOCATION
This Agreement shall not be amended, modified or revoked at any
time, in whole or part, without the mutual written consent of the Executive and
the Bank, and such mutual consent shall be required even if the Executive is no
longer employed by the Bank.
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SECTION XI
EXECUTION
11.1 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and any
previous agreements or understandings between the parties hereto
regarding the subject matter hereof are merged into and superseded by
this Agreement.
11.2 This Agreement shall be executed in triplicate, each copy of which,
when so executed and delivered, shall be an original, but all three
copies shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the Bank and the Holding Company have caused this
Agreement to be executed on this 29th day of February, 2000.
WITNESS: FIRST FEDERAL SAVINGS BANK
/s/ William J. Landers By: /s/ Steven L. Banks
President
(Title)
WITNESS: EXECUTIVE
/s/ William J. Landers /s/ Larry G. Phillips
- --------------------------- ---------------------------------
Larry G. Phillips
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SECOND RESTATED EXECUTIVE SUPPLEMENTAL
RETIREMENT INCOME AGREEMENT
BENEFICIARY DESIGNATION
The Executive, under the terms of the Second Restated Executive
Supplemental Retirement Income Agreement executed by the Bank and dated February
29, 2000 hereby designates the following Beneficiary to receive any guaranteed
payments or death benefits under such Agreement, following his death:
PRIMARY BENEFICIARY: ____________________________________
SECONDARY BENEFICIARY: ____________________________________
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: ______________________, 2000
- ---------------------------------- -----------------------------
(WITNESS) EXECUTIVE
Exhibit A
1
EXECUTIVE
SHAREHOLDER BENEFIT PROGRAM
AGREEMENT FOR STEVE BANKS
FIRST FEDERAL SAVINGS BANK
February 1, 2000
Financial Institution Consulting Corporation
700 Colonial Road, Suite 260
Memphis, Tennessee 38117
WATS: 1-800-873-0089
FAX: (901) 684-7414
(901) 684-7400
<PAGE>
EXECUTIVE SHAREHOLDER BENEFIT PLAN
AGREEMENT FOR STEVE BANKS
This Executive Shareholder Benefit Plan Agreement (the "Agreement"),
effective as of the 1st day of February, 2000, formalizes the understanding by
and between FIRST FEDERAL SAVINGS BANK (the "Bank"), a federally chartered stock
savings bank having its principal place of business in Indiana, and STEVE BANKS
(hereinafter referred to as "Executive"). Any reference herein to the "Holding
Company" shall mean Marion Capital Holdings, Inc.
W I T N E S S E T H :
WHEREAS, the Executive is employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore performed
by the Executive and wishes to encourage his continued employment; and
WHEREAS, the Executive wishes to be assured that he will be entitled to
a certain amount of additional compensation for some definite period of time
from and after retirement from active service with the Bank or other termination
of employment and wishes to provide his beneficiary with benefits from and after
death; and
WHEREAS, the Bank and the Executive wish to provide the terms and
conditions upon which the Bank shall pay such additional compensation to the
Executive after retirement or other termination of employment and/or death
benefits to his beneficiary after death; and
WHEREAS, the Bank has adopted this Executive Shareholder Benefit Plan
which controls all issues relating to benefits as described herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the Bank and the Executive agree as follows:
<PAGE>
SECTION I
DEFINITIONS
When used herein, the following words shall have the meanings below
unless the context clearly indicates otherwise:
1.1 "Accrued Benefit" means that portion of the Retirement Benefit which is
required to be expensed and/or accrued over a period not to exceed ten
(10) years under generally accepted accounting principles by the
following methodology: 54.55% of the difference between the Bank's
aggregate after-tax income derived from annual increases in the cash
surrender value of the hypothetical pool of no-load, no-surrender
charge life insurance policies described in Appendix I and the
after-tax Cost of Funds Expense.
If such contracts for life insurance are not purchased or are
subsequently surrendered or lapsed, then the Bank shall receive an
annual policy illustrations that assume the above- described policies
were purchased, or were not subsequently surrendered or lapsed. Such
illustrations will be received from the insurance company and will
indicate the increases in policy cash surrender values for purposes of
calculating the Accrued Benefit.
In either case, references to life insurance contracts 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
beneficiar(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 creditor of the Bank.
1.2 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.3 "Administrator" means the Bank.
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1.4 "Bank" means FIRST FEDERAL SAVINGS BANK and any successor thereto.
1.5 "Beneficiary" means the person or persons designated as beneficiary in
writing to the Bank to whom the share of a deceased Executive's account
is payable. If no beneficiary is so designated, then the Executive's
Spouse, if living, will be deemed the beneficiary. If the Executive's
Spouse is not living, then the Children of the Executive will be deemed
the beneficiary. If there are no living Children, then the Estate of
the Executive will be deemed the beneficiary.
1.6 "Cause" means personal dishonesty, willful misconduct, willful
malfeasance, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations, including
driving while intoxicated, or similar offenses), final cease-and-desist
order, material breach of any provision of this Agreement, or gross
negligence in matters of material importance to the Bank.
1.7 "Change in Control" shall mean and include the following with respect
to the Bank or the Holding Company:
(1) a Change in Control of a nature that would be required to be
reported in response to Item I (a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or
(2) a change in control of the Bank within the meaning of 12
C.F.R. 574.4; or
(3) a Change in Control at such time as
(i) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of
securities of the Bank representing Twenty Five
Percent (25.0%) or more of the combined voting power
of the Bank's outstanding securities ordinarily
having the right to vote at the election
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of directors, except for any stock purchased by the
Bank's Employee Stock Ownership Plan and/or trust; or
(ii) 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 comprising the Incumbent Board, or whose
nomination for election by the Bank's stockholders
was approved by the Bank's nominating committee which
is comprised of members of the Incumbent Board, shall
be, for purposes of this clause (ii), considered as
though he were a member of the Incumbent Board; or
(iii) merger, consolidation, or sale of all or
substantially all of the assets of the Bank occurs;
or
(iv) a proxy statement is issued soliciting proxies from
the stockholders of the Bank by someone other than
the current management of the Bank, seeking
stockholder approval of a plan of reorganization,
merger, or consolidation of the Bank with one or more
corporations as a result of which the outstanding
shares of the class of the Bank's securities are
exchanged for or converted into cash or property or
securities not issued by the Bank.
The term "person" includes an individual, a group acting in concert, a
corporation, a partnership, an association, a joint venture, a pool, a
joint stock company, a trust, an unincorporated organization or similar
company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities. The term "acquire" means
obtaining ownership, control, power to vote or sole power of
disposition of stock, directly or indirectly or through one or more
transactions or subsidiaries, through purchase, assignment, transfer,
exchange, succession or other means, including (1) an increase in
percentage ownership resulting from a redemption, repurchase, reverse
stock split or a similar transaction involving other securities of the
same class; and (2) the
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acquisition of stock by a group of persons and/or companies acting in
concert which shall be deemed to occur upon the formation of such
group, provided that an investment advisor shall not be deemed to
acquire the voting stock of its advisee if the advisor (a) votes the
stock only upon instruction from the beneficial owner and (b) does not
provide the beneficial owner with advice concerning the voting of such
stock. The term "security" includes nontransferable subscription rights
issued pursuant to a plan of conversion, as well as a "security," as
defined in 15 U.S.C. ss. 78c(2)(1`); and the term "acting in concert"
means (1) knowing participation in a joint activity or interdependent
conscious parallel action towards a common goal whether or not pursuant
to an express agreement, or (2) a combination or pooling of voting or
other interests in the securities of an issuer for a common purpose
pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written or otherwise. Further, acting in
concert with any person or company shall also be deemed to be acting in
concert with any person or company that is acting in concert with such
other person or company.
Notwithstanding the above definitions, the Board, in its absolute
discretion, may make a finding that a Change in Control of the Bank has
taken place without the occurrence of any or all of the events
enumerated above.
1.7 "Children" means the Executive's children, both natural and adopted and
any issue of any predeceased Children, then living at the time payments
are due the Children under this Agreement.
1.8 "Code" means the Internal Revenue Code of 1986 as amended from time to
time.
1.9 "Cost of Funds Expense" means, an interest rate as hereinafter defined
to be applied and compounded annually with respect to the after tax
cash flow related to the Agreement, including benefit payments and an
initial premium sum of Five Million Five Hundred Thousand Dollars
($5,500,000). The interest rate shall be equal to
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80% of the last available one (1) year advance rate from the Federal
Home Loan Bank in Indianapolis as determined on January 1 of each Plan
Year, or such other rate as is mutually agreed by the Bank and the
Executive; provided, however, that it shall be 80% of 6.60% for the
first Plan Year.
1.10 "Effective Date" shall be the date of February 1, 2000.
1.11 "Estate" means the estate of the Executive.
1.12 "Interest Factor" means Seven Per Cent (7%) per annum.
1.13 "Normal Retirement Date" means the first day of the month coincident
with or next following the Executive's sixty-fifth (65th) birthday.
1.14 "Payout Period" means the time frame during which certain benefits
payable hereunder shall be distributed. Payments shall be made in equal
monthly installments commencing within thirty (30) days following the
occurrence of the event which triggers distribution and continuing for
One Hundred Eighty (180) consecutive months. For purposes of the
Survivor's Benefit payable hereunder, the Payout Period shall be One
Hundred Eighty (180) consecutive months.
1.15 "Plan Year" shall mean the calendar year; provided, however, that the
first Plan Year shall be February 1, 2000 through December 31, 2000.
1.16 "Permanently and Totally Disabled" means Executive has, for at least
six (6) months, been unable to perform the services incident to his
position with the Bank as a result of accidental bodily injury or
sickness and that the status is likely to continue for an indefinite
period, as reasonably determined subsequent to the expiration of the
six (6) month period by a duly licensed physician selected in good
faith by the Bank.
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1.17 "Spouse" means the individual to whom the Executive is legally married
at the time of the Executive's death.
1.18 "Suicide" means the act of intentionally killing oneself.
1.19 "Supplemental Retirement Income Benefit" means an annual amount,
payable over the Payout Period, equal to the annuitized value of the
Accrued Benefit using the Interest Factor.
1.20 "Survivor's Benefit" means the benefit provided to Executive's
Beneficiary under Subsection 2.1 payable over the Payout Period. The
Survivor's Benefit shall be $23,502 per month.
SECTION II
PRE RETIREMENT AND POST RETIREMENT DEATH BENEFITS
2.1 Death Prior to Termination of Employment or After Change in Control. If
Executive dies prior to termination of employment with the Bank or
after termination of employment with the Bank coincident with or
following a Change in Control (but before commencement of payment of
the Supplemental Retirement Income Benefit to Executive), his
Beneficiary shall be entitled to the Survivor's Benefit. The first
installment shall begin within thirty (30) days after the date of death
of Executive (or within thirty (30) days after the date the Bank is
notified of Executive's death) and each succeeding installment shall be
paid on the next succeeding month thereof during the Payout Period.
2.2 Death Subsequent to Retirement. In the event of death of Executive
while receiving monthly benefits under this Plan or after retirement on
or after the Executive's Normal Retirement Date but before commencement
of payment of the Supplemental Retirement Income Benefit to Executive,
except under Section 3.3 hereof, then the unpaid balance of such
monthly
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payments remaining to be paid at that time shall continue to be paid
monthly for the remainder of the Payout Period to Executive's
Beneficiary.
2.3 Death by Reason of Suicide. In the event Executive dies by reason of
suicide at any time within twenty-six (26) months after execution of
this Agreement, the Bank shall be under no obligation to provide any
benefits to the Executive's Beneficiary.
2.4 Death After Voluntary Termination of Employment Prior to Normal
Retirement Age. In the event of Executive's death following a voluntary
termination of employment with the Bank prior to his Normal Retirement
Date, for any reason other than Cause, the Executive's Beneficiary
shall be entitled to his Accrued Benefit determined as of the date of
termination of employment and annuitized using the Interest Factor.
SECTION III
SUPPLEMENTAL RETIREMENT INCOME BENEFIT
AND DISABILITY BENEFIT
3.1 Normal Retirement Benefit. At Executive's retirement on or after the
Normal Retirement Date, the Bank shall commence payments of the
Supplemental Retirement Income Benefit to Executive. Such payments
shall commence the first day of the month next following the
Executive's Normal Retirement Date and shall be payable in monthly
installments throughout the Payout Period.
3.2 Disability. If Executive becomes Permanently and Totally Disabled prior
to reaching his Normal Retirement Date, while covered by the provisions
of this Agreement, Executive shall be entitled to his Accrued Benefit
at the time of disability, annuitized using the Interest Factor and
payable over the Payout Period. Payments shall begin within thirty (30)
days after Executive becomes Permanently and Totally Disabled. In the
event the Executive dies at any time after termination of employment
due to disability but prior to commencement or
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completion of all payments due and owing hereunder, the Bank shall pay
to the Executive's Beneficiary the Survivor's Benefit for the remainder
of the Payout Period plus a lump sum payment equal to the present value
of the difference between the Survivor's Benefit and the Accrued
Benefit payments already paid to the Executive. Such additional lump
sum payment shall be made within thirty (30) days after the Executive's
death or within thirty (30) days after the date the Bank is notified of
Executive's death.
3.3 Involuntary Termination of Employment. In the event of Executive's
involuntary termination of employment, including involuntary
termination coincident with or within three (3) years following a
Change in Control, but excluding termination due to death, disability
or termination for Cause, the Executive shall be entitled to receive a
retirement benefit equal to the Survivor's Benefit. The Bank, or its
successor, shall commence payment of such benefit within thirty (30)
days after the Executive's Normal Retirement Date, as defined herein.
For these purposes, Executive's voluntary termination of employment
within three (3) years following a Change in Control shall be deemed to
be an involuntary termination of employment.
3.4 Voluntary Termination of Employment. In the event of Executive's
voluntary termination of employment with the Bank prior to his Normal
Retirement Date, for any reason other than Cause, the Executive (or his
Beneficiary, if applicable) shall be entitled to his Accrued Benefit
determined as of the date of termination of employment and annuitized
using the Interest Factor. The benefit payable hereunder shall be in
accordance with Section 7.1 below.
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SECTION IV
EXECUTIVE'S RIGHT TO ASSETS
The rights of the Executive, any Beneficiary of the Executive, or any
other person claiming through the Executive under this Agreement, shall be
solely those of an unsecured general creditor of the Bank. The Executive, the
Beneficiary of the Executive, or any other person claiming through the
Executive, shall only have the right to receive from the Bank those payments as
specified under this Agreement. The Executive agrees that he, his Beneficiary,
or any other person claiming through him shall have no rights or interests
whatsoever in any asset of the Bank, including any insurance policies or
contracts which the Bank may possess or obtain to informally fund this
Agreement. Any asset used or acquired by the Bank in connection with the
liabilities it has assumed under this Agreement, except as expressly provided,
shall not be deemed to be held under any trust for the benefit of the Executive
or his Beneficiaries, nor shall it be considered security for the performance of
the obligations of the Bank. It shall be, and remain, a general, unpledged, and
unrestricted asset of the Bank.
SECTION V
RESTRICTIONS UPON FUNDING
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,
his Beneficiaries or any successor in interest to him shall be and remain simply
a general creditor of the Bank in the same manner as any other creditor having a
general claim for matured and unpaid compensation. The Bank reserves the
absolute right, at its sole discretion, to either fund the obligations
undertaken by this Agreement or to refrain from funding the same and to
determine the extent, nature, and method of such informal 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 Executive be deemed to have
any lien nor right, title or interest in or to any specific funding
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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
Executive shall assist the Bank by freely submitting to a physical examination
and supplying such additional information necessary to obtain such insurance or
annuities.
SECTION VI
ALIENABILITY AND ASSIGNMENT PROHIBITION
Neither Executive nor any 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 his Beneficiary, nor be transferrable by operation of law in the event of
bankruptcy, insolvency or otherwise. In the event Executive or any Beneficiary
attempts assignment, communication, hypothecation, transfer or disposal of the
benefits hereunder, the Bank's liabilities shall forthwith cease and terminate.
SECTION VII
TERMINATION OF EMPLOYMENT
7.1 Termination of Service Prior to Retirement Date. If, prior to
Executive's Normal Retirement Date, Executive voluntarily terminates
employment with the Bank, the Bank shall pay to the Executive the
benefit set forth in Subsection 3.4. Such payments shall commence
within thirty (30) days of his termination of employment and shall
continue throughout the Payout Period. Notwithstanding the above, if
Executive is involuntary terminated without Cause or following a Change
in Control as contemplated in Subsection 3.3, Executive shall be
entitled to the benefit set forth therein, commencing within thirty
(30) days of Executive's Normal Retirement Date.
7.2 Termination of Service for Cause. Should Executive be terminated for
Cause, his benefits
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under this Agreement shall be forfeited and this Agreement shall become
null and void.
SECTION VIII
ACT PROVISIONS
8.1 Named Fiduciary And Administrator. The Bank shall be the Named
Fiduciary and Administrator of this Agreement. As Administrator, the
Bank shall be responsible for the management, control and
administration of the Agreement as established herein. The
Administrator may delegate to others certain aspects of the management
and operational responsibilities of the Agreement, including the
employment of advisors and the delegation of ministerial duties to
qualified individuals.
8.2 Claims Procedure And Arbitration. In the event that benefits under this
Agreement 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 Administrator named above within sixty (60) days from the date
payments are refused. The Administrator and its Board of Directors
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.
If claimants desire a second review, they shall notify the
Administrator in writing within sixty (60) days of the first claim
denial. Claimants may review the Agreement or any documents relating
thereto and submit any issues, in writing, and comments they may feel
appropriate. In its sole discretion, the 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
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provisions of the Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of the Agreement or the meaning and effect of the
terms and conditions thereof, then claimants may submit the dispute to
mediation, administered by the American Arbitration Bank ("AAA") (or a
mediator selected by the parties) in accordance with the AAA's
Commercial Mediation Rules. If mediation is not successful in resolving
the dispute, it shall be settled by arbitration administered by the AAA
under its Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
Where a dispute arises as to the Bank's discharge of 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.
SECTION IX
MISCELLANEOUS
9.1 No Effect on Employment Rights. Nothing contained herein shall confer
upon the Executive the right to be retained in the service of the Bank
nor limit the right of the Bank to discharge or otherwise deal with the
Executive without regard to the existence of this Agreement. The
provisions of 12 CFR Part 563.39 (including all of its subparts) shall
be fully applicable to this Agreement.
9.2 Disclosure. Each Executive shall receive a copy of his Agreement and
the Administrator will make available, upon request, a copy of the
rules and regulations that govern this type of Agreement.
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9.3 State Law. The Agreement is established under, and will be construed
according to, the laws of the State of Indiana, to the extent that such
laws are not preempted by the Act and valid regulations published
thereunder.
9.4 Severability. In the event that any of the provisions of this Agreement
or portion thereof, are held to be inoperative or invalid by any court
of competent jurisdiction, then: (1) insofar as is reasonable, effect
will be given to the intent manifested in the provisions held invalid
or inoperative, and (2) the validity and enforceability of the
remaining provisions will not be affected thereby.
9.5 Incapacity of Recipient. In the event Executive is declared incompetent
and a conservator or other person legally charged with the care of his
person or of his estate is appointed, any benefits under the Agreement
to which such Executive is entitled shall be paid to such conservator
or other person legally charged with the care of his person or his
Estate. Except as provided above in this paragraph, when the Bank's
Board of Directors in its sole discretion, determines that an Executive
is unable to manage his financial affairs, the Board may direct the
Bank to make distributions to any person for the benefit of such
Executive.
9.6 Unclaimed Benefit. Each Executive shall keep the Bank informed of his
current address and the current address of his Beneficiaries. The Bank
shall not be obligated to search for the whereabouts of any person. If
the location of an Executive is not made known to the Bank within three
years after the date on which any payment of the Executive's
Supplemental Retirement Income Benefit may be made, payment may be made
as though the Executive had died at the end of the three-year period.
If, within one additional year after such three-year period has
elapsed, or, within three years after the actual death of the
Executive, the Bank is unable to locate any Beneficiary of the
Executive, then the Bank may fully discharge its obligation by payment
to the Estate.
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9.7 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Agreement, neither the Bank, nor any individual
acting as an employee or agent of the Bank or as a member of the Board
of Directors shall be liable to any Executive, former Executive, or any
other person for any claim, loss, liability or expense incurred in
connection with the Agreement.
9.8 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.
9.9 Affect on Other Corporate Benefit Agreements. 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
agreement constituting a part of the Bank's existing or future
compensation structure.
9.10 Headings. Headings and sub-headings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part of this
Agreement.
9.11 Rabbi Trust. The Bank intends to incorporate this Agreement into the
First Federal Savings Bank of Marion Rabbi Trust for the Executive
Supplemental Retirement Income Plans and Excess Benefit Plans, dated
December 1, 1996, into which the Bank intends to contribute assets
which shall be held therein, subject to the claims of the Bank's
creditors in the event of the Bank's "Insolvency" as defined in the
agreement which establishes such rabbi trust, until the contributed
assets are paid to the Executives and their Beneficiaries in such
manner and at such times as specified in this Agreement. It is the
intention of the Bank to make contributions to the rabbi trust to
provide the Bank with a source of funds to assist it in meeting the
liabilities of this Agreement. The rabbi trust and any assets held
therein shall conform to the terms of the rabbi trust agreement which
has been established in conjunction with this Agreement. To the extent
the language in this Agreement is modified by the language in the rabbi
trust agreement,
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the rabbi trust agreement shall supersede this Agreement. Any
contributions to the rabbi trust shall be made during each year of the
Plan in accordance with the rabbi trust agreement. The amount of such
contribution(s) shall be equal to the full present value of all benefit
accruals under this Plan, if any, less: (i) previous contributions made
on behalf of the Executive to the rabbi trust, and (ii) earnings to
date on all such previous contributions.
9.12 Secular Trust. A secular trust called the Steve Banks Grantor Trust
shall be established in the event of a Change in Control, into which
the Bank shall make a contribution only in such event. The contribution
shall be the full present value, using an appropriate discount rate, of
the retirement benefit specified in Subsection 3.3; provided, however,
in no event shall the contribution be less than an amount which is
sufficient to provide the Executive with after-tax benefits (assuming a
constant tax rate equal to the rate in effect as of the date of the
Change in Control) beginning at his Normal Retirement Age equal in
amount to that benefit which would have been payable to the Executive
if no secular trust had been implemented and the benefit obligation had
been accrued under APB Opinion No. 12, as amended by FAS 106. In the
event that such contribution is made to the secular trust, Executive,
at his sole discretion, shall have the right to receive the funds at
such time and in such manner as can be supported by the contributed
amount.
9.13 Tax Withholding. The Bank may withhold from any benefit payable under
this Agreement all federal, state, city, or other taxes as shall be
required pursuant to any law or governmental regulation then in effect.
SECTION X
NON-COMPETITION AFTER NORMAL RETIREMENT
10.1 Non-Compete Clause. Except as stated in the second paragraph of this
subsection, the Executive expressly agrees that, as consideration for
the agreements of the Bank contained herein and as a condition to the
performance by the Bank of its obligations hereunder, throughout the
entire period beginning at the time of termination of employment until
the final payment is made to Executive, as provided herein, he will
not, without the prior written
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consent of the Bank, engage in, become interested, directly or
indirectly, as a sole proprietor, as a partner in a partnership, or as
a substantial shareholder in a corporation, nor become associated with,
in the capacity of an employee, director, officer, principal, agent,
trustee or in any other capacity whatsoever, any enterprise conducted
in the trading area of the business of the Bank which enterprise is, or
may deemed to be, competitive with any business carried on by the Bank
as of the date of the termination of the Executive's employment or his
retirement. The parties agree that if, for any reason, any covenant
contained herein is held by a court or other tribunal to be
unenforceable or invalid, that such court or tribunal will have the
authority to limit such covenant to that which the court or tribunal
deems proper under the circumstances and to enforce such covenant as
limited. Notwithstanding the foregoing, Executive agrees to honor the
terms of this Non-Compete Clause and not to contest its enforceability.
In the event Executive's termination follows a Change in Control or
other material change in the Bank's structure or business activities,
Executive shall be entitled to his Supplemental Retirement Income
Benefit whether or not he enters into an arrangement that is deemed to
be competitive with the Bank.
10.2 Breach. In the event of any breach by the Executive of the agreements
and covenants contained herein, the Board of Directors of the Bank
shall direct that any unpaid balance of any payments to the Executive
under this Agreement be suspended, and shall thereupon notify the
Executive of such suspensions, in writing. Thereupon, if the Board of
Directors of the Bank shall determine that said breach by the Executive
has continued for a period of one (1) month following notification of
such suspension, all rights of the Executive and his Beneficiaries
under this Agreement, including rights to further payments hereunder,
shall thereupon terminate.
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SECTION XI
AMENDMENT/REVOCATION
This Agreement shall not be amended, modified, or revoked at any time,
in whole or part, without the mutual written consent of the Executive and the
Bank, and such mutual consent shall be required even if the Executive is no
longer employed by the Bank.
ARTICLE XII
EXECUTION
12.1 This Agreement sets forth the entire understanding of the parties
hereto with respect to the transactions contemplated hereby, and any
previous agreements or understandings between the parties hereto
regarding the subject matter hereof are merged into and superseded by
this Agreement.
12.2 This Agreement shall be executed in triplicate, each copy of which,
when so executed and delivered, shall be an original, but all three
copies shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the Bank and the Executive have caused this
Agreement to be executed on the day and date first above written.
ATTEST: FIRST FEDERAL SAVINGS BANK:
By: /s/ Nora K. Kuntz By:/s/ Larry G. Phillips
Sr. VP & Secretary-Treasurer
(Title)
WITNESS: EXECUTIVE:
By: /s/ Jon R. Marler /s/ Steven L. Banks
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EXECUTIVE SHAREHOLDER BENEFIT PLAN AGREEMENT
BENEFICIARY DESIGNATION
The Executive, under the terms of the Executive Shareholder Benefit
Plan Agreement executed by the Bank, dated the 1st day of February, 2000, hereby
designates the following Beneficiary(ies) to receive any guaranteed payments or
death benefits under such Agreement, following his death:
PRIMARY BENEFICIARY:
SECONDARY BENEFICIARY:
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: ______________________, 2000
- ----------------------------------- ------------------------------
(WITNESS) EXECUTIVE
- -----------------------------------
(WITNESS)
Exhibit A
21
DIRECTORS
SHAREHOLDER BENEFIT PLAN
AGREEMENT
FIRST FEDERAL SAVINGS BANK
February 1, 2000
Financial Institution Consulting Corporation
700 Colonial Road, Suite 260
Memphis, Tennessee 38117
WATS: 1-800-873-0089
FAX: (901) 684-7414
(901) 684-7400
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DIRECTORS
SHAREHOLDER BENEFIT PLAN
AGREEMENT
This Directors Shareholder Benefit Plan Agreement (the "Plan"),
effective as of the 1st day of February, 2000, formalizes the understanding by
and between FIRST FEDERAL SAVINGS BANK (the "Bank"), a federally chartered stock
savings bank having its principal place of business in Indiana, and its
directors, hereinafter referred to as "Director(s)", who shall be eligible to
participate in this Plan by execution of a Directors Shareholder Benefit Plan
Joinder Agreement ("Joinder Agreement") in a form provided by the Bank. Any
reference herein to the "Holding Company" shall mean Marion Capital Holdings,
Inc.
W I T N E S S E T H :
WHEREAS, the Directors serve the Bank as members of the Board of
Directors; and
WHEREAS, the Bank recognizes the valuable services heretofore performed
by the Directors and wishes to encourage their continued service; and
WHEREAS, the Directors wish to be assured that they will be entitled to
a certain amount of additional compensation for some definite period of time
from and after retirement from active service with the Bank and wishes to
provide their beneficiaries with benefits from and after death; and
WHEREAS, the Bank and the Directors wish to provide the terms and
conditions upon which the Bank shall pay such additional compensation to the
Directors after retirement and/or death benefits to their beneficiaries after
death; and
WHEREAS, the Bank has adopted this Directors Shareholder Benefit Plan
which controls all issues relating to benefits as described herein;
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NOW, THEREFORE, in consideration of the premises and of the mutual
promises herein contained, the Bank and the Directors agree as follows:
SECTION I
DEFINITIONS
When used herein, the following words shall have the meanings below
unless the context clearly indicates otherwise:
1.1 "Accrued Benefit" means that portion of the Retirement Benefit which is
required to be expensed and/or accrued over a period not to exceed ten
(10) years under generally accepted accounting principles by the
following methodology: the Director's Percentage, to be specified in
the Director's Joinder Agreement, of the difference between the Bank's
aggregate after-tax income derived from annual increases in the cash
surrender value of the hypothetical pool of no-load, no-surrender
charge life insurance policies described in Appendix I and the
after-tax Cost of Funds Expense.
If such contracts for 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, or were not subsequently surrendered or lapsed. Such
illustrations will be received from the insurance company and will
indicate the increases in policy cash surrender values for purposes of
calculating the Accrued Benefit.
In either case, references to life insurance contracts are merely for
purposes of calculating a benefit. The Bank has no obligation to
purchase such life insurance and, if purchased, the Directors and their
beneficiaries shall have no ownership interest in such policies and
shall always have no greater interest in the benefits under this Plan
than that of unsecured creditors of the Bank.
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1.2 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.3 "Administrator" means the Bank.
1.4 "Bank" means FIRST FEDERAL SAVINGS BANK and any successor thereto.
1.5 "Beneficiary" means the person or persons (and their heirs) designated
as Beneficiary in the Director's Joinder Agreement to whom the deceased
Director's benefits are payable. If no Beneficiary is so designated,
then the Director's Spouse, if living, will be deemed the Beneficiary.
If the Director's Spouse is not living, then the Children of the
Director will be deemed the Beneficiaries and will take on a per
stirpes basis. If there are no living Children, then the Estate of the
Director will be deemed the Beneficiary.
1.6 "Benefit Age" shall be the birthday on which the Director becomes
eligible to receive the Retirement Benefit under the Plan. Such
birthday shall be designated in the Director's Joinder Agreement.
1.7 "Benefit Eligibility Date" shall be the date on which a Director is
entitled to receive his Retirement Benefit. A Director's "Benefit
Eligibility Date" shall occur on the 1st day of the month coincident
with or next following the month in which the Director attains his
Benefit Age designated in the Joinder Agreement.
1.8 "Cause" means personal dishonesty, willful misconduct, willful
malfeasance, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations, including
driving while intoxicated, or similar offenses), final cease-and-desist
order, material breach of any provision of this Plan, or gross
negligence in matters of material importance to the Bank.
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1.9 "Change in Control" shall mean and include the following with respect
to the Bank or the Holding Company:
(1) a Change in Control of a nature that would be required to be
reported in response to Item I (a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or
(2) a change in control of the Bank within the meaning of 12
C.F.R. 574.4; or
(3) a Change in Control at such time as
(i) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of
securities of the Bank representing Twenty Five
Percent (25.0%) or more of the combined voting power
of the Bank's outstanding securities ordinarily
having the right to vote at the election of
directors, except for any stock purchased by the
Bank's Employee Stock Ownership Plan and/or trust; or
(ii) 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 comprising the Incumbent Board, or whose
nomination for election by the Bank's stockholders
was approved by the Bank's nominating committee which
is comprised of members of the Incumbent Board, shall
be, for purposes of this clause (ii), considered as
though he were a member of the Incumbent Board; or
(iii) merger, consolidation, or sale of all or
substantially all of the assets of the Bank occurs;
or
(iv) a proxy statement is issued soliciting proxies from
the stockholders of the Bank by someone other than
the current management of the Bank, seeking
stockholder approval of a plan of reorganization,
merger, or consolidation of
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the Bank with one or more corporations as a result of
which the outstanding shares of the class of the
Bank's securities are exchanged for or converted into
cash or property or securities not issued by the
Bank.
The term "person" includes an individual, a group acting in concert, a
corporation, a partnership, an association, a joint venture, a pool, a
joint stock company, a trust, an unincorporated organization or similar
company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities. The term "acquire" means
obtaining ownership, control, power to vote or sole power of
disposition of stock, directly or indirectly or through one or more
transactions or subsidiaries, through purchase, assignment, transfer,
exchange, succession or other means, including (1) an increase in
percentage ownership resulting from a redemption, repurchase, reverse
stock split or a similar transaction involving other securities of the
same class; and (2) the acquisition of stock by a group of persons
and/or companies acting in concert which shall be deemed to occur upon
the formation of such group, provided that an investment advisor shall
not be deemed to acquire the voting stock of its advisee if the advisor
(a) votes the stock only upon instruction from the beneficial owner and
(b) does not provide the beneficial owner with advice concerning the
voting of such stock. The term "security" includes nontransferable
subscription rights issued pursuant to a plan of conversion, as well as
a "security," as defined in 15 U.S.C. ss. 78c(2)(1`); and the term
"acting in concert" means (1) knowing participation in a joint activity
or interdependent conscious parallel action towards a common goal
whether or not pursuant to an express agreement, or (2) a combination
or pooling of voting or other interests in the securities of an issuer
for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or
otherwise. Further, acting in concert with any person or company shall
also be deemed to be acting in concert with any person or company that
is acting in concert with such other person or company.
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Notwithstanding the above definitions, the Board, in its absolute
discretion, may make a finding that a Change in Control of the Bank has
taken place without the occurrence of any or all of the events
enumerated above.
1.10 "Children" means the Director's children, both natural and adopted and
any issue of any predeceased Children, then living at the time payments
are due the Children under this Plan.
1.11 "Code" means the Internal Revenue Code of 1986 as amended from time to
time.
1.12 "Cost of Funds Expense" means, an interest rate as hereinafter defined
to be applied and compounded annually with respect to the after tax
cash flow related to the Plan, including benefit payments and an
initial principal sum of Five Million Five Hundred Thousand Dollars
($5,500,000). The interest rate shall be equal to 80% of the last
available one (1) year advance rate from the Federal Home Loan Bank in
Indianapolis as determined on January 1 of each Plan Year, or such
other rate as is mutually agreed upon by the Bank and the Director,
provided, however, that it shall be 80% of 6.60% for the first Plan
Year.
1.13 "Director's Percentage" means the multiplier specified in the
Director's Joinder Agreement used to determine the Director's annual
Accrued Benefit in accordance with Subsection 1.1.
1.14 "Disability Benefit" means the monthly benefit payable to the Director
following a determination, in accordance with Subsection 3.6, that he
is no longer able, properly and satisfactorily, to perform his duties
as director.
1.15 "Effective Date" shall be the date of February 1, 2000.
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1.16 "Estate" means the estate of the Director.
1.17 "Interest Factor" means Seven Per Cent (7%) per annum.
1.18 "Payout Period" means the time frame during which certain benefits
payable hereunder shall be distributed. Payments shall be made in equal
monthly installments commencing within thirty (30) days following the
occurrence of the event which triggers distribution and continuing for
One Hundred Eighty (180) consecutive months. For purposes of the
Survivor's Benefit payable hereunder, the Payout Period shall be One
Hundred Eighty (180) consecutive months.
1.19 "Plan Year" shall mean the calendar year; provided, however that the
first Plan Year shall be February 1, 2000 through December 31, 2000.
1.20 "Retirement Benefit" means an annual amount, payable to the Director in
monthly installments over the Payout Period, equal to the annuitized
value of the Accrued Benefit using the Interest Factor, provided,
however, that in no event shall the Director's Retirement Benefit
exceed his highest annual board fees.
1.21 "Spouse" means the individual to whom the Director is legally married
at the time of the Director's death.
1.22 "Suicide" means the act of intentionally killing oneself.
1.23 "Survivor's Benefit" means an annual amount payable to the Beneficiary
in monthly installments over the Payout Period, equal to the amount
designated in the Director's Joinder Agreement.
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SECTION II
RABBI TRUST
The Bank intends to incorporate this Plan into the First Federal
Savings Bank of Marion Rabbi Trust for the Director Deferred Compensation Master
Agreement and Director Emeritus Plan, dated December 1, 1996, into which the
Bank intends to contribute assets which shall be held therein, subject to the
claims of the Bank's creditors in the event of the Bank's "Insolvency" as
defined in the agreement which establishes such rabbi trust, until the
contributed assets are paid to the Directors and their Beneficiaries in such
manner and at such times as specified in this Plan. It is the intention of the
Bank to make contributions to the rabbi trust to provide the Bank with a source
of funds to assist it in meeting the liabilities of this Plan. The rabbi trust
and any assets held therein shall conform to the terms of the rabbi trust
agreement which has been established in conjunction with this Plan. To the
extent the language in this Plan is modified by the language in the rabbi trust
agreement, the rabbi trust agreement shall supersede this Plan. Any
contributions to the rabbi trust shall be made during each year of the plan in
accordance with the rabbi trust agreement. The amount of such contribution(s)
shall be equal to the full present value of all benefit accruals under this
Plan, if any, less: (i) previous contributions made on behalf of the Director to
the rabbi trust, and (ii) earnings to date on all such previous contributions.
SECTION III
BENEFITS
3.1 Retirement Benefit. If the Director is in the service of the Bank until
reaching his Benefit Age, the Director shall be entitled to the
Retirement Benefit. Such Retirement Benefit shall commence on the 1st
day of the month following the Director's actual retirement or other
termination of service on the Board, other than a termination of
service due to the Director's death, and shall be payable in monthly
installments throughout the Payout Period. In the event a Director dies
after commencement of the Retirement Benefit payments but before
completion of all such payments due and owing hereunder, the Bank shall
pay to the Director's Beneficiary a continuation of the monthly
installments for the remainder of the Payout Period.
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3.2 Death Prior to Benefit Age. If the Director dies prior to attaining his
Benefit Age but while in the service of the Bank, the Director's
Beneficiary shall be entitled to the Survivor's Benefit. The Survivor's
Benefit shall commence within thirty (30) days of the Director's death
and shall be payable in monthly installments throughout the Payout
Period.
3.3 Voluntary or Involuntary Termination Other Than for Cause.
(a) If the Director's service with the Bank is voluntarily or
involuntarily terminated prior to the attainment of his Benefit
Eligibility Date, for any reason other than for Cause, the Director's
death, disability, or following a Change in Control (as defined), the
Director (or his Beneficiary) shall be entitled to the annuitized value
(using the Interest Factor) of (i) his vested Accrued Benefit
calculated as of the date of his termination of service, plus (ii)
interest accrued on such vested Accrued Benefit from the date of
termination until his Benefit Age.
Such benefit shall commence on the Director's Benefit Eligibility Date
and shall be payable in monthly installments throughout the Payout
Period. In the event the Director dies at any time after commencement
of payments hereunder, but prior to completion of all such payments due
and owing hereunder, the Bank shall pay to the Director's Beneficiary a
continuation of the monthly installments for the remainder of the
Payout Period.
(b) If the Director dies after his voluntary or involuntary termination
of service occurring prior to his Benefit Eligibility Date, and prior
to the commencement of benefits hereunder, the Director's Beneficiary
shall be entitled to the annuitized value (using the Interest Factor)
of his Accrued Benefit. The payment of such benefit shall commence
within thirty (30) days of the Director's death. The benefit shall be
payable in monthly installments over the Payout Period.
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3.4 Termination of Service Related to a Change in Control.
(a) If the Director's service is terminated (either voluntarily or
involuntarily) following or coincident with a Change in Control, the
Director shall be entitled to a retirement benefit equal to the
Survivor's Benefit. Such benefit shall commence on the 1st day of the
month following his termination of service and shall be payable in
monthly installments throughout the Payout Period. In the event that
the Director dies at any time after commencement of the payments, but
prior to completion of all such payments due and owing hereunder, the
Bank, or its successor, shall pay to the Director's Beneficiary a
continuation of the monthly installments for the remainder of the
Payout Period.
(b) If, after such termination, the Director dies prior to commencement
of the benefits hereunder, the Director's Beneficiary shall be entitled
to the Survivor's Benefit which shall commence within thirty (30) days
of the Director's death. The Survivor's Benefit shall be payable in
monthly installments over the Payout Period.
3.5 Termination for Cause. If the Director is terminated for Cause, all
benefits under this Plan shall be forfeited and this Plan shall become
null and void as to the Director.
3.6 Disability Benefit. Notwithstanding any other provision hereof, if
requested by the Director and approved by the Board of Directors, the
Director who has not attained his Benefit Eligibility Date shall be
entitled to receive the Disability Benefit hereunder, in any case in
which it is determined by a duly licensed physician selected by the
Bank, that the Director is no longer able, properly and satisfactorily,
to perform his regular duties as a Director, because of ill health,
accident, disability or general inability due to age. If the Director's
service is terminated pursuant to this paragraph and Board of Director
approval is obtained, the Director may elect to begin receiving the
Disability Benefit in lieu of any benefit available under Section 3.3,
which is not available prior to the Director's Benefit Eligibility
Date. The Disability Benefit shall equal the Director's Accrued
Benefit, annuitized (using the Interest Factor) over the Payout Period.
The Disability Benefit shall be payable in monthly installments over
the Payout Period commencing within thirty (30)
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<PAGE>
days following the later of (i) the above mentioned disability
determination and (ii) the approval of the Disability Benefit by the
Board of Directors. In the event the Executive dies at any time after
termination of employment due to disability but prior to commencement
or completion of all payments due and owing hereunder, the Bank shall
pay to the Director's Beneficiary the Survivor's Benefit for the
remainder of the Payout Period plus a lump sum payment equal to the
present value of the difference between the Survivor's Benefit and the
Accrued Benefit payments already paid to the Executive.
3.7 Non-Competition During and After Service on the Board.
(a) In consideration of the agreements of the Bank contained herein and
of the payments to be made by the Bank pursuant hereto, the Director
hereby agrees that, so long as he remains in the service of the Bank,
he will not actively engage, either directly or indirectly, in any
business or other activity which is or may be deemed to be in any way
competitive with or adverse to the best interests of the business of
the Bank unless the Directors participation therein has been consented
to, in writing, by the Board of Directors.
(b) The Director expressly agrees that, as consideration for the
covenants of the Bank contained herein and as a condition to the
performance by the Bank of its obligations hereunder, from and after
any voluntary or involuntary termination of service, other than a
termination of service in connection with a Change in Control pursuant
to Subsection 3.4, and continuing throughout the entire Payout Period,
as provided herein, he will not, without the prior written consent of
the Bank, become associated with, in the capacity of an employee,
director, officer, principal, agent, trustee or in any other capacity
whatsoever, any enterprise conducted in the trading area of the
business of the Bank which enterprise is, or may be deemed to be,
competitive with any business carried on by the Bank as of the date of
the termination of the Director's service or his retirement.
(c) In the event of a termination of the Director's service related to
a Change in Control pursuant to Subsection 3.4, paragraph (b) of this
Subsection 3.7 shall cease to be a condition to the performance by the
Bank of its obligations under this Plan.
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3.8 Breach. In the event of any breach by the Director of the agreements
and covenants contained herein, the Board of Directors of the Bank
shall direct that any unpaid balance of any payments to the Director
under this Plan be suspended, and shall thereupon notify the Director
of such suspensions, in writing. Thereupon, if the Board of Directors
of the Bank shall determine that said breach by the Director has
continued for a period of one (1) month following notification of such
suspension, all rights of the Director and his Beneficiaries under this
Plan, including rights to further payments hereunder, shall thereupon
terminate.
SECTION IV
BENEFICIARY DESIGNATION
The Director shall make an initial designation of primary and secondary
Beneficiaries upon execution of his Joinder Agreement and shall have the right
to change such designation, at any subsequent time, by submitting to the
Administrator in substantially the form attached as Exhibit A to the Joinder
Agreement, a written designation of primary and secondary Beneficiaries. Any
Beneficiary designation made subsequent to execution of the Joinder Agreement
shall become effective only when receipt thereof is acknowledged in writing by
the Administrator.
SECTION V
DIRECTOR'S RIGHT TO ASSETS
The rights of the Director, any Beneficiary, or any other person
claiming through the Director under this Plan, shall be solely those of an
unsecured general creditor of the Bank. The Director, the Beneficiary, or any
other person claiming through the Director, shall only have the right to receive
from the Bank those payments so specified under this Plan. The Director agrees
that he, his Beneficiary, or any other person claiming through him shall have no
rights or interests whatsoever in any asset of the Bank, including any insurance
policies or contracts which the Bank may possess or obtain to informally fund
this Plan. Any asset used or acquired by the Bank in connection with the
liabilities it has assumed under this Plan, unless expressly provided herein,
shall not be deemed to be
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held under any trust for the benefit of the Director or his Beneficiaries, nor
shall any asset be considered security for the performance of the obligations of
the Bank. Any such asset shall be and remain, a general, unpledged, and
unrestricted asset of the Bank.
SECTION VI
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 Plan. The Director,
his Beneficiaries or any successor in interest to him shall be and remain simply
a general unsecured 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 in its sole discretion to either purchase assets to
meet its obligations undertaken by this Plan or to refrain from the same and to
determine the extent, nature, and method of such asset purchases. Should the
Bank decide to purchase assets such as life insurance, mutual funds, disability
policies or annuities, the Bank reserves the absolute right, in its sole
discretion, to terminate such assets at any time, in whole or in part. At no
time shall the Director be deemed to have any lien, right, title or interest in
or to any specific investment or to any assets of the Bank. If the Bank elects
to invest in a life insurance, disability or annuity policy upon the life of the
Director, then the Director shall assist the Bank by freely submitting to a
physical examination and by supplying such additional information necessary to
obtain such insurance or annuities.
SECTION VII
ALIENABILITY AND ASSIGNMENT PROHIBITION
Neither the Director nor any Beneficiary under this Plan shall
have any power or right to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify or otherwise encumber in advance any of the benefits payable
hereunder, nor shall any of said benefits be subject to seizure for the payment
of any debts, judgments, alimony or separate maintenance owed by the Director or
his Beneficiary, nor be transferable by operation of law in the event of
bankruptcy, insolvency or otherwise.
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In the event the Director or any Beneficiary attempts assignment, communication,
hypothecation, transfer or disposal of the benefits hereunder, the Bank's
liabilities shall forthwith cease and terminate.
SECTION VIII
ACT PROVISIONS
8.1 Named Fiduciary and Administrator. The Bank, as Administrator, shall be
the Named Fiduciary of this Plan. As Administrator, the Bank shall be
responsible for the management, control and administration of the Plan
as established herein. The Administrator may delegate to others certain
aspects of the management and operational responsibilities of the Plan,
including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
8.2 Claims Procedure and Arbitration. In the event that benefits under this
Plan are not paid to the Director (or to his Beneficiary in the case of
the Director's death) and such claimants feel they are entitled to
receive such benefits, then a written claim must be made to the
Administrator within sixty (60) days from the date payments are
refused. The Bank and its Board of Directors 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 Plan or the Joinder Agreement upon which the denial is based, and
any additional material or information necessary to perfect the claim.
Such writing by the Bank and its Board of Directors shall further
indicate the additional steps which must be undertaken by claimants if
an additional review of the claim denial is desired.
If claimants desire a second review, they shall notify the
Administrator in writing within sixty (60) days of the first claim
denial. Claimants may review this Plan, the Joinder Agreement or any
documents relating thereto and submit any issues and comments, in
writing, they may feel appropriate. In its sole discretion, the
Administrator shall then review the second claim and provide a written
decision within sixty (60) days of receipt
15
<PAGE>
of such claim. This decision shall state the specific reasons for the
decision and shall include reference to specific provisions of this
Plan or the Joinder Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Plan and the Joinder Agreement or the
meaning and effect of the terms and conditions thereof, then claimants
may submit the dispute to mediation, administered by the American
Arbitration Association ("AAA") (or a mediator selected by the parties)
in accordance with the AAA's Commercial Mediation Rules. If mediation
is not successful in resolving the dispute, it shall be settled by
arbitration administered by the AAA under its Commercial Arbitration
Rules, and judgment on the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof.
SECTION IX
MISCELLANEOUS
9.1 No Effect on Director's Rights. Nothing contained herein will confer
upon the Director the right to be retained in the service of the Bank
nor limit the right of the Bank to deal with the Director without
regard to the existence of the Plan.
9.2 State Law. The Plan is established under, and will be construed
according to, the laws of the State of Indiana, to the extent such laws
are not preempted by the Act and valid regulations published
thereunder.
9.3 Severability. In the event that any of the provisions of this Plan or
portion thereof, are held to be inoperative or invalid by any court of
competent jurisdiction, then: (1) insofar as is reasonable, effect will
be given to the intent manifested in the provisions held invalid or
inoperative, and (2) the validity and enforce ability of the remaining
provisions will not be affected thereby.
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9.4 Incapacity of Recipient. In the event the Director is declared
incompetent and a conservator or other person legally charged with the
care of his person or Estate is appointed, any benefits under the Plan
to which such Director is entitled shall be paid to such conservator or
other person legally charged with the care of his person or Estate.
9.5 Unclaimed Benefit. The Director shall keep the Bank informed of his
current address and the current address of his Beneficiaries. The Bank
shall not be obligated to search for the whereabouts of any person. If
the location of the Director is not made known to the Bank as of the
date upon which any payment of any benefits may first be made, the Bank
shall delay payment of the Director's benefit payment(s) until the
location of the Director is made known to the Bank; however, the Bank
shall only be obligated to hold such benefit payment(s) for the
Director until the expiration of thirty-six (36) months. Upon
expiration of the thirty-six (36) month period, the Bank may discharge
its obligation by payment to the Director's Beneficiary. If the
location of the Director's Beneficiary is not made known to the Bank by
the end of an additional two (2) month period following expiration of
the thirty-six (36) month period, the Bank may discharge its obligation
by payment to the Director's Estate. If there is no Estate in existence
at such time or if such fact cannot be determined by the Bank, the
Director and his Beneficiary(ies) shall thereupon forfeit any rights to
the balance, if any, of any benefits provided for such Director and/or
Beneficiary under this Plan.
9.6 Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, no individual acting as an employee or agent of
the Bank, or as a member of the Board of Directors shall be personally
liable to the Director or any other person for any claim, loss,
liability or expense incurred in connection with the Plan.
9.7 Gender. Whenever in this Plan 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.
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9.8 Effect on Other Corporate Benefit Plans. Nothing contained in this Plan
shall affect the right of the Director to participate in or be covered
by any other corporate benefit available to Directors of the Bank
constituting a part of the Bank's existing or future compensation
structure.
9.9 Suicide. Notwithstanding anything to the contrary in this Plan, the
benefits otherwise provided herein shall not be payable and this Plan
shall become null and void with respect to the Director if the
Director's death results from suicide, whether sane or insane, within
twenty-four (24) months after the execution of his Joinder Agreement.
9.10 Inurement. This Plan shall be binding upon and shall inure to the
benefit of the Bank, its successors and assigns, and the Director, his
successors, heirs, executors, administrators, and Beneficiaries.
9.11 Headings. Headings and sub-headings in this Plan are inserted for
reference and convenience only and shall not be deemed a part of this
Plan.
9.12 Secular Trust. A secular trust in the name of the Director shall be
established in the event of a Change in Control, into which the Bank
shall make a contribution only in such event. The contribution shall be
the full present value, using an appropriate discount rate, of the
retirement benefit specified in Subsection 3.4.
SECTION X
AMENDMENT/REVOCATION
This Plan shall not be amended, modified or revoked at any time,
in whole or part, as to any Director, without the mutual written consent of the
Director and the Bank, and such mutual consent shall be required even if the
Director is no longer in the service of the Bank.
18
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SECTION XI
EXECUTION
11.1 This Plan sets forth the entire understanding of the parties hereto
with respect to the transactions contemplated hereby, and any previous
agreements or understandings between the parties hereto regarding the
subject matter hereof are merged into and superseded by this Plan.
11.2 This Plan shall be executed in triplicate, each copy of which, when so
executed and delivered, shall be an original, but all three copies
shall together constitute one and the same instrument.
19
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IN WITNESS WHEREOF, the Bank has caused this Plan to be executed
on the day and date first above written.
ATTEST: FIRST FEDERAL SAVINGS BANK
/s/ Nora K. Kuntz By: /s/ Larry G. Phillips
Secretary Sr. VP & Secretary-Treasurer
Title:
20
<PAGE>
FIRST AMENDMENT TO THE
DIRECTORS SHAREHOLDER BENEFIT PLAN
WHEREAS, First Federal Savings Bank of Marion, in Marion, Indiana, (the
"Bank") has adopted a Directors Shareholder Benefit Plan (the "Plan"), effective
February 1, 2000, this First Amendment to the Plan is for the purpose of
amending the Plan as follows:
The Plan is hereby amended such that Subsection 1.1 of Section I -
Definitions shall now read:
1.1 "Accrued Benefit" means that portion of the Retirement Benefit which is
required to be expensed and/or under generally accepted accounting
principles by the following methodology: the Director's Percentage, to
be specified in the Director's Joinder Agreement, of the difference
between (i) the Bank's aggregate after-tax income derived from annual
increases in the cash surrender value of the hypothetical pool of
no-load, no-surrender charge life insurance policies described in
Appendix I and (ii) the after-tax Cost of Funds Expense; provided,
however, that in no event shall such yearly accrual exceed that accrual
necessary under the benefit/years of service method to pay, beginning
at the Benefit Eligibility Date, the Retirement Benefit payable over
the Payout Period.
If such contracts for 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, or were not subsequently surrendered or lapsed. Such
illustrations will be received from the insurance company and will
indicate the increases in policy cash surrender values for purposes of
calculating the Accrued Benefit.
In either case, references to life insurance contracts are merely for
purposes of calculating a benefit. The Bank has no obligation to
purchase such life insurance and, if purchased, the Directors and their
beneficiaries shall have no ownership interest in such policies and
shall always have no greater interest in the benefits under this Plan
than that of unsecured creditors of the Bank.
All other provisions and of the Plan, which are not specifically
modified by this First Amendment, are hereby incorporated and shall remain in
full force and effect.
IN WITNESS WHEREOF, the Bank has caused this First Amendment to the
Directors Shareholder Benefit Plan to be executed on this 22nd day of February,
2000.
FIRST FEDERAL SAVINGS BANK OF MARION
(Bank)
Attest: By: /s/ Larry G. Phillips
/s/ K. Kuntz Senior Vice President & Secretary-Treasurer
/s/ John M. Dalton /s/ Steven Banks
John M. Dalton (Director) Steven Banks (Director)
/s/ Jon R. Marler /s/ Jerry McVicker
Jon R. Marler (Director) Jerry McVicker (Director)
<PAGE>
DIRECTORS SHAREHOLDER BENEFIT PLAN
JOINDER AGREEMENT
I, John Dalton, and FIRST FEDERAL SAVINGS BANK hereby agree for good
and valuable consideration, the value of which is hereby acknowledged, that I
shall participate in the Directors Shareholder Benefit Plan ("Plan") established
on February 1, 2000, by FIRST FEDERAL SAVINGS BANK, as such Plan may now exist
or hereafter be modified; and do further agree to the terms and conditions
thereof.
I understand that I must execute this Directors Shareholder Benefit
Plan Joinder Agreement ("Joinder Agreement") as well as notify the Administrator
of such execution, on or before March 1, 2000, in order to participate in the
Plan from its Effective Date. Otherwise, I may execute this Joinder Agreement
and give notice of such execution to the Administrator at least thirty (30) days
prior to any February 1.
My "Benefit Age" shall be Seventy (70).
My "Director's Percentage" shall be 10.33%.
My annual "Survivor's Benefit" shall be Nine Thousand One Hundred and
Sixty-Seven Dollars ($9,167), subject to Subsection 3.2 and all relevant
Subsections of the Plan.
In general, I understand that my receipt (or my Beneficiary's receipt)
of the Retirement Benefit (or Survivor's Benefit) shall be subject to all
provisions of the Plan.
In general, I understand that if I voluntarily or involuntarily
terminate service at the Bank pursuant to Subsection 3.3 of the Plan and prior
to reaching my Benefit Age, for any reason other than for Cause, my retirement
benefit shall be computed in accordance with Subsection 3.3 of the Plan, and in
general such benefit shall be based on the annuitized value of (i) my Accrued
Benefit on such date, plus (ii) interest accrued on such Accrued Benefit from
the date of termination until my Benefit Age.
I hereby designate the following individuals as my "Beneficiary" and I
am aware that I can subsequently change such designation by submitting to the
Administrator, at any subsequent time, and in substantially the form attached
hereto as Exhibit A, a written designation of the primary and secondary
Beneficiaries to whom payment under the Plan shall be made in the event of my
death prior to complete distribution of the benefits due and payable under the
Plan. I understand that any Beneficiary designation made subsequent to execution
of the Joinder Agreement shall become effective only when receipt thereof is
acknowledged in writing by the Administrator.
PRIMARY BENEFICIARY: _______________________________________________
SECONDARY BENEFICIARY:_______________________________________________
<PAGE>
I further understand that I am entitled to review or obtain a copy of
the Plan, at any time, and may do so by contacting the Bank.
This Joinder Agreement shall become effective upon execution (below) by
both the Director and a duly authorized officer of the Bank.
Dated this 22nd day of February, 2000.
/s/ John M. Dalton
(Director)
/s/ Larry G. Phillips Sr. VP & Secretary-Treasurer
(Bank's duly authorized Officer)
<PAGE>
DIRECTORS SHAREHOLDER BENEFIT PLAN
JOINDER AGREEMENT
I, Steve Banks, and FIRST FEDERAL SAVINGS BANK hereby agree for good
and valuable consideration, the value of which is hereby acknowledged, that I
shall participate in the Directors Shareholder Benefit Plan ("Plan") established
on February 1, 2000, by FIRST FEDERAL SAVINGS BANK, as such Plan may now exist
or hereafter be modified; and do further agree to the terms and conditions
thereof.
I understand that I must execute this Directors Shareholder Benefit
Plan Joinder Agreement ("Joinder Agreement") as well as notify the Administrator
of such execution, on or before March 1, 2000, in order to participate in the
Plan from its Effective Date. Otherwise, I may execute this Joinder Agreement
and give notice of such execution to the Administrator at least thirty (30) days
prior to any February 1.
My "Benefit Age" shall be Seventy (70).
My "Director's Percentage" shall be 14.10%.
My annual "Survivor's Benefit" shall be Forty-Nine Thousand Five
Hundred and Twenty-Eight Dollars ($49,528), subject to Subsection 3.2 and all
relevant Subsections of the Plan.
In general, I understand that my receipt (or my Beneficiary's receipt)
of the Retirement Benefit (or Survivor's Benefit) shall be subject to all
provisions of the Plan.
In general, I understand that if I voluntarily or involuntarily
terminate service at the Bank pursuant to Subsection 3.3 of the Plan and prior
to reaching my Benefit Age, for any reason other than for Cause, my retirement
benefit shall be computed in accordance with Subsection 3.3 of the Plan, and in
general such benefit shall be based on the annuitized value of (i) my Accrued
Benefit on such date, plus (ii) interest accrued on such Accrued Benefit from
the date of termination until my Benefit Age.
I hereby designate the following individuals as my "Beneficiary" and I
am aware that I can subsequently change such designation by submitting to the
Administrator, at any subsequent time, and in substantially the form attached
hereto as Exhibit A, a written designation of the primary and secondary
Beneficiaries to whom payment under the Plan shall be made in the event of my
death prior to complete distribution of the benefits due and payable under the
Plan. I understand that any Beneficiary designation made subsequent to execution
of the Joinder Agreement shall become effective only when receipt thereof is
acknowledged in writing by the Administrator.
PRIMARY BENEFICIARY: _______________________________________________
SECONDARY BENEFICIARY:_______________________________________________
<PAGE>
I further understand that I am entitled to review or obtain a copy of
the Plan, at any time, and may do so by contacting the Bank.
This Joinder Agreement shall become effective upon execution (below) by
both the Director and a duly authorized officer of the Bank.
Dated this 22nd day of February, 2000.
/s/ Steve Banks
(Director)
/s/ Larry G. Phillips Sr. VP & Secretary-Treasurer
(Bank's duly authorized Officer)
<PAGE>
DIRECTORS SHAREHOLDER BENEFIT PLAN
JOINDER AGREEMENT
I, Jon Marler, and FIRST FEDERAL SAVINGS BANK hereby agree for
good and valuable consideration, the value of which is hereby acknowledged, that
I shall participate in the Directors Shareholder Benefit Plan ("Plan")
established on February 1, 2000, by FIRST FEDERAL SAVINGS BANK, as such Plan may
now exist or hereafter be modified; and do further agree to the terms and
conditions thereof.
I understand that I must execute this Directors Shareholder
Benefit Plan Joinder Agreement ("Joinder Agreement") as well as notify the
Administrator of such execution, on or before March 1, 2000, in order to
participate in the Plan from its Effective Date. Otherwise, I may execute this
Joinder Agreement and give notice of such execution to the Administrator at
least thirty (30) days prior to any February 1.
My "Benefit Age" shall be Seventy (70).
My "Director's Percentage" shall be 11.78%.
My annual "Survivor's Benefit" shall be Forty-One Thousand Three
Hundred and Ninety-One Dollars ($41,391), subject to Subsection 3.2 and all
relevant Subsections of the Plan.
In general, I understand that my receipt (or my Beneficiary's
receipt) of the Retirement Benefit (or Survivor's Benefit) shall be subject to
all provisions of the Plan.
In general, I understand that if I voluntarily or involuntarily
terminate service at the Bank pursuant to Subsection 3.3 of the Plan and prior
to reaching my Benefit Age, for any reason other than for Cause, my retirement
benefit shall be computed in accordance with Subsection 3.3 of the Plan, and in
general such benefit shall be based on the annuitized value of (i) my Accrued
Benefit on such date, plus (ii) interest accrued on such Accrued Benefit from
the date of termination until my Benefit Age.
I hereby designate the following individuals as my "Beneficiary"
and I am aware that I can subsequently change such designation by submitting to
the Administrator, at any subsequent time, and in substantially the form
attached hereto as Exhibit A, a written designation of the primary and secondary
Beneficiaries to whom payment under the Plan shall be made in the event of my
death prior to complete distribution of the benefits due and payable under the
Plan. I understand that any Beneficiary designation made subsequent to execution
of the Joinder Agreement shall become effective only when receipt thereof is
acknowledged in writing by the Administrator.
PRIMARY BENEFICIARY: _______________________________________________
SECONDARY BENEFICIARY:_______________________________________________
<PAGE>
I further understand that I am entitled to review or obtain a
copy of the Plan, at any time, and may do so by contacting the Bank.
This Joinder Agreement shall become effective upon execution
(below) by both the Director and a duly authorized officer of the Bank.
Dated this 22nd day of February, 2000.
/s/ Jon R. Marler
(Director)
/s/ Larry G. Phillips Sr. VP & Secretary-Treasurer
(Bank's duly authorized Officer)
<PAGE>
DIRECTORS SHAREHOLDER BENEFIT PLAN
JOINDER AGREEMENT
I, Jerry McVicker, and FIRST FEDERAL SAVINGS BANK hereby agree
for good and valuable consideration, the value of which is hereby acknowledged,
that I shall participate in the Directors Shareholder Benefit Plan ("Plan")
established on February 1, 2000, by FIRST FEDERAL SAVINGS BANK, as such Plan may
now exist or hereafter be modified; and do further agree to the terms and
conditions thereof.
I understand that I must execute this Directors Shareholder
Benefit Plan Joinder Agreement ("Joinder Agreement") as well as notify the
Administrator of such execution, on or before March 1, 2000, in order to
participate in the Plan from its Effective Date. Otherwise, I may execute this
Joinder Agreement and give notice of such execution to the Administrator at
least thirty (30) days prior to any February 1.
My "Benefit Age" shall be Seventy (70).
My "Director's Percentage" shall be 9.25%.
My annual "Survivor's Benefit" shall be Thirty-Two Thousand Four
Hundred and Thirty-One Dollars ($32,431), subject to Subsection 3.2 and all
relevant Subsections of the Plan.
In general, I understand that my receipt (or my Beneficiary's
receipt) of the Retirement Benefit (or Survivor's Benefit) shall be subject to
all provisions of the Plan.
In general, I understand that if I voluntarily or involuntarily
terminate service at the Bank pursuant to Subsection 3.3 of the Plan and prior
to reaching my Benefit Age, for any reason other than for Cause, my retirement
benefit shall be computed in accordance with Subsection 3.3 of the Plan, and in
general such benefit shall be based on the annuitized value of (i) my Accrued
Benefit on such date, plus (ii) interest accrued on such Accrued Benefit from
the date of termination until my Benefit Age.
I hereby designate the following individuals as my "Beneficiary"
and I am aware that I can subsequently change such designation by submitting to
the Administrator, at any subsequent time, and in substantially the form
attached hereto as Exhibit A, a written designation of the primary and secondary
Beneficiaries to whom payment under the Plan shall be made in the event of my
death prior to complete distribution of the benefits due and payable under the
Plan. I understand that any Beneficiary designation made subsequent to execution
of the Joinder Agreement shall become effective only when receipt thereof is
acknowledged in writing by the Administrator.
PRIMARY BENEFICIARY: _______________________________________________
SECONDARY BENEFICIARY:_______________________________________________
<PAGE>
I further understand that I am entitled to review or obtain a
copy of the Plan, at any time, and may do so by contacting the Bank.
This Joinder Agreement shall become effective upon execution
(below) by both the Director and a duly authorized officer of the Bank.
Dated this 22nd day of February, 2000.
/s/ Jerry McVicker
(Director)
/s/ Larry G. Phillips Sr. VP & Secretary-Treasurer
(Bank's duly authorized Officer)
<PAGE>
DIRECTORS SHAREHOLDER BENEFIT PLAN
BENEFICIARY DESIGNATION
The Director, under the terms of the Directors Shareholder
Benefit Plan executed by the Bank on February 1, 2000, hereby designates the
following Beneficiary to receive any guaranteed payments or death benefits under
such Plan, following his death:
PRIMARY BENEFICIARY: ____________________________________
SECONDARY BENEFICIARY: _________________________________
This Beneficiary Designation hereby revokes any prior Beneficiary
Designation which may have been in effect.
Such Beneficiary Designation is revocable.
DATE: ______________________, 2000
- ---------------------------------- ----------------------------
(WITNESS) DIRECTOR
- ----------------------------------
(WITNESS)
Exhibit A
SECOND AMENDMENT
TO THE EXCESS BENEFIT AGREEMENT
OF
FIRST FEDERAL SAVINGS BANK OF MARION
MARION, INDIANA
This Second Amendment ("Amendment"), dated the 10th day of March, 2000, hereby
amends the Excess Benefit Agreement ("Agreement") dated February 28, 1996,
between First Federal Savings Bank of Marion and John M. Dalton as follows:
The following Section 8.12 is added to the Agreement:
8.14 Secular Trust. A secular trust called the John Dalton Grantor Trust
shall be established in the event of a Change in Control, into which
the Bank shall make a contribution only in such event. If the Executive
dies prior to this contribution being made, then the Executive's
Beneficiary is entitled to the Survivor's Benefit beginning within
thirty (30) days payable over the Payout Period. The contribution shall
be the full present value, using an appropriate discount rate, of the
benefit specified in Subsection 1.14; provided, however, in no event
shall the contribution be less than an amount which is sufficient to
provide the Executive with after-tax benefits (assuming a constant tax
rate equal to the rate in effect as of the date of the Change in
Control) beginning at his Benefit Age equal in amount to that benefit
which would have been payable to the Executive if no secular trust had
been implemented and the benefit obligation had been accrued under APB
Opinion No. 12, as amended by FAS 106.
<PAGE>
IN WITNESS WHEREOF, the Bank has caused ths Amendment to be executed in
triplicate, this the 10th day of March, 2000.
FIRST FEDERAL SAVINGS BANK OF MARION
By: /s/ Steven L. Banks
Title: President
/S/ John M. Dalton
----------------------------------------
JOHN M. DALTON
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000894372
<NAME> Marion Capital Holdings, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-1-1999
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1.000
<CASH> 2,493,816
<INT-BEARING-DEPOSITS> 4,443,199
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,972,274
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 166,995,050
<ALLOWANCE> 2,260,064
<TOTAL-ASSETS> 199,193,520
<DEPOSITS> 129,474,282
<SHORT-TERM> 0
<LIABILITIES-OTHER> 38,107,143
<LONG-TERM> 0
0
0
<COMMON> 8,025,048
<OTHER-SE> 23,587,047
<TOTAL-LIABILITIES-AND-EQUITY> 199,193,520
<INTEREST-LOAN> 10,584,006
<INTEREST-INVEST> 314,750
<INTEREST-OTHER> 78,806
<INTEREST-TOTAL> 10,977,562
<INTEREST-DEPOSIT> 4,762,044
<INTEREST-EXPENSE> 5,750,137
<INTEREST-INCOME-NET> 5,227,425
<LOAN-LOSSES> 458,027
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,681,075
<INCOME-PRETAX> 2,230,756
<INCOME-PRE-EXTRAORDINARY> 2,066,018
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,066,018
<EPS-BASIC> 1.49
<EPS-DILUTED> 1.48
<YIELD-ACTUAL> 8.26
<LOANS-NON> 1,965,000
<LOANS-PAST> 1,965,000
<LOANS-TROUBLED> 2,418,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,271,701
<CHARGE-OFFS> (486,995)
<RECOVERIES> 3,381
<ALLOWANCE-CLOSE> 2,260,064
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,260,064
</TABLE>
