EXHIBIT 10.6
SOUTHERN MICHIGAN BANK & TRUST
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is made this
________ day of __________________, 2003, by and between Southern
Michigan Bank & Trust (the "Company"), and Name (the
"Director").
INTRODUCTION
To encourage the Director to
remain a member of the Company's Board of Directors, the Company is
willing to provide to the Director a deferred fee opportunity. The
Company will pay the Director's benefits from the Company's general
assets. This Agreement between the Director and the Company
modifies the terms of the Director's participation in the Plan,
replaces all benefits which otherwise were payable under the Plan,
and supercedes all previous Agreements under this Plan.
AGREEMENT
The Director and the Company
agree as follows:
Article 1
Definitions
1.1
Definitions . Whenever used in this Agreement, the following
words and phrases shall have the meanings specified:
1.1.1 " Change of Control " means the transfer
of shares of the Company's voting common stock such that one entity
or one person acquires (or is deemed to acquire when applying
Section 318 of the Code) more than 50 percent of the Company's
outstanding voting common stock followed within twelve (12) months
by the Director's Termination of Service for reasons other than
death, Disability or retirement.
1.1.2 " Code " means the Internal Revenue Code
of 1986, as amended. References to a Code section shall be deemed
to be to that section as it now exists and to any successor
provision.
1.1.3 "Deferral Account" means the Company's
accounting of the Director's accumulated Deferrals plus accrued
interest.
1.1.4 "Deferrals" means the amount of the
Director's fees, which the Director elects to defer according to
this Agreement.
1.1.5 "Disability " means the Director's
suffering a sickness, accident or injury which has been determined
by the carrier of any individual or group disability insurance
policy covering the Director, or by the Social Security
Administration, to be a disability rendering the Director totally
and permanently disabled. The Director must submit proof to the
Company of the carrier's or Social Security Administration's
determination upon the request of the Company.
1.1.6 "Early Retirement Date" means the earlier
of: i) the Director attaining age 60; or ii) the Director having 15
Years of Service on the Board of Directors of the Company.
1.1.7 " Effective Date " means January 1,
2004.
1.1.8 " Election Form " means the Form attached
as Exhibit 1.
1.1.9 " Fees " means the total fees payable to
the Director during a Plan Year.
1.1.10 " Normal Retirement Age " means
the Director's 70th birthday.
1.1.11 " Normal Retirement Date " means
the later of the Normal Retirement Age or Termination of
Service.
1.1.12 " Plan Year " means the calendar
year.
1.1.13 " Termination of Service " means that
the Director ceases to be a member of the Company's Board of
Directors for any reason whatsoever other than by reason of a leave
of absence which is approved by the Company. For purposes of this
Agreement, if there is a dispute over the Director's status or the
date of the Director's Termination of Service, the Company shall
have the sole and absolute right to decide the dispute.
1.1.14 "Years of Service" means the total
number of twelve-month periods during which the Director serves as
a member of the Company's Board of Directors.
Article 2
Deferral Election
2.1
Initial Election . The Director shall make an
initial deferral election under this Agreement by filing with the
Company a signed Election Form within thirty (30) days after the
Effective Date of this Agreement. The Election Form shall set forth
the amount of Fees to be deferred and shall be effective to defer
only Fees earned after the date the Election Form is received by
the Company.
2.2
Election Changes
2.2.1 Generally . The Director may modify the
amount of Fees to be deferred annually by filing a new Election
Form with the Company prior to the beginning of the Plan Year
in
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which the Fees are to
be deferred. The modified deferral election shall not be effective
until the calendar year following the year in which the subsequent
Election Form is received and approved by the Company.
2.2.2 Hardship . If an unforeseeable financial
emergency arising from the death of a family member, divorce,
sickness, injury, catastrophe or similar event outside the control
of the Director occurs, the Director, by written instructions to
the Company, may reduce future deferrals under this Agreement.
Article 3
Deferral Account
3.1
Establishing and Crediting . The Company shall
establish a Deferral Account on its books for the Director and
shall credit to the Deferral Account the following amounts:
3.1.1 Deferrals . The Fees deferred by the
Director as of the time the Fees would have otherwise been paid to
the Director.
3.1.2 Interest . On each Anniversary Date and
immediately prior to the payment of any benefits, interest on the
account balance since the preceding credit under this Section
3.1.2, if any, at an annual rate, compounded monthly, equal to the
Merrill Lynch 10+ year high quality corporate bond rate as
published in the Wall Street Journal on the first business
day following January 1.
3.2
Statement of Accounts . The Company shall
provide to the Director, within one hundred twenty (120) days after
each Anniversary Date, a statement setting forth the Deferral
Account balance.
3.3
Accounting Device Only . The Deferral Account
is solely a device for measuring amounts to be paid under this
Agreement. The Deferral Account is not a trust fund of any kind.
The Director is a general unsecured creditor of the Company for the
payment of benefits. The benefits represent the mere Company
promise to pay such benefits. The Director's rights are not subject
in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by the
Director's creditors.
Article 4
Lifetime Benefits
4.1
Normal Retirement Benefit . If the Director's
Termination of Services occurs after the Early Retirement Date for
reasons other than death or Disability, the Company shall pay to
the Director the benefit described in this Section 4.1 in lieu of
any other benefit under this Agreement.
4.1.1 Amount of Benefit . The benefit under
this Section 4.1 is the Deferral Account balance at the Director's
Termination of Service Date.
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4.1.2 Payment of Benefit . The Company shall
pay the benefit to the Director in the manner elected by the
Director on the Form of Benefit Election, attached as Exhibit II.
The Company shall continue to credit interest under Section 3.1.2
on the remaining account balance, if applicable, during any
installment period.
4.2
Early Termination Benefit . If the Director's
Termination of Services occurs before the Early Retirement Date for
reasons other than death or Disability, the Company shall pay to
the Director the benefit in this Section 4.2.
4.2.1 Amount of Benefit . The benefit under
this Section 4.2 is the Deferral Account balance at the Director's
Termination of Service.
4.2.2 Payment of Benefit . The Company shall
pay the benefit to the Director in a lump sum within 90 days after
the Director's Termination of Service.
4.3
Disability Benefit . If the Director
terminates service as a Director due to Disability prior to Normal
Retirement Date, the Company shall pay to the Director the benefit
described in this Section 4.3 in lieu of any other benefit under
this Agreement.
4.3.1 Amount of Benefit . The benefit under
this Section 4.3 is the Deferral Account balance at the Director's
Termination of Service.
4.3.2 Payment of Benefit . The Company shall
pay the benefit to the Director in the manner elected by the
Director on the Form of Benefit Election, attached as Exhibit II.
The Company shall continue to credit interest under Section 3.1.2
on the remaining account balance, if applicable, during any
installment period.
4.4
Change of Control Benefit . Upon a Change of
Control while the Director is in the active service of the Company,
the Company shall pay to the Director the benefit described in this
Section 4.4 in lieu of any other benefit under this Agreement.
4.4.1 Amount of Benefit . The benefit under
this Section 4.4 shall be the Deferral Account balance on the
Director's Termination of Service.
4.4.2 Payment of Benefit . The Company shall
pay the benefit to the Director in the manner elected by the
Director on the Form of Benefit Election, attached as Exhibit II.
The Company shall continue to credit interest under Section 3.1.2
on the remaining account balance, if applicable, during any
installment period.
4.5
Hardship Distribution . Upon the Board of
Director's determination (following petition by the Director) that
the Director has suffered an unforeseeable financial emergency as
described in Section 2.2.2, the Company shall distribute to the
Director all or a portion of the Deferral Account balance as
determined by the Company, but in no event shall the distribution
be greater than is necessary to relieve the financial hardship.
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Article 5
Death Benefits
5.1
Death During Active Service . If the Director
dies while in the active service of the Company, the Company shall
pay to the Director's beneficiary the benefit described in this
Section 5.1 in lieu of any other benefit under this Agreement.
5.1.1 Amount of Benefit . The benefit under
Section 5.1 is the Deferral Account balance at the date of the
Director's death.
5.1.2 Payment of Benefit . The Company shall
pay the benefit to the beneficiary in the form of a lump sum amount
payable within 90 days of the death of the Director.
5.1.3 Supplemental Death Benefit. The Company
shall pay to the beneficiary a Supplemental Death Benefit. This
Supplemental Death Benefit will be the Estimated Deferral Account
balance at the Director's 65 th birthday divided by 180,
payable monthly for 180 months. The Estimated Deferral Account
balance will be calculated by taking the Deferral Account balance
on the date of death plus the average monthly contribution made
over the previous 12 months, projected at the current plan interest
rate (not to exceed 7%), to the Director's 65 th
birthday. If the Director's death occurs after the Director's 65
th birthday, but before the Director's Normal Retirement
Age, the Supplemental Death Benefit will be the Deferral Account
balance on the date of death, divided by 180, payable monthly for
180 months. This amount will not exceed the net death benefit paid
to the bank under the Director's bank owned life insurance
policy(s). This benefit will commence within 90 days of the receipt
of the death benefit by the bank.
5.2
Death During Benefit Period . If the Director
dies after
