EXHIBIT
10.4
LCNB
CORPORATION
NON-QUALIFIED
EXECUTIVE RETIREMENT PLAN
(EFFECTIVE FEBRUARY 1,
2009)
Q:/5129/plandoc/Plan 409A 090520 final
Table
Of Contents
Page
Table
of Contents
i
Introduction
1
Article
1
Name
2
Article
2
Purpose
2
Article
3
Definitions
2
Article
4
Eligibility
for Participation
7
Article
5
Administration
of the Plan
8
Article
6
Retirement
Benefits
10
Article
7
Change
in Control; Key Employees
13
Article
8
Death
Benefits and Beneficiary Designations
14
Article
9
Funding
Obligation of the Employer
15
Article
10
Amendment
and Termination
16
Article
11
General
Provisions
17
Appendix
A
20
i
LCNB
CORPORATION
NON-QUALIFIED
EXECUTIVE RETIREMENT PLAN
INTRODUCTION
LCNB Corporation (“Employer”)
previously established and maintained the Lebanon Citizens National
Bank Employees Pension Plan, a Section 401(a) tax-qualified plan
for eligible employees. Effective January 1, 2009, the
tax-qualified plan was amended and restated as part of the Pentegra
Defined Benefit Plan for Financial Institutions. In
connection with such restatement, seven (7) executive officers of
the Employer were excluded from further participation in the
restated tax-qualified plan, effective February 1, 2009.
The LCNB Corporation Non-Qualified
Executive Retirement Plan (“Plan”) provides for future
retirement benefits, effective February 1, 2009, for the seven (7)
executive officers of the Employer thereafter excluded from the
Employer’s tax-qualified retirement plan. The Plan
benefit is calculated based on all years of benefit service, offset
by the amount of retirement benefit payable under the restated
tax-qualified plan (“Qualified Plan”) as of January 31,
2009. The Qualified Plan accrued benefits for the seven (7)
executive officers are “frozen” as of January 31, 2009
and no further service or compensation is taken into account
thereunder after that date. The Plan is intended to comply
with Section 409A of the Internal Revenue Code and final Treasury
Regulations issued thereunder, addressing requirements for
non-qualified deferred compensation plans.
1
Article
1
Name
The deferred compensation plan set forth
herein shall be known as the LCNB CORPORATION NON-QUALIFIED
EXECUTIVE RETIREMENT PLAN ("Plan"). The Plan is effective as
of February 1, 2009, and is intended to comply with Section 409A of
the Code, addressing the requirements for non-qualified deferred
compensation plans.
Article
2
Purpose
The purpose of the Plan is to assist LCNB
Corporation in retaining the vital and valuable services of certain
key employees until their retirement and to induce such key
employees to utilize their best efforts to maintain and enhance the
business of the Employer through an enhanced retirement benefit.
The Plan is intended to constitute an unfunded non-qualified
deferred compensation plan.
Article
3
Definitions
For purposes of the Plan, the following
words and phrases shall have the following meanings, unless a
different meaning is plainly required by the context.
Wherever used, the masculine pronoun shall include the
feminine pronoun, the feminine pronoun shall include the masculine
pronoun, the singular shall include the plural and the plural shall
include the singular.
3.1
"Accrued Benefit" shall mean the Normal
Retirement Benefit under Section 6.2, multiplied by a fraction (not
to exceed one (1)), the numerator of which is the number of a
Participant’s Years of Credited Service at Separation From
Service and the denominator of which is the number of Years of
Credited Service a Participant would have if such Participant
worked until Normal Retirement Date. For this purpose, Years
of Credited Service is based upon all Years with the
Employer.
3.2
"Actuarial Equivalent" shall mean a
benefit of equivalent actuarial value, determined by using factors
under the Prior Plan, as then in effect.
3.3
"Beneficiary" shall mean the person or
persons designated pursuant to Article 8 to receive any benefits
under the Plan in the event of a Participant's death.
2
3.4
"Board of Directors" shall mean the Board
of Directors of the Employer.
3.5
"Break in Service" shall mean a
Participant’s failure to complete more than five hundred
(500) hours during a Plan Year.
3.6
"Change in Control" means any one of the
following events: (i) a change in the ownership of a
Participant's employer, (ii) a change in the effective control of a
Participant's employer, or (iii) a change in the ownership of a
substantial portion of the assets of a Participant's employer,
where each such event is as hereafter defined in paragraphs (A),
(B) and (C), following, where the occurrence of such event must be
objectively determinable, without discretionary authority by the
Employer.
(A)
A change in the ownership of a
corporation occurs on the date that any one person, or more than
one person acting as a group (as hereafter defined) acquires
ownership of stock of the corporation that, together with stock
held by such person or group, constitutes more than fifty percent
(50%) of the total fair market value or total voting power of the
stock of such corporation. However, if any one person or more
than one person acting as a group, is considered to own more than
fifty percent (50%) of the total fair market value or total voting
power of the stock of a corporation, the acquisition of additional
stock by the same person or persons is not considered to cause a
change in the ownership of the corporation (or to cause a change in
the effective control of the corporation). An increase in the
percentage of stock owned by any one person, or persons acting as a
group, as a result of a transaction in which the corporation
acquires its stock in exchange for property will be treated as an
acquisition of stock for this purpose. This definition
applies only when there is a transfer of stock of a corporation (or
issuance of stock of a corporation) and stock in such corporation
remains outstanding after the transaction.
For purposes of paragraphs (A), (B) and
(C), persons will not be considered to be "acting as a group"
solely because they purchase or own stock of the same corporation
at the same time, or as a result of the same public offering.
However, persons will be considered to be acting as a group
if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar
business transaction with the corporation. If a person,
including an entity, owns stock in both corporations that enter
into a merger, consolidation, purchase or acquisition of stock, or
similar transaction, such shareholder is considered to be acting as
a group with other shareholders in a corporation prior to the
transaction giving rise to the change and not with respect to the
ownership interest in the other corporation.
(B)
A change in the effective control of a corporation
occurs on the date that either: (i) any one person, or more
than one person acting as a group (as defined under paragraph (A),
above), acquires (or has acquired during the 12-month
period
3
ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the
corporation possessing thirty percent (30%) or more of the total
voting power of the stock of such corporation; or (ii) a majority
of members of the corporation's board of directors is replaced
during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the
corporation's board of directors prior to the date of the
appointment or election, provided that the term corporation refers
solely to the relevant corporation, for which no other corporation
is a majority shareholder. In the absence of an event
described above, a change in the effective control of a corporation
will not have occurred.
A change in effective control also may
occur in any transaction in which either of the two corporations
involved in the transaction has a Change in Control
event.
If any one person, or more than one
person acting as a group (as defined under paragraph (A), above) is
considered to effectively control a corporation, the acquisition of
additional control of the corporation by the same person or persons
is not considered to cause a change in the effective control of the
corporation.
(C)
A change in the ownership of a
substantial portion of a corporation's assets occurs on the date
that any one person, or more than one person acting as a group (as
defined under paragraph (A), above) acquires (or has acquired
during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the corporation
that have a total gross fair market value equal to or more than
forty percent (40%) of the total gross fair market value of all the
assets of the corporation immediately prior to such acquisition or
acquisitions. For this purpose, gross fair market value means
the value of the assets of the corporation, or the value of the
assets being disposed of, determined without regard to any
liabilities associated with such assets.
There is no Change in Control event under
paragraph (C) when there is a transfer to an entity that is
controlled by the shareholders of the transferring corporation
immediately after the transfer, as provided in this paragraph.
A transfer of assets by a corporation is not treated as a
change in the ownership of such assets if the assets are
transferred to: (i) a shareholder of the corporation
(immediately before the asset transfer) in exchange for or with
respect to its stock; (ii) an entity, 50 percent or more of
the total value or voting power of which is owned, directly or
indirectly, by the corporation; (iii) a person, or more than
one person acting as a group (as defined under paragraph (A),
above), that owns, directly or indirectly, fifty percent (50%) or
more of the total value or voting power of all the outstanding
stock of the corporation; or (iv) an entity, at least fifty percent
(50%) of the total value or voting power of which is owned,
directly or indirectly, by a person described in clause (iii),
above. For purposes of this paragraph, and except as
otherwise provided, a person's status is determined immediately
after the transfer of the assets. For example, a transfer to
a corporation in which the transferor corporation has no ownership
interest before the transaction, but which is a majority-owned
subsidiary of the transferor corporation after the
transaction
4
is not treated as a change in the
ownership of the assets of the transferor corporation.
3.7
"Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
3.8
"Committee" shall mean the person or
persons appointed to administer the Plan.
3.9
"Compensation" shall mean total wages as
paid to a Participant during a calendar year by the Employer, as
reported on form W-2 and any Section 401(k) plan contributions
which are not includable in the gross income of a Participant.
Compensation excludes any contributions which are not
includable in the gross income of an employee by reason of the
application of Code Sections 125, 132(f)(4), 402(h)(1)(B), 403(b)
and 457(b). In no event shall Compensation in excess of
$245,000 (as adjusted by the Secretary of the Treasury in years
after 2009 for increases in the cost of living under Section 415(d)
of the Code) be taken into account for any Participant. The
Committee will, upon request, provide each Participant with the
limit for any particular Plan Year.
A Participant’s "Average Monthly
Compensation" is the highest monthly average of Compensation from
the Employer for any five (5) consecutive years of employment that
yield the highest such average. The average is based upon
Compensation from the Employer for Years of Service while a
Participant in the Plan or Prior Plan. If a Participant has
less than five (5) years of employment, the Participant’s
total period of employment and Compensation shall be used to
calculate the average.
Compensation in the year a Participant
has a Separation From Service shall be excluded from the
calculation of Average Monthly Compensation.
3.10
"Disability Retirement Date" shall mean
the first day of the month after the Committee determines that a
Participant is Disabled and entitled to retirement pursuant to
Section 6.5.
3.11
"Disabled" refers to a Participant who is
unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or is (by
reason of any medically determinable physical or mental impairment,
which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months),
receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering
Employees of the Participant's Employer. Alternatively,
Disabled shall refer to a determination by the Social Security
Administration that a Participant is totally disabled.
3.12
"Early Retirement Date" shall mean the
first day of the month five (5) years prior to a
Participant’s Normal Retirement Date, or the first day of any
month thereafter prior to Normal Retirement Date.
3.13
"Effective Date" shall mean February 1,
2009.
3.14
"Employer" shall mean LCNB Corporation,
Lebanon, Ohio, and any successor thereto.
3.15
"Hours of Service" shall mean the actual
hours worked by a Participant as well as hours for which a
Participant is paid but is not at work, such as paid vacation or
paid sick leave.
3.16
"Key Employee" shall mean a Participant
who is a "key employee" as defined in Code Section 416(i), without
regard to paragraph (5) thereof; provided that the Employer's stock
is publicly traded on an established securities market, or
otherwise.
3.17
"Normal Retirement Date" shall mean the
first day of the month coincident with or following the date on
which a Participant attains the later of age sixty-five (65) or the
fifth (5 th ) anniversary of the Participant’s
initial participation in the Prior Plan or the Plan, if the
Participant was not a participant in the Prior Plan.
3.18
"Participant" shall mean any person who
has been designated by the Board of Directors to participate in the
Plan, in accordance with the provisions herein set
forth.
3.19
"Plan" shall mean the LCNB Corporation
Non-Qualified Executive Retirement Plan, effective February 1,
2009, as herein set forth.
3.20
"Plan Year" shall mean the twelve (12)
month period beginning each January 1 st and ending on
each December 31 st .
3.21
"Postponed Retirement Date" shall mean
the first day of the month coincident with or following a
Separation From Service after attainment of Normal Retirement
Date.
3.22
"Prior Plan" shall mean the Section
401(a) tax-qualified pension plan for employees of Lebanon Citizens
National Bank, as in effect on January 31, 2009, including any
predecessor version thereof.
3.23
"Separation From Service" shall mean a
Participant’s death, retirement, or other termination of
service within the meaning of Code Section 409A. No
separation from service shall be deemed to occur due to military
leave, sick leave, or other bona fide leave of absence if the
period of such leave does not exceed six (6) months or, if longer,
so long as right to reemployment is provided by contract. An
Employee shall not be treated as having a separation from service
if the Employee provides more than insignificant services for the
Employer following the Employee’s actual or purported
separation from service with the Employer. Services shall be
treated as not being insignificant if such services are performed
at an annual rate that is at least equal to twenty percent (20%) of
the services rendered by the Employee for the Employer, on average,
during the immediately preceding three (3) full calendar years of
employment (or if employed less than three (3) years, such shorter
period of employment) and the annual base compensation for such
services is at least equal to twenty percent (20%) of the average
base compensation earned during the final three (3) full calendar
years of employment (or
6
if employed less than three (3) years,
such shorter period of employment). Where an Employee
continues to provide services to the Employer other than as an
Employee, a separation from service will not be deemed to have
occurred if the Participant is providing services at an annual rate
that is fifty percent (50%) or more of the services rendered, on
average, during the immediately preceding three (3) full calendar
years of employment (or if employed less than three (3) years, such
lesser period) and the annual base compensation for such services
is fifty percent (50%) or more of the annual base compensation
earned during the final three (3) full calendar years of employment
(or if less, such lesser period).
3.24
"Year of Credited Service" shall mean,
for purposes of benefit accruals, any Plan Year of service with the
Employer in which a Participant is credited with one thousand
(1,000) Hours of Service.
3.25
"Year of Service" shall mean, for
purposes of vesting of Plan benefits, the crediting of one thousand
(1,000) Hours of Service during any Plan Year of service with the
Employer. If a Participant is reemployed after incurring five
(5) consecutive Break in Service years, all Years of Service after
such Breaks in Service shall count for the purposes of vesting in
Plan benefits that accrued before such breaks, but both pre-break
and post-break service shall count for purposes of vesting in the
Plan benefits that accrue after such breaks.
Article
4
Eligibility for Participation
4.1
The Participants in the Plan shall be
those persons as may be designated from time to time by the Board
of Directors, upon such terms and conditions as the Board of
Directors shall agree upon. Such Participants shall be chosen
from a select group of management or highly compensated employees.
As of the Effective Date of the Plan, the Participants shall
be those Employees named in Appendix A.
4.2
From time to time, the Employer may
designate one or more additional employees as participants in the
Plan, from the class of employees who are members of a select group
of management employees or are highly compensated employees.
Newly eligible employees shall participate as of the date
specified by the Board of Directors.
4.3
The Employer may, from time to time,
remove any Participant from participation in the Plan; provided,
however, that such removal will not reduce the amount of retirement
benefit credited to the Participant under the Plan, as determined
as of the date of such Participant’s removal. A
Participant so removed shall remain a Participant until all
benefits are distributed in accordance with the provisions of the
Plan.
4.4
The Committee shall provide each eligible
employee with an
