Exhibit 10.12
DIRECTOR DEFERRED
COMPENSATION
AGREEMENT
John Buschemeyer
First Federal Savings &
Loan Association
Corydon, Indiana
Financial Institution Consulting
Corporation
700 Colonial Road, Suite 260
Memphis, Tennessee 38117
WATS: 1-800-873-0089
FAX: (901) 684-7414
(901) 684-7400
DIRECTOR DEFERRED COMPENSATION
AGREEMENT
This Director Deferred Compensation
Agreement (the “Agreement”), effective as of the 1st
day of April, 1992, by and between FIRST FEDERAL SAVINGS &
LOAN ASSOCIATION (the “Association”), a mutual savings
association organized and existing under the laws of the State of
Indiana, hereinafter referred to as “Association” and
JOHN BUSCHEMEYER, hereinafter referred to as
“Director”, for the purpose of formalizing the
agreement between the Association and the Director in which the
Director defers receipt of fees under the terms and conditions
described below.
WITNESSETH:
WHEREAS, the Director serves the Association as a member
of the Board; and
WHEREAS, the Association recognizes the valuable services
heretofore performed for it by Director and wishes to encourage
continued service; and
WHEREAS, the Association values the efforts, abilities
and accomplishments of the Director and recognizes that
Director’s services will substantially contribute to its
continued growth and profits in the future; and
WHEREAS, the Director wishes to defer a certain portion
of fees to be earned in the future; and
WHEREAS, the parties hereto desire to formalize the terms
and conditions upon which the Association shall pay such deferred
compensation to the Director or his designated beneficiary;
and
WHEREAS, the parties hereto intend that this Agreement be
considered an unfunded arrangement, maintained primarily to provide
deferred compensation benefits to the Director for purposes of the
Employee Retirement Income Security Act of 1974, as amended;
and
WHEREAS, the Association has adopted this Director
Deferred Compensation Agreement which controls all issues relating
to the Deferred Compensation Benefit as described
herein;
NOW, THEREFORE,
in consideration of the mutual
promises herein contained, the parties hereto agree to the
following terms and conditions:
SECTION I
DEFINITIONS
When used herein, the following
words and phrases shall have the meanings below unless the context
clearly indicates otherwise:
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1.1
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“Accrued
Benefit” means the sum of all deferred amounts and interest
credited to the Director’s Retirement Account and due and
owing to the Director or his Beneficiaries pursuant to this
Agreement.
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1.2
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“Act” means the Employee Retirement
Income Security Act of 1974, as amended from time to
time.
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1.3
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“Association” means FIRST FEDERAL
SAVINGS & LOAN ASSOCIATION and any successor
thereto.
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1.4
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“Beneficiary” means the person or
persons designated as Beneficiary in writing to the Association to
whom the share of a deceased Director’s account is 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
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.
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1.5
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“Children” means the
Director’s children, both natural and adopted, then living at
the time payments are due the Children under this
Agreement.
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1.6
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“Deferral
Period” means the forty-one (41) month period which
commences on April 1, 1992.
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1.7
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“Deferred
Compensation Benefit” means Three Hundred Ninety-Six
($396.00) Dollars per month payable for a one hundred eighty
(180) month period, such period to begin at Director’s
Normal Retirement Date.
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1.8
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“Disability Retirement Benefit”
means the benefit payable to Director following a determination
that he is no longer able, properly and satisfactorily, to perform
his duties as Director. Said benefit shall be payable monthly for a
fifteen (15) year period which, subject to the provisions of
Subsection 4.4, shall begin not more than thirty (30) days
following the above-mentioned disability determination.
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1.9
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“Effective Date” shall be the
effective date of this Agreement, April 1, 1992.
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1.10
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“Estate” means the Estate of the
Director.
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1.11
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“Normal
Retirement Date” means the first day of the month following
the Director’s seventieth (70) birthday.
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1.12
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“Payout
Period” means the time frame in which certain benefits
payable hereunder shall be distributed. Said benefits may (at the
request of the Director or his Beneficiary and subject to the
Association’s discretion) be paid in a lump sum within thirty
(30) days of the event which triggers payment or in equal
monthly installments commencing on the first day of the month
coincident with or next following said event and continuing for a
period of one hundred eighty (180) months.
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1.13
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“Retirement Account” means book
entries maintained by the Association reflecting deferred amounts;
provided, however, that the existence of such book entries and the
Retirement Account shall not create and shall not be deemed to
create a trust of any kind, or a fiduciary relationship between the
Association and the Director, his designated Beneficiary, or other
Beneficiaries under this Agreement. Compensation shall be deferred
when it is earned by the Director.
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1.14
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“Spouse” means the individual to
whom the Director is legally married at the time of the
Director’s death.
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1.15
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“Survivor’s Benefit” means
monthly level payments in an amount of Three Hundred Ninety-Six
($396.00) Dollars.
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SECTION II
DEFERRED
COMPENSATION
Commencing on the Effective Date,
and continuing through the end of the Deferral Period, the Director
and the Association agree that the Director shall defer into his
Retirement Account monthly Director’s fees of One Hundred
Fifty ($150.00) Dollars that the Director would otherwise be
entitled to receive from the Association for each month of the
Deferral Period. In the event the Director desires to increase his
monthly deferrals during the term of this Agreement, the Director
shall have the option to defer such additional amounts, provided
such election is made prior to earning the higher fee and approval
of the Board of Directors is obtained. If an election to defer a
higher amount is made and the required approval is obtained, the
Deferred Compensation Benefit shall be increased proportionately,
taking into account the timing and amount of such increased
deferrals. Such additional deferrals and the compensation payable
will be evidenced by an Amendment to this Agreement.
SECTION III
TERMINATION OF
ELECTION
The Director’s election to
defer compensation shall continue in effect, pursuant to the terms
of this Agreement unless and until the Director files with the
Association a Notice of Discontinuance (Exhibit B attached hereto).
A Notice of Discontinuance shall be effective if filed at least
twenty (20) days prior to any
January 1st, April 1st, July 1st or
October 1st. Such Notice of Discontinuance shall be effective
commencing with the
January 1st, April 1st, July 1st or
October 1st following its filing, whichever applies, and shall
apply only with respect to the Director’s compensation
attributable to services not yet performed.
SECTION IV
RETIREMENT BENEFIT
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4.l
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Retirement
Benefit . Provided
Director has deferred all fees during the Deferral Period and
subject to Subsection 5.1 of this Agreement, the Association agrees
to pay the Deferred Compensation Benefit commencing upon the
Director’s Normal Retirement Date. Such payments will be made
according to the provisions of the Payout Period.
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4.2
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Retirement
Benefit - Shortened Deferral Period . In the event Director defers fees for a period
less than forty-one (41) months, whether through his
termination of service on the Board, election to discontinue
deferrals, absenteeism from meetings, or disability, Director shall
be entitled to receive, upon reaching Normal Retirement Age, a
Deferred Compensation Benefit determined by multiplying Three
Hundred Ninety-Six ($396.00) Dollars by a fraction, the numerator
of which is equal to the total Board fees actually deferred by
Director and the denominator of which is equal to the total Board
fees which would have been deferred during the entire forty-one
(41) month deferral period. Such benefit payments will be made
according to the provisions of the Payout Period.
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4.3
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Continued Service Beyond
Normal Retirement Date .
The Director shall have the option, upon attaining his Normal
Retirement Date, to elect to receive his Deferred Compensation
Benefit, notwithstanding his continued service on the Board of
Directors of the
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Association. The Director’s
election to receive this benefit notwithstanding his continued
service must be made in writing at least one (1) year prior to
his Normal Retirement Date. The Deferred Compensation Benefit
payable upon election pursuant to this paragraph shall be the
amount that would have been payable had the Director retired from
service with the Association as of his Normal Retirement Date. Any
such election shall be irrevocable, and shall result in the
termination of the Director’s right to any further deferrals
hereunder.
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4.4
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Disability
Retirement Benefit .
Notwithstanding any other provision hereof, if requested by the
Director and approved by the Board, the Director shall be entitled
to receive payments hereunder prior to his Normal Retirement Date,
in any case in which it is determined by a duly licensed physician
selected by the Association that, because of ill health, accident,
disability or general inability because of age, the Director is no
longer able, properly and satisfactorily, to perform his regular
duties as a Director. If the Director’s service is terminated
pursuant to this paragraph and Board approval is obtained, the
Director may elect to begin receiving the annuity value of his
Accrued Benefit. The interest factor used to annuitize the Accrued
Benefit shall be equal to the greater of the average cost of
deposits of the Association for the prior twelve (12) month
period or the internal rate of return earned on the
Director’s deferrals up to the date of disability. In the
event the total benefits received by the Director pursuant to this
Subsection are less than the total Deferred Compensation Benefit,
upon Director’s death, an additional amount shall be paid to
Director’s Beneficiary to make up the difference. This
payment, when added to the burial expenses provided by Subsection
5.3, shall discharge the Association’s obligation under this
Agreement.
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SECTION V
DEATH BENEFITS
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5.1
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Death
Benefit Prior to Commencement of Retirement Benefits
. In the event of the
Director’s death while in the service of the Association and
prior to commencement of the Deferred Compensation Benefit, the
Association shall pay a Survivor’s Benefit for a period of
one hundred eighty (180) months. Said benefit shall be
distributed in accordance with the Payout Period.
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5.2
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Death
Benefit After Commencement of Benefits . In the event of Director’s death after
the commencement of Retirement Benefits or Disability Retirement
Benefits, but prior to the completion of all such payments due and
owing hereunder, the Association shall pay to Director’s
Beneficiary the Survivor’s Benefit for the remainder of the
one hundred eighty (180) month period.
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5.3
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Additional
Death Benefit - Burial Expenses . In addition to the above described death
benefits, upon Director’s death, Director’s Beneficiary
shall be entitled to receive a one-time lump sum benefit in the
amount of Ten Thousand ($10,000) Dollars.
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SECTION VI
OFFSET FOR OBLIGATIONS TO
ASSOCIATION
If, at such time as the Director
becomes entitled to benefit payments he
