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EXHIBIT 10.8
SOUTHERN MICHIGAN BANK &
TRUST
DIRECTOR DEFERRED FEE AGREEMENT
THIS AGREEMENT is made this
________ day of __________________, ______, 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:
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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.
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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.
1.1.15
"Net Death Proceeds " means the amount of total death
proceeds that exceeds cash surrender value for any bank-owned life
insurance policy on the Director's life for which the Company is
owner and beneficiary. Any such policy shall be a general asset of
the Company, and neither the Director nor his/her beneficiaries
shall have any preferred or secured claim to such policy.
1.1.16
"Projected Benefit" means the amount the Deferral Account
would have been assuming (i) the Director lived to age 65; (ii) the
Director continued to make contributions from the date of death
until age 65 at a contribution rate equal to the average of the
Director's deferrals for the twelve (12) months prior to death; and
(iii) interest continued to be credited at the rate in effect as of
the date of death, with such rate not to exceed seven percent
(7%).
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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
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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 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:
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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
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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.
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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.
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.
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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.
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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.
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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.
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. If the Director dies before the age of 65 while
actively in the service of the Company, the Company shall pay to
the beneficiary a benefit equal to the Projected Benefit as defined
in Secti
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