Exhibit 10.6
TRUST AGREEMENT
FOR DEFERRED COMPENSATION PLAN
AND 2005 SUB-PLAN
OF VERSAILLES SAVINGS &
LOAN COMPANY
(AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 2005)
This Versailles Savings &
Loan Company Trust Agreement (the “Trust Agreement”) is
made as of the 21 st day of August 2009, by and between Versailles
Savings & Loan Company (the “Bank”) and the
Trustee Committee, which initially consists of Douglas P. Ahlers,
Edward L. Borchers and James Poeppelman, as may be changed from
time to time, to serve as trustee of the Trust (the
“Trustee”).
WITNESSETH:
WHEREAS, the Bank has adopted the Versailles
Savings & Loan Company Deferred Compensation Plan and the
2005 Sub-Plan (collectively, the “Plan”) to provide
deferred compensation for its Directors and certain members of the
Bank’s senior management (collectively, the
“Participant” or
“Participants”);
WHEREAS, the Bank wishes to establish this trust (the
“Trust”) to fund the obligations under the Plan with
the assets contributed to the Trust to be subject to the claims of
the Bank’s creditors in the event of the Bank’s
insolvency, as herein defined, until paid to a Participant or their
beneficiaries in such manner and at such times as specified in the
Plan, and intends that the Trust shall satisfy the requirements of
Revenue Procedure 92-64 which sets forth a model grantor trust for
use in executive compensation arrangements; and
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not affect
the status of the Plan maintained for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees for purposes of Title I of the Employee
Retirement Income Security Act of 1974 (“ERISA”) and
trustees of the Bank.
NOW, THEREFORE,
the parties do hereby establish the
Trust and agree that the Trust shall be comprised, held and
disposed of as follows:
Section 1. Establishment of
Trust.
(a) The Bank hereby deposits with
the Trustee in trust cash valued at not less $100.00 which shall
become the initial principal of the Trust to be held, administered
and disposed of by the Trustee as provided in this Trust Agreement.
The initial principal of the Trust, together with any future
contributions to the Trust and any other assets held by the Trust,
and earnings thereon, are collectively referred to herein as the
“Trust Assets.”
(b) The Trust hereby established
shall be irrevocable by the Bank at all times until the Trust is
terminated pursuant to Section 12(b) hereof.
(c) The Trust is intended to be a
grantor trust, of which the Bank is the grantor, within the meaning
of subpart E, part I, subchapter J, chapter 1, subtitle A of the
Internal Revenue Code of 1986, as amended (the “Code”),
and shall be construed accordingly.
(d) The principal of the Trust, and
any earnings thereon, shall be held separate and apart from other
funds of the Bank and shall be used exclusively for the uses and
purposes of the Plan and general creditors as herein set forth.
Participants in the Plan and their beneficiaries shall have no
preferred claim on, or any beneficial ownership interest in, any of
the Trust Assets. Any rights created under the Plan and this Trust
Agreement shall be mere unsecured contractual rights of a
Participant in the Plan and their beneficiaries against the Bank.
Any assets held by the Trust will be subject to the claims of the
Bank’s general creditors under federal and state law in the
event of the Bank’s insolvency, as defined in
Section 3(a) hereof.
(e) The Bank, in its sole
discretion, may at any time, or from time to time, make additional
deposits of cash or other property in trust with the Trustee to
augment the principal to be held, administered and disposed of by
the Trustee as provided in this Trust Agreement. Neither the
Trustee nor a Participant in the Plan or beneficiary of a
Participant in the Plan shall have any right to compel such
additional deposits.
(f) Notwithstanding any other
provision of this Trust Agreement, all Trust Assets shall be held
in the United States of America, and at no time shall the Trustee
or any other person or entity cause any of such assets to be
transferred outside of the United States.
Section 2. Payments to Plan
Participants and their Beneficiaries.
(a) The Bank shall deliver to the
Trustee a schedule (the “Payment Schedule”) consistent
with the terms of the applicable Plan in respect of a Participant
in the Plan (and their beneficiaries), that provides instructions
acceptable to the Trustee which set forth the amounts payable to a
Participant in the applicable Plan or their beneficiaries, if
applicable, the form in which such amount is to be paid, and the
time of commencement for payment of such amounts. As provided for
herein, the Payment Schedule may be revised by the Bank. Except as
otherwise provided herein, the Trustee shall make payments to a
Participant in the Plan or their beneficiaries in accordance with
such Payment Schedule, as it may be revised from time-to-time by
the Bank, and any instructions received from the Bank. The
preparation and delivery of the Payment Schedule referred to in
this subsection shall be the responsibility of the Bank. The
Trustee shall use the Trust Assets to make such payments to
Participants or their beneficiaries in accordance with the Payment
Schedule. In respect of such amounts payable, the Bank shall
determine the provision for any withholdings required by federal,
state and local taxes with respect to the payment of benefits
pursuant to the Plan. The Bank shall, prior to the date such
payment is due, instruct the Trustee to withhold the appropriate
amount from any payment to be made under the Payment Schedule, and
the Trustee shall then make payment of the net benefits, without
any further reduction, directly to a Participant in the Plan or
their beneficiaries as they become due unless the Bank elects to
make such payments directly. The Bank shall report and pay withheld
amounts to the appropriate tax authorities from assets outside the
Trust. The Trustee shall reinvest any amounts withheld pursuant to
this Section in accordance with Section 5.
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(b) The entitlement of a Participant
or their beneficiaries to benefits under the Plan shall be
determined by the Bank or such party as it shall designate under
the Plan, and any claim for such benefits shall be considered and
reviewed under the procedures set out in the Plan.
(c) The Bank may make payment of
benefits directly to a Participant or their beneficiaries as they
become due under the terms of a Plan. In such event, the Bank shall
revise the Payment Schedule as appropriate to reflect any direct
payments by the Bank. In addition, if the principal of the Trust,
and any earnings thereon, are not sufficient to make payments of
benefits in accordance with the terms of a Plan, the Bank shall
make the balance of each such payment as it falls due. The Trustee
shall notify the Bank when principal and earnings are not
sufficient to make any payment pursuant to the Payment
Schedule.
Section 3. The
Trustee’s Responsibility Regarding Payments to Trust
Beneficiaries When the Bank is Insolvent.
(a) The Trustee shall cease payment
of benefits to a Participant in a Plan and their beneficiaries if
the Bank becomes Insolvent. The Bank shall be considered
“Insolvent” for purposes of this Trust Agreement if the
Bank is subject to a pending proceeding as a debtor under the
United States Bankruptcy Code or if the Bank is subject to any
receivership or conservatorship proceedings under federal banking
laws.
(b) At all times during the
continuance of this Trust, the principal and income of the Trust
shall be subject to claims of general creditors of the Bank under
federal and state law as set forth below.
(1) The Board of Directors of the
Bank shall have the duty to inform the Trustee in writing if the
Bank is deemed to be Insolvent. If a person claiming to be a
creditor of the Bank alleges in writing to the Trustee that the
Bank has become Insolvent, the Trustee shall determine whether the
Bank is Insolvent in accordance with the procedure set forth in
subparagraph (2) below and, pending such determination, the
Trustee shall discontinue payment of benefits to a Participant or
their beneficiaries.
(2) Unless an officer of the Trustee
responsible for administering the Trust has actual knowledge that
the Bank is Insolvent, or has received notice from the Bank or a
person claiming to be a creditor alleging that the Bank is
Insolvent, the Trustee shall have no duty to inquire whether the
Bank is Insolvent. The Trustee may in all events rely on such
evidence concerning the Bank’s solvency as may be furnished
to the Trustee and that provides the Trustee with a reasonable
basis for making a determination concerning the Bank’s
Insolvent status.
(3) If at any time the Trustee has
determined that the Bank is Insolvent, the Trustee shall
discontinue payments to a Participant in a Plan or their
beneficiaries and shall hold the assets of the Trust for the
benefit of the Bank’s general creditors. The Trustee shall
promptly notify the Bank of its determination that the Bank is
insolvent and of the discontinuation of payments hereunder. Nothing
in this Trust Agreement shall in any way diminish any rights of a
Participant in a Plan or their beneficiaries to pursue their rights
as general creditors of the Bank with respect to benefits due under
a Plan or otherwise.
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(4) The Trustee shall resume the
payment of benefits to a Participant or their beneficiaries in
accordance with Section 2 of this Trust Agreement only after
the Trustee has determined that the Bank is not Insolvent (or is no
longer Insolvent). The Trustee will promptly notify the Bank of its
intention to resume the payment of benefits hereunder.
(5) The Trustee shall incur no
personal liability for any determination made pursuant to this
Section 3 that was made in good faith.
(c) Provided that there are
sufficient assets, if the Trustee discontinues the payment of
benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the Bank shall provide the
Trustee with a revised Payment Schedule such that the first payment
following such discontinuance shall include the aggregate amount of
all payments due to a Participant in a Plan or their beneficiaries
under the terms of a Plan for the period of such discontinuance,
less the aggregate amount of any payments made to a Participant in
a Plan or their beneficiaries directly by the Bank in lieu of the
payments provided for hereunder during any such period of
discontinuance.
Section 4. Payments to the
Bank.
Except as provided in Section 3
hereof, the Bank shall have no right or power to direct the Trustee
to return to the Bank or to divert to others any of the Trust
Assets before all payment of benefits have been made the to
participant in a Plan and their beneficiaries pursuant to the terms
of a Plan.
Section 5. Investment and
Other Authority.
The Trustee may invest the Trust
Assets in such assets as the Bank may from time to time direct.
Notwithstanding the foregoing, to the extent any such assets are
invested in common stock or common stock units of Versailles
Financial Corporation (the “Company”), such investments
(i) must not be diversified; (ii) must remain at all
times invested in the form of common stock or common stock units of
the Company, as applicable; and (iii) must be distributed
solely in the form of shares of common stock of the Company. All
rights associated with the Trust Assets shall be exercised by the
Trustee or the person designated by the Trustee, and shall in no
event be exercisable by or rest with a Plan Participant, except
that voting rights with respect to Trust Assets will be exercised
by the Bank. Except for any assets invested in common stock or
common stock units of the Company, the Bank shall have the right at
any time, and from time to time in its sole discretion, to
substitute assets of equal fair market value for any Trust Asset.
This right is exercisable by the Bank
