EXHIBIT 10.8
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
AGREEMENT
This Agreement, made and entered into this 26th day of June, 1997, by and
between Merrill Merchants Bank, a Bank organized and existing under the laws of
the State of Maine (hereinafter referred to as "the Bank"), and Edwin N. Clift,
a Key Employee and the Executive of the Bank (hereinafter referred to as "the
Executive").
The Executive has been in the employ of the Bank for several years and has
now and for years past faithfully served the Bank. It is the consensus of the
Board of Directors of the Bank (the "Board") that the Executive's services have
been of exceptional merit, in excess of the compensation paid and an invaluable
contribution to the profits and position of the Bank in its field of activity.
The Board further believes that the Executive's experience, knowledge of
corporate affairs, reputation and industry contacts are of such value and his
continued services are so essential to the Bank's future growth and profits that
it would suffer severe financial loss should the Executive terminate his
services.
Accordingly, it is the desire of the Bank and the Executive to enter into
this Agreement under which the Bank will agree to make certain payments to the
Executive upon his retirement and, alternatively, to his beneficiary(ies) in the
event of his premature death while employed by the Bank.
It is the intent of the parties hereto that this Agreement be considered an
arrangement maintained primarily to provide supplemental retirement benefits for
the Executive, as a member of a select group of management or highly-compensated
employees of the Bank for purposes of the Employee Retirement Security Act of
1974 (ERISA). The Executive is fully advised of the Bank's financial status and
has had substantial input in the design and operation of this benefit plan.
Therefore, in consideration of the Executive's services performed in the
past and those to be performed in the future and based upon the mutual promises
and covenants herein contained, the Bank and the Executive, agree as follows:
I. DEFINITIONS
A. Effective Date:
The Effective Date of this Agreement shall be June 26, 1997.
B. Plan Year:
Any reference to "Plan Year" shall mean a calendar year from January 1 to
December 31. In the year of implementation, the term "Plan Year" shall
mean the period from the effective date to December 31 of the year of the
effective date.
C. Retirement Date:
Retirement Date shall mean retirement from service with the Bank which
becomes effective on the first day of the calendar month following the
month in which the Executive reaches his sixty-fifth (65th) birthday or
such later date as the Executive may actually retire.
D. Termination of Service:
Termination of Service shall mean voluntary resignation of service by the
Executive or the Bank's discharge of the Executive without cause ["cause"
defined in subparagraph III (D) hereinafter], prior to the Normal
Retirement Age [described in subparagraph I (J) hereinafter].
E. Pre-Retirement Account:
A Pre-Retirement Account shall be established as a liability reserve
account on the books of the Bank for the benefit of the Executive. Prior
to termination of service or the Executive's retirement, such liability
reserve account shall be increased or decreased each Plan Year (including
the Plan Year in which the Executive ceases to be employed by the Bank) by
an amount equal to the annual earnings or loss for that Plan Year
determined by the Index [described in subparagraph I (G) hereinafter],
less the Cost of Funds Expense for that Plan Year [described in
subparagraph I (H) hereinafter].
F. Index Retirement Benefit:
The Index Retirement Benefit for the Executive for any year shall be equal
to the excess of the annual earnings (if any) determined by the Index
[subparagraph I (G)] for that Plan Year over the Cost of Funds Expense
[subparagraph I (H)] for that Plan Year.
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G. Index:
The Index for any Plan Year shall be the aggregate annual after-tax income
from the life insurance contracts described hereinafter as defined by FASB
Technical Bulletin 85-4. This Index shall be applied as if such insurance
contracts were purchased on the effective date hereof.
Insurance Company: Alexander Hamilton Life Insurance
Policy Form: Flexible Premium Adjustable Life
Policy Name: Executive Security Plan III
Insured's Age and Sex: 57, Male
Riders: None
Ratings: None
Option: A
Face Amount: $1,495,000
Premiums Paid: $604,000
Number of Premium Payments: One
Assumed Purchase Date: June 26, 1997
If such contracts of life insurance are actually purchased by the Bank
then the actual policies as of the dates they were purchased shall be used
in calculations under this Agreement. If such contracts of life insurance
are not purchased or are subsequently surrendered or lapsed, then the Bank
shall receive annual policy illustrations that assume the above described
policies were purchased from the above named insurance company(ies) on the
Effective Date from which the increase in policy value will be used to
calculate the amount of the Index.
In either case, references to the life insurance contract are merely for
purposes of calculating a benefit. The Bank has no obligation to purchase
such life insurance and, if purchased, the Executive and his
beneficiary(ies) shall have no ownership interest in such policy and shall
always have no greater interest in the benefits under this Agreement than
that of an unsecured general creditor of the Bank.
H. Cost of Funds Expense:
The Cost of Funds Expense for any Plan Year shall be calculated by taking
the sum of the amount of premiums set forth in the Indexed policies
described above plus the amount of any after-tax benefits paid to the
Executive pursuant to this Agreement (Paragraph III hereinafter) plus the
amount of all previous years after-tax Costs of Funds Expense, and
multiplying that sum by the average after-tax cost of funds of the Bank's
third quarter Call Report for the Plan Year as filed with the Federal
Reserve.
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I. Change of Control:
Change of control shall be deemed to be the cumulative transfer of more
than fifty percent (50%) of the voting stock of the Bank Holding Company
from the Effective Date of this Agreement. For the purposes of this
Agreement, transfers on account of deaths or gifts, transfers between
family members or transfers to a qualified retirement plan maintained by
the Bank shall not be considered in determining whether there has been a
change in control.
J. Normal Retirement Age:
Normal Retirement Age shall mean the date on which the Executive attains
age sixty-five (65).
II. EMPLOYMENT
No provision of this Agreement shall be deemed to restrict or limit any
existing employment agreement by and between the Bank and the Executive,
nor shall any conditions herein create specific employment rights to the
Executive nor limit the right of the Employer to discharge the Executive
with or without cause. In a similar fashion, no provision shall limit the
Executive's rights to voluntarily sever his employment at any time.
III. INDEX BENEFITS
The following benefits provided by the Bank to the Executive are in the
nature of a fringe benefit and shall in no event be construed to effect
nor limit the Executive's current or prospective salary increases, cash
bonuses or profit-sharing distributions or credits.
A. Retirement Benefits:
Should the Executive continue to be employed by the Bank until his "Normal
Retirement Age" defined in subparagraph I (J), he shall be entitled to
receive the balance in his Pre-Retirement Account [as defined in
subparagraph I (E)] in some number of equal annual installments to be
determined six months prior to his Retirement Date, commencing thirty (30)
days following the Executive's Normal Retirement Date. In addition to
these payments, commencing with the Plan Year in which the Executive
attains his Retirement Date, the Index Retirement Benefit [as defined in
subparagraph I (F) above] for each year shall be paid to the Executive
until his death.
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B. Termination of Service:
Subject to subparagraph III (D) hereinafter, should the Executive suffer a
termination of service [defined in subparagraph I (D)], he shall be
entitled to receive twenty percent (20%), times the number of full years
(to a maximum of 100%) the Executive has served from the date of first
employment prior to attaining Normal Retirement Age with the Bank, times
the balance in the Pre-Retirement Account paid over the number of equal
annual installments determined six months prior to his date of termination
commencing at the Retirement Date [subparagraph I (C)]. In addition to
these payments, twenty percent (20%) times full years of service with the
Bank, times the Index Retirement Benefit for each year shall be paid to
the Executive until his death.
C. Death:
Should the Executive die prior to having received the full balance of the
Pre- Retirement Account, the unpaid balance of the Pre-Retirement Account
shall be paid in a lump sum to the beneficiary selected by the Executive
and filed with the Bank. In the absence of or a failure to designate a
beneficiary, the unpaid balance shall be paid in a lump sum to the
personal representative of the Executive's estate.
D. Discharge for Cause:
Should the Executive be discharged for cause at any time prior to his
Retirement Date, all Index Benefits under this Agreement [subparagraphs
III (A), (B) or (C)] shall be forfeited. The term "for cause" shall mean
the conviction of a felony or gross-misdemeanor involving moral turpitude,
fraud, dishonesty or willful violation of any law that results in an
adverse effect on the Bank. If a dispute arises as to discharge "for
cause", such dispute shall be resolved by arbitration as set forth in this
Agreement.
E. Death Benefit:
Except as set forth above, there is no death benefit provided under this
Agreement.
IV. RESTRICTIONS UPON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement. The
Executive, his beneficiary(ies) or any successor in interest to him shall
be and remain simply a general creditor of the Bank in the same manner as
any other creditor having a
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general claim for matured and unpaid compensation.
The Bank reserves the absolute right at its sole discretion to either fund
the obligations undertaken by this Agreement or to refrain from funding
the same and to determine the exact nature and method of such funding.
Should the Bank elect to fund this Agreement, in whole or in part, through
the purchase of life insurance, mutual funds, disability policies or
annuities, the Bank reserves the absolute right, in its sole discretion,
to terminate such funding at any time, in whole or in part. At no time
shall the Executive be deemed to have any lien or right, title or interest
in or to any specific funding investment or to any assets of the Bank.
If the Bank elects to invest in a life insurance, disability or annuity
policy upon the life of the Executive, then the Executive shall assist the
Bank by freely submitting to a physical exam and supplying such additional
information necessary to obtain such insurance or annuities.
V. CHANGE OF CONTROL
Upon a Change of Control [as defined in subparagraph I (I) herein], the
Executive shall immediately become one hundred percent (100%) vested in
all benefits promised in this Agreement. If the Executive's employment is
subsequently terminated then he shall immediately begin to receive the
benefits promised in this Agreement. The Executive will also remain
eligible for all promised death benefits in this Agreement. In addition,
no sale, merger or consolidation of the Bank shall take place unless the
new or surviving entity expressly acknowledges the obligations under this
Agreement and agrees to abide by its terms.
VI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
Neither the Executive, his/her surviving spouse nor any other beneficiary
under this Agreement shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise encumber
in advance any of the benefits payable hereunder nor shall any of said
benefits be subject to seizure for the payment of any debts, judgments,
alimony or separate maintenance owed by the Executive or his beneficiary,
nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Executive or any beneficiary
attempts assignment, commutation, hypothecation, transfer or disposal of
the benefits hereunder, the Bank's liabilities shall forthwith cease and
terminate.
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B. Binding Obligation of Bank and any Successor in Interest:
The Bank expressly agrees that it shall not merge or consolidate into or
with another bank or sell substantially all of its assets to another bank,
firm or person until such bank, firm or person expressly agrees, in
writing, to assume and discharge the duties and obligations of the Bank
under this Agreement. This Agreement shall be binding upon the parties
hereto, their successors, beneficiary(ies), heirs and personal
representatives.
C. Revocation:
It is agreed by and between the parties hereto that, during the lifetime
of the Executive, this Agreement may be amended or revoked at any time or
times, in whole or in part, by the mutual written assent of the Executive
and the Bank.
D. Gender:
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine or
neuter gender, whenever they should so apply.
E. Effect on Other Bank Benefit Plans:
Nothing contained in this Agreement shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit-sharing, group, bonus or other supplemental
compensation or fringe benefit plan constituting a part of the Bank's
existing or future compensation structure.
F. Headings:
Headings and subheadings in this Agreement are inserted for reference and
convenience only and shall not be deemed a part of this Agreement.
G. Applicable Law:
The validity and interpretation of this Agreement shall be governed by the
laws of the State of Maine.
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VII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this plan shall be
Merrill Merchants Bank until its removal by the Board. As Named
Fiduciary and Administrator, the Bank shall be responsible for the
management, control and administration of the Salary Continuation
Agreement as established herein. The Named Fiduciary may delegate to
others certain aspects of the management and operation responsibilities
of the plan including the employment of advisors and the delegation of
ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration:
In the event a dispute arises over benefits under this Agreement and
benefits are not paid to the Executive (or to his beneficiary in the
case of the Executive's death) and such claimants feel they are
entitled to receive such benefits, then a written claim must be made to
the Plan Administrator named above within ninety (90) days from the
date payments are refused. The Plan Administrator shall review the
written claim and if the claim is denied, in whole or in part, they
shall provide in writing within ninety (90) days of receipt of such
claim their specific reasons for such denial, reference to the
provisions of this Agreement upon which the denial is based and any
additional material or information necessary to perfect the claim. Such
written notice shall further indicate the additional steps to be taken
by claimants if a further review of the claim denial is desired. A
claim shall be deemed denied if the Plan Administrator fails to take
any action within the aforesaid ninety-day period.
If claimants desire a second review they shall notify the Plan
Administrator in writing within ninety (90) days of the first claim
denial. Claimants may review this Agreement or any documents relating
thereto and submit any written issues and comments they may feel
appropriate. In its sole discretion, the Plan Administrator shall then
review the second claim and provide a written decision within ninety
(90) days of receipt of such claim. This decision shall likewise state
the specific reasons for the decision and shall include reference to
specific provisions of this Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of this Agreement or the meaning and effect of
the terms and conditions thereof, then claimants may submit the dispute
to a Board of Arbitration for final arbitration. Said Board shall
consist of one member
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selected by the claimant, one member selected by the Bank, and the
third member selected by the first two members. The Board shall operate
under any generally recognized set of arbitration rules. The parties
hereto agree that they and their heirs, personal representatives,
successors and assigns shall be bound by the decision of such Board
with respect to any controversy properly submitted to it for
determination.
Where a dispute arises as to the Bank's discharge of the Executive "for
cause", such dispute shall likewise be submitted to arbitration as
above described and the parties hereto agree to be bound by the
decision thereunder.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof on the 26th day
of June, 1997 and that, upon execution, each has received a conforming copy.
MERRILL MERCHANTS BANK
/s/ Marilyn M. Harlow By: /s/ Deborah Jordan CFO
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Witness Title
/s/ Marilyn M. Harlow By: /s/ Edwin N. Clift
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Witness Edwin Clift
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