UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
October 29, 2015
Civista Bancshares, Inc.
(Exact name of Registrant as specified in its charter)
Ohio | 001-36192 | 34-1558688 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
( IRS Employer Identification No.) |
100 East Water Street, P.O. Box 5016, Sandusky, Ohio 44870
(Address of principle executive offices)
Registrants telephone number, including area code: (419) 625-4121
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) On October 29, 2015, Civista Bancshares, Inc. (the Company) and its banking subsidiary, Civista Bank (the Bank), entered into Change in Control Agreements (the CIC Agreements) with seven of its executive officers. Previously, the Bank had change in control agreements in place with James O. Miller (the Companys Chairman, Chief Executive Officer and President), Todd A. Michel (the Companys Senior Vice President and Controller) and three other officers who have since retired. The CIC Agreements replace and supersede the prior change in control agreements for James O. Miller and Todd A. Michel and were also executed by the Company, the Bank and Dennis G. Shaffer (the Companys Executive Vice President), Richard J. Dutton (the Companys Senior Vice President), James E. McGookey (the Companys Senior Vice President, General Counsel and Secretary), and two other executive officers.
The CIC Agreements are intended to secure the services of key officers during the period of transition in the event of a change in control (as defined in the CIC Agreements). Unless there has been a change in control, the CIC Agreements do not require either the Company or the Bank to retain the officers in its employ or to pay any specified level of compensation or benefits. Each CIC Agreement provides that, upon a change in control, the officer shall receive a retention bonus equal to one and one-half times the officers annual base salary in effect prior to the change in control. Also, under each CIC Agreement, the officer will be entitled to receive a severance payment following a change in control if the officer is not employed in a similar position at the same or higher salary through the end of the CIC Agreements term (except in the case of either a voluntary resignation of employment or a termination for cause). The amount of the severance payment is conditioned upon the officer agreeing to restrictions on competition with the Company for twelve months following the officers termination. If the officer agrees to the non-compete restrictions, the officer shall receive a severance payment equal to one times the officers annual base salary plus eighteen months of COBRA premiums. If the officer does not agree to the non-compete restrictions, the officer will be entitled only to a severance payment of one dollar.
The term of each CIC Agreement continues until December 31, 2015 but shall be automatically extended on each December 31 for one additional year unless either party elects not to extend the term. In the event that a change in control occurs during the term, the CIC Agreement provides that the term will be extended for a twenty-four month period following the change in control. In each CIC Agreement, the officer also agrees not to reveal non-public information of the Company and not to solicit customers or employees of the Company for a period of twelve months after the officers termination.
The foregoing description of the CIC Agreements is a summary and is qualified in its entirety by reference to the form of the CIC Agreement, which is filed as Exhibit 10.1 and is incorporated by reference herein.
In addition, on October 29, 2015, the Company, on behalf of it and its subsidiaries, entered into Pension Shortfall Agreements (the Shortfall Agreements) with James O. Miller, Todd A. Michel and James E. McGookey and seven other employees of the Bank. When the Company ceased accruals to its defined benefit pension plan on April 30, 2014, the circumstances of some participants with limited periods until their anticipated retirement dates would not permit them to use other available alternatives to make up for the shortfall in their expected pension. The
Company calculated the total amount of the shortfall for each of the referenced individuals after considering its contributions to other retirement benefits. The Company executed the Shortfall Agreements agreeing to annually credit a bookkeeping account with an amount equal to the total shortfall for that individual divided by the number of years until the individuals anticipated retirement. The annual amount to be credited by the Company for James O. Miller is $33,704.25, for Todd A. Michel $29,188.65 and for James E. McGookey $15,014.50. The total in the account will be credited with hypothetical earnings at a rate equal to the ten-year United States Treasury Constant Maturity rate re-determined quarterly. An amount equal to the total credited to the account will be paid to the employee upon his or her separation from service with the Company, unless the separation was for cause, as defined in the Shortfall Agreement.
The foregoing description of the Shortfall Agreements is a summary and is qualified in its entirety by reference to the form of Pension Shortfall Agreement, which is filed as Exhibit 10.2 and is incorporated by reference herein.
Item 9.01 | Financial Statements and Exhibits. |
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Exhibits . The following exhibit is included with this Current Report on Form 8-K:
Exhibit
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Description |
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10.1 | Form of Change of Control Agreement by and among Civista Bancshares, Inc., Civista Bank and certain executive officers | |
10.2 | Form of Pension Shortfall Agreement by and among Civista Bancshares, Inc., Civista Bank and certain executive officers |
Civista Bancshares, Inc. is a $1.3 billion financial holding company headquartered in Sandusky, Ohio and may be accessed at www.civb.com . The Companys common shares are traded on the NASDAQ Capital Market under the symbol CIVB. The Companys depositary shares, each representing a 1/40 th ownership interest in a Series B Preferred Share, are traded on the NASDAQ Capital Market under the symbol CIVBP.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
First Citizens Banc Corp |
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(Registrant) | ||||||
Date: October 29, 2015 |
/s/ Todd A. Michel |
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Todd A. Michel, | ||||||
Senior Vice President and Controller |
Exhibit 10.1
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT (Agreement) is entered into as of the day of , 2015 (the Effective Date), by and among CIVISTA BANCSHARES, INC. (formerly known as FIRST CITIZENS BANC CORP), an Ohio corporation (the Corporation), CIVISTA BANK (formerly known as THE CITIZENS BANKING COMPANY), an Ohio bank (the Bank), and , an employee of the Corporation and/or the Bank and/or of a subsidiary of either (the Employee). The Corporation, the Bank and any subsidiary of either, that employs the Employee are collectively referred to herein as the Employer.
WHEREAS, the Employer wishes to assure itself of the continuity of the Employees services in the event of any actual change in control of the Corporation; and
WHEREAS, the Employer and the Employee accordingly desire to enter into this Agreement on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, it is hereby agreed by and between the parties as follows:
1. T ERM OF A GREEMENT . The Term of this Agreement shall commence on the Effective Date and shall continue through December 31, 2015; provided, however , that on such date and on each December 31 thereafter, the Term of this Agreement shall automatically be extended for one additional year unless, not later than the preceding January 1 either party shall have given written notice to the other that such party does not wish to extend the Term; and provided, however, that if a Change in Control (as defined in Section 4 below) shall have occurred during the original or any extended Term of this Agreement, the Term of this Agreement shall continue for a period of twenty-four (24) calendar months commencing with the calendar month in which such Change in Control occurs and shall end upon the expiration of such twenty-four (24) month period.
2. R ETENTION B ONUS . If, during the Term, a Change in Control occurs, in recognition of the Employees services during the period leading up to and ending upon the consummation of such Change in Control, the Employer shall pay to the Employee (within thirty (30) days after the date a Change in Control occurs) a bonus in a lump sum amount equal to the sum of (A) one and one-half (1 1 ⁄ 2 ) times the Employees annual base salary in effect during the twelve (12) month period immediately preceding the date upon which a Change in Control occurs, plus (B) the average of the cash value of the compensation, other than the annual base salary, awarded to the Employee during the three (3) calendar years immediately preceding the date upon which the Change in Control occurs. In this Agreement, the cash value of the compensation shall be determined by the full amount or face value of the compensation award without reduction due to any restrictions, vesting periods or possible unasserted future clawbacks that may apply to the compensation.
3. E MPLOYMENT A FTER A C HANGE IN C ONTROL . If the Employee is in the employ of the Employer on the date of a Change in Control, the Employer hereby agrees to continue the Employee in its employ for the period commencing on the date of the Change in Control and ending on the earlier of the last day of the Term of this Agreement or the date of the Employees termination of employment described in (i) or (ii) of this Section 3 (the Employment Period).
During the Employment Period, the Employee shall hold such position with the Employer and exercise such authority and perform such employment duties as are commensurate with the Employees position, authority and duties immediately prior to the Change in Control. The Employee agrees that during the Employment Period the Employee shall devote full business time exclusively to the Employees duties and perform such duties faithfully and efficiently; provided, however , that nothing in this Agreement shall prevent either (i) the Employee from voluntarily resigning from employment upon at least sixty (60) days written notice to the Employer under circumstances which do not constitute a Termination (as defined below in Section 6), or (ii) the Employer terminating the Employee for Cause as defined in Section 6 hereof or for any other reason or no reason.
4. C HANGE IN C ONTROL . For purposes of this Agreement, a Change in Control means the happening of any of the following:
A. Any Person (other than those Persons in control of the Corporation and/or the Bank, as applicable, as of the Effective Date, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation and/or the Bank, as applicable) becomes the beneficial owner (within the meaning of the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder (the Exchange Act)), directly or indirectly, of securities of the Corporation and/or the Bank, as applicable, representing fifty percent (50%) or more of the combined voting power of the Corporations (or the Banks, as applicable) then outstanding securities; or
B. During any period of two (2) consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the board of directors of the Corporation (and any new director, whose election by the Corporations stockholders or the Banks stockholders, as applicable, was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was so approved), cease for any reason to constitute a majority thereof; or
C. The consummation of (A) a plan of complete liquidation of the Corporation or the Bank; or (B) an agreement for the sale or disposition of all or substantially all the Corporations or Banks assets; or (C) a merger, consolidation, or reorganization of the Corporation and/or the Bank with or involving any other corporation, other than a merger, consolidation, or reorganization that would result in the voting securities of the Corporation or the Bank (as applicable) outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), at least fifty percent (50%) of the combined voting power of the voting securities of the Corporation or the Bank (as applicable) (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization.
However, in no event shall a Change in Control be deemed to have occurred, with respect to the Employee, if the Employee is part of a purchasing group which consummates the Change in Control transaction. The Employee shall be deemed part of a purchasing group for purposes of the preceding sentence if the Employee is an equity participant in the purchasing company or group (except for: (i) passive ownership of less than three percent (3%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or
group which is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing directors of the Corporation, as applicable).
As used herein, the term Person shall have the meaning ascribed to such term in the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a group as defined in Section 13(d). The term Person shall not include the Corporation or the Bank, any officer or director of the Corporation, the Bank, or a subsidiary of the Corporation or the Bank, or a group controlled by such directors or officers, or any employee benefit plan of the Corporation, the Bank, or a subsidiary of the Corporation or Bank; provided, however, that the term Person shall include any individual who is a director or an officer on the Effective Date, and who as of the Effective Date beneficially owned five percent (5%) or more of the voting shares of common stock of the Corporation, or a group controlled by such director or officer.
5. C OMPENSATION D URING THE E MPLOYMENT P ERIOD . During the Employment Period, the Employee shall be compensated as follows:
A. The Employee shall receive compensation which is not less than the total compensation, including the base salary, incentive compensation and any other compensation paid by the Employer to the Employee, whether in cash or in any other form during the year immediately prior to the Employment Period; and
B. The Employee shall be eligible to participate in the Employer employee benefit plans which are not materially less favorable to the Employee than the Employer employee benefit plans in which the Employee participated in immediately prior to the Employment Period.
6. T ERMINATION . For purposes of this Agreement, the term Termination shall mean termination of the employment of the Employee during the Employment Period either (i) by the Employer, for any reason other than death, Disability (as defined below), or Cause (as described below), or (ii) by resignation of the Employee upon the occurrence of one or more of the following events:
A. A significant change in the nature or scope of the Employees authorities or duties from those described in Section 3 above, a breach of any of the provisions of Section 5 above, or the breach by the Employer of any other provision of this Agreement;
B. The relocation of the Employees office to a location more than thirty-five (35) miles from the location of the Employees office immediately prior to the Employment Period;
C. The failure of the Corporation to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement as contemplated in Section 16 below.
The date of the Employees Termination under this Section 6 shall be the date specified by the Employee or the Employer, as the case may be, in a written notice to the other party complying with the requirements of Section 12 below. For purposes of this Agreement, the Employee shall be considered to have a Disability during the period in which the Employee is unable, by reason of a medically determinable physical or mental impairment, to engage in the material and substantial
duties of the Employees regular occupation, which condition is expected to be permanent. For purposes of this Agreement, the term Cause means, in the reasonable judgment of the Board of Directors of the Employer, (i) the willful and continued failure by the Employee to substantially perform the Employees duties with the Employer after written notification by the Employer, or (ii) the willful engaging by the Employee in conduct which is demonstrably injurious to the Employer, monetarily or otherwise, or (iii) the engaging by the Employee in egregious misconduct involving moral turpitude. For purposes of this Agreement, no act, or failure to act, on the Employees part shall be deemed willful unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that such action was in the best interest of the Employer.
7. S EVERANCE P AYMENTS . In the event of a Termination described in Section 6 above, the Employee shall be entitled to receive (in addition to the Employees unpaid salary, accrued vacation pay and unreimbursed business expenses through and including the date of Termination) whichever of the following, A. or B., that the Employee shall select (which selection shall be by written notice from the Employee to the Employer, and in the event the Employee fails to so select, the Employee shall be deemed to have selected B.):
A. For a period of twelve (12) consecutive calendar months after the Employees Termination, he will not, without the Employers written consent, either directly or indirectly engage in, make any investment in or have any interest in any business in competition with the Employers business that is located or conducting business in any county in which the Employer conducted business on the date of his Termination. In consideration thereof, the Employee shall be entitled to receive a lump sum payment in cash no later than thirty (30) business days after the date of Termination equal to the sum of:
i. | an amount equal to one (1) times (a) the Employees annual base salary in effect immediately prior to the date of Termination, plus (b) the cash value of all other compensation (determined by the full amount or face value of the compensation award without reduction due to any restrictions, vesting periods or possible unasserted future clawbacks that may apply to the compensation), other the annual base salary, awarded to the Employee during the year immediately preceding the date of Termination; and |
ii. |
an amount equal to eighteen (18) multiplied by the amount of the monthly COBRA premium for family coverage in effect under the Employers group health plan on the date of Termination (provided, however, if upon the issuance of future regulatory or other guidance, the foregoing formula would constitute or create a discriminatory insured plan of the Employer in violation of Sections 2716(a) and 2716(b) of the Public Health Service Act (as added by Section 1001(5) of the Patient Protection and Affordable Care Act, as amended by Section 10101(d) thereof) (a Discriminatory Insured Plan), the Employer and the Employee agree to amend such formula in a manner that shall provide substantially the same economic |
benefit to the Employee but shall not be a Discriminatory Insured Plan. |
The parties recognize that the Employer will have no adequate remedy at law for breach by the Employee of the restrictions imposed by this Section 7A. and that the Employer could suffer substantial and irreparable damage if he breaches any of these restrictions. For this reason, the Employee agrees that, if the Employee breaches any of the restrictions imposed under this Section 7.A., the Employer may seek a temporary and/or permanent injunction to restrain any breach or threatened breach of these restrictions or a decree of specific performance, mandamus, or other appropriate remedy to enforce compliance with the restrictions imposed under this Section 7.A.
B. The amount of One Dollar ($1.00).
8. E XCESS P ARACHUTE P AYMENT L IMITATION . Notwithstanding any other provision of this Agreement, if the sum of the payments to the Employee described in this Agreement and in any other agreement, program, or plan between the Employee and the Employer (or an affiliate of the Employer) attributable to the same Change in Control constitute excess parachute payments (as defined in Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (Code)), the Employer shall reduce the amounts otherwise payable to the Employee under this Agreement so that the Employees total parachute payment (as defined in Code Section 280G(b)(2)(A)) under this Agreement and any other agreements, programs, or plans shall be One Thousand Dollars ($1,000) less than the amount that would be an excess parachute payment.
9. W ITHHOLDING . All payments to the Employee under this Agreement will be subject to all applicable withholding of state and federal taxes.
10. C ONFIDENTIALITY AND N ON -S OLICITATION . The Employee agrees that:
A. Except as may be required by the lawful order of a court or agency of competent jurisdiction, or except to the extent that the Employee has express authorization from the Employer, the Employee agrees to keep secret and confidential all non-public information concerning the Employer (or any entity controlled by the Employer) which was acquired by or disclosed to the Employee during the course of the Employees employment with the Employer (or any entity controlled by the Employer), and not to disclose the same, either directly or indirectly, to any other person, firm or business entity or to use it in any way.
B. Except to the extent that the Employee has express authorization from the Employer, while the Employee is employed by the Employer and for a period of twelve (12) months after the date of the Employees Termination or other termination of employment with the Employer, the Employee covenants and agrees that Employee will not (whether for the Employee or for any other person, business, partnership, association, firm, company or corporation) initiate contact with, solicit, divert or take away any of the Employers (i) customers (entities or individuals from which the Employer, or any entity controlled by the Employer, received or receives payment for services), or (ii) employees (or employees of any entity controlled by the Employer).
11. M ITIGATION AND S ET -O FF . The Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise.
The Employer shall not be entitled to set off against the amounts payable to the Employee under this Agreement any amounts earned by the Employee in other employment after termination of employment with the Employer, or any amounts which might have been earned by the Employee in other employment had he sought such other employment.
12. N OTICES . Any notice of Termination of the Employees employment by the Employer or the Employee for any reason under Section 6 above shall be upon no less than fifteen (15) days and no greater than forty-four (45) days advance written notice to the other party. Any notices, requests, demand and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Employee at the last address the Employee has filed in writing with the Employer or, in the case of the Employer, to the attention of the Secretary of the Employer, at its principal executive offices.
13. N ON -A LIENATION . The Employee shall not have any right to pledge, hypothecate, anticipate or in any way create a lien upon any amounts provided under this Agreement; and no amounts payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. Nothing in this Section 13 shall limit the Employees rights or powers to dispose of the Employees property by Last Will and Testament or limit any rights or powers which the Employees executor or administrator would otherwise have. This Agreement shall inure to the benefit of and be enforceable by the Employees personal or legal representatives, executors, administrators, successors, heirs, designees, devisees, and legatees. If the Employee should die while any amount is still payable to the Employee hereunder had the Employee continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to the Employees designees, devisees, or legatee, or if there are none, to the Employees estate.
14. G OVERNING L AW . The provisions of this Agreement shall be construed in accordance with the laws of the State of Ohio, without application of conflict of laws provisions thereunder.
15. E NTIRE A GREEMENT ; A MENDMENT . This Agreement constitutes the entire agreement of the parties with respect to this matter and supersedes any other agreement, communication or representation between the parties, oral or written, covering the same subject matter. This Agreement may be amended or canceled by mutual agreement of the parties in writing without the consent of any other person and, except as specifically provided in Section 16 hereof, so long as the Employee lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof.
16. S UCCESSORS TO THE E MPLOYER . This Agreement shall be binding upon and inure to the benefit of the Employer and any successor of the Employer. The Employer shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Employer to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Employer would be required to perform it if no succession had taken place.
17. E MPLOYMENT S TATUS . Nothing herein contained shall be deemed to create an employment agreement between the Employer and the Employee, providing for the employment of the Employee by the Employer for any fixed period of time. The Employees employment with the
Employer is terminable at will by the Employer or the Employee, and each shall have the right to terminate the Employees employment with the Employer at any time, with or without Cause, subject to (i) the notice provisions of this Agreement, and (ii) the Employers obligation to provide severance payments if and as required by Section 7. Upon a termination of the Employees employment prior to the date of a Change in Control, there shall be no rights of the Employee under this Agreement.
18. S EVERABILITY . In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.
19. S URVIVAL . Notwithstanding any other provision of this Agreement to the contrary, Sections 10 and 16 shall survive the termination of this Agreement and the termination of the Employees employment with the Employer.
20. C OUNTERPARTS . This Agreement may be executed in two or more counterparts, any one of which shall be deemed the original without reference to the others.
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IN WITNESS WHEREOF, the Employee and the Employer have executed this Agreement as of the day and year first above written, but on the dates indicated below each.
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CIVISTA BANCSHARES, INC., formerly known as FIRST CITIZENS BANC CORP) | ||
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CIVISTA BANK (formerly known as THE CITIZENS BANKING COMPANY) | ||
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Exhibit 10.2
PENSION SHORTFALL AGREEMENT
THIS PENSION SHORTFALL AGREEMENT ( Agreement ) is made by and between CIVISTA BANCSHARES, INC. , formerly known as First Citizens Banc Corp., on behalf of itself and each of its subsidiaries (together with its subsidiaries, the Company ) and ( Employee ), and is effective as of , 2015 (the Effective Date ).
WHEREAS, the Company sponsors a tax-qualified defined benefit pension plan known as the Pension Plan for Employees of First Citizens Banc Corp. and its Affiliates, Plan No. 001 (the DB Plan ); and
WHEREAS, on April 30, 2014, the Company amended the DB Plan to permanently freeze and cease future benefit accruals thereunder (the DB Plan Freeze ); and
WHEREAS, because of the DB Plan Freeze, Employees future retirement benefits were significantly impacted; and
WHEREAS, the Company desires to lessen the impact of the DB Plan Freeze upon Employee; and
WHEREAS, the parties desire to enter into this Agreement effective as of the Effective Date;
NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations contained herein, the Company and Employee agree as follows:
1. Shortfall Account . The Company shall maintain a bookkeeping account (referred to herein as the Shortfall Account ) to which (i) beginning on the day following the DB Plan Freeze (i.e., May 1, 2014) and continuing on the 1 st day of January of each year thereafter that Employee is employed by the Company, $ shall be credited, and (ii) Hypothetical Earnings will be credited. As used herein, the term Hypothetical Earnings shall mean earnings credited to the Shortfall Account (during the period commencing May 1, 2014, and ending on the last day of the calendar quarter preceding the date of Employees separation from service with the Company) on
the last day of each calendar quarter at a rate equal to the ten-year United States Treasury Constant Maturity rate as published by the Federal Reserve Bank on the first day of each month during that quarter with the rate so determined used as the applicable rate during the remainder of that month.
2. Payment . Employee shall vest in an amount equal to the total amounts credited to Employees Shortfall Account as of the date of Employees separation from service, within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended ( Code ), with the Company other than a separation from service for Cause ; and such vested amount shall be paid to Employee in a lump sum prior to March 15 of the year following the year in which such vesting occurs and no later than sixty (60) business days following the date of such separation from service. Employee acknowledges and agrees that such lump sum payment shall consist solely of the amounts credited to the Shortfall Account as of the date of Employees separation from service without Cause. As used herein, Cause means the termination of Employees employment with the Company which termination the Companys board of directors has determined is the result of Employees act of dishonesty, misappropriation, embezzlement, intentional fraud, or Employees conviction or please of nolo contendere in respect of a felony. For the avoidance of doubt, if Employees separation from service is due to the Companys termination of Employee for Cause, Employee will not vest and this Agreement shall automatically terminate and Employee shall forfeit all rights hereunder to any payment.
3. Unfunded Agreement . This Agreement is intended to constitute an unfunded, unsecured agreement of deferred compensation that complies with the short-term deferral exception to Code Section 409A, and constitutes a mere promise by the Company to make a payment to Employee in the future out of the Companys general assets. Employee shall have the status of, and shall have no better status than, a general unsecured creditor of the Company. The Company and Employee agree that the Company has not and will not in the future set aside assets for security or enter into any other arrangement which will cause this Agreement to be or become funded for purposes of the Code or the Employee Retirement Income Security Act of 1974, as amended. If the Company determines that the short-term deferral exception to Code Section 409A becomes inapplicable, then if Employee is a specified employee, within the meaning of Code Section 409A, the payment due under this Agreement to Employee shall be payable in a lump sum on the Companys first payroll date following the earlier of (i) the date that is six (6) months after Employees separation from service, or (ii) the date of Employees death.
4. Applicable Law . This Agreement is entered into under, and shall be governed for all purposes of, the laws of the State of Ohio.
5. Tax Withholdings . The Company may withhold from any payment made pursuant to this Agreement, all taxes and other withholdings as may be required by applicable law.
6. No Assignment by Employee . Employees rights and interest in this Agreement shall not be subject to voluntary or involuntary assignment, alienation or transfer, whether by operation of law or otherwise. Notwithstanding the foregoing, in the event Employees separation from service is due to Employees death, the payment to which Employee is entitled pursuant to Section 2 hereof shall be paid to Employees designated beneficiary(ies) (pursuant to a written designation of beneficiary(ies) delivered by Employee to the Company prior to Employees death in
a form acceptable to the Company; or in the absence of such designation of beneficiary(ies), to Employees surviving spouse to whom Employee is legally married on the date of Employees death, and in the event Employee is not survived by such a spouse, to Employees estate.
7. Claims and Review Procedures . Generally the amount credited to the Shortfall Account will be paid under this Agreement without the necessity of the filing a claim. Employee or beneficiary or other person (such being referred to below as a claimant ) may deliver to the Company a written claim for a determination with respect to the amounts payable to such claimant pursuant to this Agreement. The claim must state with particularity the determination desired by the claimant. Solely for purposes of this Section 7, the term Company refers to the Company and any committee designated by the Company to consider claimants claim or claimants appeal of a denied claim.
The Company shall, within ninety (90) days after the receipt of a written claim, send written notification to the claimant as to its disposition, unless special circumstances require an extension of time for processing the claim. If such an extension is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial period. In no event shall such extension exceed a period of ninety (90) days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Company expects to render the final decision.
In the event the claim is wholly or partially denied, the written notification shall state the specific reason or reasons for the denial, include specific references to pertinent Agreement provisions on which the denial is based, provide an explanation of any additional material or information necessary for the claimant to perfect the claim and a statement of why such material or information is necessary, and set forth the procedure by which the claimant may appeal the denial of the claim, including a statement of the claimants right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review. If the claim has not been granted and notice is not furnished within the time period specified in the preceding paragraph, the claim shall be deemed denied for the purpose of proceeding to appeal in accordance with the following paragraph below.
In the event a claimant wishes to appeal the denial of his claim, the claimant may request a review of such denial by making written application to the Company within sixty (60) days after receipt of the written notice of denial (or the date on which such claim is deemed denied if written notice is not received within the applicable time period specified in the paragraph above). Such claimant (or his duly authorized representative) may, upon written request to the Company, review documents which are pertinent to such claim, obtain copies of such documents free of charge, submit in writing issues and comments in support of his position, and may request a hearing, which the Company, in its sole discretion, may grant. Within sixty (60) days after receipt of the written appeal (unless an extension of time is necessary due to special circumstances or is agreed to by the parties), the Company shall notify the claimant of its final decision. Such final decision shall be in writing and shall include specific reasons for the decision and specific references to the pertinent Agreement provisions on which the decision is based. If an extension of time for review is required because of special circumstances, written notice of the extension shall be furnished to be claimant prior to the commencement of the extension. Any extension of time will not exceed sixty (60) days.
Any decision on review shall take into consideration all comments, documents, records, and other information submitted by the claimant (or the claimants duly authorized representative) relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. Such decision must be written in a manner calculated to be understood by the claimant, and it must contain specific reasons for the decision, specific reference(s) to the pertinent Agreement provisions upon which the decision was based, and such other matters as the Company deems relevant. If the claim has not been granted and written notice is not provided within the time period specified above, the appeal shall be deemed denied.
If the claimant does not follow the procedures set forth above, the claimant shall be deemed to have waived his right to appeal benefit determinations under the Agreement. In addition, the decisions, actions, and records of the Company shall be conclusive and binding upon all persons having or claiming to have any right or interests in or under the Agreement.
8. Entire Agreement . This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof; and any modification or termination of this Agreement shall be effective only if it is in writing signed by the parties.
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IN WITNESS WHEREOF, Employee and the Company have executed this Agreement effective as of the day and year first above written, but on the dates indicated below each.
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CIVISTA BANCSHARES, INC. | ||
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