EX-10.8



 






EXHIBIT 10.8




FEDERAL HOME LOAN BANK OF CINCINNATI

DEFERRED COMPENSATION AGREEMENT

FOR

SANDRA E. BELL




          THIS AGREEMENT is entered into as of the 25th day of February, 2004, by and
between FEDERAL HOME LOAN BANK OF CINCINNATI (the “Bank”) and SANDRA E. BELL (the “Executive”).




W I T N E S S E T H:




          WHEREAS, the Bank is desiring to employ Executive and Executive desires to accept employment
with the Bank; and




          WHEREAS, in order to provide retirement benefits for its employees, the Bank established and
currently maintains the Comprehensive Retirement Program of the Financial Institutions Retirement
Fund, a qualified, defined benefit pension plan (the “Pension Plan”), the Financial Institutions
Thrift Plan, a qualified defined contribution pension plan (the “Thrift Plan”), and the Federal
Home Loan Bank of Cincinnati Benefit Equalization Plan, a nonqualified deferred compensation plan
that provides defined benefit and defined contribution pension benefits (the “BEP”); and




          WHEREAS, in order to induce Executive to accept employment, the Bank and Executive desire to
enter into an agreement embodying the terms and conditions of a nonqualified deferred compensation
arrangement agreed upon during the recruitment of the Executive, which benefits are in addition to
the benefits, if any, that may be provided to the Executive under the Pension Plan, the Thrift
Plan, and the BEP.




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          NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this
Agreement, the parties agree as follows:




     1. Retirement Benefit. (a) To the extent vested pursuant to Paragraph 3 below, and
not otherwise forfeited by Executive, the Executive shall be entitled to the retirement benefit
provided under this Agreement (the “Retirement Benefit”). The Retirement Benefit shall be an
amount equal to Two Hundred Fifty Thousand Dollars ($250,000.00), plus the return on investment on
such amount as determined in accordance with Paragraph 1(b) below.



          (b) From time to time, the Bank shall credit on the balance of the Retirement Benefit an
amount equal to the return on investment that would be ordinarily credited on such balance if the
Retirement Benefit were benefits provided under the thrift plan component of the BEP.




     2. Form of Benefit. The vested portion of the Retirement Benefit shall be paid to the
Executive at the time, in the form, and under the same terms and conditions as benefits provided
under the thrift plan component of the BEP to a participant who terminates employment with the Bank
other than on account of the participant’s death or Disability (as defined in Paragraph 5 below).



     3. Vesting. (a) The Executive will vest in the Retirement Benefit according to the
following schedule:



	 	 	 	 	 
	Years of Service	 	Vested Percentage	 
	Less than 5
	 	 	0	%
	5 or more
	 	 	100	%






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     For purposes of this Paragraph 3, the term “Years of Service” shall mean the Executive’s
actual years of service (as such term is used in the Pension Plan for purposes of determining a
participant’s years of vesting service).



          (b) Notwithstanding the vesting schedule provided in Paragraph 3(a) above, and subject to
Paragraph 3(c) below, in the event the Bank terminates the employment of the Executive before she
becomes fully vested in the Retirement Benefit in accordance with Paragraph 3(a) above, and such
termination of employment is without “Cause” (as defined in Paragraph 3(d) below), the Executive
shall fully vest in the Retirement Benefit on the date of such termination.




          (c) The Executive shall forfeit the Retirement Benefit in the event that (i) the Bank
terminates the employment of the Executive for “Cause” before the Executive becomes fully vested in
the Retirement Benefit in accordance with Paragraph 3(a) above, or (ii) the Executive voluntarily
resigns from her employment with the Bank without “Good Reason” before she becomes fully vested in
the Retirement Benefit in accordance with Paragraph 3(a) above. If Executive voluntarily resigns
from her employment with the Bank for “Good Reason,” and she has not otherwise forfeited her right
to receive the Retirement Benefit, in lieu of the Retirement Benefit the Executive shall be
entitled to a reduced benefit under this Agreement that shall equal the Accrued Percentage of the
Retirement Benefit, as defined in Paragraph 4(a) below. The Accrued Percentage of the Retirement
Benefit shall be paid pursuant to the form of payment elected pursuant to Paragraph 2 above. For
purposes of this Section, the term “Good Reason” shall mean and be limited to (i) a significant,
material and adverse diminution in the Executive’s job duties, responsibilities and authority, or
organizational




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reporting relationship to the President of the Bank, (ii) a diminution in the Executive’s annual
base salary and a reduction of not less than 25% in the Executive’s incentive opportunity, where
such reductions are measured from the annual base salary and incentive opportunity provided to
Executive in the calendar year immediately preceding such diminutions, or (iii) a failure or
refusal to execute any financial statements of the Bank that unfairly and grossly inaccurately
represent the Bank’s financial position.




          (d) For purposes of this Agreement, “Cause” shall mean termination based upon (i) the
Executive’s indictment for, conviction of, or plea of guilty or nolo contendre to any felony or any
crime involving fraud, dishonesty, or moral turpitude, (ii) commission of any theft, fraud,
embezzlement by the Executive which results in, or is intended to result in, the Executive’s gain
or enrichment at the Bank’s expense, (iii) the Executive’s failure to follow lawful instructions,
which are material to the Executive’s employment duties, of the President of the Bank or the Board
of Directors of the Bank, (iv) the inability to perform the material duties and responsibilities of
the Executive’s employment with the Bank as a result of the use of or addiction to alcohol or
drugs, or (v) the willful or reckless engaging by the Executive in conduct which is materially
injurious to the Bank, monetarily or otherwise.




     4. Death Benefit. (a) If the Executive dies before receiving the entire balance of
the vested Retirement Benefit, and the Executive has not otherwise forfeited her right to receive
the Retirement Benefit, in lieu of the Retirement Benefit the Executive’s designated beneficiary
shall be entitled to a death benefit (the “Death Benefit”). The amount of the Death Benefit shall
equal the remaining balance of the vested Retirement Benefit. If the Executive dies while in the
employment of the Bank



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and prior to becoming fully vested in the Retirement Benefit, the Death Benefit shall equal the
Accrued Percentage of the Retirement Benefit. The “Accrued Percentage” is the percentage
determined by the following fraction:



Years of Service credited as of the Executive’s date of termination

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For example, if the Executive died after being credited with two (2) Years of Service, the Death
Benefit would be equal to 40% of the Retirement Benefit. Any partial Year of Service shall be
calculated on a monthly pro-rata basis. The Death Benefit shall be paid in substantially equal
annual installments over a period of 10 years or such shorter period of time as determined by the
Bank.




          (b) The Executive shall have the right to designate a beneficiary to receive the Death
Benefit, if any, due under this Agreement. The designation shall be made in the same manner and
under the same terms and conditions as described in the BEP.




     5. Disability Benefit. If the Executive ceases employment with the Bank on account
of becoming Disabled before the commencement of the payment of the vested portion of the Retirement
Benefit, files an application for disability benefits with the Bank within thirteen months (13) of
the date she became Disabled, and has not otherwise forfeited her right to receive the Retirement
Benefit, in lieu of the Retirement Benefit the Executive shall be entitled to a disability benefit
(the “Disability Benefit”). The amount, if any, of the Disability Benefit under this Agreement
shall be equal to the Retirement Benefit, except that if the Executive becomes Disabled before
becoming fully vested in the Retirement Benefit, the Disability Benefit shall equal the Accrued
Percentage of the Retirement Benefit. The Disability Benefit shall be paid pursuant to the form of
payment



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elected pursuant to Paragraph 2 above. For purposes of this Agreement, the Executive shall be
“Disabled” upon the occurrence of any of the following: (i) the Executive is determined by the
Social Security Administration to be eligible for disability benefits under Title II of the Federal
Social Security Act, or (ii) the Executive becomes eligible for disability benefits under the
Pension Plan.



     6. Funding of Benefits. (a) The obligation to pay any benefits under this Agreement
shall at all times be an unfunded and unsecured obligation of the Bank. The Bank shall not be
obligated to establish any trust, escrow arrangement or other fiduciary relationship for the
purpose of segregating funds for the payment of any benefits under this Agreement. Executive shall
be required to look solely and exclusively to the general assets of the Bank for the payment of any
benefits under this Agreement. With respect to the Bank’s obligations under this Agreement,
Executive shall merely have an unsecured claim against the Bank and neither Executive nor any
person claiming under or through Executive shall have any interest in any specific asset or assets
owned or held by the Bank or a related entity by reason of this Agreement.



          (b) All property and rights purchased with any amounts held to assist the Bank in satisfying
its obligations under this Agreement, and all income attributable to such amounts, property or
rights, shall remain (until made available to Executive or her designated beneficiary) solely the
property and rights of the Bank subject only to the claims of the Bank’s general creditors.
Nothing contained in this Agreement shall in any way limit the Bank’s right to make any investment
it may wish in order to accumulate funds to assist it in the satisfaction of its obligations under
this Agreement.




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     7. Claims and Appeals Procedures. All claims for benefits under the Agreement and
appeals regarding any such denied claims shall be made and administered in the same manner and
under the same terms and conditions as described in the BEP.



     8. Prohibition Against Assignment. To the extent permitted by law, none of the
benefits payable under this Agreement shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of
Executive or Executive’s beneficiary or beneficiaries, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, attach or garnish such benefits shall be void.



     9. Successors and Assigns. This Agreement shall inure to the benefit of, and be
binding upon the Bank, its successors and assigns, and the Executive and her heirs.



     10. Amendment and Termination. This Agreement may not be amended, altered or
modified, except by a written instrument signed by the parties hereto, or their respective
successors and may not otherwise be terminated except as provided herein.



     11. Right to Discharge Executive. Neither the establishment of this Agreement, nor
any amendment or revision thereof, nor the payment of any amounts thereunder shall be construed:
(i) as giving Executive or any other person any right of employment with the Bank, unless such
right is specifically provided by this Agreement, or (ii) as giving Executive the right to be
retained in the service of the Bank in her current capacity or in any other capacity. Executive
shall remain subject to discharge to the same extent as if this Agreement had never been entered
into. It is therefore



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expressly understood by the parties that this Agreement relates exclusively to deferred
compensation for the Executive’s services and is not intended or shall be construed as an
employment contract.



     12. Payment to Incompetent, Etc. If the Bank finds that any person to whom amounts
are payable under this Agreement is unable to care for his or her affairs because of illness or
injury, or is a minor, any payment due (unless a prior claim shall have been made by a duly
appointed guardian or other legal representative) may be paid to the spouse, a child, a parent, a
sibling, or otherwise for the benefit of such person, in the Bank’s discretion.



     13. Determination of Proper Payee. The Bank’s determination as to the identity of the
proper payee of any amount under this Agreement and the amount properly payable shall be binding
and conclusive on all parties having or claiming to have an interest under this Agreement; and
payment in accordance with such determination shall constitute a complete discharge of all
obligations on account of such amount.



     14. Interpretation of Agreement. The Bank shall have sole and exclusive authority to
interpret the terms of this Agreement. Such interpretation shall be final and conclusive on all
parties having or claiming to have an interest under this Agreement.



     15. Enforceability. If any provision of this Agreement, or any part thereof, is held
invalid or unenforceable, this Agreement shall be interpreted as if such provision or part thereof
was not contained herein, and the same shall in no way affect the validity or enforceability of any
other provision in this Agreement.



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     16. Exclusivity of Agreement. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter of this Agreement have been made by either
party which are not expressly contained herein and this Agreement shall supercede all prior
agreements, negotiations, correspondence, undertakings and communications of the parties, oral or
written, with respect to the subject matter hereof. This Agreement shall not affect any other
agreement by and between the Bank and Executive, unless expressly provided in such other agreement.



     17. Governing Law. This Agreement shall be construed and administered in accordance
with and governed by the laws of the State of Ohio.



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          IN WITNESS WHEREOF, THE FEDERAL HOME LOAN BANK OF CINCINNATI and SANDRA E. BELL have executed
this Agreement this
25th day of February, 2004.



	 	 	 	 	 
	 	FEDERAL HOME LOAN BANK OF CINCINNATI

 	 
	 	By:  	/s/ David H. Hehman
 	 
	 	Print Name:  David H. Hehman 	 
	 	Title:  
President & Chief Executive Officer 	 
	 
	 	By:  	     /s/ Richard T. Fitzpatric
 	 
	 	Print Name:  
Richard T. Fitzpatric 	 
	 	Title:  
VP, Human Resources & Administration 	 
	 
	 	SANDRA E. BELL

 	 
	 	By:  	/s/ Sandra E. Bell
 	 





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