Document:

EX-10.6

 

EXHIBIT 10.6

THE FEDERAL HOME LOAN BANK OF CINCINNATI

NONQUALIFIED DEFERRED COMPENSATION PROGRAM FOR DIRECTORS

(1990 RESTATEMENT)

(As Amended through September 2002)

Effective March 1, 1990, THE FEDERAL HOME LOAN BANK OF CINCINNATI (the “Bank”) hereby amends and
restates its Nonqualified Deferred Compensation Program for Directors (the “Program”) to provide
the benefits set forth in this instrument.

Section 1. Elections. (a) Prior to the start of the first board or committee
meeting attended by an individual Director of the Bank in any calendar year during which this
Program is in effect, the Director may elect to defer the Bank’s payment to him of all or any
percentage or specified dollar amount of director’s fees from the Bank that will be earned by him
during such calendar year. Such election shall be made in writing, on the form attached hereto,
and shall be delivered to the President or Secretary of the Bank.

(b) In addition, prior to the start of the first board meeting after the effective date of this
restatement of the Program, a Director may make a deferral election under this Program with respect
to director’s fees from the Bank that will be earned by him during the balance of the calendar year
following receipt of such election. If made, such election shall supersede any previous election
made for that year.

(c) At any time during a year, upon written notice delivered to the President or the Secretary of
the Bank, the Director may revoke his deferral election for the balance of such year. Any such
revocation shall be effective only with respect to director’s fees which have not yet been earned.

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(d) Except as provided above, an election under this Program shall be irrevocable, and the
director’s fees deferred thereunder will not be paid to the Director or his beneficiary until the
time or times prescribed in his election or as otherwise provided in this Program.

Section 2. Accounts and Interest. (a) The Bank shall establish a memorandum
account on its books and records for each Director who has elected to defer fees under this
Program. The memorandum account shall be credited with the amount of any fee deferred as of the
time such fee is earned, and separate subaccounts shall be maintained to the extent necessary to
distinguish amounts deferred under each respective deferral election.

(b) Each Director’s memorandum account shall be credited quarterly with a return on investment
(positive or negative) that is substantially equivalent to the net return on investment that would
have been earned on such Director’s elected investments under this Program. A Director may elect
from the investment options that are approved by the Committee, and such Director may change his
investment elections once each calendar month, including during his retirement.

(c) Notwithstanding any provision to the contrary, if the Bank modifies the return on investment to
be credited to the Directors’ memorandum accounts, such modification shall only have prospective
effect.

Section 3. Payment of Amounts Deferred. (a) Except as provided below, all
amounts deferred under this Program, together with related interest, shall be paid to the Director
at the end of the deferral period and in the form designated by the Director in the respective
deferral election from among the available options.

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(b) In the event that the Director incurs a hardship prior to the receipt of all amounts deferred
under this Program and related interest, then, to the extent necessary to satisfy that part of the
hardship which the Director reasonably represents cannot be satisfied through other resources (such
as insurance or other compensation, reasonable liquidation of assets, cessation of elective
deferrals, or available credit on reasonable terms) of the Director or his immediate family, the
Administrative Committee of the Bank may, in its sole discretion, accelerate the time for payment
of such amounts notwithstanding the deferral period and/or payment method designated by the
Director in his deferral election. For this purpose, a hardship shall be defined as an immediate
and heavy financial need on account of medical expenses, the purchase of a principal residence, the
payment of tuition, or the need to prevent eviction from or foreclosure on a principal residence.

(c) In the event that the Director dies prior to the receipt of all amounts deferred under this
Program and related interest, then the unpaid balance shall be paid to any beneficiary or
beneficiaries designated by the Director in the respective deferral election or in any subsequent
designation of beneficiary election delivered by the Director to the President or Secretary of the
Bank, subject to the requirement that such beneficiary survives the Director by 30 days. Payments
to a beneficiary shall be made as soon as administratively practical in the form designated by the
Director from among the available options; provided, however, that if installment payments to the
Director with respect to a particular deferral have already begun, then any installment payments to
the beneficiary shall be limited to the number of remaining years over which payments would have
continued to the Director had he lived; and provided further that if a designated beneficiary
entitled to payment hereunder dies prior to the receipt of the full amount, then the unpaid balance
shall be paid in lump sum to such beneficiary’s estate.

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If no designation of a beneficiary is made by the Director or if the designated Nonqualified
Deferred Compensation Plan beneficiary does not survive the Director by 30 days, then the deferral
and related interest shall be paid in a lump sum to the Director’s estate.

Section 4. Withholding. The Bank shall withhold from any payments made under this
Program the amount of any taxes required to be withheld under federal, state, or local law.

Section 5. Unfunded Obligation. The obligation of the Bank to provide payments
under this Program is a general contractual obligation of the Bank and imposes no obligation on the
Bank to provide for payment through any specific source or fund. An individual Director and any
person claiming under or through him shall have no greater rights than an unsecured creditor of the
Bank.

Section 6. No Assignment. To the extent permitted by law, no right to any payment
under this Program may be assigned, transferred, pledged, or encumbered, and no right to any
payment under this Program is subject to the claims of creditors or others, or to legal process.

Section 7. Amendment and Termination. The Bank through its Board of Directors may
amend or terminate this Program at any time and for any reason. Except as provided below, no such
amendment or termination shall affect the amount or timing of payments to a Director of amounts
deferred prior to the date of adoption of such amendment or termination, nor reduce the interest to
be credited with respect to such prior deferrals, unless the Director gives his express written
consent to such change. In the event that the Bank is restructured or dissolved, the

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obligation to make payments under this Program may be transferred to any institution which succeeds
to all or any part of the business of the Bank, as determined in sole discretion of the Bank.

5EX-10.7

 

EXHIBIT 10.7

January 29, 2004

Ms. Sandra E. Bell

20 Connor Court

Irvington, NY 10533

Dear Sandra,

The purpose of this letter is to confirm your recent discussions and offer of employment with David
H. Hehman, President/CEO of the Federal Home Loan Bank of Cincinnati. As discussed, the position
that has been tendered to you and which you have verbally accepted is entitled Executive Vice
President, Chief Financial Officer with a biweekly starting salary of $12,115.39 (converts to
$315,000 on an annual basis). Your designation as a Bank Officer is subject to the approval by the
Bank’s Board of Directors and will be presented at the February Board meeting. The Bank
anticipates you will begin employment on Thursday April 1, 2004 following your relocation to
Cincinnati.

As an Officer of the Bank, you will be eligible to participate in the Bank’s Executive Incentive
Compensation Plan (the Officers’ Incentive Plan). This plan will allow you to receive an incentive
payment of up to 55% of your base salary depending upon the Bank’s success in achieving its
corporate goals. This incentive program has been a major factor in the Bank achieving a majority
of its annual goals over the past several years. At its February meeting, the Bank’s Board of
Directors will be asked to approve your participation in the Officers’ Incentive Plan for the 2004
plan year.

Pursuant to your discussions with Mr. Hehman, in addition to being eligible to participate in the
Bank’s two IRS-qualified pension plans and the non-qualified Benefit Equalization Plan, the Bank
will also provide you with a supplemental retirement benefit equal to $250,000, plus applicable
interest earnings, which will be governed by a separate, non-qualified deferred compensation
agreement prepared by Bank counsel. As mutually agreed, you will be fully vested in this
non-qualified, supplemental benefit upon the fifth anniversary of your Bank employment. Please
refer to the enclosed, draft agreement for specific details regarding this supplemental retirement
benefit. Should you have any questions or require clarification of the draft agreement, please
don’t hesitate to contact me.

As further discussed, the Bank will reimburse your relocation expenses to Greater Cincinnati based
upon its current policy and, additionally agrees to provide the following enhanced relocation
benefits on a tax neutral basis (where applicable).

	 	1.	 	The Bank will provide reimbursement for decorating expenses associated with your new
home in Greater Cincinnati not to exceed $26,250 (equivalent to one month’s salary).

 

 

Ms. Sandra E. Bell
January 29, 2004
Page 2

	 	2.	 	The Bank will reimburse reasonable commuting expenses (including airfare) between
Cincinnati and your New York residence during the months of April, May and June of 2004.
	 
	 	3.	 	The Bank will provide an additional 90 days of duplicate housing assistance (for a
total not to exceed 150 days) to accommodate your commute during the months of April, May
and June of 2004.
	 
	 	4.	 	Finally, the Bank will provide reimbursement for the additional moving expenses
associated with the temporary storage of your household belongings while you reside in
temporary housing as well as the delivery, repacking and reshipment of the household
belongings used while residing in temporary housing, until your subsequent move to a
permanent residence in Greater Cincinnati.

The Bank offers an extensive fringe benefit package which is designed to provide our employees with
comprehensive options for planning their current and future security. As we discussed, the Bank
agrees to waive the three-month waiting period for enrollment and participation in the following
benefits, specifically its Medical, Dental, Vision, Flexible Spending Accounts, Life and Long Term
Disability programs.

Please note that the waiver of the waiting periods for the Bank’s medical, dental and vision
coverages is subject to the approval by the Bank’s insurance carrier, Anthem Blue Cross and Blue
Shield. Although we anticipate Anthem will approve our request, should these waiting periods not
be waived, the Bank agrees to reimburse the premium that you would be required to pay to continue
the coverages through your current employer (under the provisions of COBRA) until the Bank’s
waiting periods are completed. In general, COBRA is a federal regulation which requires employers
to extend terminating employees including those who voluntarily resign, the option to continue
their health insurance coverages for up to eighteen months by paying 102% of the premium for such
coverage.

Additionally, the Bank will provide a company car and monthly parking space for your use. However,
as mutually agreed, the Bank will defer procuring this vehicle until the lease term on your current
car has ended. Also enclosed please find a handbook which further describes the Bank’s fringe
benefit programs, including the Bank’s vacation and sick leave benefits.

On your first day of employment, you will be scheduled to attend an orientation session with the
Bank’s Human Resources Department. During this orientation, you will receive enrollment materials
regarding the Bank’s employee benefit programs and will also be asked to complete additional
paperwork required for employment. Please note that, in order to comply with federal laws which
require the Bank to verify your eligibility for employment, you will need to bring

 

 

Ms. Sandra E. Bell
January 29, 2004
Page 3

certain identification and eligibility documents, e.g., your driver’s license and social security
card.

Please confirm your acceptance of this offer by signing the space provided below, and returning the
signed letter to me in the enclosed, postage paid envelope no later than Friday, February 27, 2004.
A copy of this letter is enclosed for your personal records.

As referenced above, enclosed for your review are two copies of the draft non-qualified deferred
compensation agreement which will govern your supplemental retirement benefit. If this draft
agreement is acceptable to you, please sign and return both copies of the agreement in the envelope
provided. Once all signatures are obtained, a copy of the executed agreement will be returned to
you for your records.

On behalf of the Bank and Mr. Hehman, let me welcome you to our organization. I am confident that
with your management experience and leadership capabilities, we will be able to continue with our
efforts to enhance and improve the Bank’s operations.

Again, welcome, and should you have any questions before you begin at the Bank, please feel free to
contact me at (513) 852-5704.

	 	 	 	 	 
	 

	 	Cordially yours,
	 	 
	 
	 	 	 	 
	 

	 	/s/ Richard T. Fitzpatric	 	 
	 

	 	 	 	 
	 

	 	Richard T. Fitzpatric	 	 
	 

	 	Vice President	 	 
	 

	 	Human Resources & Administration	 	 

Enclosures (4)

Cc: David H. Hehman

Offer of employment with the Federal Home Loan Bank of Cincinnati is hereby accepted.

	 	 	 	 	 	 	 
	                     /s/ Sandra E. Bell

	 	 	 	          2/18/04
	 	 
	 

	 	 	 	 	 	 
	                    Ms. Sandra E. Bell

	 	 	 	           Date

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