RESTATED DIRECTOR SUPPLEMENTAL RETIREMENT INCOME and DEFERRED COMPENSATION AGREEMENT FOR MARTIN LUKACS MAGYAR BANK New Brunswick, New Jersey January 1, 2006 Financial Institution Consulting Corporation Memphis, Tennessee 38117 WATS: 1-800-873-0089...
Exhibit
10.8
RESTATED
DIRECTOR
SUPPLEMENTAL RETIREMENT
INCOME
and DEFERRED COMPENSATION AGREEMENT
FOR
XXXXXX XXXXXX
MAGYAR
BANK
New
Brunswick, New Jersey
January
1, 2006
Financial
Institution Consulting Corporation
000
Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxx 00000
WATS:
0-000-000-0000
FAX:
(000) 000-0000
(000)
000-0000
RESTATED
DIRECTOR
SUPPLEMENTAL RETIREMENT
INCOME
and DEFERRED COMPENSATION AGREEMENT
FOR
XXXXXX XXXXXX
This
Restated Director Supplemental Retirement Income and Deferred Compensation
Agreement for Xxxxxx Xxxxxx (the "Agreement"), effective as of the 1st day
of
January, 2006, amends and restates the Director Supplemental Retirement Income
and Deferred Compensation Agreement for Xxxxxx Xxxxxx dated February 1, 2004,
and formalizes the understanding by and between MAGYAR BANK (the "Bank"), a
state chartered savings bank having its principal place of business in New
Brunswick, New Jersey, and XXXXXX XXXXXX (hereinafter referred to as
"Director"). All prior non-qualified Director deferred compensation agreements,
including any and all Joinder Agreements, with respect to the Director and
MAGYAR BANK, are hereby superseded and replaced by this Agreement
W
I T N E S S E T H :
WHEREAS,
the
Director serves the Bank as a member of the board; and
WHEREAS,
the
Bank recognizes the valuable services heretofore performed by the Director
and
wishes to encourage his continued service; and
WHEREAS,
the
Director wishes to be assured that the Director will be entitled to a certain
amount of additional compensation for some definite period of time from and
after retirement from active service with the Bank or other termination of
service and wishes to provide his beneficiary with benefits from and after
death; and
WHEREAS,
the
Bank and the Director wish to provide the terms and conditions upon which the
Bank shall pay such additional compensation to the Director after retirement
or
other termination of service and/or death benefits to his beneficiary after
death; and
WHEREAS,
the
Bank has adopted this Director Supplemental Retirement Income and Deferred
Compensation Agreement which controls all issues relating to benefits as
described herein; and
WHEREAS,
Section
409A of the Internal Revenue Code of 1986 (“Code”), as amended, requires that
certain deferred compensation arrangements comply with its terms or subject
the
recipient of the compensation to potential taxes and penalties; and
WHEREAS,
the
Bank desires to amend and restate the Agreement to comply with Code Section
409A
and any Treasury Regulations promulgated thereunder; and
WHEREAS,
the
Board of Directors of the Bank has conditionally approved the
amendment and restatement of the Agreement, subject to the approval of the
New
Jersey Department of Banking and Insurance.
NOW,
THEREFORE,
in
consideration of the premises and of the mutual promises herein contained,
the
Bank and the Director agree as follows:
SECTION
I
DEFINITIONS
When
used
herein, the following words and phrases shall have the meanings below unless
the
context clearly indicates otherwise:
1.1
|
"Accrued
Benefit Account" shall be represented
by
the bookkeeping entries required to record the Director=s
(i) Phantom Contributions plus (ii) accrued interest, equal to the
Interest Factor, earned to-date on such amounts. However, neither
the
existence of such bookkeeping entries nor the Accrued Benefit Account
itself shall be deemed to create either a trust of any kind, or a
fiduciary relationship between the Bank and the Director or any
Beneficiary.
|
1.2
|
"Act"
means the Employee Retirement Income Security Act of 1974, as amended
from
time to time.
|
1.3
|
AAdministrator@
means the Bank.
|
1.4
|
"Bank"
means MAGYAR BANK and any successor
thereto.
|
3
1.5
|
"Beneficiary"
means the person or persons (and their heirs) designated as Beneficiary
in
Exhibit B of this Agreement to whom the deceased Director=s
benefits are payable. If no Beneficiary is so designated, then the
Director=s
Spouse, if living, will be deemed the Beneficiary. If the
Director=s
Spouse is not living, then the Children of the Director will be deemed
the
Beneficiaries and will take on a per stirpes basis. If there are
no
Children, then the Estate of the Director will be deemed the
Beneficiary.
|
1.6
|
"Benefit
Age" means the later of: (i) the Director's sixty-fifth (65th) birthday
or
(ii) the actual date the Director=s
full-time service with the Bank terminates.
|
1.7
|
"Benefit
Eligibility Date" means the date on which the Director is entitled
to
receive any benefit(s) pursuant to Section(s) III or V of this Agreement.
It shall be the first day of the month following both the attainment
of
the Directors’ Benefit Age and his actual retirement from the Board of
Directors.
|
1.8
|
"Board
of Directors" means the board of directors of the
Bank.
|
1.9
|
"Cause"
means termination of the Director=s
service on the Board of Directors due to: (i) actions or inactions
which
constitute a breach of the bylaws of the Bank or (ii) the
Director=s
personal dishonesty, willful misconduct, willful malfeasance, breach
of
fiduciary duty involving personal profit, intentional failure to
perform
stated duties, willful violation of any law, rule, regulation (other
than
traffic violations or similar offenses), or final cease-and-desist
order,
material breach of any provision of this Plan, or gross negligence
in
matters of material importance to the
Bank.
|
1.10
|
“Change
in Control” shall mean a change in the ownership of the Bank or Company
under paragraph (a) below, a change in effective control of the Bank
or
Company under paragraph (b) below, or a change in the ownership of
a
substantial portion of the assets of the Bank or Company under paragraph
(c) below. For all purposes hereunder, the definition of Change in
Control
shall be construed to be consistent with the requirements of Proposed
Treasury Regulation Section 1.409A-3(g), except to the extent that
such
proposed regulations are superseded by subsequent
guidance.
|
4
For
this
subsection “persons acting as a group” is defined as follows; Persons will be
considered to be acting as a group if they are owners of a corporation that
enters into a merger, consolidation, purchase or acquisition of stock, or
similar business transaction with the corporation. Persons will not be
considered to be acting as a group solely because they purchase or own stock
of
the same corporation at the same time, or as a result of the same public
offering. If a person, including an entity, owns stock in both corporations
that
enter into a merger, consolidation, purchase or acquisition of stock, or similar
transaction, such shareholder is considered to be acting as a group with other
shareholders in a corporation only with respect to the ownership in that
corporation prior to the transaction giving rise to the change and not with
respect to the ownership interest in the other corporation.
(a)
|
Change
in Ownership of the Bank or Company
|
Change
in
the ownership occurs on the date that any one person, or more than one person
acting as a group (as defined above), acquires ownership of stock of the Bank
or
Company that, together with stock held by such person or group, constitutes
more
than 50 percent of the total fair market value or total voting power of the
stock of such corporation. However, if any one person or more than one person
acting as a group, is considered to own more than 50 percent of the total fair
market value or total voting power of the stock of a corporation, the
acquisition of additional stock by the same person or persons is not considered
to cause a change in the ownership of the corporation or to cause a change
in
the effective control of the corporation.
(b)
|
Change
in the Effective Control of the Bank or
Company
|
A
change
in the effective control of the Bank or Company occurs on the date that either
-
(1)
Any
one person, or more than one person acting as a group (as defined above),
acquires (or has acquired during the 12-month period ending on the date of
the
most recent acquisition by such person or persons) ownership of stock of the
Company possessing 20 percent or more of the total voting power of the stock
of
the Company (except that if an individual Director’s agreement becomes subject
to Code Section 409A, then the required percentage of acquired ownership of
stock under this Subsection 1.10 (b)(1) shall be 35 percent or more); or
5
(2)
a
majority of members of the Company’s board of directors is replaced during any
12-month period by directors whose appointment or election is not endorsed
by a
majority of the members of the Company’s board of directors prior to the date of
the appointment or election.
(c)
|
Change
in the Ownership of a Substantial Portion of the Bank’s or Company’s
Assets.
|
Change
in
the ownership of a substantial portion of the Bank or Company’s assets occurs on
the date that any one person, or more than one person acting as a group (as
defined above), acquires (or has acquired during the 12-month period ending
on
the date of the most recent acquisition by such person or persons) assets from
the corporation that have a total gross fair market value equal to or more
than
40 percent of the total gross fair market value of all of the assets of the
Bank
or Company immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of the Bank
or
Company, or the value of the assets being disposed of, determined without regard
to any liabilities associated with such assets.
1.11
|
"Children"
means all natural or adopted children of the Director and issue of
any
predeceased child or children.
|
1.12
|
"Code"
means the Internal Revenue Code of 1986, as amended from time to
time.
|
1.13
|
“Company”
shall mean Magyar Bancorp, Inc.
|
1.14
|
"Contribution(s)"
means those annual total contributions comprised of both the Elective
Contributions and the Emeritus Contributions which the Bank is required
to
make to the Retirement Income Trust Fund on behalf of the Director
in
accordance with Subsection 2.1(a) and in the amounts set forth in
Exhibit
A of the Agreement. Such Contributions, for the first Plan Year,
shall
include any and all amounts accrued by the Bank to pay the benefits
promised to the Director under any prior non-qualified deferred
compensation agreements including any Joinder Agreements previously
executed by the Bank and the Director.
|
6
1.15
|
(a)
"Disability Benefit" means the benefit payable to the Director following
a
determination, in accordance with Subsection 6.1(a), that he is no
longer
able, properly and satisfactorily, to perform his duties at the
Bank.
|
(b)
"Disability Benefit-Supplemental" (if applicable) means the benefit payable
to
the Director=s
Beneficiary upon the Director=s
death
in accordance with Subsection 6.1(b).
1.16
|
"Effective
Date" of this Agreement shall be January 1, 2006. The original effective
date of this Agreement was February 1, 2004. The Agreement is hereby
amended and restated effective January 1, 2006 in order to conform
to Code
Section 409A.
|
1.17
|
“Elective
Contribution” shall refer to the Director’s voluntary monthly pre-tax
deferral of board fees, committee fees and/or retainer plus interest
compounded annually at a rate equal to the Interest Factor. The Director
may elect to change his voluntary deferral amount by submitting to
the
Bank a Notice of Adjustment of Elective Contribution thirty (30)
days
prior to the end of any Plan Year.
|
1.18
|
“Emeritus
Contribution” shall refer to the amounts necessary to support an annual
amount payable to the Director at Benefit Age based upon a percentage,
as
stated in Appendix A, of the Director’s total board fees, committee fees
and/or retainer in the twelve months prior to the Director’s Benefit
Eligibility Date. The percentage shall be determined by the following
formula: ten percent (10%) plus two and one-half percent (2 ½%) for each
year of service as a Director, with a minimum of fifty percent (50%),
provided the Director has served for at least five (5) years, and
a
maximum of sixty percent (60%). Notwithstanding the foregoing, any
Director who serves as Board Chairman for a five-year term (other
than the
current Chairman) shall be entitled to receive seventy-five percent
(75%).
|
1.19
|
"Estate"
means the estate of the Director.
|
1.20
|
"Interest
Factor" means monthly compounding, discounting or annuitizing, as
applicable, at a rate set forth in
Exhibit A.
|
7
1.21
|
"Payout
Period" means the time frame during which certain benefits payable
hereunder shall be distributed. Payments shall be made in monthly
installments commencing on the first day of the month following the
occurrence of the event which triggers distribution and continuing
for a
period of one hundred eighty (180) months. Should the Director make
a
Timely Election to receive a lump sum benefit payment, the
Director=s
Payout Period shall be deemed to be one (1) month.
|
1.22
|
"Phantom
Contributions" means those annual Contributions which the Bank is
no
longer required to make on behalf of the Director to the Retirement
Income
Trust Fund. Rather, once the Director has exercised the withdrawal
rights
provided for in Subsection 2.2, the Bank shall be required to record
the
annual amounts set forth in Exhibit A of the Agreement in the
Director=s
Accrued Benefit Account, pursuant to Subsection 2.1.
|
1.23
|
"Plan
Year" shall mean the twelve (12) month period commencing January
1 and
ending December 31.
|
1.24
|
"Retirement
Income Trust Fund" means the trust fund account established by the
Director and into which annual Contributions will be made by the
Bank on
behalf of the Director pursuant to Subsection 2.1. The contractual
rights
of the Bank and the Director with respect to the Retirement Income
Trust
Fund shall be outlined in a separate writing to be known as the Xxxxxx
Xxxxxx Grantor Trust agreement.
|
1.25
|
ASpouse@
means the individual to whom the Director is legally married at the
time
of the Director=s
death, provided, however, that the term ASpouse@
shall not refer to an individual to whom the Director is legally
married
at the time of death if the Director and such individual have entered
into
a formal separation agreement or initiated divorce
proceedings.
|
1.26
|
"Supplemental
Retirement Income Benefit" means an annual amount (before
taking into account federal and state income taxes), payable in monthly
installments throughout the Payout Period. Such benefit is projected
pursuant to the Agreement for the purpose of determining the Contributions
to be made to the Retirement Income Trust Fund (or Phantom Contributions
to be recorded in the Accrued Benefit Account). The annual Contributions
and Phantom
|
8
Contributions
have been actuarially determined, using the assumptions set forth in Exhibit
A,
in order to fund for the projected Supplemental Retirement Income Benefit.
The
Supplemental Retirement Income Benefit for which Contributions (or Phantom
Contributions) are being made (or recorded) is set forth in Exhibit A.
1.27
|
"Timely
Election" means the Director has made an election to change the form
of
his benefit payment(s) from the Retirement Income Trust Fund by filing
with the Administrator a Notice of Election to Change Form of Payment
(Exhibit C of this Agreement). In the case of benefits payable from
the
Retirement Income Trust Fund, such election may be made at any time.
In
the case of benefits payable from the Accrued Benefit Account, such
election generally shall have been made prior to December 31, 2006
(i.e.
the last day of the “Transition Period” for bringing plans into compliance
with Code Section 409A). Unless the Transition Period is extended
by the
Internal Revenue Service, if the Director makes an election subsequent
to
December 31, 2006 with respect to distributions from the Accrued
Benefit
Account, then (i) such election may not take effect until at least
twelve
(12) months after the date on which the election is made, (ii) in
the case
of an election related to a payment other than due to disability
or death,
the first payment with respect to which such election is made must
be
deferred for a period of not less than five (5) years from the date
such
payment would otherwise have been made, and (iii) any election related
to
a distribution at a specified time or pursuant to a fixed schedule
may not
be made less than twelve (12) months prior to the date of the first
scheduled payment.
|
SECTION
II
BENEFIT
FUNDING
2.1
|
(a)
Retirement
Income Trust Fund and Accrued Benefit Account.
The Director shall establish the Xxxxxx Xxxxxx Grantor Trust into
which
the Bank shall be required to make annual Contributions on the
Director=s
behalf, pursuant to Exhibit A and this Section II of the Agreement.
A
trustee shall be selected by the Director. The trustee shall maintain
an
account, separate and distinct from the Director=s
personal contributions, which account shall constitute the Retirement
Income Trust Fund. The trustee shall be charged with the responsibility
of
investing all contributed funds. Distributions from the Retirement
Income
Trust Fund of the Xxxxxx Xxxxxx Grantor Trust may be made by the
trustee
to the Director, for purposes of payment of any income or employment
taxes
|
9
due
and
owing on Contributions by the Bank to the Retirement Income Trust Fund, if
any,
and on any taxable earnings associated with such Contributions which the
Director shall be required to pay from year to year, under applicable law,
prior
to actual receipt of any benefit payments from the Retirement Income Trust
Fund.
If the Director exercises his withdrawal rights pursuant to Subsection 2.2,
the
Bank=s
obligation to make Contributions to the Retirement Income Trust Fund shall
cease
and the Bank=s
obligation to record Phantom Contributions in the Accrued Benefit Account shall
immediately commence pursuant to Exhibit A and this Section II of the Agreement.
To the extent this Agreement is inconsistent with the Xxxxxx Xxxxxx Grantor
Trust Agreement, the Xxxxxx Xxxxxx Grantor Trust Agreement shall supersede
this
Agreement.
The
annual Contributions (or Phantom Contributions) required to be made by the
Bank
to the Retirement Income Trust Fund (or recorded by the Bank in the Accrued
Benefit Account) have been actuarially determined and are set forth in Exhibit
A
which is attached hereto and incorporated herein by reference. Contributions
shall be made by the Bank to the Retirement Income Trust Fund (i) within
seventy-five (75) days of establishment of such trust, and (ii) within the
first
thirty (30) days of the beginning of each subsequent Plan Year, unless this
Section expressly provides otherwise. Phantom Contributions, if any, shall
be
recorded in the Accrued Benefit Account within the first thirty (30) days of
the
beginning of each applicable Plan Year, unless this Section expressly provides
otherwise. Phantom Contributions shall accrue interest at a rate equal to the
Interest Factor, during the Payout Period, until the balance of the Accrued
Benefit Account has been fully distributed. Interest on any Phantom Contribution
shall not commence until such Payout Period commences.
The
Administrator shall review the schedule of annual Contributions (or Phantom
Contributions) provided for in Exhibit A (i) within thirty (30) days prior
to
the close of each Plan Year and (ii) if the Director is employed by the Bank
until attaining Benefit Age, on or immediately before attainment of such Benefit
Age. Such review shall consist of an evaluation of the accuracy of all
assumptions used to establish the schedule of Contributions (or Phantom
Contributions). Provided that (i) the Director has not exercised his withdrawal
rights pursuant to Subsection 2.2 and (ii) the investments contained in the
Retirement Income Trust Fund have been deemed reasonable by the Bank, the
Administrator shall prospectively amend or supplement the schedule of
Contributions provided for in Exhibit A should the Administrator determine
during any such
10
review
that an
increase
in or
supplement
to
the
schedule of Contributions is necessary in order to adequately fund the
Retirement Income Trust Fund so as to provide an annual benefit (or to provide
the lump sum equivalent of such benefit, as applicable) equal to the
Supplemental Retirement Income Benefit, on an after-tax basis, commencing at
Benefit Age and payable for the duration of the Payout Period.
(b)
Withdrawal
Rights Not Exercised.
(1)
Contributions
Made Annually
If
the
Director does not exercise any withdrawal rights pursuant to Subsection 2.2,
the
annual Contributions to the Retirement Income Trust Fund shall continue each
year, unless this Subsection 2.1(b) specifically states otherwise, until the
earlier of (i) the last Plan Year that Contributions are required pursuant
to
Exhibit A, or (ii) the Plan Year of the Director's termination of
service.
(2)
Termination
Following a Change in Control
If
the
Director does not exercise his withdrawal rights pursuant to Subsection 2.2
and
a Change in Control occurs at the Bank, followed within thirty-six (36) months
by either (i) the Director's involuntary termination of service, or (ii)
Director's voluntary termination of service after: (A) a material change in
the
Director's function, duties, or responsibilities, which change would cause
the
Director's position to become one of lesser responsibility, importance, or
scope
from the position the Director held at the time of the Change in Control, (B)
a
relocation of the Director's principal place of service by more than thirty
(30)
miles from its location prior to the Change in Control, or (C) a material
reduction in the benefits and perquisites to the Director from those being
provided at the time of the Change in Control, the Emeritus Contributions as
set
forth on Schedule A shall continue to be required of the Bank. The Bank shall
be
required to make an immediate lump sum Contribution to the Director's Retirement
Income Trust Fund in an amount equal to: (i) the full Emeritus Contribution
required for the Plan Year in which such termination occurs, if not yet made,
plus (ii) the present value (computed using a discount rate equal to the
Interest Factor) of all remaining Emeritus Contributions to the Retirement
Income Trust Fund, and (iii) the present value (computed using the a discount
rate equal to the Interest Factor) of the interest only component of the
Elective Contribution; provided, however, that, if necessary, an additional
amount shall be contributed to the Retirement Income Trust Fund which is
sufficient to
11
provide
the Director with after-tax benefits (assuming a constant tax rate equal to
the
rate in effect as of the date of Director=s
termination) beginning at Benefit Age following such termination, equal in
amount to that benefit which would have been payable to the Director if no
secular trust had been implemented and the benefit obligation had been accrued
under APB Opinion No. 12, as amended by FAS 106.
(3)
Termination
For Cause
If
the
Director does not exercise his withdrawal rights pursuant to Subsection 2.2,
and
is terminated for Cause pursuant to Subsection 5.2, no further Contribution(s)
to the Retirement Income Trust Fund shall be required of the Bank, and if not
yet made, no Contribution shall be required for the Plan Year in which such
termination for Cause occurs.
(4)
Voluntary or Involuntary Termination of Service.
If
the
Director does not exercise his withdrawal rights pursuant to
Subsection 2.2, and the Director's service with the Bank is voluntarily or
involuntarily terminated for any reason, including a termination due to
disability of the Director but excluding termination for Cause, or termination
following a Change in Control within thirty-six (36) months of such Change
in
Control, no further Contribution(s), as defined in Subsection 1.14, to the
Retirement Income Trust Fund shall be required of the Bank, and if not yet
made,
no Contribution shall be required for the Plan Year in which such termination
occurs. Notwithstanding the above, the Bank will be required to make annual
payments to Director’s Retirement Income Trust Fund determined as
follows:
1.
|
Determine
what the accrued liability would have been as of the Director’s date of
termination, had no secular trust been
implemented.
|
2.
|
Determine
the benefit payable, beginning at the Benefit Age, for 180 months
which
that accrued liability would support had interest been added to that
liability on an annual basis using the Accrued Benefit Interest Factor
set
forth in Exhibit A.
|
3.
|
The
Bank shall make payments to the Director’s Retirement Income Trust Fund on
an annual basis in amounts equal to the accrued interest expense
which
would have been recorded absent the secular trust
arrangement.
|
(5)
Death
During Service.
12
If
the
Director does not exercise any withdrawal rights pursuant to
Subsection 2.2, and dies while employed by the Bank, and if, following the
Director=s
death,
the assets of the Retirement Income Trust Fund are insufficient to provide
the
Supplemental Retirement Income Benefit to which the Director is entitled, the
Bank shall be required to make a Contribution to the Retirement Income Trust
Fund equal to the sum of the remaining Contributions set forth on Exhibit A,
after taking into consideration any payments under any life insurance policies
that may have been obtained on the Director=s
life by
the Retirement Income Trust Fund. Such final contribution shall be payable
in a
lump sum to the Retirement Income Trust Fund within thirty (30) days of the
Director=s
death.
(c)
Withdrawal
Rights Exercised.
(1)
Phantom
Contributions Made Annually.
If
the
Director exercises his withdrawal rights pursuant to Subsection 2.2, no further
Contributions to the Retirement Income Trust Fund shall be required of the
Bank.
Thereafter, Phantom Contributions shall be recorded annually in the Director's
Accrued Benefit Account within thirty (30) days of the beginning of each Plan
Year, commencing with the first Plan Year following the Plan Year in which
the
Director exercises his withdrawal rights. Such Phantom Contributions shall
continue to be recorded annually, unless this Subsection 2.1(c) specifically
states otherwise, until the earlier of (i) the last Plan Year that Phantom
Contributions are required pursuant to Exhibit A, or (ii) the Plan Year of
the
Director's termination of service.
(2)
Termination
Following a Change in Control
If
the
Director exercises his withdrawal rights pursuant to Subsection 2.2, Phantom
Contributions shall commence in the Plan Year following the Plan Year in which
the Director first exercises his withdrawal rights. If a Change in Control
occurs at the Bank, and within thirty-six (36) months of such Change in Control,
the Director's service is either (i) involuntarily terminated, or (ii)
voluntarily terminated by the Director after: (A) a material change in the
Director's function, duties, or responsibilities, which change would cause
the
Director's position to become one of lesser responsibility, importance, or
scope
from the position the Director held at the time of the Change in Control, (B)
a
relocation of the Director's principal place of service by more than thirty
(30)
miles from its location prior to the Change in Control, or (C) a material
reduction in the benefits and perquisites to the Director from those being
provided at the time of the Change in
13
Control,
the Phantom Contribution set forth below shall be required of the Bank. The
Bank
shall be required to record a lump sum Phantom Contribution in the Accrued
Benefit Account within ten (10) days of the Director=s
termination of service equal to (i) the full Emeritus Contribution required
for
the Plan Year in which such termination occurs, if not yet made, plus (ii)
the
present value (computed using a discount rate equal to the Interest Factor)
of
all remaining Emeritus Contributions to the Retirement Income Trust Fund, and
(iii) the present value (computed using the a discount rate equal to the
Interest Factor) of the interest only component of the Elective Contribution.
The amount of such final Phantom Contribution shall be actuarially determined
based on the Phantom Contribution required, at such time, in order to provide
a
benefit via this Agreement equal in amount to that benefit which would have
been
payable to the Director if no secular trust had been implemented and the benefit
obligation had been accrued under APB Opinion No. 12, as amended by FAS 106.
(Such actuarial determination shall reflect the fact that amounts shall be
payable from both the Accrued Benefit Account as well as the Retirement Income
Trust Fund and shall also reflect the amount and timing of any withdrawal(s)
made by the Director from the Retirement Income Trust Fund pursuant to
Subsection 2.2.)
(3)
Termination
For Cause
If
the
Director is terminated for Cause pursuant to Subsection 5.2, the entire balance
of the Director=s
Accrued
Benefit Account at the time of such termination, which shall include any Phantom
Contributions which have been recorded plus interest accrued on such Phantom
Contributions, shall be forfeited.
(4)
Voluntary
and Involuntary
Termination of Service.
If
the
Director exercises his withdrawal rights pursuant to Subsection 2.2, and the
Director's service with the Bank is voluntarily or involuntarily terminated
for
any reason including termination due to disability of the Director, but
excluding termination for Cause, or termination following a Change in Control,
within thirty (30) days of such termination of service, no further Phantom
Contributions shall be required of the Bank. Interest, at a rate equal to the
Interest Factor, shall accrue on such Phantom Contributions until the Director’s
Benefit Eligibility Date.
(5)
Death
During Service.
14
If
the
Director exercises his withdrawal rights pursuant to Subsection 2.2, and
dies while employed by the Bank, Phantom Contributions included on Exhibit
A
shall be required of the Bank. Such Phantom Contributions shall commence in
the
Plan Year following the Plan Year in which the Director exercises his withdrawal
rights and shall continue through the Plan Year in which the Director dies.
The
Bank shall also be required to record a final Phantom Contribution within thirty
(30) days of the Director=s
death.
The amount of such final Phantom Contribution shall be actuarially determined
based on the Phantom Contribution required at such time (if any), in order
to
provide a benefit via this Agreement equivalent to the Supplemental Retirement
Income Benefit commencing within thirty (30) days of the date the Administrator
receives notice of the Director=s
death
and continuing for the duration of the Payout Period. (Such actuarial
determination shall reflect the fact that amounts shall be payable from the
Accrued Benefit Account as well as the Retirement Income Trust Fund and shall
also reflect the amount and timing of any withdrawal(s) made by the Director
pursuant to Subsection 2.2.)
2.2
|
Withdrawals
From Retirement Income Trust
Fund.
|
Exercise
of withdrawal rights by the Director pursuant to the Xxxxxx Xxxxxx Grantor
Trust
agreement shall terminate the Bank's obligation to make any further
Contributions to the Retirement Income Trust Fund, and the Bank=s
obligation to record Phantom Contributions pursuant to Subsection 2.1(c) shall
commence. For purposes of this Subsection 2.2, Aexercise
of withdrawal rights@
shall
mean those withdrawal rights to which the Director is entitled under Article
III
of the Xxxxxx Xxxxxx Grantor Trust agreement and shall exclude any distributions
made by the trustee of the Retirement Income Trust Fund to the Director for
purposes of payment of income taxes in accordance with Subsection 2.1 of this
Agreement and the tax reimbursement formula contained in the trust document,
or
other trust expenses properly payable from the Xxxxxx Xxxxxx Grantor Trust
pursuant to the provisions of the trust document.
2.3
|
Benefits
Payable From Retirement Income Trust
Fund
|
Notwithstanding
anything else to the contrary in this Agreement, in the event that the trustee
of the Retirement Income Trust Fund purchases a life insurance policy with
the
Contributions to and, if applicable, earnings of the Trust, and such life
insurance policy is intended to continue in force beyond the Payout Period
for
the disability or retirement benefits payable from the Retirement Income Trust
Fund pursuant to this Agreement, then the trustee shall have discretion
15
to
determine the portion of the cash value of such policy available for purposes
of
annuitizing the Retirement Income Trust Fund (it being understood that for
purposes of this Section 2.3, Aannuitizing@
does not
mean surrender of such policy and annuitizing of the cash value received upon
such surrender) to provide the disability or retirement benefits payable under
this Agreement, after taking into consideration the amounts reasonably believed
to be required in order to maintain the cash value of such policy to continue
such policy in effect until the death of the Director and payment of death
benefits thereunder.
SECTION
III
RETIREMENT
BENEFIT
3.1
|
(a)
Normal
form of payment.
|
If
(i)
the Director is employed with the Bank until reaching his Benefit Age and (ii)
the Director has not made a Timely Election to receive a lump sum benefit,
this
Subsection 3.1(a) shall be controlling with respect to retirement
benefits.
The
Retirement Income Trust Fund, measured as of the Director's Benefit Age, shall
be annuitized (using the Interest Factor) into monthly installments and shall
be
payable for the Payout Period. Such benefit payments shall commence on the
Director's Benefit Eligibility Date. Should Retirement Income Trust Fund assets
actually earn a rate of return, following the date such balance is annuitized,
which is less than the rate of return used to annuitize the Retirement Income
Trust Fund, no additional contributions to the Retirement Income Trust Fund
shall be required by the Bank in order to fund the final benefit payment(s)
and
make up for any shortage attributable to the less-than-expected rate of return.
Should Retirement Income Trust Fund assets actually earn a rate of return,
following the date such balance is annuitized, which is greater than the rate
of
return used to annuitize the Retirement Income Trust Fund, the final benefit
payment to the Director (or his Beneficiary) shall distribute the excess amounts
attributable to the greater-than-expected rate of return. The Director may
at
anytime during the Payout Period request to receive the unpaid balance of his
Retirement Income Trust Fund in a lump sum payment. If such a lump sum payment
is requested by the Director, payment of the balance of the Retirement Income
Trust Fund in such lump sum form shall be made only if the Director gives notice
to both the Administrator and trustee in writing. Such lump sum payment shall
be
payable within thirty
16
(30)
days
of such notice. In the event the Director dies at any time after attaining
his
Benefit Age, but prior to commencement or completion of all monthly payments
due
and owing hereunder, (i) the trustee of the Retirement Income Trust Fund shall
pay to the Director's Beneficiary the monthly installments (or a continuation
of
such monthly installments if they have already commenced) for the balance of
months remaining in the Payout Period, or (ii) the Director's Beneficiary may
request to receive the unpaid balance of the Director's Retirement Income Trust
Fund in a lump sum payment. If a lump sum payment is requested by the
Beneficiary, payment of the balance of the Retirement Income Trust Fund in
such
lump sum form shall be made only if the Director's Beneficiary notifies both
the
Administrator and trustee in writing of such election within ninety (90) days
of
the Director's death. Such lump sum payment shall be payable within thirty
(30)
days of such notice.
The
Director=s
Accrued
Benefit Account (if applicable), measured as of the Director=s
Benefit
Age, shall be annuitized (using the Interest Factor) into monthly installments
and shall be payable for the Payout Period. Such benefit payments shall commence
on the Director=s
Benefit
Eligibility Date. In the event the Director dies at any time after attaining
his
Benefit Age, but prior to commencement or completion of all the payments due
and
owing hereunder, (i) the Bank shall pay to the Director=s
Beneficiary the same monthly installments (or a continuation of such monthly
installments if they have already commenced) for the balance of months remaining
in the Payout Period.
(b)
Alternative
payout option.
If
(i)
the Director is employed with the Bank until reaching his Benefit Age, and
(ii)
the Director has made a Timely Election to receive a lump sum benefit, this
Subsection 3.1(b) shall be controlling with respect to retirement benefits.
The
balance of the Retirement Income Trust Fund and the Accrued Benefit Account
(if
applicable), measured as of the Director=s
Benefit
Age, shall be paid to the Director in a lump sum on his Benefit Eligibility
Date. In the event the Director dies after becoming eligible for such payment
(upon attainment of his Benefit Age), but before the actual payment is made,
his
Beneficiary shall be entitled to receive the lump sum benefit in accordance
with
this Subsection 3.1(b) within thirty (30) days of the date the Administrator
receives notice of the Director’s death.
17
Notwithstanding
the foregoing, unless the Director has made a Timely Election to receive a
lump
sum distribution from the Accrued Benefit Account, distributions from the
Accrued Benefit Account will be paid over the Payout Period, commencing within
thirty (30) days of the Director’s Benefit Age.
SECTION
IV
PRE-RETIREMENT
DEATH BENEFIT
4.1
|
(a)
Normal
form of payment.
|
If
(i)
the Director dies while employed by the Bank, and (ii) the Director has not
made
a Timely Election to receive a lump sum benefit, this Subsection 4.1(a) shall
be
controlling with respect to pre-retirement death benefits.
The
balance of the Director=s
Retirement Income Trust Fund, measured as of the later of (i) the
Director=s
death,
or (ii) the date any final lump sum Contribution is made pursuant to Subsection
2.1(b), shall be annuitized (using the Interest Factor) into monthly
installments and shall be payable for the Payout Period. Such benefits shall
commence within thirty (30) days of the date the Administrator receives notice
of the Director=s
death.
Should Retirement Income Trust Fund assets actually earn a rate of return,
following the date such balance is annuitized, which is less than the rate
of
return used to annuitize the Retirement Income Trust Fund, no additional
contributions to the Retirement Income Trust Fund shall be required by the
Bank
in order to fund the final benefit payment(s) and make up for any shortage
attributable to the less-than-expected rate of return. Should Retirement Income
Trust Fund assets actually earn a rate of return, following the date such
balance is annuitized, which is greater than the rate of return used to
annuitize the Retirement Income Trust Fund, the final benefit payment to the
Director=s
Beneficiary shall distribute the excess amounts attributable to the
greater-than-expected rate of return. The Director=s
Beneficiary may request to receive the unpaid balance of the
Director=s
Retirement Income Trust Fund in a lump sum payment. If a lump sum payment is
requested by the Beneficiary, payment of the balance of the Retirement Income
Trust Fund in such lump sum form shall be made only if the Director=s
Beneficiary notifies both the Administrator and trustee in writing of such
election within ninety (90) days of the Director=s
death.
Such lump sum payment shall be made within thirty (30) days of such
notice.
18
The
Director=s
Accrued
Benefit Account (if applicable), measured as of the later of (i) the
Director's death or (ii) the date any final lump sum Phantom Contribution is
recorded in the Accrued Benefit Account pursuant to Subsection 2.1(c), shall
be
annuitized (using the Interest Factor) into monthly installments and shall
be
payable to the Director's Beneficiary for the Payout Period. Such benefit
payments shall commence within thirty (30) days of the date the Administrator
receives notice of the Director=s
death,
or if later, within thirty (30) days after any final lump sum Phantom
Contribution is recorded in the Accrued Benefit Account in accordance with
Subsection 2.1(c).
(b)
Alternative
payout option.
If
(i)
the Director dies while employed by the Bank, and (ii) the Director has made
a
Timely Election to receive a lump sum benefit, this Subsection 4.1(b) shall
be
controlling with respect to pre-retirement death benefits.
The
balance of the Director=s
Retirement Income Trust Fund and the Accrued Benefit Account (if applicable),
measured as of the later of (i) the Director=s
death,
or (ii) the date any final lump sum Contribution is made pursuant to Subsection
2.1(b), shall be paid to the Director's Beneficiary in a lump sum within thirty
(30) days of the date the Administrator receives notice of the Director's
death.
Notwithstanding the foregoing, unless the Director has made a Timely Election
to
receive a lump sum distribution with respect to the Accrued Benefit Account,
distributions from the Accrued Benefit Account will be paid over the Payout
Period commencing within thirty (30) days of the date the Administrator receives
notice of the Director=s
death.
SECTION
V
BENEFIT(S)
IN THE EVENT OF TERMINATION OF SERVICE
PRIOR
TO BENEFIT AGE
5.1
|
Voluntary
or Involuntary Termination of Service Other Than for Cause.
In the event the Director=s
service with the Bank is voluntarily or involuntarily terminated
prior to
Benefit Age, for any reason, including a Change in Control, but excluding
(i) any disability related termination for which the Board of Directors
has approved early payment of benefits pursuant to Subsection 6.1,
(ii)
the Director's pre-retirement death, which shall be covered in Section
IV,
(iii) or
|
19
termination
for Cause, which shall be covered in Subsection 5.2, the Director (or his
Beneficiary) shall be entitled to receive benefits in accordance with this
Subsection 5.1. Payments of benefits pursuant to this Subsection 5.1 shall
be
made in accordance with Subsection 5.1(a) or 5.1(b) below, as
applicable.
(a)
Normal
form of payment.
(1)
Director
Lives Until Benefit Age
If
(i)
after such termination, the Director lives until attaining his Benefit Age,
and
(ii) the Director has not made a Timely Election to receive a lump sum benefit,
this Subsection 5.1(a)(1) shall be controlling with respect to retirement
benefits.
The
Retirement Income Trust Fund, measured as of the Director's Benefit Age, shall
be annuitized (using the Interest Factor) into monthly installments and shall
be
payable for the Payout Period. Such payments shall commence on the Director's
Benefit Eligibility Date. Should Retirement Income Trust Fund assets actually
earn a rate of return, following the date such balance is annuitized, which
is
less than the rate of return used to annuitize the Retirement Income Trust
Fund,
no additional contributions to the Retirement Income Trust Fund shall be
required by the Bank in order to fund the final benefit payment(s) and make
up
for any shortage attributable to the less-than-expected rate of return. Should
Retirement Income Trust Fund assets actually earn a rate of return, following
the date such balance is annuitized, which is greater than the rate of return
used to annuitize the Retirement Income Trust Fund, the final benefit payment
to
the Director (or his Beneficiary) shall distribute the excess amounts
attributable to the greater-than-expected rate of return. The Director may
at
anytime during the Payout Period request to receive the unpaid balance of his
Retirement Income Trust Fund in a lump sum payment. If such a lump sum payment
is requested by the Director, payment of the balance of the Retirement Income
Trust Fund in such lump sum form shall be made only if the Director gives notice
to both the Administrator and trustee in writing. Such lump sum payment shall
be
payable within thirty (30) days of such notice. In the event the Director dies
at any time after attaining his Benefit Age, but prior to commencement or
completion of all monthly payments due and owing hereunder, (i) the trustee
of
the Retirement Income Trust Fund shall pay to the Director's Beneficiary the
monthly installments (or a continuation of the monthly installments if they
have
already commenced) for the balance of months remaining in the Payout Period,
or
(ii) the Director's
20
Beneficiary
may request to receive the unpaid balance of the Director's Retirement Income
Trust Fund in a lump sum payment. If a lump sum payment is requested by the
Beneficiary, payment of the balance of the Retirement Income Trust Fund in
such
lump sum form shall be made only if the Director's Beneficiary notifies both
the
Administrator and trustee in writing of such election within ninety (90) days
of
the Director's death. Such lump sum payment shall be made within thirty (30)
days of such notice.
The
Director=s
Accrued
Benefit Account (if applicable), measured as of the Director=s
Benefit
Age, shall be annuitized (using the Interest Factor) into monthly installments
and shall be payable for the Payout Period. Such benefit payments shall commence
on the Director=s
Benefit
Eligibility Date. In the event the Director dies at any time after attaining
his
Benefit Age, but prior to commencement or completion of all the payments due
and
owing hereunder, (i) the Bank shall pay to the Director=s
Beneficiary the same monthly installments (or a continuation of such monthly
installments if they have already commenced) for the balance of months remaining
in the Payout Period.
(2)
Director
Dies Prior to Benefit Age
If
(i)
after such termination, the Director dies prior to attaining his Benefit Age,
and (ii) the Director has not made a Timely Election to receive a lump sum
benefit, this Subsection 5.1(a)(2) shall be controlling with respect to
retirement benefits.
The
Retirement Income Trust Fund, measured as of the date of the Director's death,
shall be annuitized (using the Interest Factor) into monthly installments and
shall be payable for the Payout Period. Such payments shall commence within
thirty (30) days of the date the Administrator receives notice of the Director's
death. Should Retirement Income Trust Fund assets actually earn a rate of
return, following the date such balance is annuitized, which is less than the
rate of return used to annuitize the Retirement Income Trust Fund, no additional
contributions to the Retirement Income Trust Fund shall be required by the
Bank
in order to fund the final benefit payment(s) and make up for any shortage
attributable to the less-than-expected rate of return. Should Retirement Income
Trust Fund assets actually earn a rate of return, following the date such
balance is annuitized, which is greater than the rate of return used to
annuitize the Retirement Income Trust Fund, the final benefit payment to the
Director's
21
Beneficiary
shall distribute the excess amounts attributable to the greater-than-expected
rate of return. The Director's Beneficiary may request to receive the unpaid
balance of the Director's Retirement Income Trust Fund in the form of a lump
sum
payment. If a lump sum payment is requested by the Beneficiary, payment of
the
balance of the Retirement Income Trust Fund in such lump sum form shall be
made
only if the Director's Beneficiary notifies both the Administrator and trustee
in writing of such election within ninety (90) days of the Director's death.
Such lump sum payment shall be made within thirty (30) days of such
notice.
The
Director=s
Accrued
Benefit Account (if applicable), measured as of the date of the
Director=s
death,
shall be annuitized (using the Interest Factor) into monthly installments and
shall be payable for the Payout Period. Such payments shall commence within
thirty (30) days of the date the Administrator receives notice of the
Director=s
death.
(b)
Alternative
Payout Option.
(1)
Director
Lives Until Benefit Age
If
(i)
after such termination, the Director lives until attaining his Benefit Age,
and
(ii) the Director has made a Timely Election to receive a lump sum benefit,
this
Subsection 5.1(b)(1) shall be controlling with respect to retirement benefits.
The
balance of the Retirement Income Trust Fund and the Accrued Benefit Account
(if
applicable), measured as of the Director's Benefit Age, shall be paid to the
Director in a lump sum on his Benefit Eligibility Date. In the event the
Director dies after becoming eligible for such payment (upon attainment of
his
Benefit Age), but before the actual payment is made, his Beneficiary shall
be
entitled to receive the lump sum benefit in accordance with this Subsection
5.1(b)(1) within thirty (30) days of the date the Administrator receives notice
of the Director's death.
Notwithstanding the foregoing, unless the Director has made a Timely Election
to
receive a lump sum distribution from the Accrued Benefit Account, distributions
from the Accrued Benefit Account will be paid over the Payout Period, commencing
within thirty (30) days of the Director’s Benefit Age.
(2)
Director
Dies Prior to Benefit Age
22
If
(i)
after such termination, the Director dies prior to attaining his Benefit Age,
and (ii) the Director has made a Timely Election to receive a lump sum benefit,
this Subsection 5.1(b)(2) shall be controlling with respect to pre-retirement
death benefits.
The
balance of the Retirement Income Trust Fund and the Accrued Benefit Account (if
applicable), measured as of the date of the Director's death, shall be paid
to
the Director's Beneficiary within thirty (30) days of the date the Administrator
receives notice of the Director's death.
Notwithstanding the foregoing, unless the Director has made a Timely Election
to
receive a lump sum distribution with respect to the Accrued Benefit Account,
distributions from the Accrued Benefit Account will be paid over the Payout
Period commencing within thirty (30) days of the date the Administrator receives
notice of the Director=s
death.
5.2
|
Termination
For Cause.
|
If
the
Director is terminated for Cause, all benefits under this Agreement, other
than
those which can be paid from previous Contributions to the Retirement Income
Trust Fund (and earnings on such Contributions), shall be forfeited.
Furthermore, no further Contributions (or Phantom Contributions, as applicable)
shall be required of the Bank for the year in which such termination for Cause
occurs (if not yet made). The Director shall be entitled to receive a benefit
in
accordance with this Subsection 5.2.
The
balance of the Director=s
Retirement Income Trust Fund shall be paid to the Director in a lump sum on
his
Benefit Eligibility Date. In the event the Director dies prior to his Benefit
Eligibility Date, his Beneficiary shall be entitled to receive the balance
of
the Director's Retirement Income Trust Fund in a lump sum within thirty (30)
days of the date the Administrator receives notice of the Director's death.
23
SECTION
VI
OTHER
BENEFITS
6.1
|
(a)
Disability
Benefit.
|
If
the
Director's service is terminated prior to Benefit Age due to a disability that
meets the criteria set forth below, the Director may request to receive the
Disability Benefit in lieu of the retirement benefit(s) available pursuant
to
Section 5.1 (which is (are) not available prior to the Director's Benefit
Eligibility Date).
In
any
instance in which it is determined by a duly licensed, independent physician
selected by the Bank, that the Director is
“disabled,” the
Director shall be entitled to receive a lump sum Disability Benefit
hereunder. For
these
purposes, a distribution from the Accrued Benefit Account (but not the
Retirement Income Trust Fund) shall require a determination that the Director
is
“disabled”
within the meaning of proposed Treasury Regulation Section
1.409A-3(g)(4).
The
Director shall be entitled to the following lump sum benefit(s) in lieu of
any
benefits under Subsection 5.1. The lump sum benefit(s) to which the Director
is
entitled shall include: (i) the balance of the Retirement Income Trust Fund,
plus (ii) the balance of the Accrued Benefit Account (if applicable). The
benefit(s) shall be paid within thirty (30) days following the date of the
Director's final disability determination. In the event the Director dies after
becoming eligible for such payment(s) but before the actual payment(s) is (are)
made, his Beneficiary shall be entitled to receive the benefit(s) provided
for
in this Subsection 6.1(a) within thirty (30) days of the date the Administrator
receives notice of the Director's death.
(b)
Disability
Benefit - Supplemental.
Furthermore,
if Board of Director approval is obtained within thirty (30) days of the
Director=s
death,
the Bank shall make a direct, lump sum payment to the Director's Beneficiary
in
an amount equal to the sum of all remaining Contributions (or Phantom
Contributions) set forth in Exhibit A, but not required pursuant to Subsection
2.1(b) (or 2.1(c)) due to the Director's disability-related termination. Such
lump sum payment, if approved by the Board of Directors, shall be payable to
the
Director=s
Beneficiary within thirty (30) days of such Board of Director
approval.
24
6.2
|
Additional
Death Benefit - Burial Expense.
|
Upon
the
Director=s
death,
the Director=s
Beneficiary shall also be entitled to receive a one-time lump sum death benefit
in the amount of Ten Thousand Dollars ($10,000). This benefit shall be paid
directly from the Bank to the Beneficiary and shall be provided specifically
for
the purpose of providing payment for burial and/or funeral expenses of the
Director. Such death benefit shall be payable within thirty (30) days of the
date the Administrator receives notice of the Director=s
death.
The Director=s
Beneficiary shall not be entitled to such benefit if the Director is terminated
for Cause prior to death.
SECTION
VII
BENEFICIARY
DESIGNATION
The
Director shall make an initial designation of primary and secondary
Beneficiaries upon execution of this Agreement and shall have the right to
change such designation, at any subsequent time, by submitting to (i) the
Administrator, and
(ii) the
trustee of the Retirement Income Trust Fund, in substantially the form attached
as Exhibit B to this Agreement, a written designation of primary and secondary
Beneficiaries. Any Beneficiary designation made subsequent to execution of
this
Agreement shall become effective only when receipt thereof is acknowledged
in
writing by the Administrator.
SECTION
VIII
DIRECTOR'S
RIGHT TO ASSETS
The
rights of the Director, any Beneficiary, or any other person claiming through
the Director under this Agreement, shall be solely those of an unsecured general
creditor of the Bank. The Director, the Beneficiary, or any other person
claiming through the Director, shall only have the right to receive from the
Bank those payments or amounts so specified under this Agreement. The Director
agrees that he, his Beneficiary, or any other person claiming through him shall
have no rights or interests whatsoever in any asset of the Bank, including
any
insurance policies or contracts which the Bank may possess or obtain to
informally fund this Agreement. Any asset used or acquired by the Bank in
connection with the liabilities it has assumed under this Agreement shall not
be
deemed to be held under any trust for the benefit of the Director or his
Beneficiaries, unless such asset is contained in the rabbi trust described
in
25
Section
XII of this Agreement. Any such asset shall be and remain a general, unpledged
asset of the Bank in the event of the Bank=s
insolvency.
SECTION
IX
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, other than those
Contributions required to be made to the Retirement Income Trust Fund. The
Director, his Beneficiaries or any successor in interest to him shall be and
remain simply a general unsecured creditor of the Bank in the same manner as
any
other creditor having a general claim for matured and unpaid compensation.
The
Bank reserves the absolute right in its sole discretion to either purchase
assets to meet its obligations undertaken by this Agreement or to refrain from
the same and to determine the extent, nature, and method of such asset
purchases. Should the Bank decide to purchase assets such as life insurance,
mutual funds, disability policies or annuities, the Bank reserves the absolute
right, in its sole discretion, to replace such assets from time to time or
to
terminate its investment in such assets at any time, in whole or in part. At
no
time shall the Director be deemed to have any lien, right, title or interest
in
or to any specific 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
Director, then the Director shall assist the Bank by freely submitting to a
physical examination and by supplying such additional information necessary
to
obtain such insurance or annuities.
SECTION
X
ACT
PROVISIONS
10.1
|
Named
Fiduciary and Administrator.
The Bank, as Administrator, shall be the Named Fiduciary of this
Agreement. As Administrator, the Bank shall be responsible for the
management, control and administration of the Agreement as established
herein. The Administrator may delegate to others certain aspects
of the
management and operational responsibilities of the Agreement, including
the employment of advisors and the delegation of ministerial duties
to
qualified individuals.
|
26
10.2
|
Claims
Procedure and Arbitration.
In the event that benefits under this Agreement are not paid to the
Director (or to his Beneficiary in the case of the Director's death)
and
such claimants feel they are entitled to receive such benefits, then
a
written claim must be made to the Administrator within sixty (60)
days
from the date payments are refused. The Administrator shall review
the
written claim and, if the claim is denied, in whole or in part, it
shall
provide in writing, within ninety (90) days of receipt of such claim,
its
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 writing by the
Administrator shall further indicate the additional steps which must
be
undertaken by claimants if an additional review of the claim denial
is
desired.
|
If
claimants desire a second review, they shall notify the Administrator in writing
within sixty (60) days of the first claim denial. Claimants may review this
Agreement or any documents relating thereto and submit any issues and comments,
in writing, they may feel appropriate. In its sole discretion, the Administrator
shall then review the second claim and provide a written decision within sixty
(60) days of receipt of such claim. This decision shall 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 Plan and the Agreement or the meaning and effect of the
terms and conditions thereof, then claimants may submit the dispute to
mediation, administered by the American Arbitration Association (AAAA@)
(or a
mediator selected by the parties) in accordance with the AAA=s
Commercial Mediation Rules. If mediation is not successful in resolving the
dispute, it shall be settled by arbitration administered by the AAA under its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof.
27
SECTION
XI
MISCELLANEOUS
11.1
|
No
Effect on Employment Rights.
Nothing contained herein will confer upon the Director the right
to be
retained in the service of the Bank nor limit the right of the Bank
to
discharge or otherwise deal with the Director without regard to the
existence of the Agreement.
|
11.2
|
Governing
Law.
The Agreement is established under, and will be construed according
to,
the laws of the state of New Jersey, to the extent such laws are
not
preempted by the Act or other applicable federal law and valid regulations
published thereunder.
|
11.3
|
Construction
and Severability.
The funding of and payment of benefits from the Accrued Benefit Account
is
deemed to be a nonqualified deferred compensation arrangement within
the
meaning of Code Section 409A. To the extent that the funding of a
benefit
under the Retirement Income Trust Fund under this Agreement is deemed
to
be a nonqualified deferred compensation arrangement, then that part
of
this Agreement shall also be operated, administered and construed
consistent with Code Section 409A. To the extent that a provision
of the
Agreement fails to comply with Code Section 409A and a construction
consistent with Code Section 409A is not possible, such provision
shall be
void ab initio.
In addition, the Agreement shall be subject to amendment, with or
without
advance notice to Director and other interested parties, and on a
prospective or retroactive basis, including but not limited to amendment
in a manner that adversely affects the rights of Directors and other
interested parties, to the extent necessary to effect compliance
with Code
Section 409A. In the event that any of the provisions of this Agreement
or
portion thereof, are held to be inoperative or invalid by any court
of
competent jurisdiction, then: (1) insofar as is reasonable, effect
will be
given to the intent manifested in the provisions held invalid or
inoperative, and (2) the validity and enforceability of the remaining
provisions will not be affected
thereby.
|
11.4
|
Treatment
as a Director.
For purposes of this Agreement, it is assumed that the Director is
treated
as a “director” in accordance with Proposed Treasury Regulation Section
1.409A-1(h)(2). If under future guidance or rulings promulgated by
the
Internal Revenue Service or Treasury Department under Code Section
409A it
is determined that the Director should properly be
|
28
treated
as an “employee” for purposes of this Agreement, distributions to the Director
due to Separation from Service will be made in accordance with the provisions
of
Proposed Treasury Regulation Section 1.409A-1(h)(1).
11.5
|
Incapacity
of Recipient.
In the event the Director is declared incompetent and a conservator
or
other person legally charged with the care of his person or Estate
is
appointed, any benefits under the Agreement to which such Director
is
entitled shall be paid to such conservator or other person legally
charged
with the care of his person or Estate.
|
11.6
|
Unclaimed
Benefit.
The Director shall keep the Bank informed of his current address
and the
current address of his Beneficiaries. The Bank shall not be obligated
to
search for the whereabouts of any person. If the location of the
Director
is not made known to the Bank as of the date upon which any payment
of any
benefits from the Accrued Benefit Account may first be made, the
Bank
shall delay payment of the Director's benefit payment(s) until the
location of the Director is made known to the Bank; however, the
Bank
shall only be obligated to hold such benefit payment(s) for the Director
until the expiration of thirty-six (36) months.
|
11.7
|
Limitations
on Liability.
Notwithstanding any of the preceding provisions of the Agreement,
no
individual acting as an employee or agent of the Bank, or as a member
of
the Board of Directors shall be personally liable to the Director
or any
other person for any claim, loss, liability or expense incurred in
connection with the Agreement.
|
11.8
|
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.
|
11.9
|
Effect
on Other Corporate Benefit Agreements.
Nothing contained in this Agreement shall affect the right of the
Director
to participate in or be covered by any qualified or non-qualified
pension,
profit sharing, group, bonus or other supplemental compensation or
fringe
benefit agreement constituting a part of the Bank's existing or future
compensation structure.
|
11.10
|
Suicide.
Notwithstanding anything to the contrary in this Agreement, if the
Director's death results from suicide, whether sane or insane, within
twenty-six (26) months after execution of this
|
29
Agreement,
all further Contributions to the Retirement Income Trust Fund (or Phantom
Contributions recorded in the Accrued Benefit Account) shall thereupon cease,
and no Contribution (or Phantom Contribution) shall be made by the Bank to
the
Retirement Income Trust Fund (or recorded in the Accrued Benefit Account) in
the
year such death resulting from suicide occurs (if not yet made). All benefits
other than those available from previous Contributions to the Retirement Income
Trust Fund under this Agreement shall be forfeited, and this Agreement shall
become null and void. The balance of the Retirement Income Trust Fund, measured
as of the Director's date of death, shall be paid to the Beneficiary within
thirty (30) days of the date the Administrator receives notice of the Director's
death.
11.11
|
Inurement.
This Agreement shall be binding upon and shall inure to the benefit
of the
Bank, its successors and assigns, and the Director, his successors,
heirs,
executors, administrators, and
Beneficiaries.
|
11.12
|
Headings.
Headings and sub-headings in this Agreement are inserted for reference
and
convenience only and shall not be deemed a part of this
Agreement.
|
11.13
|
Establishment
of a Rabbi Trust.
The Bank shall establish a rabbi trust into which the Bank shall
contribute assets which shall be held therein, subject to the claims
of
the Bank's creditors in the event of the Bank's "Insolvency" (as
defined
in such rabbi trust agreement), until the contributed assets are
paid to
the Director and/or his Beneficiary in such manner and at such times
as
specified in this Agreement. It is the intention of the Bank that
the
contribution or contributions to the rabbi trust shall provide the
Bank
with a source of funds to assist it in meeting the liabilities of
this
Agreement.
|
11.14
|
Source
of Payments.
All payments provided in this Agreement shall be timely paid in cash
or
check from the general funds of the Bank or the assets of the rabbi
trust,
to the extent made from the Accrued Benefit Account.
|
30
SECTION
XII
AMENDMENT/PLAN
TERMINATION
12.1
|
Amendment
or Plan Termination.
The Bank intends this Agreement to be permanent, but
reserves the right to amend or terminate the Agreement when such
amendment
or termination is required due to objection to the plan by the Bank's
regulatory authorities. The
Agreement may not be amended or terminated without the express written
consent of the parties. Any amendment or termination of the Agreement
shall be made pursuant to a resolution of the Board of Directors
of the
Bank and shall be effective as of the date of such resolution. No
amendment or termination of the Agreement shall directly or indirectly
deprive the Director of all or any portion of the Director's Retirement
Income Trust Fund (and Accrued Benefit Account, if applicable) as
of the
effective date of the resolution amending or terminating the
Agreement.
|
Notwithstanding
the foregoing, if an individual Director’s agreement is subject to Code Section
409A, :the Bank may terminate this Agreement only under the following
circumstances and conditions:
(a)
|
The
Board of Directors may terminate the Agreement within 12 months of
a
corporate dissolution taxed under Code Section 331, or with approval
of a
bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the
amounts deferred under the Agreement are included in the Director’s gross
income in the latest of (i) the calendar year in which the Agreement
terminates; (ii) the calendar year in which the amount is no longer
subject to a substantial risk of forfeiture; or (iii) the first calendar
year in which the payment is administratively
practicable.
|
(b)
|
The
Board of Directors may terminate the Agreement within the 30 days
preceding a Change in Control (but not following a Change in Control),
provided that the Agreement shall only be treated as terminated if
all
substantially similar arrangements sponsored by the Bank are terminated
so
that the Director and all participants under substantially similar
arrangements are required to receive all amounts of compensation
deferred
under the terminated arrangements within 12 months of the date of
the
termination of the
arrangements.
|
31
(c)
|
The
Board of Directors may terminate the Agreement provided that (i)
all
arrangements sponsored by the Bank that would be aggregated with
this
Agreement under Proposed Regulation Section 1.409A-1(c) if the Director
covered by this Agreement was also covered by any of those other
arrangements are also terminated; (ii) no payments other than payments
that would be payable under the terms of the arrangement if the
termination had not occurred are made within 12 months of the termination
of the arrangement; (iii) all payments are made within 24 months
of the
termination of the arrangements; and (iv) the Bank does not adopt
a new
arrangement that would be aggregated with any terminated arrangement
under
Proposed Regulation Section 1.409A-1(c) if the Director participated
in
both arrangements, at any time within five years following the date
of
termination of the arrangement.
|
12.2
|
Director's
Right to Payment Following Plan Termination.
In the event of a termination of the Agreement, the Director shall
be
entitled to the balance, if any, of his Retirement Income Trust Fund
(and
Accrued Benefit Account, if applicable). However, if such termination
is
done in anticipation of or pursuant to a AChange
in Control,@
such balance(s) shall include the final Contribution (or final Phantom
Contribution) made (or recorded) pursuant to Subsection 2.1(b)(2)
(or
2.1(c)(2)). Payment of the balance(s) of the Director's Retirement
Income
Trust Fund (and Accrued Benefit Account, if applicable) shall not
be
dependent upon his continuation of service with the Bank following
the
termination date of the Agreement. Payment of the balance(s) of the
Director's Retirement Income Trust Fund (and Accrued Benefit Account,
if
applicable) shall be made in a lump sum within thirty (30) days of
the
date of termination of the
Agreement.
|
SECTION
XIII
EXECUTION
13.1
|
This
Agreement and the Xxxxxx Xxxxxx Grantor Trust Agreement set forth
the
entire understanding of the parties hereto with respect to the
transactions contemplated hereby, and any previous agreements or
understandings between the parties hereto regarding the subject matter
hereof are merged into and superseded by this Agreement and the Xxxxxx
Xxxxxx Grantor Trust Agreement.
|
32
13.2
|
This
Agreement shall be executed in triplicate, each copy of which, when
so
executed and delivered, shall be an original, but all three copies
shall
together constitute one and the same
instrument.
|
[Remainder
of Page Intentionally
Left Blank]
33
IN
WITNESS WHEREOF, the Bank and the Director have caused this Agreement to be
executed on the day and date first above written.
ATTEST:
|
MAGYAR
BANK:
|
||
/s/ |
By:
|
/s/ Xxxxxxxxx X. Xxxxx | |
Title:
|
President/CEO | ||
WITNESS:
|
DIRECTOR:
|
||
/s/ | /s/ Xxxxxx Xxxxxx | ||
34
CONDITIONS,
ASSUMPTIONS,
AND
SCHEDULE
OF CONTRIBUTIONS AND PHANTOM CONTRIBUTIONS
1.
|
Interest
Factor - for purposes of:
|
a.
|
the
Accrued Benefit Account - shall be six percent (6%) per annum, compounded
monthly.
|
b.
|
the
Elective Contributions - shall be ten percent (10%) per annum, compounded
monthly.
|
c.
|
the
Emeritus Contributions - shall be six percent (6%) per annum, compounded
monthly.
|
d.
|
the
Retirement Income Trust Fund - for purposes of annuitizing the balance
of
the Retirement Income Trust Fund over the Payout Period, the trustee
of
the Xxxxxx Xxxxxx Grantor Trust shall exercise discretion in selecting
the
appropriate rate given the nature of the investments contained in
the
Retirement Income Trust Fund and the expected return associated with
the
investments. For these purposes, if the trustee of the Retirement
Income
Trust Fund has purchased a life insurance policy, the trustee shall
have
the discretion to determine the portion of the cash value of such
policy
available for purposes of annuitizing the Retirement Income Trust
Fund, in
accordance with Section 2.3 of the Agreement.
|
2.
|
The
amount of the annual Emeritus Contributions (or Phantom Contributions)
to
the Retirement Income Trust Fund (or Accrued Benefit Account) has
been
based on the annual interest-adjusted accounting accruals which would
be
required of the Bank through the earlier of the Director=s
death or Benefit Age, (i) pursuant to APB Opinion No. 12, as amended
by
FAS 106 and (ii) assuming a discount rate equal to six percent (6%)
per
annum, in order to provide a portion of the unfunded, non-qualified
Supplemental Retirement Income Benefit. The Emeritus Contributions
are
calculated to support a benefit based upon 50%
of
the Director’s total board fees, committee fees and/or retainer in the
twelve months prior to Director’s Benefit Eligibility Date.
|
3.
|
The
amount of the annual Elective Contributions (or Phantom Contributions)
to
the Retirement Income Trust Fund (or Accrued Benefit Account) has
been
based on the annual interest-adjusted accounting accruals which would
be
required of the Bank through the earlier of the Director’s death or
Benefit Age, (i) pursuant to APB Opinion No. 12, as amended by FAS
106 and
(ii) assuming a discount rate equal to ten percent (10%) per annum,
in
order to provide a portion of the unfunded, non-qualified Supplemental
Retirement Income Benefit. Director has elected a monthly, pre-tax
deferral of board fees, committee fess and/or retainer in the amount
of
$1,500
per month until the last deferral has been made on August 1,
2010.
|
4.
|
For
purposes of this Agreement, and benefit calculations under this Agreement,
future increases in Board Fees after 2006 will be limited to the
actual
increase or four percent (4%), whichever is
less.
|
Exhibit
A
5.
|
Supplemental
Retirement Income Benefit means an actuarially determined annual
amount
equal to Sixty-Two Thousand Five Hundred and Twelve Dollars ($62,512)
at
age 65 if paid entirely from the Accrued Benefit Account or Forty
Thousand
Seven Dollars ($40,007) at age 65 if paid from the Retirement Income
Trust
Fund.
|
The
Supplemental Retirement Income Benefit:
!
|
the
definition of Supplemental Retirement Income Benefit has been incorporated
into the Agreement for the sole purpose of actuarially establishing
the
amount of annual Contributions (or Phantom Contributions) to the
Retirement Income Trust Fund (or Accrued Benefit Account). The amount
of
any actual retirement, pre-retirement or disability benefit payable
pursuant to the Agreement will be a function of (i) the amount and
timing
of Contributions (or Phantom Contributions) to the Retirement Income
Trust
Fund (or Accrued Benefit Account) and (ii) the actual investment
experience of such Contributions (or the monthly compounding rate
of
Phantom Contributions).
|
6. |
Schedule
of Annual Gross Contributions/Phantom
Contributions
|
Plan
Year
|
Elective
Contributions
|
Emeritus
Contributions
|
Total
Contributions
|
2004
|
$74,261
|
$38,805
|
$113,066
|
2005
|
26,782
|
14,169
|
40,951
|
2006
|
29,586
|
28,219
|
57,805
|
2007
|
32,684
|
31,498
|
64,182
|
2008
|
36,106
|
35,075
|
71,181
|
2009
|
39,887
|
38,973
|
78,860
|
2010
|
37,938
|
43,218
|
81,156
|
2011
|
28,480
|
27,984
|
56,464
|
Exhibit
A
- Cont=d.
RESTATED
DIRECTOR
SUPPLEMENTAL RETIREMENT INCOME and
DEFERRED
COMPENSATION AGREEMENT
BENEFICIARY
DESIGNATION
The
Director, under the terms of the Restated Director Supplemental Retirement
Income and Deferred Compensation Agreement executed by the Bank, dated the
1st
day of February, 2004, as amended and restated effective January 1, 2006, hereby
designates the following Beneficiary(ies) to receive any guaranteed payments
or
death benefits under such Agreement, following his death:
PRIMARY
BENEFICIARY:
|
|
SECONDARY
BENEFICIARY:
|
This
Beneficiary Designation hereby revokes any prior Beneficiary Designation which
may have been in effect.
Such
Beneficiary Designation is revocable.
DATE:
______________________, 20__
WITNESS
|
DIRECTOR
|
Exhibit
B
RESTATED
DIRECTOR
SUPPLEMENTAL RETIREMENT INCOME and
DEFERRED
COMPENSATION AGREEMENT
NOTICE
OF ELECTION TO CHANGE FORM OF PAYMENT
TO:
|
Bank
Attention:
|
I
hereby
give notice of my election to change the form of payment of my Supplemental
Retirement Income Benefit, as specified below. I
understand that such notice, in
order to be effective, must be submitted in accordance with the time
requirements described in Subsection 1.27 of my Restated Director Supplemental
Retirement Income and Deferred Compensation Agreement.
G
|
I
hereby elect to change the form of payment of my benefits from monthly
installments throughout my Payout Period to a lump sum benefit
payment.
|
G
|
I
hereby elect to change the form of payment of my benefits from a
lump sum
benefit payment to monthly installments throughout my Payout Period.
Such
election hereby revokes my previous notice of election to receive
a lump
sum form of benefit payments.
|
DIRECTOR
|
|||
DATE
|
|||
ACKNOWLEDGED
|
|||
BY:
|
|||
TITLE:
|
|||
|
|||
DATE
|
Exhibit
C
RESTATED
DIRECTOR
SUPPLEMENTAL RETIREMENT INCOME and
DEFERRED
COMPENSATION AGREEMENT
NOTICE
OF ADJUSTMENT OF ELECTIVE CONTRIBUTION
TO:
|
Bank
Attention:
|
I
hereby
give notice of my election to adjust the amount of my Elective Contribution
in
accordance with my Restated Director Supplemental Retirement Income and Deferred
Compensation Agreement, dated the 1st
day of
February, 2004, as amended and restated effective January 1, 2006. This notice
is submitted thirty (30) days prior to January 1st, and shall become effective
January 1st, as specified below.
Adjust
deferral as of:
|
January
1st, 2___
|
Previous
Deferral Amount
|
____________
per month
|
New
Deferral Amount
|
____________
per month
|
(to
discontinue deferral, enter $0)
|
DIRECTOR
|
||
DATE
|
||
ACKNOWLEDGED
BY
|
||
TITLE
|
||
DATE
|
Exhibit
D