AMENDMENT To The Hudson Valley Bank Supplemental Retirement Plan of 1997
Exhibit 10.5
AMENDMENT
To The
Xxxxxx Valley Bank
Supplemental Retirement Plan of 1997
To The
Xxxxxx Valley Bank
Supplemental Retirement Plan of 1997
THIS AMENDMENT (the “Amendment”) TO THE XXXXXX VALLEY BANK SUPPLEMENTAL RETIREMENT
PLAN OF 1997 (the “Plan” or the “Agreement”) is executed on this ___day of December, 2008, by
Xxxxxx Valley Bank, N.A., formerly known as Xxxxxx Valley Bank, a national banking association
(hereinafter referred to as the “Plan Sponsor” and/or the “Service Provider,”) and
______ (hereinafter referred to as the “Participant”), and represents an effort by
both parties to comply with the requirements of Internal Revenue Code Section 409A. The Plan
Sponsor has operated this Plan since 2005 in good faith compliance with the provisions of Section
409A and all Applicable Guidance.
WHEREAS the Agreement may be amended at any time by the mutual written consent of the parties
to the Agreement; and
WHEREAS it is both anticipated and expected that the terms and provisions of the Plan may need
to be amended again in the future to assure continued compliance. The Plan Sponsor and the
Participant acknowledge that fact and agree to take any and all steps necessary to operate the plan
in “good faith” based on their current understanding of the regulations;
NOW, THEREFORE, the Plan is hereby amended (without specific numerical reference) by adding
and/or replacing certain definitions and adding or replacing certain articles of the Plan. Nothing
contained herein is considered by the Plan Sponsor to constitute a material modification of the
original Plan:
The following definitions if specifically identified in the original Plan are hereby replaced in
their entirety, and if not found in the original Plan are hereby added:
“Aggregated Plans” shall mean this Plan and any other like-type plan or arrangement
(nonaccount balance plan) of the Plan Sponsor in which the Participant participates and to which
the Plan or Applicable Guidance requires the aggregation of all such nonqualified Deferred
Compensation Plans in applying Code § 409A and associated regulations.
“Applicable Guidance” shall mean, as the context requires, Code § 409A, Final Treasury
Regulations §1.409A, or other written Treasury or IRS guidance regarding or affecting Code § 409A.
“Change in Control” shall mean the occurrence of a Change in Control event, within the meaning
of Treasury Regulations §1.409A-3(i)(5) and described in any of subparagraph (a), (b), or (c),
(collectively referred to as “Change in Control Events”), or any combination of the Change in
Control Events. To constitute a Change in Control Event with respect to the Participant or
Beneficiary, the Change in Control Event must relate to: (i) the Plan Sponsor for whom the
Participant is performing services at the time of the Change in Control Event; (ii) the Plan
Sponsor that is liable for the payment of the Accrued Benefit (or all Plan Sponsors liable for the
payment if more than one Plan Sponsor is liable); or (iii) a Plan Sponsor that is a majority
shareholder of a Plan Sponsor identified in clause (i) or (ii), or any Plan Sponsor in a chain of
Plan Sponsors in which each Plan Sponsor is a majority shareholder of another Plan Sponsor in the
chain, ending in a Plan Sponsor identified in clause (i) or (ii).
(a) Change in Ownership. A Change in Ownership occurs if a person, or a group of
persons acting together, acquires more than fifty percent (50%) of the stock of the Plan
Sponsor, measured by voting power or value. Incremental increases in ownership by a person
or group that already owns fifty percent (50%) of the Plan Sponsor do not result in a Change
of Ownership, as defined in Treasury Regulations §1.409A-3(i)(5)(v).
(b) Change in Effective Control. A Change in Effective Control occurs if, over a twelve
(12) month period: (i) a person or group acquires stock representing thirty percent (30%) of
the voting power of the Plan Sponsor; or (ii) a majority of the members of the Board of the
ultimate parent Plan Sponsor is replaced by directors not endorsed by the persons who were
members of the Board before the new directors’ appointment, as defined in Treasury
Regulations §1.409A-3(i)(5)(vi).
(c) Change in Ownership of a Substantial Portion of Corporate Assets. A Change in
Control based on the sale of assets occurs if a person or group acquires forty percent (40%)
or more of the gross fair market value of the assets of a Plan Sponsor over a twelve (12)
month period. No change in control results pursuant to this Article (c) if the assets are
transferred to certain entities controlled directly or indirectly by the shareholders of the
transferring corporation, as defined in Treasury Regulations §1.409A-3(i)(5)(vii).
“Disability” shall be defined as a condition of the Participant whereby he or she
either: (i) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months; or (ii) is, by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health plan
covering employees of the Plan Sponsor. The Plan Administrator will determine whether the
Participant has incurred a Disability based on its own good faith determination and may require the
Participant to submit to reasonable physical and mental examinations for this purpose. The
Participant will also be deemed to have incurred a Disability if determined to be totally disabled
by the Social Security Administration, Railroad Retirement Board, or in accordance with a
disability insurance program, provided that the definition of disability applied under such
disability insurance program complies with the requirements of Treasury Regulation §1.409A-3(i)(4)
and authoritative guidance.
“Plan” shall mean this Supplemental Retirement Plan of 1997, the Participation Agreement (if
any), all Election Forms (if any), the Trust (if any), and any other written documents relevant to
the Plan. For purposes of applying Code § 409A requirements, this Plan is a nonaccount balance plan
under Treasury Regulation §1.409-1(c)(2)(i)(A.
“Plan Sponsor” shall mean the person or entity: (i) receiving the services of the Participant;
(ii) with respect to whom the Legally Binding Right to compensation arises; and (iii) all persons
with whom such person or entity would be considered a single employer under Code §414(b) or
§414(c).
“Section 409A” shall mean Section 409A of the Code and the Treasury Regulations and other
Applicable Guidance issued under that Section.
“Separation from Service” shall mean:
(a) Employee Participants. The occurrence of a Participant’s death, retirement, or
“other termination of employment” (as defined in Treasury Regulations §1.409A-1(h)(1)) with the
Plan Sponsor (as defined in Treasury Regulations §1.409A-1(h)(3)).
(i) Effect of Leave. A Participant does not incur a Separation from Service
if the Participant is on military leave, sick leave, or other bona fide leave of
absence if the period of such leave does not exceed six (6) months or, if longer,
the period for which a statute or contract provides the Participant with the right
to reemployment with the Plan Sponsor. If a Participant’s leave exceeds six (6)
months but the Participant is not entitled to reemployment under a statute or
contract, the Participant incurs a Separation from Service on the next day following
the expiration of such six (6) month period.
(ii) Termination of Employment. A Participant will have incurred a Separation
from Service where the Plan Sponsor and the Participant reasonably anticipated that no
further services would be performed after a certain date. Notwithstanding the above, a
Participant is presumed to have Separated from Service (whether as an Employee or an
Independent Contractor), when the level of bona fide services performed decreases to a level
equal to or less than twenty percent (20%) of the services performed by the Participant
during the immediately preceding 36-month period (or the full period of services to the
employer if the Participant has been providing services to the Plan Sponsor for less than 36
months). A Participant will be presumed not to have Separated from Service where the level
of bona fide services performed continues at a level that is fifty percent (50%) or more of
the average level of service performed by the Participant during the immediately preceding
36-month period (or the full period of services to the employer if the Participant has been
providing services to the Plan Sponsor for less than 36 months).
(b) Independent Contractor Participants. A Separation from Service will occur upon
the expiration of the contract (or in the case of more than one contract, all contracts)
under which services are performed for the Plan Sponsor (as defined in Treasury Regulations
§1.409A-1(h)(3)), if the expiration constitutes a good-faith and complete termination of the
contractual relationship. The Plan is considered to satisfy the requirement with respect to
an amount payable to an Independent Contractor upon a Separation from Service if: (i) no
amount will be paid to the Participant before a date at least twelve (12) months after the
day on which the contract expires under which the Participant performs services for the Plan
Sponsor (or, in the case of more than one contract, all such contracts expire); and (ii) no
amount payable to the Participant on that date will be paid to the Participant if, after the
expiration of the contract (or contracts) and before that date, the Participant performs
services for the Service Recipient as an Independent Contractor or an Employee.
“Specified Employee” shall mean that the Participant also satisfies the definition of a “key
employee” as such term is defined in Code §416(i) (without regard to Section 416(i)(5)). However,
the Participant is not a Specified Employee unless any stock of the Plan Sponsor is publicly traded
on an established securities market or otherwise, as defined in Code §1.897-1(m). If the
Participant is a key employee at any time during the twelve (12) months ending on the
identification date, the Participant is a Specified Employee for the twelve (12) month period
commencing on the first day of the fourth (4th) month following the identification date.
For purposes of this Article, the identification date is December 31 unless a different date is
specified in writing by the Plan Sponsor. The determination of the Participant as a Specified
Employee shall be made by the Administrator in accordance with IRC Section 416(i), the “specified
employee” requirements of Section 409A, and Treasury Regulations.
“Treasury Regulations” shall mean regulations promulgated by the Internal Revenue Service for
the United States Department of the Treasury, as they may be amended from time to time.
The following articles if specifically identified in the original Plan are hereby replaced in their
entirety, and if not found in the original Plan are hereby added:
Prohibition on Acceleration of Payments. Notwithstanding anything in this Plan to the
contrary, neither the Plan Sponsor nor a Participant may accelerate the time or schedule of any
payment or amount scheduled to be paid under this Plan, except as otherwise permitted by Treasury
Regulations §1.409A-3(j)(4). The Plan Sponsor shall deny any change made to an election if the Plan
Sponsor determines that the change violates the requirements of authoritative guidance. However,
the Plan Sponsor shall permit the acceleration of the time or schedule of payment to pay the
Participant at any time the arrangement fails to meet the requirements of Code Section 409A and the
Treasury Regulations and other guidance promulgated thereunder. Such payment shall not exceed the
amount required to be included in income as the result of the failure to comply with the
requirements of Code Section 409A.
Delay in Payment by Plan Sponsor.
(a) A payment may be delayed to a date after the designated payment date under any of
the circumstances described below, and the provision will not fail to meet the requirements
of establishing a permissible payment event. The delay in the payment will not constitute a
subsequent deferral election, so long as the Plan Sponsor treats all payments to similarly
situated Participants on a reasonably consistent basis.
(i) Payments subject to Section 162(m). A payment may be delayed to the extent
that the Plan Sponsor reasonably anticipates that if the payment were made as
scheduled, the Plan Sponsor’s deduction with respect to such payment would not be
permitted due to the application of Code §162(m). If a payment is delayed, such
payment must be made either:
(1) during the Participant’s first taxable year in which the Plan Sponsor
reasonably anticipates, or should reasonably anticipate, that if the payment
is made during such year, the deduction of such payment will not be barred by
application of Code §162(m), or
(2) during the period beginning with the date of the Participant’s
Separation from Service and ending on the later of the last day of the Taxable
Year of the Plan Sponsor in which the Participant separates from service or
the fifteenth (15th) day of the third (3rd) month
following the Participant’s Separation from Service. Where any scheduled
payment to a specific Participant in the Plan Sponsor’s Taxable Year is
delayed in accordance with this Article, the delay in payment will be treated
as a subsequent deferral election unless all scheduled payments to the
Participant that could be delayed in accordance with this Article are also
delayed. Where the payment is delayed to a date on or after the Participant’s
Separation from Service, the payment will be considered a payment upon a
Separation from Service for purposes of the rules under Treasury Regulations
§1.409A-3(i)(2) (payments to specified employees upon a separation from
service), and the six (6) month delay rule will apply for Specified Employees.
(ii) Payments that would violate Federal securities laws or other applicable
law. A payment may be delayed where the Plan Sponsor reasonably anticipates that the
making of the payment will violate Federal securities laws or other applicable law
provided that the payment is made at the earliest date at which the Plan Sponsor
reasonably anticipates that the making of the payment will not cause such violation.
The making of a payment that would cause inclusion in gross income or the
application of any penalty provision or other provision of the Internal Revenue Code
is not treated as a violation of applicable law.
(iii) Other events and conditions. The Plan Sponsor may delay a payment upon
such other events and conditions as the Commissioner of the Internal RS may
prescribe.
(iv) Not withstanding the above, a payment may be delayed where the payment would
jeopardize the ability of the Plan Sponsor to continue as a going concern.
(b) Treatment of Payment as Made on Designated Payment Date. Each payment under this
Plan is deemed made on the required payment date even if the payment is made after such date,
provided the payment is made by the latest of: (i) the end of the calendar year in which the
payment is due; (ii) the 15th day of the third calendar month following the payment due date;
(iii) in case the Plan Sponsor cannot calculate the payment amount on account of
administrative impracticality which is
beyond the Participant’s control (or the control of the Participant’s estate), in the
first calendar year in which payment is practicable; (iv) in case the Plan Sponsor does not
have sufficient funds to make the payment without jeopardizing the Plan Sponsor’s solvency,
in the first calendar year in which the Plan Sponsor’s funds are sufficient to make the
payment.
Claims Procedure. This Article is based on final regulations issued by the Department of Labor
and published in the Federal Register on November 21, 2000 and codified in Section 2560.503-1 of
the Department of Labor Regulations. If any provision of this Article conflicts with the
requirements of those regulations, the requirements of those regulations will prevail.
(a) Claim. A Participant or Beneficiary (hereinafter referred to as a “Claimant”) who
believes he or she is entitled to any Plan benefit under this Plan may file a claim with the
Plan Sponsor. The Plan Sponsor shall review the claim itself or appoint an individual or
entity to review the claim.
(b) Claim Decision. The Claimant shall be notified within ninety (90) days after the
claim is filed (forty-five (45) days for a Disability Claim), whether the claim is allowed
or denied, unless the claimant receives written notice from the Plan Sponsor or appointee of
the Plan Sponsor prior to the end of the ninety (90) day period (forty-five (45) days for a
Disability Claim) stating that special circumstances require an extension of the time for
decision. For a claim other than for Disability, such extension is not to extend beyond the
day which is one-hundred eighty (180) days after the day the claim is filed as long as the
Plan Sponsor notifies the claimant of the circumstances requiring the extension, and the
date as of which a decision is expected to be rendered. For a Disability Claim, a thirty
(30) day extension is permitted, with an additional thirty (30) days permitted, provided
that the Plan Sponsor notifies the claimant prior to expiration of the first 30 day
extension, of the circumstances requiring the extension, and the date as of which a decision
is expected to be rendered. If the Plan Sponsor denies the claim, it must provide to the
Claimant, in writing or by electronic communication:
(i) The specific reasons for such denial;
(ii) Specific reference to pertinent provisions of this Plan on which such
denial is based;
(iii) A description of any additional material or information necessary for the
Claimant to perfect his or her claim, by providing such material to the Plan Sponsor
within forty-five (45) days, and an explanation why such material or such
information is necessary; and
(iv) A description of the Plan’s appeal procedures and the time limits
applicable to such procedures, including a statement of the Claimant’s right to
bring a civil action under Section 502(a) of ERISA following a denial of the appeal
of the denial of the benefits claim.
(c) Review Procedures. A request for review of a denied claim must be made in writing
to the Plan Sponsor within sixty (60) days after receiving notice of denial. The decision
upon review will be made within sixty (60) days (forty-five (45) days for a Disability
claim) after the Plan Sponsor’s receipt of a request for review. If the Plan Sponsor
determines that an extension of time for processing is required, written notice of the
extension shall be furnished to the claimant (which will include the expected date of
rendering a decision) prior to the termination of the initial period, but in no event will
the extension exceed sixty (60) days (forty-five (45) days for a Disability claim).
The reviewer shall afford the Claimant an opportunity to review and receive, without
charge, all relevant documents, information, and records and to submit issues and comments
in writing to the Plan Sponsor. The reviewer shall take into account all comments,
documents, records, and other information submitted by the Claimant relating to the claim
regardless of whether the information was submitted or considered
in the benefit determination. Upon completion of its review of an adverse initial
claim determination, the Plan Sponsor will give the Claimant, in writing or by electronic
notification, a notice containing:
(i) its decision;
(ii) the specific reasons for the decision;
(iii) the relevant Plan provisions on which its decision is based;
(iv) a statement that the Claimant is entitled to receive, upon request and
without charge, reasonable access to, and copies of, all documents, records and
other information in the Plan’s files which is relevant to the Claimant’s claim for
benefit;
(v) a statement describing the Claimant’s right to bring an action for judicial
review under ERISA Section 502(a); and
(vi) If an internal rule, guideline, protocol, or other similar criterion was
relied upon in making the adverse determination on review, a statement that a copy
of the rule, guideline, protocol, or other similar criterion will be provided
without charge to the Claimant upon request.
(d) Calculation of Time Periods. For purposes of the time periods specified in
this Article, the period of time during which a benefit determination is required to be made
begins at the time a claim is filed in accordance with this Plan’s procedures without regard
to whether all the information necessary to make a decision accompanies the claim. If a
period of time is extended due to a Claimant’s failure to submit all information necessary,
the period for making the determination shall be tolled from the date the notification is
sent to the Claimant until the date the Claimant responds.
(e) Failure of Plan to Follow Procedures. If the Plan Sponsor fails to follow the
claims procedure required by this Article, a Claimant shall be deemed to have exhausted the
administrative remedies available under this Plan and shall be entitled to pursue any
available remedy under Section 502(a) of ERISA on the basis that this Plan has failed to
provide a reasonable claims procedure that would yield a decision on the merits of the
claim.
(f) Failure of Claimant to Follow Procedures. A Claimant’s compliance with the
foregoing provisions of this Article is a mandatory prerequisite to the Claimant’s right to
commence any legal action with respect to any claim for benefits under the Plan.
Amendment. The Plan Sponsor reserves the right to amend this Plan at any time to comply with
Section 409A and other Applicable Guidance or for any other purpose, provided that such amendment
will not cause the Plan to violate the provisions of Section 409A. Except to the extent necessary
to bring this Plan into compliance with Section 409A, no amendment or modification shall be
effective to decrease the value or vested percentage of a Participant’s Accrued Benefit in
existence at the time an amendment or modification is made to the Plan.
Plan Termination. The Plan Sponsor reserves the right to terminate this Plan in
accordance with one of the following, subject to the restrictions imposed by Section 409A and
authoritative guidance:
(a) Corporate Dissolution or Bankruptcy. This Plan may be terminated within twelve (12)
months of a corporate dissolution taxed under Code § 331, or with the approval of a Plan
Sponsor bankruptcy court pursuant to 11 U.S.C. Section 503(b)(1)(A), and distributions may
then be made to the Participant provided that the
amounts payable under this Plan are included in the Participants’ gross income in the latest
of:
(i) The calendar year in which the Plan termination
occurs;
(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) Change in Control. This Plan may be terminated within the thirty (30) days
preceding or the twelve (12) months following a Change in Control. This Plan will then be
treated as terminated only if all substantially similar arrangements sponsored by the Plan
Sponsor are terminated so that all participants in all similar arrangements are required to
receive all amounts of compensation deferred under the terminated arrangements within twelve
(12) months of the date of termination of the arrangements.
(c) Discretionary Termination. The Plan Sponsor may also terminate this Plan and make
distributions provided that:
(i) All plans sponsored by the Plan Sponsor that would be aggregated with any
terminated arrangements under Treasury Regulations §1.409A-1(c) are terminated;
(ii) No payments, other than payments that would be payable under the terms of
this plan if the termination had not occurred, are made within twelve (12) months of
this plan termination;
(iii) All payments are made within twenty-four (24) months of this plan
termination; and
(iv) Neither the Plan Sponsor nor any of its affiliates adopts a new plan
that would be aggregated with any terminated plan if the same Participant
participated in both arrangements at any time within three (3) years following the
date of termination of this Plan.
(v) The termination does not occur proximate to a downturn in the
financial health of the Plan Sponsor.
Compliance with Section 409A and Authoritative Guidance. Notwithstanding anything in this Plan
to the contrary, all provisions of this Plan, including but not limited to the definitions of
terms, elections to defer, and distributions, shall be made in accordance with and shall comply
with Section 409A and any authoritative guidance. The Plan Sponsor will amend the terms of this
Plan retroactively, if necessary, to the extent required to comply with Section 409A and any
authoritative guidance. No provision of this Plan shall be followed to the extent that following
such provision would result in a violation of Section 409A or the authoritative guidance, and no
election made by a Participant hereunder, and no change made by a Participant to a previous
election, shall be accepted by the Plan Sponsor if the Plan Sponsor determines that acceptance of
such election or change could violate any of the requirements of Section 409A or the authoritative
guidance. This Plan and any accompanying forms shall be interpreted in accordance with, and
incorporate the terms and conditions required by, Section 409A and the authoritative guidance,
including, without limitation, any such Treasury Regulations or other guidance that may be issued
after the date hereof.
Status of Plan. The Plan is intended to be a plan that: (i) is not qualified within the
meaning of Code Section 401(a); and (ii) “is unfunded and is maintained by the Plan Sponsor
primarily for the purpose of providing deferred compensation for a select group of management or
highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3), and
401(a)(1). Furthermore, the provisions of this Plan, both in form and in operation, are intended
to comply with the requirements of Section 409A(a)(2), (3), and (4) of the Code. This Plan shall be
administered and interpreted to the extent possible in a manner consistent with these intentions.
If the Plan Sponsor or Plan Administrator determines in good faith that a Participant who has not
experienced a Separation from Service no longer qualifies as a member of a select group of
management or highly compensated employees, as membership in such group is determined in accordance
with Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA, or that such a Participant’s participation
in the Plan could jeopardize the status of this Plan as a plan intended to be “unfunded” and
“maintained primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees” within the meaning of ERISA Sections 201(2),
301(a)(3), and 401(a)(1), or causes the Plan to fail to comply with any requirements of Sections
409A(a)(2), (3), or (4) of the Code, the Plan Sponsor may take reasonable steps necessary to
maintain the status of the Plan as such or to prevent or cure any failure, as the case may be.
The following Article is hereby deleted:
17. LUMP SUM PAYMENT OF BENEFITS
IN WITNESS OF THE ABOVE, the Plan Sponsor and Participant have executed this Amendment to the
Agreement.
WITNESS:
|
FOR THE PLAN SPONSOR: | |||
(name)
|
(name of Plan Sponsor) | |||
(signature of witness)
|
(signature of authorized officer of Plan Sponsor) | |||
(title if any)
|
(title of signing officer) | |||
| THE PARTICIPANT: | ||||
| (signature) | ||||
| (print name) |
