ESB BANK AMENDED AND RESTATED DIRECTOR RETIREMENT AGREEMENT
Exhibit
10.8
[Form
for Director Agreement at Bank Level]
ESB
BANK
AMENDED
AND RESTATED DIRECTOR RETIREMENT AGREEMENT
THIS
AMENDED AND RESTATED AGREEMENT is made and entered into this 20th day of
November 2007, by and between ESB Bank (the “Bank”), a wholly-owned subsidiary
of ESB Financial Corporation (the “Corporation”), located in Ellwood City,
Pennsylvania, and ________________ (the “Director”), intending to be legally
bound hereby.
INTRODUCTION
The
Bank and the Director previously
entered into a certain Amended and Restated Director Retirement Agreement
dated
as of November 21, 2006 (the “Prior Agreement”). This Agreement
amends and restates the Prior Agreement in its entirety as hereinafter set
forth
in order to comply with the requirements of Section 409A of the Internal
Revenue
Code of 1986, as amended (the “Code”), including the final regulations issued by
the Internal Revenue Service in April 2007. No benefits payable under
this Agreement shall be deemed to be grandfathered for purposes of Section
409A
of the Code.
This
Agreement shall at all times be characterized as a “top hat” plan of deferred
compensation maintained for a select group of management or highly compensated
employees, as described under Sections 201(2), 301(a)(3) and 401(a)(1) of
the
Employee Retirement Income Security Act of 1974, as amended, and any regulations
relating thereto (“ERISA”). The
Agreement
has been and shall continue to be operated in compliance with Section 409A
of
the Code. The Agreement is an unfunded plan for tax
purposes. The provisions of the Agreement shall be construed to
effectuate such intentions.
AGREEMENT
The
Director and the Bank agree as follows:
Article
1
Definitions
Whenever
used in this Agreement, the following words and phrases shall have the meanings
specified:
1.1 “Base
Board Fees” means the regular monthly Bank board fees and does not include
committee fees, advisory board fees, director emeritus fees, liaison fees
or
other income that might be received by the Director.
1.2 “Change
in Control” means a change in the ownership of the Corporation or the Bank,
a change in the effective control of the Corporation or the Bank or a change
in
the ownership of a substantial portion of the assets of the Corporation or
the
Bank, in each case as provided under Section 409A of the Code and the
regulations thereunder.
1
1.3 “Code”
means the Internal Revenue Code of 1986, as amended.
1.4 “Deferred
Retirement” means the Director has met the eligibility requirements
described in Article 2 and has a Separation from Service after his Normal
Retirement Age for any reason other than following a Change in
Control.
1.5 “Deferred
Retirement Date” means the first day of the month coincident with or next
following the date of the Director’s Separation from Service subsequent to the
Director’s Normal Retirement Age.
1.6 “Early
Termination” means the Director has met the eligibility requirements
described in Article 2 but has a Separation from Service before Normal
Retirement Age for any reason other than following a Change in
Control.
1.7 “Early
Termination Date” means the month, day and year in which Early Termination
occurs.
1.8 “Effective
Date” means February 11, 2005, except that the amendment and restatement of
this Agreement shall be effective as of the date first written
above.
1.9 “Normal
Retirement Age” means the Director’s 75th
birthday.
1.10 “PlanYear”
means the calendar year. In the year of inception, the Plan Year
commences on the Effective Date of this Agreement and ends on December 31st of the
same
year.
1.11 “Separation
from Service” means a termination of a Director’s services (whether as an
employee or as an independent contractor) to the Corporation and the Bank
for
any reason. Whether a Separation from Service has occurred shall be
determined in accordance with the requirements of Section 409A of the Code
based
on whether the facts and circumstances indicate that the Corporation, the
Bank
and the Director reasonably anticipated that no further services would be
performed after a certain date or that the level of bona fide services the
Director would perform after such date (whether as an employee or as an
independent contractor) would permanently decrease to no more than twenty
percent (20%) of the average level of bona fide services performed (whether
as
an employee or an independent contractor) over the immediately preceding
thirty-six (36) month period. For purposes of this Agreement, if
there is a dispute over the service status of the Director or the date of
the
Director’s Separation from Service, the Bank shall have the sole and absolute
right to decide the dispute.
1.12 “Specified
Employee” means a key employee within the meaning of Section 409A of the
Code and the regulations thereunder.
1.13 “Termination
for Cause” has the meaning set forth in Section 6.2.
1.14 “Years
of Service” means the total number of continuous years of service as a
Director of the Bank, inclusive of any approved leaves of absences and service
as a member of the Board of Directors of any bank acquired by the Bank or
the
Corporation, including all years of service accrued prior to the Effective
Date. In the event the Director also becomes a director of the
Corporation, a year of service of both the Bank and the Corporation concurrently
shall only count as one year of service; and provided further, that any service
as a director emeritus or as an advisory director shall be excluded in
determining Years of Service.
2
Article
2
Eligibility
to Participate
To
be
entitled to any benefit under this Agreement, the Director must have a minimum
of 5 Years of Service as a director of the Bank (as opposed to service as
a
director of any bank acquired by the Bank or the Corporation) and a minimum
of
10 total Years of Service.
Article
3
Retirement
Benefits
3.1 Annual
Normal Retirement Benefit. If the Director satisfies the
requirements of Article 2 and remains in continuous service as a member of
the
Board of Directors of the Bank from the Effective Date of this Agreement
until
Normal Retirement Age, the Bank shall pay to the Director the benefit described
in this Section 3.1 in lieu of any other benefit under this
Agreement.
3.1.3 Amount
of Benefit. The Annual Normal Retirement Benefit under this
Section 3.1 will be determined using the following formula:
The
Director’s Base Board Fees earned during the last full calendar year prior to
his retirement date (or, if earlier, the last full calendar year prior to
becoming a director emeritus), multiplied by a ratio ranging from 25% to
80%
based on the Director’s total Years of Service as follows:
|
|
Years
of Service
|
Retirement
Percentage
|
||
|
|
10
|
25.0%
|
||
|
|
11
|
27.5%
|
||
|
|
12
|
30.0%
|
||
|
|
13
|
32.5%
|
||
|
|
14
|
35.0%
|
||
|
|
15
|
37.5%
|
||
|
|
16
|
40.0%
|
||
|
|
17
|
42.5%
|
||
|
|
18
|
45.0%
|
||
|
|
19
|
47.5%
|
||
|
|
|
20 or more |
80.0%
|
|
3.1.4 Payment
of Benefit. The Bank shall pay the annual benefit to the
Director each year for five years, with the annual benefits to be paid in
equal
monthly installments on the first day of each month commencing with the month
following the Director’s Separation from Service and continuing for the 59
months that follow, subject to Section 3.5 hereof.
3
3.2 Early
Termination Benefit. Upon Early Termination, the Bank shall pay
to the Director the benefit described in this Section 3.2 in lieu of any
other
benefit under this Agreement.
3.2.3 Amount
of Benefit. The benefit under this Section 3.2 is the Early
Termination Annual Benefit set forth in Schedule A for the Plan Year ended
immediately prior to the Early Termination Date.
3.2.4 Payment
of Benefit. The Bank shall pay the benefit to the Director (or
his beneficiary if Separation from Service was due to death) in a lump sum
payment within 60 days of the Director’s Early Termination Date, subject to
Section 3.5 hereof.
3.3 Deferred
Retirement Benefit. If the Director satisfies the requirements
of Article 2 and remains in continuous service as a member of the Board of
Directors of the Bank from the Effective Date of this Agreement until his
Deferred Retirement Date, the Bank shall pay to the Director the benefit
described in this Section 3.3 in lieu of any other benefit under this
Agreement.
3.3.1 Amount
of Benefit. The Deferred Retirement Benefit under this Section
3.3 will be determined using the same formula as set forth in Section 3.1.1
above.
3.3.2 Payment
of Benefit. The Bank shall pay the annual benefit to the
Director each year for five years, with the annual benefits to be paid in
equal
monthly installments on the first day of each month commencing with the month
following the Director’s Separation from Service and continuing for the 59
months that follow, subject to Section 3.5 hereof.
3.4 Change
in Control Annual Benefit. If the Director satisfies the
requirements of Article 2 and is in the active service of the Bank at the
time
of a Change in Control, and does not have a Separation from Service prior
to the
consummation of the transaction which constitutes the Change in Control,
the
Bank shall pay to the Director the benefit described in this Section 3.4
in lieu
of any other benefit under this Agreement.
3.4.3 Amount
of Benefit. The annual benefit under this Section 3.4 is the
Director’s Base Board Fees earned during the last full calendar year
prior to consummation of the Change in Control (or, if earlier, the last
full
calendar year prior to becoming a director emeritus) multiplied by
80%.
3.4.4 Payment
of Benefit. The Bank shall
pay the annual benefit to the Director each year for five years, with the
annual
benefits to be paid in equal monthly installments commencing on the first
day of
the month following consummation of the Change in Control and continuing
for the
59 months that follow.
4
3.5 Six-Month
Delay. If the Director is a Specified Employee upon reaching
Normal Retirement Age, then the monthly payments specified in Section 3.1.2
above shall not commence until the first day of the month following the lapse
of
six months after reaching Normal Retirement Age, and shall then continue
for the
59 months that follow. If the Director is a Specified Employee upon
Early Termination, then the lump sum payment specified in Section 3.2.2 above
shall be delayed until the first day of the month following the lapse of
six
months after the Early Termination Date. If the Director is a
Specified Employee upon Deferred Retirement, then the monthly payments specified
in Section 3.3.2 above shall not commence until the first day of the month
following the lapse of six months after the Deferred Retirement Date, and
shall
then continue for the 59 months that follow.
Article
4
Death
Benefits
4.3 Death
During Benefit Period. If the Director dies after the benefit
payments have commenced under this Agreement but before receiving all such
payments, the Bank shall pay the remaining benefits to the Director’s
beneficiary at the same time and in the same amounts they would have been
paid
to the Director had the Director survived.
4.4 Death
Before Benefit Payments Commence. If the Director is
entitled to benefit payments under this Agreement, but dies prior to the
commencement of said benefit payments, the Bank shall pay the benefit payments
to the Director’s beneficiary that the Director was entitled to prior to death,
except that the benefit payments shall commence on the first day of the month
following the date of the Director’s death.
Article
5
Beneficiaries
5.1 Beneficiary
Designations. The Director shall designate a beneficiary by
filing a written designation with the Bank. The Director may revoke
or modify the designation at any time by filing a new
designation. However, designations and revocations or modifications
of designations shall only be effective if they are filed with the Bank as
a
written document, signed by the Director and accepted by the Bank during
the
Director’s lifetime. The Director’s beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Director,
or if
the Director names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Director dies without a valid beneficiary
designation, all payments shall be made to the Director’s estate.
5.2 Facility
of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition
of
his or her property, the Bank may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incapacitated
person or incapable person. The Bank may require proof of incapacity,
minority or guardianship as it may deem appropriate prior to distribution
of the
benefit. Such distribution shall completely discharge the Bank from
all liability with respect to such benefit.
5
Article
6
General
Limitations
6.3 Excess
Parachute or Golden Parachute Payment. Notwithstanding any provision of
this Agreement to the contrary, the Bank shall not pay any benefit under
this
Agreement to the extent the benefit would be a parachute payment under Section
280G of the Code or would be a prohibited golden parachute payment pursuant
to
12 C.F.R. §359.2 and for which the appropriate federal banking agency has not
given written consent to pay pursuant to 12 C.F.R. §359.4.
6.4 Termination
for Cause. Notwithstanding any provision of this Agreement to the contrary,
the Bank shall not pay any benefit under this Agreement if the Bank terminates
the Director’s service for:
6.4.1 Gross negligence or gross neglect
of duties;
6.4.2 Commission of a felony or
of a gross misdemeanor involving moral turpitude; or
6.4.3 Fraud,
disloyalty, dishonesty or willful violation of any law or significant Bank
or
Corporation policy committed in connection with the Director’s service and
resulting in an adverse effect on the Bank or the Corporation.
6.3
Removal. Notwithstanding any provision of this Agreement to
the contrary, the Bank shall not pay any benefit under this Agreement if
the
Director is subject to a final removal or prohibition order issued by an
appropriate federal banking agency pursuant to Section 8(e) of the Federal
Deposit Insurance Act.
Article
7
Claims
and Review Procedures
7.2
Claims
Procedure. A Director or beneficiary (“claimant”) who has not
received benefits under the Agreement that he or she believes should be paid
shall make a claim for such benefits as follows:
7.2.1 Initiation
– Written Claim. The claimant initiates a claim by submitting to the Bank a
written claim for the benefits.
7.2.2 Timing
of Bank Response. The Bank shall respond to such claimant within 90 days
after receiving the claim. If the Bank determines that special circumstances
require additional time for processing the claim, the Bank can extend the
response period by an additional 90 days by notifying the claimant in writing,
prior to the end of the initial 90-day period, that an additional period
is
required. The notice of extension must set forth the special circumstances
and
the date by which the Bank expects to render its decision.
6
7.2.3 Notice
of Decision. If the Bank denies part or all of the claim, the Bank shall
notify the claimant in writing of such denial. The Bank shall write the
notification in a manner calculated to be understood by the claimant. The
notification shall set forth:
7.2.3.1 The
specific reasons for the denial,
7.2.3.2 A
reference to the specific provisions of the Agreement on which the denial
is
based,
7.2.3.3 A
description of any additional information or material necessary for the claimant
to perfect the claim and an explanation of why it is needed,
7.2.3.4 An
explanation of the Agreement’s review procedures and the time limits applicable
to such procedures, and
7.2.3.5 A
statement of the claimant’s right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination on review.
7.2 Review
Procedure. If the Bank denies part or all of the claim, the claimant shall
have the opportunity for a full and fair review by the Bank of the denial,
as
follows:
7.21
Initiation – Written Claim. The claimant initiates a claim by
submitting to the Bank a written claim for the benefits.
7.22
Timing of Bank Response. The Bank shall respond to such claimant within 90
days after receiving the claim. If the Bank determines that special
circumstances require additional time for processing the claim, the Bank
can
extend the response period by an additional 90 days by notifying the claimant
in
writing, prior to the end of the initial 90-day period, that an additional
period is required. The notice of extension must set forth the special
circumstances and the date by which the Bank expects to render its
decision.
7.2.3
Considerations on Review. In considering the review, the Bank shall
take into account all materials and information the claimant submits relating
to
the claim, without regard to whether such information was submitted or
considered in the initial benefit determination.
7.2.4
Timing of Bank Response. The Bank shall respond in writing to such
claimant within 60 days after receiving the request for review. If the Bank
determines that special circumstances require additional time for processing
the
claim, the Bank can extend the response period by an additional 60 days by
notifying the claimant in writing, prior to the end of the initial 60-day
period, that an additional period is required. The notice of extension must
set
forth the special circumstances and the date by which the Bank expects to
render
its decision.
7
7.2.5
Notice of Decision. The Bank shall notify the claimant in writing
of its decision on review. The Bank shall write the notification in a manner
calculated to be understood by the claimant. If the Bank denies part or all
of
the claim, the notification shall set forth:
7.2.5.1
The specific
reasons for the denial,
7.2.5.2
A reference
to the specific provisions of the Agreement on which the denial is
based,
7.2.5.3
A statement
that the claimant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to the claimant’s claim for benefits,
7.2.5.4 A
statement of the claimant’s right to bring a civil action under ERISA Section
502(a), and
7.2.5.5 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.
Article
8
Amendment
and Termination
|
|
8.1
|
Amendment
or Termination of Agreement.
|
8.1.1 General. This
Agreement may be amended or terminated only by a written agreement signed
by the
Bank and the Director, except as provided in Article 6 and except as provided
below. A termination of this Agreement will not be a distributable
event, except in the two circumstances set forth in Section 8.1.2
below. Notwithstanding anything in the Agreement to the contrary, the
Bank may amend in good faith any terms of the Agreement, including retroactively
to the extent permitted by law, in order to comply with Section 409A of the
Code.
8.1.2 Termination. Under
no circumstances may the Agreement permit the acceleration of the time or
form
of any payment under the Agreement prior to the payment events specified
herein,
except as provided in this Section 8.1.2. The Bank may, in its
discretion, elect to terminate the Agreement in any of the following two
circumstances and accelerate the payment of the entire unpaid balance of
the
Director’s vested benefits under Article 3 as of the date of such payment in
accordance with Section 409A of the Code:
|
(iv)
|
the
Agreement is irrevocably terminated at a time that is not proximate
to a
downturn in the financial health of the Corporation or the Bank
and (1)
all arrangements sponsored by the Corporation and the Bank that
would be
aggregated with the Agreement under Treasury Regulation 1.409A-1(c)
if the
Director participated in such arrangements are terminated, (2)
no payments
are made within 12 months of the date the Corporation and the Bank
take
all necessary action to irrevocably terminate the arrangements,
other than
payments that would be payable under the terms of the arrangements
if the
termination had not occurred; (3) all payments are made within
24 months
of the date the Corporation and the Bank take all necessary action
to
irrevocably terminate the arrangements; and (4) neither the Corporation
nor the Bank adopts a new arrangement that would be aggregated
with the
Agreement under Treasury Regulation 1.409A-1(c) if the Director
participated in both arrangements, at any time within three years
following the date the Corporation and the Bank take all necessary
action
to irrevocably terminate the Agreement;
or
|
8
|
|
(ii)
|
the
Agreement is terminated within 12 months of a corporate dissolution
taxed
under Section 331 of the Code, or with the approval of a bankruptcy
court
pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred by
the Director under the Agreement are included in the Director’s gross
income in the later of (1) the calendar year in which the termination
of
the Agreement occurs, or (2) the first calendar year in which the
payment
is administratively practicable.
|
Article
9
Miscellaneous
9.11 Binding
Effect. This Agreement shall bind the Director and the Bank, and
their successors, beneficiaries, survivors, executors, administrators and
transferees.
9.12 No
Guarantee of Service. This Agreement is not a service policy or
contract. It does not give the Director the right to remain a member
of the Board of Directors of the Bank, nor does it interfere with the Bank’s
right to terminate the Director’s service. It also does not require
the Director to remain a Board member nor interfere with the Director’s right to
terminate service at any time.
9.13 Non-Transferability.
Benefits under this Agreement cannot be sold, transferred, assigned, pledged,
attached or encumbered in any manner.
9.14 Tax
Withholding. The Bank shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
9.15 Applicable
Law. This Agreement and all rights hereunder shall be governed
by the laws of the Commonwealth of Pennsylvania, except to the extent preempted
by the laws of the United States of America.
9.16 Reorganization. The
Bank shall not merge or consolidate into or with another company, or reorganize,
or sell substantially all of its assets to another company, firm or person
unless such succeeding or continuing company, firm or person agrees to assume
and discharge the obligations of the Bank under this Agreement.
9
9.17 Unfunded
Arrangement. The Director and any beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay
such benefits. The rights to benefits are not subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the
Director’s life is a general asset of the Bank to which the Director and
beneficiary have no preferred or secured claim.
9.18 Changes
in Statutes or Regulations. If any statutory or regulation
provision referenced herein is subsequently changed or re-numbered, or is
replaced by a separate provision, then the references in this Agreement to
such
statutory or regulatory provision shall be deemed to be a reference to such
section as amended, re-numbered or replaced.
9.19 Entire
Agreement. This Agreement constitutes the entire agreement
between the Bank and the Director as to the subject matter hereof. No
rights are granted to the Director by virtue of this Agreement other than
those
specifically set forth herein.
9.20 Administration. The
Bank shall have all powers which are necessary to administer this Agreement,
including but not limited to:
| 9.10.5 | Interpreting the provisions of the Agreement; | |
| 9.10.6 | Establishing and revising the method of accounting for the Agreement; | |
| 9.10.7 | Maintaining a record of benefit payments; and | |
| 9.10.8 | Establishing rules and prescribing any forms necessary or desirable to administer the Agreement. | |
IN
WITNESS WHEREOF, the Director and a duly authorized officer of ESB Bank have
signed this Agreement.
| DIRECTOR: | ESB BANK: | ||||
|
|
|||||
| By: | |||||
| Name: |
Name:
|
||||
|
|
Title:
|
||||
10
BENEFICIARY
DESIGNATION
ESB
BANK
AMENDED
AND RESTATED DIRECTOR RETIREMENT AGREEMENT
|
|
__________________
|
I
designate the following as beneficiary of any death benefits under the ESB
Bank
Amended and Restated Director Retirement Agreement:
|
|
Primary: ___________________________________________________________________________________________________________
|
|
|
__________________________________________________________________________________________________________________
|
|
|
Contingent: ________________________________________________________________________________________________________
|
|
|
__________________________________________________________________________________________________________________
|
|
|
Note: To
name a trust as beneficiary, please provide the name of the Trustee(s)
and
the exact name and date of the trust
agreement.
|
I
understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the
designations will be automatically revoked if the beneficiary predeceases
me or,
if I have named my spouse as beneficiary, in the event of the dissolution
of our
marriage.
Signature ______________________________
Date __________________________________
Accepted
by the Bank this ______ day of _________________, 200_.
By ____________________________________
Title __________________________________
11
