AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
Xxxxxxxx Financial Corporation 10-Q
Exhibit 10.4
AMENDED
AND RESTATED
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
This Amended and Restated Supplemental Executive Retirement Agreement (the “Agreement”) is entered into effective November 9, 2016 by Xxxxxxxx Financial Corporation, with offices at 000 Xxx Xxxxxxx, Xxxxxx, Xxx Xxxx 00000, and Xxxxx X. Xxxxx, residing at _____________________ (the “Executive”).
The Executive and Xxxxxxxx Financial Corporation previously entered into a Supplemental Executive Retirement Agreement, dated on or about January 1, 2004 (the “Original Agreement”), and Section 8.1 hereof sets forth the only provision of the Original Agreement which is incorporated into this Agreement. For good and valuable consideration, including without limitation (i) continued active participation and other benefits under this Agreement, (ii) an additional Supplemental Executive Retirement Agreement, also dated on or about the date hereof, and (iii) the grant of an equity award on or about the date hereof, which equity award is expressly conditioned upon Executive’s execution and delivery of this Agreement, the receipt and sufficiency of which is acknowledged, the parties now desire to clarify, amend and restate the Original Agreement as set forth herein. The principal objective of this Agreement and the Original Agreement is and was to ensure the payment of competitive levels of retirement income to the Executive, who has been determined to be a key executive of Xxxxxxxx Financial Corporation and its subsidiaries, in order to retain and motivate such Executive.
1.1. | “Board of Directors” means the Board of Directors of Xxxxxxxx Financial Corporation. |
1.2. | “Cause” has the meaning set forth in Section 2.3. |
1.3. | “Code” means the Internal Revenue Code of 1986, as amended. |
1.4. | “Competition with the Company” has the meaning set forth in Section 2.3. |
1.5. | “Committee” means the Compensation Committee of the Board of Directors, which has been given authority by the Board of Directors to administer this Agreement. |
1.6. | “Company” means Xxxxxxxx Financial Corporation. |
1.7. | “Compensation” has the meaning set forth in Section 7.1(b). |
1.8. | “Disabled” means that 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 twelve (12) months, the Executive is unable to engage in any substantial gainful activity. |
1.9. | “Early Retirement Reduction” has the meaning set forth in Section 3.1. |
1.10. | “Earnings” means the average of the Executive’s five (5) highest calendar years (or such lesser number if the Executive has not completed five (5) years of service for the purpose of determining Earnings) of base pay, which shall mean the Executive’s base salary excluding bonuses, profit sharing, and the like, and which may include base pay in years prior to the Executive’s commencement of participation under this Agreement if so determined by the Board of Directors. |
1.11. | “Excise Tax” has the meaning set forth in Section 7.1(c). |
1.12. | “Good Reason” exists in the event of (i) a material diminution in the Executive’s base compensation, authority, duties or responsibilities; (ii) a material change in the geographic location at which the Executive is required to perform the duties of the Executive’s position; or (iii) a material breach of this Agreement by the Company or its successor, or of any other agreement pursuant to which the Executive provides services for the Company or its successor, provided the Executive gives written notice to the Company or its successor, as applicable, within ninety (90) days of the initial existence of the condition described in (i), (ii) or (iii), above, and the Company or its successor fails to remedy such condition within thirty (30) days after receipt of such notice. |
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1.13. | “Release” has the meaning set forth in Section 8.11. |
1.14. | “Release Date” has the meaning set forth in Section 8.11. |
1.15. | “Retirement Age” has the meaning set forth in Section 2.2. |
1.16. | “Retirement Benefit Freeze” has the meaning set forth in Section 2.1. |
1.17. | “Retirement Date” has the meaning set forth in Section 2.2. |
1.18. | “Surviving Spouse” means the spouse of the Executive, if any, designated at or prior to his Retirement Date on his ‘Beneficiary Designation Form’, surviving on the date of death of the Executive; provided, however, that if the Executive, as of the date of Executive’s death, is no longer married to the person so designated, then such person is not a Surviving Spouse for purposes of this Agreement. |
1.19. | “Vested” means having completed at least (ten) 10 years of service beginning on the date set forth in Section 3.3. |
1.20. | “Years of Service Reduction” has the meaning set forth in Section 3.1. |
SECTION II. ELIGIBILITY FOR BENEFITS
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SECTION III. AMOUNT AND FORM OF RETIREMENT BENEFIT
3.1 Retirement Benefit. The annual retirement benefit amount payable by the Company under this Agreement shall equal seventy-five percent (75%) of the Executive’s Earnings less (a) the hypothetical value of the annual amount of a single life annuity for the life of the Executive determined as if the accrual of benefits under the Xxxxxxxx Financial Corporation Retirement Plan had not been frozen, based upon the Executive’s relevant age, service, and compensation as in effect at the time such determination of value is made, and using the benefit formula in the Xxxxxxxx Financial Corporation Retirement Plan as of the date the accrual of further benefits under the Xxxxxxxx Financial Corporation Retirement Plan was frozen, and (b) the annual amount of the Executive’s Social Security benefits (with the amounts in subsections (a) and (b) based upon the Committee’s good faith estimate of the amounts of such benefits); provided, however, that the annual retirement benefit shall be reduced by five percent (5%) for each year that the Executive’s years of service under this Agreement are less than twenty (20) years (the “Years of Service Reduction”). The monthly retirement benefit payable by the Company to the Executive shall equal one-twelfth (1/12) of such annual retirement benefit. In the event the Executive’s Retirement Date under Section 2.2 occurs prior to the Executive attaining the age of sixty-five (65), the annual retirement benefit otherwise determined hereunder shall be further reduced by five percent (5%) for each year of age by which the Executive’s attained age at his Retirement Date is less than sixty-five (65) years (the “Early Retirement Reduction”). For clarity, when this Agreement states that an Executive is “deemed Vested,” such does not alter the Years of Service Reduction or the Early Retirement Reduction, and is only intended to confirm that the Executive is eligible for the benefit hereunder.
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The monthly benefit payable as a single life annuity shall be payable by the Company on the first day of each calendar month beginning with the Executive’s Retirement Date through and including the month of the Executive’s death. In the event the Executive is determined to be a “specified employee”, as such term is defined in Treasury Regulations §1.409A-1(i), then any monthly benefit otherwise payable on or before the date which is six (6) months after the Executive’s termination of employment date shall be delayed until the earlier of the Executive’s date of death or the date which is six (6) months after the Executive’s termination of employment date; provided, however, that such delay is only required for benefits constituting nonqualified deferred compensation under Code Section 409A, and the delay will apply only to those benefits that are not exempt from Code Section 409A. Any such delayed payments shall be accumulated and paid in a lump sum and payments thereafter will be made as scheduled in accordance with this Section 3.1.
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(a) Upon the death of the Executive after the commencement of the Executive’s retirement benefit under Section 3.1, the Executive’s Surviving Spouse, if any, shall be entitled to an annual retirement benefit payable by the Company under this Agreement equal to fifty percent (50%) of the annual retirement benefit which the Executive had been receiving. The monthly retirement benefit payable by the Company to the Surviving Spouse shall be one-twelfth (1/12) of such annual retirement benefit and shall be payable on the first day of each month beginning with the month after the month of the Executive’s death through and including the month of the Surviving Spouse’s death.
(b) Upon the death of the Executive prior to the commencement of the Executive’s retirement benefit under Section 3.1, the Executive’s Surviving Spouse, if any, shall be entitled to an annual retirement benefit payable by the Company under this Agreement equal to fifty percent (50%) of the annual retirement benefit, determined under Section 3.1, provided that all of the following conditions are satisfied: (A) the annual retirement benefit shall be payable only if the Executive is Vested at the time of his death, as defined in Section I; and, (B) the Surviving Spouse survives until the date upon which the Executive would have attained his Retirement Age if the Executive’s death occurs prior to his Retirement Date. The monthly retirement benefit payable by the Company, if any, under this subsection to the Surviving Spouse shall equal one-twelfth (1/12) of said annual retirement benefit for the Surviving Spouse and shall be payable on the first day of each month commencing on the later of the Executive’s Retirement Age or the month after the month of the Executive’s death through and including the month of the Surviving Spouse’s death. The date utilized for the Years of Service Reduction shall be the date of the Executive’s death (or the date of the Executive’s termination of employment, if earlier), and the age utilized for the Early Retirement Reduction shall be the greater of (1) the Executive’s actual age at the time of his death (or the date of the Executive’s termination of employment, if earlier), and (2) the Retirement Age.
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(c) Upon the death of the Executive with no Surviving Spouse, or, if in the event of the Executive’s death prior to the commencement of the Executive’s retirement benefit under Section 3.1, the Executive’s Surviving Spouse shall not survive the Executive until the date upon which the Executive would have attained the Retirement Age, there shall be no benefit payment under Section 3 to the Executive, the Executive’s Surviving Spouse, the estate of either the Executive or the Surviving Spouse, or otherwise.
SECTION IV. PAYMENT OF RETIREMENT BENEFITS
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SECTION V. DEATH BENEFITS PAYABLE
SECTION VI. DISABILITY BENEFITS PAYABLE
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SECTION VII. CHANGE IN CONTROL
(a) In the event of a Change in Control, as defined in Section 7.2, of the Company, the Executive shall be deemed to have completed twenty (20) years of service and is Vested in all benefits under this Agreement (though the Early Retirement Reduction shall still apply), and the retirement benefit described in Section 3.1 shall commence at the Executive’s Retirement Date. The executive shall not be entitled to the accelerated service completion set forth in this subsection following a Retirement Benefit Freeze, unless the effective date of such Retirement Benefit Freeze occurs within the two-year period immediately prior to announcement of the Change in Control and, in such event, the executive shall remain so entitled.
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(b) In the event of a Change in Control of the Company, if the employment of the Executive is thereafter involuntarily terminated without Cause, or if the Executive voluntarily terminates employment for Good Reason (i) within two (2) years after a Change in Control, or (ii) in anticipation of a Change in Control which then occurs within two (2) years, then the Executive shall receive a benefit, in addition to any benefit under Section 3 of this Agreement, under this Section 7.1(b). The benefit under this Section 7.1(b) shall be the continuation of the Executive’s Compensation, as defined below, for a period of three (3) years (payable in accordance with the Company’s or its successor’s regular payroll procedures for executive employees, but in any event not less frequently than monthly), plus continuation of all employee welfare benefits that the Executive was participating in (health insurance, disability insurance, life insurance and the like) immediately prior to the Change in Control (or cash in an amount equal to the value of the Company’s or its successor’s contributions for such welfare benefits to the extent that the Executive is no longer eligible to participate in such programs); provided, however, that, for purposes of this Section 7.1(b), the amount of the Executive’s Compensation taken into account shall be reduced by (20%) if the Executive has attained age sixty-one (61), by 40% if the Executive has attained age sixty-two (62), by 60% if the Executive has attained age sixty-three (63), by 80% if the Executive has attained age sixty-four (64), and by 100% if the Executive has attained age sixty-five (65), with all such age determinations made as of the date of the Executive’s termination of employment. The continuation of the Executive’s employee welfare benefits under this Section 7.1(b) shall be on the same terms and conditions (subject to the aforementioned substitution of cash in lieu of benefit plan participation to the extent the Executive is ineligible therefor) as such employee welfare benefits are offered to other executive employees of the Company or of its successor, as applicable, and such continuation shall be for a three-year period even if there is no continuation payment of the Executive’s Compensation because of the 100% reduction under the preceding sentence. For purposes of this Section VII only, the term “Compensation” shall mean the Executive’s base pay (at the rate in effect immediately prior to the Change in Control) plus the Executive’s bonus and profit sharing compensation (which for this purpose shall be the average of the Executive’s bonus and profit sharing compensation earned for the two (2) most recently completed fiscal years of the Company immediately preceding the Change in Control).
(c) In the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) would be subject to the excise tax imposed by Section 4999 of the Code, including any successor to such statute of like import (the “Excise Tax”), then the amount of the benefit otherwise payable under Section 7.1(b), if any, shall be reduced, but not below zero, to the maximum amount upon which no such Excise Tax is imposed.
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(d) For purposes of this Section 7.1, the proper amounts, if any, of the Excise Tax and the adjustment under Section 7.1(c) to eliminate the Excise Tax shall be determined in the first instance by the Company. Within forty-five (45) days of being provided with written notice of any such determination, the Executive may provide written notice to the Committee of any disagreement, in which event the amounts, if any, of the Excise Tax and any adjustment under Section 7.1(c) shall be determined by independent tax counsel selected by the Company’s independent auditors. The determination of the Company (or, in the event of disagreement, the tax counsel selected) shall be final.
7.2 For purposes of this Section VII, a Change in Control shall be deemed to have occurred upon the earliest of the following: (i) the date of acquisition by any one person, or more than one person acting as a group (as defined in Treasury Regulations §1.409A-3(i)(5)(v)(B)), of stock of the Company that, together with stock held by such person or group, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; provided, however, that if any one person, or more than one person acting as a group, is considered to own more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or persons shall not be deemed to result in a Change in Control; (ii) the date a majority of members of the Company’s Board of Directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors before the date of the appointment or election; or (iii) the date that any one person, or more than one person acting as a group, acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value of more than seventy percent (70%) of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions; provided, however, that transfers of assets of the Company of any value to a related person or entity as described in Treasury Regulations §1.409A-3(i)(5)(vii)(B) shall not be deemed to result in a Change in Control.
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8.7. Construction. The masculine gender, where appearing in this Agreement, will be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates the contrary. For purposes of complying with Code Section 409A, or any successor to such statute of like import, it is acknowledged that no benefit payments may be made under this Agreement prior to the Executive’s termination of employment with the Company, that the payment of benefits pursuant to this Agreement may not be accelerated by the Company or the Executive, and that there are no elections provided under the Agreement to defer compensation or to delay a payment of benefits other than in the case of an election made pursuant to the Subsequent Deferral Rules, as described in Section 8.1.
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8.8 Controlling Law. This Agreement is established under and will be construed according to the laws of the State of New York, without regard for principles of conflicts of law. Notwithstanding the foregoing, this Agreement shall be construed consistent with the requirements of Code Section 409A, the regulations promulgated thereunder and other official guidance relating thereto such that the operation or terms of this Agreement do not result in the inclusion in income of any amount under such Code provision. For purposes of this Agreement, any term hereunder relating to the Executive’s termination of employment, the Executive terminating employment, the Executive being terminated or similar expression shall be deemed to refer to a separation from service, as defined in Treasury Regulations §1.409A-1(h). If an amount is to be paid under this Agreement in two or more installments, each installment shall be treated as a separate payment for purposes of Code Section 409A.
8.10 Disputes & Severability. In the event of any dispute after the occurrence of a Change in Control (as defined in Section 7.2) between the Company and the Executive with respect to the Executive’s rights to any payment under this Agreement, the Company shall pay all disputed amounts to the Executive in the time and manner otherwise specified by this Agreement, and, if it is finally judicially determined that the Executive was not entitled to all or a portion of such disputed amounts, the Executive shall repay to the Company the amount to which the Executive was not entitled, together with interest thereon at the judgment rate of interest then applicable in New York State. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon a determination that any term or provision is invalid, illegal or unenforceable, the court may modify this Agreement to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
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8.11 Release. In connection with Executive’s receipt of the retirement benefit described in Section 3.1, the Executive shall execute (and not revoke) a standard, customary form of release agreement (the “Release”), including without limitation the following terms. If Executive is continuously incapacitated through the Release Date, this requirement is waived. The Release must be given no more than ninety (90) days following the Executive’s employment termination, with sufficient time to allow applicable revocation period(s) to expire before the end of such ninety- (90-) day period (the final day of such 90-day period to be the “Release Date”). Pursuant to the Release, the Executive, on behalf of himself and his heirs, shall agree to waive any and all claims he or they have, had, or may have had, in each case as of the date the Executive signs the Release, in connection with his employment by the Company or its affiliates, as against the Company, its affiliates, and its and their directors and employees, other than claims arising out of the Company’s breach of its obligations under this Agreement. The Release will not prohibit or restrict the Executive (or Executive’s attorney) from initiating communications directly with, or responding to any inquiry from, or providing testimony before, any self-regulatory organization or any state or federal regulatory authority regarding the Company or the facts or circumstances of Executive’s employment with the Company. Should the Executive fail to return to the Company the executed Release on or before the Release Date, the Executive will forfeit all benefits then unpaid that otherwise would have been payable to the Executive pursuant to this Agreement.
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8.14 Original Agreement. This Agreement amends, supersedes and replaces the Original Agreement in its entirety, and the Original Agreement shall no longer be of any force or effect, except (i) where expressly referenced herein, and (ii) that years of service credit shall accrue as of the date originally established therefor under the Original Agreement.
IN WITNESS WHEREOF, this Agreement has been executed this 9th day of November, 2016.
XXXXXXXX FINANCIAL CORPORATION | |||||
By: | /s/ Xxxxxxx X. Xxxxxxx | ||||
Name: Xxxxxxx X. Xxxxxxx | |||||
ATTEST: /s/ Xxxxx Xxxxxx | Title: President & Chief Executive Officer | ||||
By: | /s/ Xxxxx X. Xxxxx | ||||
ATTEST: /s/ Xxxxxxx Xxxxxxxxx | Name: Xxxxx X. Xxxxx, Individually |
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SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
Beneficiary Designation Form
As an Executive participating in a Supplemental Executive Retirement Agreement with Xxxxxxxx Financial Corporation, I hereby designate my spouse to receive any death benefits that may become payable under the Agreement. I understand and acknowledge no death benefit will be paid under the Agreement (a) if the below-designated Spouse is not a “Surviving Spouse” as defined in the Agreement, or (b) if I do not return this Spousal Benefit Designation Form, completed and executed, to the Committee on or before my Retirement Date, as defined in the Agreement.
Spouse’s Name: ___________________________________
Social Security Number: _____________________________
Date of Birth: ______________________________
Home Address: ____________________________________________________________
Executive’s Signature: ______________________________
Witness’ Signature: ______________________________
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