AMENDED AND RESTATED EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME AGREEMENT FOR CHRIS C. GAGAS PATHFINDER BANK Amended and Restated Effective January 1, 2005 Financial Institution Consulting Corporation Memphis, Tennessee 38117 WATS: 1-800-873-0089 FAX:...
AMENDED
AND RESTATED EXECUTIVE SUPPLEMENTAL RETIREMENT
INCOME
AGREEMENT
FOR
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PATHFINDER
BANK
Amended
and Restated Effective January 1, 2005
Financial
Institution Consulting Corporation
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FAX:
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AMENDED
AND RESTATED
EXECUTIVE
SUPPLEMENTAL RETIREMENT
INCOME
AGREEMENT FOR ▇▇▇▇▇ ▇▇▇▇▇
This
Amended and Restated Executive Supplemental Retirement Income Agreement (the
“Agreement”) updates and revises the Restated Executive Supplemental Retirement
Income Agreement (the “Original Agreement”) for ▇▇▇▇▇ ▇. ▇▇▇▇▇ (the
“Executive”), which was originally effective as of September 1,
1998. The Bank has herein amended and restated the Agreement with the
intention that the Agreement shall at all times satisfy Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and the regulations
thereunder. Any reference herein to the “Holding Company” shall mean
Pathfinder Bancorp, Inc. and any reference herein to the “Mutual Holding
Company” shall mean Pathfinder Bancorp, M.H.C.
WITNESSETH:
WHEREAS, the Executive and the
Bank entered into the Agreement dated as of September 1, 1998; and
WHEREAS, Section 409A of the
Internal Revenue Code (the “Code”), effective January 1, 2005, requires deferred
compensation arrangements to comply with its provisions and restrictions and
limitations on payments of deferred compensation; and
WHEREAS, Code Section 409A and
the final regulations issued thereunder necessitate changes to the Agreement;
and
WHEREAS, the Executive has
agreed to such changes; and
WHEREAS, the parties hereto
desire to set forth the terms of the amended and restated Agreement and the
continuing employment relationship of the Bank and the Executive;
and
WHEREAS, the Bank and the
Executives intend this Agreement to be considered an unfunded arrangement,
maintained primarily to provide supplemental retirement income for such
Executives, members of a select group of management or highly compensated
employees of the Bank, for tax purposes and for purposes of the Employee
Retirement Income Security Act of 1974, as amended.
NOW, THEREFORE, in
consideration of the premises and of the mutual promises herein contained, the
Bank and the Executive 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:
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1.1
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“Accrued
Benefit Account” means that portion of the Supplemental Retirement Income
Benefit which is required to be expensed and accrued under generally
accepted accounting principles (GAAP) by any appropriate method which the
Bank’s Board of Directors may require in the exercise of its sole
discretion.
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1.2
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“Act”
means the Employee Retirement Income Security Act of 1974, as amended from
time to time.
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1.3
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“Administrator”
means the Bank.
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1.4
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“Bank”
means PATHFINDER BANK and any successor
thereto.
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1.5
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“Beneficiary”
means the person or persons (and their heirs) designated as Beneficiary in
Exhibit B of this Agreement to whom the deceased Executive’s benefits are
payable. If no Beneficiary is so designated, then the
Executive’s Spouse, if living, will be deemed the Beneficiary. If the
Executive’s Spouse is not living, then the Children of the Executive will
be deemed the Beneficiaries and will take on a per stirpes
basis. If there are no Children, then the Estate of the
Executive will be deemed the
Beneficiary.
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1.6
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“Benefit
Age” means the Executive’s seventieth (70th)
birthday. Notwithstanding the above, in the event of a Change
in Control, followed within thirty-six (36) months by the Executive’s
voluntary termination of employment on or after his sixty-second birthday
for one of the reasons set forth in Section 2.2 below, the Executive’s
termination shall not be considered a retirement for purposes of lowering
the Executive’s Benefit Age.
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1.7
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“Benefit
Eligibility Date” means the date on which the Executive is entitled to
receive maximum Supplemental Retirement Income Benefit available under
this plan. It shall be the first day of the month following the
month in which the Executive attains his Benefit
Age.
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1.8
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“Board
of Directors” means the board of directors of the
Bank.
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1.9
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“Cause”
means personal dishonesty, willful misconduct, willful malfeasance, breach
of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, role, regulation
(other than traffic violations or similar offenses), or final
cease-and-desist order, material breach of any provision of this
Agreement, or gross negligence in matters of material importance to the
Bank.
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1.10
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“Change
in Control” shall mean and include the following with respect to the
Mutual Holding Company, the Bank, or the Holding
Company:
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(i)
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a
reorganization, merger, merger conversion, consolidation or sale of all or
substantially all of the assets of the Bank, the Mutual Holding Company or
the Holding Company, or a similar transaction in which the Bank, the
Mutual Holding Company or the Holding Company is not the resulting entity;
or
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(ii)
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individuals
who constitute the board of directors of the Bank, the Mutual Holding
Company or the Holding Company on the date hereof (the “Incumbent Board”)
cease for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election
was approved by the Holding Company’s nominating committee which is
comprised of members of the Incumbent Board, shall be, for purposes of
this clause (ii) considered as though he were a member of the Incumbent
Board.
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Notwithstanding
the foregoing, a “Change in Control” of the Bank or the Holding Company shall
not be deemed to have occurred if the Mutual Holding Company ceases to own at
least 51% of all outstanding shares of stock of the Holding Company in
connection with a liquidation of the Mutual Holding Company into the Holding
Company or a conversion of the Mutual Holding Company from mutual to stock
form.
In
addition, “Change in Control” shall mean and include the following with respect
to the Bank or the Holding Company in the event that the Mutual Holding Company
converts to stock form or in the event that the Holding Company issues shares of
its common stock to stockholders other than the Mutual Holding
Company:
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(1)
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a
change in control of a nature that would be required to be reported in
response to Item 5.01 of the current report on Form 8-K, as in effect on
the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (hereinafter the “Exchange Act”);
or
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(2)
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an
acquisition of “control” as defined in the Home Owners Loan
Act, as amended, and applicable rules and regulations promulgated
thereunder, as in effect at the time of the Change in Control
(collectively, the “HOLA”), as determined by the Board of Directors of the
Bank or the Holding Company; or
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(3)
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at
such time as:
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(i)
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any
“person” (as the term is used in Sections 13(d) and 14(d) of the Exchange
Act) or “group acting in concert” is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Bank representing Twenty Percent (20%) or more of the
combined voting power of the Bank’s or Holding Company’s outstanding
securities ordinarily having the right to vote at the elections of
directors, except for any stock purchased by the Bank’s Employee Stock
Ownership Plan and/or the trust under such plan;
or
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(ii)
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a
proxy statement is issued soliciting proxies from the stockholders of the
Holding Company by someone other than the current management of the
Holding Company, seeking stockholder approval of a plan of reorganization,
merger, or consolidation of the Holding Company with one or more
corporations as a result of which the outstanding shares of the class of
the Holding Company’s securities are exchanged for or converted into cash
or property or securities not issued by the Holding
Company.
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The term
“person” includes an individual, a group acting in concert, a corporation, a
partnership, an association, a joint venture, a pool, a joint stock company, a
trust, an unincorporated organization or similar company, a syndicate or any
other group formed for the purpose of acquiring, holding or disposing of
securities. The term “acquire” means obtaining ownership, control, power to vote
or sole power of disposition of stock, directly or indirectly or through one or
more transactions or subsidiaries, through purchase, assignment, transfer,
exchange, succession or other means, including (1) an increase in percentage
ownership resulting from a redemption, repurchase, reverse stock split or a
similar transaction involving other securities of the same class; and (2) the
acquisition of stock by a group of persons and/or companies acting in concert
which shall be deemed to occur upon the formation of such group, provided that
an investment advisor shall not be deemed to acquire the voting stock of its
advisee if the advisor (a) votes the stock only upon instruction from the
beneficial owner and (b) does not provide the beneficial owner with advice
concerning the voting of such stock. The term “security” includes
nontransferable subscription rights issued pursuant to a plan of conversion, as
well as a “security,” as defined in 15 U.S.C. §78c(2)(1); and the term “acting
in concert” means (1) knowing participation in a joint activity or
interdependent conscious parallel action towards a common goal whether or not
pursuant to an express agreement, or (2) a combination or pooling of voting or
other interests in the securities of an issuer for a common purpose pursuant to
any contract, understanding, relationship, agreement or other arrangement,
whether written or otherwise. Further, acting in concert with any person or
company shall also be deemed to be acting in concert with any person or company
that is acting in concert with such other person or company.
Notwithstanding
the above definitions, the boards of directors of the Bank or the Holding
Company, in their absolute discretion, may make a finding that a Change in
Control of the Bank or the Holding Company has taken place without the
occurrence of any or all of the events enumerated above.
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1.11
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Children”
means the Executive’s children, both natural and adopted, then living at
the time payments are due the Children under this
Agreement.
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1.12
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“Code”
means the Internal Revenue Code of 1986, as amended from time to
time.
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1.13
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“Disability
Benefit” means the benefit payable to the Executive following a
determination, in accordance with Section
VII.
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1.14
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“Effective
Date” of this Agreement is January 1,
2005.
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1.15
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“Estate”
means the estate of the Executive.
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1.16
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“Interest
Factor” for purposes of the Accrued Benefit Account, shall be eight
percent (8%) per annum, compounded monthly, as set forth in Exhibit
A.
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1.17
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“Payout
Period” means the time frame during which certain benefits payable
hereunder shall be distributed. Payments shall be made in equal
monthly installments commencing on the first day of the month following
the occurrence of the event which triggers distribution and continuing for
one hundred eighty (180) months. Should the Executive make a
Timely Election to receive a lump sum benefit payment, the Executive’s
Payout Period shall be deemed to be one (1)
month.
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1.18
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“Plan
Year” shall mean the calendar year. However, “Plan Year” shall
mean September 1, 1998 through December 31, 1998, for the first Plan
Year.
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1.19
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“Retirement
Age” means the Executive’s seventieth (70th) birthday.
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1.20
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“Spouse”
means the individual to whom the Executive is legally married at the time
of the Executive’s death.
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1.21
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“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. The Supplemental
Retirement Income Benefit payable to the Executive is Sixty Thousand Six
Hundred and Eighty-six ($60,686) Dollars, as set forth in Exhibit
A.
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1.22
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“Survivor’s
Benefit” means an annual amount payable to the Beneficiary in monthly
installments throughout the Payout Period, equal to the amount set forth
in Exhibit A and according to Subsection
2.5.
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1.23
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“Timely
Election” means the Executive has made an election to change the form of
his benefit payment(s) by filing with the Administrator a Notice of
Election to Change Form of Payment (Exhibit C of this
Agreement). Such election must be made on or before December
31, 2008.
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SECTION
II
BENEFITS-GENERALLY
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2.1
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Retirement
Benefit.
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If the
Executive is in service with the Bank until reaching his Benefit Age, the
Executive shall be entitled to the Supplemental Retirement Income
Benefit. Such benefit shall commence on the Executive’s Benefit
Eligibility Date and shall be payable in equal monthly installments throughout
the Payout Period. In the event the Executive dies at any time after
attaining his Benefit Age, but prior to completion of all such payments due and
owing hereunder, the Bank shall pay to the Executive’s Beneficiary a
continuation of the monthly installments for the remainder of the Payout
Period.
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2.2
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Termination Following
a Change in Control
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If a
Change in Control occurs, and within thirty-six (36) months following such
Change in Control, the Executive’s employment is either (i) involuntarily
terminated, or (ii) voluntarily terminated by the Executive after: (A) a
material change in the Executive’s function, duties, or responsibilities, which
change would cause the Executive’s position to become one of lesser
responsibility, importance, or scope from the position the Executive held at the
time of the Change in Control, (B) a relocation of the Executive’s principal
place of employment 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 Executive from those being provided at the time of the Change
in Control, the Executive shall be entitled to the full Supplemental Retirement
Income Benefit set forth in Exhibit A that Executive would have received had
Executive continued employment up through reaching his Benefit Eligibility Date,
regardless of the Executive’s actual age on date of termination. Such
benefit shall commence within thirty (30) days following the Executive reaching
his Benefit Age and shall be payable in equal monthly installments throughout
the Payout Period. Notwithstanding the foregoing, in the event the
Executive is a Specified Employee, as defined in Treasury Regulation Section
1.409A-1(i), the Supplemental Retirement Income Benefit shall commence upon the
later of: (i) the first day of the seventh month following the executive’s
termination of employment or (ii) the date on which the Executive attains his
Benefit Age. In the event that the Executive dies at any time after
termination of employment, but prior to commencement or completion of all such
payments due and owing hereunder, the Bank, or its successor, shall pay to the
Executive’s Beneficiary a continuation of the monthly installments for the
remainder of the Payout Period within thirty (30) days of Executive’s
death. For purposes of this Section 2.2, the Executive’s termination
of employment shall be construed to require a Separation from Service as defined
in Code Section 409A and the Treasury Regulations promulgated thereunder, such
that the Bank and Executive reasonably anticipate that the level of bona fide
services the Executive would perform after termination would permanently
decrease to a level that is less than 50% of the average level of bona fide
services performed (whether as an employee or an independent contractor) over
the immediately preceding 36-month period.
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2.3
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Termination For
Cause
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If the
Executive is terminated for Cause, all benefits under this Agreement shall be
forfeited and this Agreement shall become null and void.
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2.4
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Involuntary
Termination of Employment
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If the
Executive’s employment with the Bank is involuntarily terminated for any reason,
including a termination due to Disability, but excluding termination for Cause,
or termination following a Change in Control within thirty-six (36) months
following such Change in Control, within thirty (30) days following such
involuntary termination of employment, the Executive (or his Beneficiary) shall
be entitled to the full Supplemental Retirement Income Benefit set forth in
Exhibit A that the Executive would have received had the Executive continued
employment up through reaching his Benefit Eligibility Date, regardless of the
Executive’s actual age at termination of employment. Such benefit
shall commence within thirty (30) days following the Executive reaching his
Benefit Age and shall be payable in monthly installments throughout the Payout
Period. In the event the Executive dies prior to commencement or
completion of all such payments due and owing hereunder, the Bank shall pay to
the Executive’s Beneficiary a continuation of the monthly installments for the
remainder of the Payout Period.
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2.5
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Death During
Employment
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If the
Executive dies while employed by the Bank, the Executive’s Beneficiary shall be
entitled to the Survivor’s Benefit. The Survivor’s Benefit shall
commence within thirty (30) days after the Executive’s death and shall be
payable in monthly installments throughout the Payout Period.
SECTION
III
RETIREMENT
BENEFIT
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3.1
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(a) Normal form of
payment.
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If (i)
the Executive is employed with the Bank until reaching his Retirement Age, and
(ii) the Executive 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
Executive shall be entitled to the Supplemental Retirement Income
Benefit. Such benefit shall commence on the Executive’s Benefit
Eligibility Date and shall be payable in monthly installments throughout the
Payout Period. In the event the Executive dies at any time after
attaining his Benefit Age, but prior to completion of all the payments due and
owing hereunder, the Bank shall pay to the Executive’s Beneficiary a
continuation of the monthly installments for the remainder of the Payout
Period.
(b) Alternative payout
option.
If (i)
the Executive is employed with the Bank until reaching his Retirement Age, and
(ii) the Executive 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 amount represented by the Executive’s Accrued Benefit Account,
measured as of the Executive’s Benefit Age, shall be paid to the Executive in a
lump sum on his Benefit Eligibility Date. In the event the Executive
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 following the date of the Executive’s death.
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3.2
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Additional Death
Benefit - Burial Expense. In addition to the above-described
benefits, upon the Executive’s death, the Executive’s Beneficiary shall be
entitled to receive a one-time lump sum death benefit in the amount of Ten
Thousand Dollars ($10,000.00). This benefit shall be provided
specifically for the purpose of providing payment for burial and/or
funeral expenses of the Executive. Such benefit shall be payable within
thirty (30) days of the Executive’s death. The Executive’s
Beneficiary shall not be entitled to such benefit if the Executive is
removed for Cause prior to death. Notwithstanding anything in
this Section 3.2 to the contrary, if the Executive is also a participant
in any other Trustee Deferred Compensation Agreement or an Executive
Deferred Compensation Agreement under which an additional $10,000 death
benefit for burial expenses is being paid, no additional death benefit
shall be paid under this Section
3.2.
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SECTION
IV
PRE-RETIREMENT DEATH
BENEFIT
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4.1
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(a) Normal form of
payment.
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If (i)
the Executive dies while employed by the Bank, and (ii) the Executive 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 amount represented by the Executive’s Accrued Benefit Account,
measured as of the Executive’s death shall be annuitized (using the Interest
Factor) into monthly installments and shall be payable to the Executive’s
Beneficiary for the Payout Period. Such benefits shall commence
within thirty (30) days following the date of the Executive’s
death. The Executive’s Beneficiary may request to receive the
remainder of any unpaid monthly benefit payments due from the Accrued Benefit
Account in a lump sum payment. If a lump sum payment is requested by
the Beneficiary, the amount of such lump sum payment shall be equal to the
balance of the Executive’s Accrued Benefit Account. Payment in such
lump sum form shall be made only if the Executive’s Beneficiary (i) obtains
Board of Director approval, and (ii) notifies the Administrator in writing of
such election within ninety (90) days following the Executive’s
death. Such lump sum payment, if approved by the Board of Directors,
shall be payable within thirty (30) days following such Board of Director
approval.
(b) Alternative payout
option.
If (i)
the Executive dies while employed by the Bank, and (ii) the Executive 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 amount represented by the Executive’s Accrued Benefit Count,
measured as of (i) the Executive’s death, and (ii) shall be paid to the
Executive’s Beneficiary in a lump sum within thirty (30) days following the date
of the Executive’s death.
SECTION
V
RENDERING OF CONSULTING
SERVICES
Beginning
September 1, 1999, until the Executive reaches Benefit Age, the Executive shall
render such reasonable business consulting, advisory and public relations
services as the Association’s Board of Directors may call upon the Executive to
provide. In no event shall such service exceed thirty (30) service
days per year. The Bank shall provide Executive with advance notice
sufficient to Executive of its desire to have such service
provided. In rendering these services, the Executive shall not be
considered an employee of the Bank, but shall act in the capacity of an
independent contractor. The Executive shall not be required to
perform these services during reasonable vacation periods or any periods of
illness or disability. Furthermore, the Executive shall be reimbursed
for all expenses incurred in performing such services.
This
service requirement shall not apply if Executive’s entitlement is limited to the
balance represented by the Accrued Benefit Account, pursuant to Section
VI.
SECTION
VI
BENEFIT(S) IN THE EVENT OF
TERMINATION OF SERVICE
PRIOR TO RETIREMENT
AGE
If the
Executive voluntarily terminates employment with the Bank before reaching his
Benefit Age, other than a voluntary termination following a Change in Control in
accordance with Subsection 2.2 hereof or for the purpose of rendering Consulting
Services pursuant to Section V, Executive’s Supplemental Retirement Benefit
shall be limited to the balance represented by the Accrued Benefit Account
spread out and payable over the Payout Period. Such payment shall
commence on the date in which the Executive reaches his Benefit Age and be
payable over the Payout Period, provided, however, the in the event the
Executive is a Specified Employee, as defined in Treasury Regulation Section
1.409A-1(i), such Supplemental Retirement Income Benefit shall commence upon the
later of: (i) the first day of the seventh month following the executive’s
termination of employment or (ii) the date on which the Executive attains his
Benefit Age. For purposes of this Section VI, the Executive’s
termination of employment shall be construed to require a Separation from
Service as defined in Code Section 409A and the Treasury Regulations promulgated
thereunder, such that the Bank and Executive reasonably anticipate that the
level of bona fide services the Executive would perform after termination would
permanently decrease to a level that is less than 50% of the average level of
bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period.
SECTION
VII
DISABILITY
BENEFIT
If the
Executive’s service is terminated prior to Retirement Age due to a disability
which meets the criteria set forth below, the Executive shall receive the
Disability Benefit in lieu of the retirement benefit(s) available pursuant to
Section III (which is (are) not available prior to the Executive’s Benefit
Eligibility Date).
For
purposes of this Section “Disability” or “Disabled” shall mean the Executive:
(i) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months; (ii) is, by reason of any medically determinable physical or
mental impairment which 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 3 months under an accident
and health plan covering employees of the Executive’s employer; or (iii) is
determined to be totally disabled by the Social Security Administration. In any instance in which
it is determined that the Executive is Disabled, the Executive shall be entitled
to the following lump sum benefit(s). The lump sum benefit(s) to
which the Executive is entitled shall be the balance represented by the Accrued
Benefit Account. The benefit(s) shall be paid within thirty (30) days
following the date the Executive is determined to be
Disabled. In the event the Executive 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
Section 7 within thirty (30) days following the Executive’s death.
SECTION
VIII
BENEFICIARY
DESIGNATION
The
Executive 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 the
Administrator, 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
IX
NON-COMPETITION
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9.1
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Non-Competition During
Employment.
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In
consideration of the agreements of the Bank contained herein and of the payments
to be made by the Bank pursuant hereto, the Executive hereby agrees that, for as
long as he remains employed by the Bank, he will devote substantially all of his
time, skill, diligence and attention to the business of the Bank, and will not
actively engage, either directly or indirectly, in any business or other
activity which is, or may be deemed to be, in any way competitive with or
adverse to the best interests of the business of the Bank, unless the Executive
has the prior express written consent of the Bank.
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9.2
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Breach of
Non-Competition Clause.
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(a) Continued Employment
Following Breach.
In the
event (i) any material breach by the Executive of the agreements and covenants
described in Subsection 8.1 occurs, and (ii) the Executive continues employment
at the Bank following such breach, all benefits under this Agreement shall be
forfeited.
(b) Termination of Employment
Following Breach.
In the
event (i) any material breach by the Executive of the agreements and covenants
described in Subsection 9.2 occurs, and (ii) the Executive’s employment with the
Bank is terminated due to such breach, such termination shall be deemed to be
for Cause and the benefits under this Agreement shall be forfeited.
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9.3
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Non-Competition
Following Employment.
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Executive
further understands and agrees that, following Executive’s termination of
employment, the Bank’s obligation, if any, to make payments to the Executive
under this Agreement shall be conditioned on the Executive’s forbearance from
actively engaging, either directly or indirectly, in any business or other
activity which is, or may be deemed to be, in any way competitive with or
adverse to the best interests of the Bank, unless the Executive has the prior
written consent of the Bank. In the event of the Executive’s breach
of the covenants and agreements contained herein, further payments to the
Executive shall cease and be forfeited.
SECTION
X
EXECUTIVE’S RIGHT TO
ASSETS
The
rights of the Executive, any Beneficiary, or any other person claiming through
the Executive under this Agreement, shall be solely those of an unsecured
general creditor of the Bank. The Executive, the Beneficiary, or any
other person claiming through the Executive, shall only have the right to
receive from the Bank those payments or amounts so specified under this
Agreement. The Executive 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 Executive or his Beneficiaries, unless such asset is
contained in the rabbi trust described in Section XIII 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
XI
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. The Executive, 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 Executive 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 Executive, then the Executive
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
XII
ACT
PROVISIONS
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12.1
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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.
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12.2
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Claims Procedure and
Arbitration. In the event that benefits under this Agreement are
not paid to the Executive (or to his Beneficiary in the case of the
Executive’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.
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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 Agreement and the Joinder 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
(“AAA”) (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.
SECTION
XIII
MISCELLANEOUS
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13.1
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No Effect on
Employment Rights. Nothing contained herein will confer upon the
Executive 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 Executive
without regard to the existence of the
Agreement.
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13.2
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State Law. The
Agreement is established under, and will be construed according to, the
laws of the state of New York, to the extent such laws are not preempted
by the Act and valid regulations published
thereunder.
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13.3
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Severability.
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: (i) insofar as is reasonable, effect will be given to
the intent manifested in the provisions held invalid or inoperative, and
(ii) the validity and enforceability of the remaining provisions will not
be affected thereby.
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13.4
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Incapacity of
Recipient. In the event the Executive 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
Executive is entitled shall be paid to such conservator or other person
legally charged with the care of his person or
Estate.
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13.5
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Unclaimed
Benefit. The Executive 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 Executive 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 Executive’s benefit
payment(s) until the location of the Executive is made known to the Bank;
however, the Bank shall only be obligated to hold such benefit payment(s)
for the Executive until the expiration of thirty-six (36)
months. Upon expiration of the thirty-six (36) month period,
the Bank may discharge its obligation by payment to the Executive’s
Beneficiary. If the location of the Executive’s Beneficiary is
not made known to the Bank by the end of an additional two (2) month
period following expiration of the thirty-six (36) month period, the Bank
may discharge its obligation by payment to the Executive’s
Estate. If there is no Estate in existence at such time or if
such fact cannot be determined by the Bank, the Executive and his
Beneficiary(ies) shall thereupon forfeit any rights provided for such
Executive and/or Beneficiary under this
Agreement.
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13.6
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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
Executive or any other person for any claim, loss, liability or expense
incurred in connection with the
Agreement.
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13.7
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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.
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13.8
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Effect on Other
Corporate Benefit Agreements. Nothing contained in this Agreement
shall affect the right of the Executive 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.
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13.9
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Suicide.
Notwithstanding anything to the contrary in this Agreement, if the
Executive’s death results from suicide, whether sane or insane, within
twenty-six (26) months after execution of this Agreement, all benefits
under this Agreement shall be forfeited, and this Agreement shall become
null and void.
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13.10
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Inurement. This
Agreement shall be binding upon and shall inure to the benefit of the
Bank, its successors and assigns, and the Executive, his successors,
heirs, executors, administrators, and
Beneficiaries.
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13.11
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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.
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13.12
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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.
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13.13
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Tax Withholding and
Code Section 409A Taxes. Any distribution under this
Agreement shall be reduced by the amount of any taxes required to be
withheld from such distribution. This Agreement shall permit
the acceleration of the time or schedule of a payment to pay employment
related taxes as permitted under Treasury Regulation Section 1.409A-3(j)
or to pay any taxes that may become due at any time that the arrangement
fails to meet the requirements of Code Section 409A and the regulations
and other guidance promulgated thereunder. In the latter case,
such payments 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.
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13.14
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Acceleration of
Payments. Except as specifically permitted herein or in other
sections of this Agreement, no acceleration of the time or schedule of any
payment may be made hereunder. Notwithstanding the foregoing,
payments may be accelerated hereunder by the Bank, in accordance with the
provisions of Treasury Regulation Section 1.409A-3(j)(4) and any
subsequent guidance issued by the United States Treasury
Department. Accordingly, payments may be accelerated, in
accordance with requirements and conditions of the Treasury Regulations
(or subsequent guidance) in the following circumstances: (i) as a result
of certain domestic relations orders; (ii) in compliance with ethics
agreements with the Federal government; (iii) in compliance with ethics
laws or conflicts of interest laws; (iv) in limited cash-outs (but not in
excess of the limit under Code Section 402(g)(1)(B)); (v) in the case of
certain distributions to avoid a non-allocation year under Code Section
409(p); (vi) to apply certain offsets in satisfaction of a debt of the
Executive to the Bank; (vii) in satisfaction of certain bona fide disputes
between the Executive and the Bank; or (viii) for any other purpose set
forth in the Treasury Regulations and subsequent
guidance.
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SECTION
XIV
ESTABLISHMENT OF 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 the agreement which establishes
such rabbi trust, until the contributed assets are paid to the Executive 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 contributions to
the rabbi trust shall provide the Bank with a source of funds to assist it in
meeting the liabilities of this Agreement. The rabbi trust and any
assets held therein shall conform to the terms of the rabbi trust agreement
which has been established in conjunction with the Agreement. To the
extent the language in this Agreement is modified by the language in the rabbi
trust agreement, the rabbi trust agreement shall supersede this
Agreement. Any contributions to the rabbi trust shall be made during
each Plan Year in accordance with the rabbi trust agreement. The
amount of such contribution(s) shall be equal to the full present value of all
benefit accruals under this Agreement, if any, less: (i) previous contributions
made on behalf of the Executive to the rabbi trust, and (ii) earnings to date on
all such previous contributions.
SECTION
XV
AMENDMENT/
TERMINATION
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15.1
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Amendment. This
Agreement shall not be amended, modified or terminated at any time, in
whole or part, without the mutual written consent of the Executive and the
Bank, and such mutual consent shall be required even if the Executive is
no longer employed by the Bank.
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15.2
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Complete
Termination. Subject to the requirements of Code Section
409A, in the event of complete termination of the Agreement, the Agreement
shall cease to operate and the Bank shall pay out to the Executive his
benefit as set forth below. Such complete termination of the
Agreement shall occur only under the following circumstances and
conditions:
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(a)
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The
Bank may terminate the Agreement within twelve (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 Executive’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.
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(b)
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The
Bank may terminate the Agreement within the thirty (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
Executive and all executives under substantially similar arrangements are
required to receive all amounts of compensation deferred under the
terminated arrangements within twelve (12) months of the date of the
termination of the arrangements. For these purposes, “Change in
Control” shall be defined in accordance with the Treasury Regulations
under Code Section 409A.
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(c)
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The
Bank may terminate the Agreement provided that: (i) the termination and
liquidation does not occur proximate to a downturn in the financial health
of the Bank; (ii) all arrangements sponsored by the Bank that would be
aggregated with this Agreement under Treasury Regulations Section
1.409A-1(c) if the Executive covered by this Agreement was also covered by
any of those other arrangements are also terminated; (iii) no payments
other than payments that would be payable under the terms of the
arrangement if the termination had not occurred are made within twelve
(12) months of the termination of the arrangement; (iv) all payments are
made within twenty-four (24) months of the termination of the
arrangements; and (v) the Bank does not adopt a new arrangement that would
be aggregated with any terminated arrangement under Treasury Regulations
Section 1.409A-1(c) if the Executive participated in both arrangements, at
any time within three years following the date of termination of the
arrangement.
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SECTION
XVI
EXECUTION
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16.1
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This
Agreement sets 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.
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16.2
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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.
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[Remainder
of page intentionally left blank]
IN WITNESS WHEREOF, the Bank
and the Executive have caused this Agreement to be executed on the day and date
first above written.
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PATHFINDER
BANK:
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By:
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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12/23/08
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President
and CEO
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DATE
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(Title)
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:
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EXECUTIVE:
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12/23/08
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇
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DATE
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FOR
▇▇▇▇▇ ▇. ▇▇▇▇▇
CONDITIONS,
ASSUMPTIONS, AND SCHEDULE OF BENEFITS
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1.
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The
Interest Factor for purposes of the Accrued Benefit Account shall be eight
percent (8%) per annum, compounded
monthly.
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2.
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Benefit
Age shall be seventy (70).
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3.
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Supplemental
Retirement Income Benefit means an actuarially determined annual amount
equal to Sixty Thousand Six Hundred and Eight-Six Dollars ($60,686) at age
70.
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4.
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The
annual “Survivor’s Benefit” shall be $60,686.00,
subject to Subsection 2.5.
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Receipt
of the Supplemental Retirement Income Benefit (or the Survivor’s Benefit) shall
be subject to all provisions of this Agreement.
AMENDED
AND RESTATED
EXECUTIVE
SUPPLEMENTAL RETIREMENT
INCOME
AGREEMENT
BENEFICIARY
DESIGNATION
The
Executive, under the teams of the Amended and Restated Executive Supplemental
Retirement Income Agreement executed by the Bank, dated the 1st day of January,
2005, hereby designates the following Beneficiary(ies) to receive any guaranteed
payments or death benefits under such Agreement, following his
death:
PRIMARY
BENEFICIARY: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
SECONDARY
BENEFICIARY: Anastasia, Charles, Gregory, ▇▇▇▇ per
stirpes
This
Beneficiary Designation hereby revokes any prior Beneficiary Designation which
may have been in effect.
Such
Beneficiary Designation is revocable.
DATE:
December 23, 2008
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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/a/
▇▇▇▇▇ ▇. ▇▇▇▇▇
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(WITNESS)
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EXECUTIVE
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/s/
▇▇▇▇▇ ▇▇▇▇
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(WITNESS)
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AMENDED
AND RESTATED
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 on or before December 31,
2008. You may not use this election
form to change your form of your benefit with respect to payments that are
scheduled to be made to you in 2008, or otherwise cause payments to be made to
you in 2008.
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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.
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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.
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Executive
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Date
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Acknowledged
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By:
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Title:
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Date
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________________________________________
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