UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 20, 2005
WESTFIELD FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 001-16767 73-1627673
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
141 Elm Street
Westfield, MA 01085
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (413) 568-1911
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement
On December 20, 2005, the Board of Directors of Westfield Financial,
Inc. and Westfield Bank (collectively, the "Board") amended and restated
the Westfield Bank Directors' Deferred Compensation Plan, the Benefit
Restoration Plan of Westfield Financial, Inc., and the Deferred
Compensation Agreement maintained by Westfield Bank for the benefit of
Donald A. Williams in order to comply with section 409A of the Internal
Revenue Code of 1986 and regulations or other guidance of the Internal
Revenue Service published thereunder (collectively, "Section 409A").
Section 409A requires certain IRS restrictions on payment timing to
participants under these plans and the circumstances under which elections
to defer compensation or receive distributions of deferred compensation may
be made. These plans as amended and restated to conform to the
requirements of Section 409A are attached hereto as Exhibits 10.7, 10.2,
and 10.10, respectively.
Directors' Deferred Compensation. Westfield Bank has established the Westfield Bank Directors' Deferred Compensation Plan for the benefit of non-employee directors. Under the Deferred Compensation Plan, each non- employee director may make an annual election to defer receipt of all or a portion of his or her director fees received from Westfield Financial and Westfield Bank. The deferred amounts are allocated to a deferral account and credited with interest at an annual rate equal to the rate on the highest yielding certificate of deposit issued by Westfield Bank during the year or according to the investment return of other assets as may be selected by the Compensation Committee of Westfield Bank. The Deferred Compensation Plan is an unfunded, non-qualified plan that provides for distribution of the amounts deferred to participants or their designated beneficiaries upon the occurrence of certain events such as death, retirement, termination of service, disability or a change in control of Westfield Financial, Inc. or Westfield Bank (as those terms are defined in the Deferred Compensation Plan as required by Section 409A).
Benefit Restoration Plan. Westfield Financial, Inc. has also established the Benefit Restoration Plan of Westfield Financial, Inc. in order to provide restorative payments to executives who are prevented from receiving the full benefits contemplated by the ESOP's benefit formula as well as the 401(k) Plan's benefit formula. The restorative payments consist of payments in lieu of shares that cannot be allocated to participants under the ESOP due to the legal limitations imposed on tax-qualified plans and, in the case of participants who retire before the repayment in full of the ESOP's loan, payments in lieu of the shares that would have been allocated if employment had continued through the full term of the loan. The restorative payments also consist of amounts unable to be provided under the 401(k) Plan due to certain legal limitations imposed on tax- qualified plans.
Deferred Compensation Agreements. Westfield Bank has also entered into a deferred compensation agreement with Donald A. Williams. Under this agreement, the executive is guaranteed a payment of an amount equal to what is required to make monthly payments equal to 70% of his monthly salary after retirement for the remainder of the executive's life or 240 months, whichever is greater, with offsets for the payments received from the defined benefit pension plan and Social Security payments attributable to contributions made by Westfield Bank. This payment amount is payable after retirement in the form of a single lump sum payment rather than monthly payments for the longer of (i) Mr. Williams' life or (ii) 240 months. This agreement also provide for payments upon the death or disability of the
executive that are equal in amount to the payments that would have been payable to the executive upon retirement with such payments being made for a period of 120 months.
Item 9.01 Financial Statements and Exhibits
The following exhibits are furnished with this report:
Exhibit No. Description
----------- -----------
10.2 Amended and Restated Benefit Restoration Plan of Westfield
Financial, Inc.
10.7 Amended and Restated Directors' Deferred Compensation Plan
10.10 Form of Amended and Restated Deferred Compensation
Agreement with Donald A. Williams
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WESTFIELD FINANCIAL, INC.
By: /s/ Donald A. Williams
--------------------------------
Name: Donald A. Williams
Title: Chairman of the Board and
Chief Executive Officer
Date: December 21, 2005
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
10.2 Amended and Restated Benefit Restoration Plan of Westfield
Financial, Inc.
10.7 Amended and Restated Directors' Deferred Compensation Plan
10.10 Form of Amended and Restated Deferred Compensation
Agreement with Donald A. Williams
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Exhibit 10.2
BENEFIT RESTORATION PLAN
OF
WESTFIELD FINANCIAL, INC.
Amended and Restated Effective as of December 20, 2005
Table of Contents
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Page
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Article I
Definitions
Section 1.1 Affiliated Employer 1
Section 1.2 Applicable Limitation 1
Section 1.3 Bank 1
Section 1.4 Beneficiary 1
Section 1.5 Board 2
Section 1.6 Code 2
Section 1.7 Committee 2
Section 1.8 Company 2
Section 1.9 Eligible Employee 2
Section 1.10 Employee 2
Section 1.11 Employer 2
Section 1.12 Employer Contributions 2
Section 1.13 ERISA 2
Section 1.14 ESOP 2
Section 1.15 Exchange Act 2
Section 1.16 Fair Market Value of a Share 2
Section 1.17 Former Participant 3
Section 1.18 Savings Plan 3
Section 1.19 Participant 3
Section 1.20 Plan 3
Section 1.21 Share 3
Section 1.22 Stock Unit 3
Section 1.23 Termination of Service 3
Article II
Participation
Section 2.1 Eligibility for Participation. 3
Section 2.2 Commencement of Participation. 4
Section 2.3 Termination of Participation. 4
Article III
Benefits to Participants
Section 3.1 Supplemental Savings Benefit. 4
Section 3.2 Supplemental ESOP Benefits. 5
Section 3.3 Restored ESOP Benefits. 7
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Table of Contents
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(continued)
Page
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Article IV
Death Benefits
Section 4.1 Supplemental Savings Plan Death Benefits. 8
Section 4.2 Supplemental ESOP Death Benefits. 8
Section 4.3 Restored ESOP Death Benefits. 8
Section 4.4 Beneficiaries. 8
Article V
Trust Fund
Section 5.1 Establishment of Trust. 9
Section 5.2 Contributions to Trust. 9
Section 5.3 Unfunded Character of Plan. 9
Article VI
Administration
Section 6.1 The Committee. 10
Section 6.2 Liability of Committee Members and their Delegates 10
Section 6.3 Plan Expenses 11
Section 6.4 Facility of Payment. 11
Article VII
Amendment and Termination
Section 7.1 Amendment by the Company. 11
Section 7.2 Termination. 12
Section 7.3 Amendment or Termination by Other Employers. 12
Article VIII
Miscellaneous Provisions
Section 8.1 Construction and Language. 12
Section 8.2 Headings. 12
Section 8.3 Non-Alienation of Benefits. 12
Section 8.4 Indemnification. 13
Section 8.5 Severability. 13
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Table of Contents
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(continued)
Page
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Section 8.6 Waiver. 13
Section 8.7 Governing Law. 13
Section 8.8 Taxes. 13
Section 8.9 No Deposit Account. 14
Section 8.10 No Right to Continued Employment. 14
Section 8.11 Status of Plan Under ERISA. 14
Section 8.12 Restrictions on Payments to Key Employees. 14
Section 8.13 Compliance with Section 409A of the Code. 14
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BENEFIT RESTORATION PLAN
OF
WESTFIELD FINANCIAL, INC.
ARTICLE I
DEFINITIONS
Wherever appropriate to the purposes of the Plan, capitalized terms shall have the meanings assigned to them under the Savings Plan or ESOP, as applicable; provided, however, that the following special definitions shall apply for purposes of the Plan, unless a different meaning is clearly indicated by the context:
Section 1.1 Affiliated Employer means any corporation which is a member of a controlled group of corporations (as defined in section 414(b) of the Code) that includes the Company; any trade or business (whether or not incorporated) that is under common control (as defined in section 414(c) of the Code) with the Company; any organization (whether or not incorporated) that is a member of an affiliated service group (as defined in section 414(m) of the Code) that includes the Company; any leasing organization (as defined in section 414(n) of the Code) to the extent that any of its employees are required pursuant to section 414(n) of the Code to be treated as employees of the Company; and any other entity that is required to be aggregated with the Company pursuant to regulations under section 414(o) of the Code.
Section 1.2 Applicable Limitation means any of the following: (a) the limitation on annual compensation that may be recognized under a tax- qualified plan for benefit computation purposes pursuant to section 401(a)(17) of the Code; (b) the maximum limitation on annual additions to a tax-qualified defined contribution plan pursuant to section 415(c) of the Code; (c) the maximum limitation on aggregate annual benefits and annual additions under a combination of tax-qualified defined benefit and defined contribution plans maintained by a single employer pursuant to section 415(e) of the Code; (d) the maximum limitation on annual elective deferrals to a qualified cash or deferred arrangement pursuant to section 402(g) of the Code; (e) the annual limitation on elective deferrals under a qualified cash or deferred arrangement by highly compensated employees pursuant to section 401(k) of the Code; and (f) the annual limitation on voluntary employee contributions by, and employer matching contributions for, highly compensated employees pursuant to section 401(m) of the Code.
Section 1.3 Bank means Westfield Bank and its successors or assigns.
Section 1.4 Beneficiary means any person, other than a Participant or Former Participant, who is determined to be entitled to benefits under the terms of the Plan.
Section 1.5 Board means the Board of Directors of Company.
Section 1.6 Code means the Internal Revenue Code of 1986 (including the corresponding provisions of any prior law or succeeding law).
Section 1.7 Committee means the Compensation Committee of the Board of Directors of the Company, or such other person, committee or other entity as shall be designated by or on behalf of the Board to perform the duties set forth in Article VI.
Section 1.8 Company means Westfield Financial, Inc., a Massachusetts corporation, and any successor thereto.
Section 1.9 Eligible Employee means an Employee who is eligible for participation in the Plan in accordance with the provisions of Article II.
Section 1.10 Employee means any person, including an officer, who is employed by the Employer.
Section 1.11 Employer means the Bank and any successor thereto and the Company and any successor thereto and any Affiliated Employer which, with the prior written approval of the Board of Directors of the Bank and subject to such terms and conditions as may be imposed by the Board, shall adopt this Plan.
Section 1.12 Employer Contributions means contributions (other than pursuant to a compensation reduction agreement) by any Employer to the Savings Plan or the ESOP.
Section 1.13 ERISA means the Employee Retirement Income Security Act of l974, as amended from time to time (including the corresponding provisions of any succeeding law).
Section 1.14 ESOP means the Employee Stock Ownership Plan of Westfield Financial, Inc., as amended from time to time (including the corresponding provisions of any successor qualified employee stock ownership plan adopted by the Company).
Section 1.15 Exchange Act means the Securities Exchange Act of 1934, as amended from time to time (including the corresponding provisions of any succeeding law).
Section 1.16 Fair Market Value of a Share means, with respect to a Share on a specified date:
(a) the final reported sales price on the date in question (or if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) as reported in the principal consolidated reporting system with respect to securities listed or admitted to trading on the principal United States securities exchange on which the Shares are listed or admitted to trading; or
(b) if the Shares are not listed or admitted to trading on any such exchange, the closing bid quotation with respect to a Share on such date on the National Association of Securities Dealers Automated Quotations System, or, if no such quotation is provided, on another similar system, selected by the Committee, then in use; or
(c) if sections 1.16(a) and (b) are not applicable, the fair market value of a Share as the Committee may determine.
Section 1.17 Former Participant means a person whose participation in the Plan has terminated as provided under section 2.3.
Section 1.18 Savings Plan means the tax-qualified 401(k) plan maintained by the Company or the Bank from time to time.
Section 1.19 Participant means any person who is participating in the Plan in accordance with its terms.
Section 1.20 Plan means the Benefit Restoration Plan of Westfield Financial, Inc. as amended from time to time (including the corresponding provisions of any successor plan adopted by the Company).
Section 1.21 Share means a share of common stock, par value $.01 per share, of Westfield Financial, Inc.
Section 1.22 Stock Unit means a right to receive a payment under the Plan in an amount equal, on the date as of which such payment is valued, to the Fair Market Value of a Share.
Section 1.23 Termination of Service means an Employee's separation from service with all Employers as an Employee, whether by resignation, discharge, death, disability, retirement or otherwise.
ARTICLE II
PARTICIPATION
Section 2.1 Eligibility for Participation.
Only Eligible Employees may become Participants. An Employee shall become an Eligible Employee if:
(a) he has been designated an Eligible Employee by resolution of the Board; and
(b) he is a participant in the Savings Plan or the ESOP, or any combination thereof, and the benefits to which he is entitled thereunder are limited by one or more of the Applicable Limitations;
provided, however, that no person shall be named an Eligible Employee, nor shall any person who has been an Eligible Employee continue as an Eligible Employee, to the extent that such person's participation, or continued participation, in the Plan would cause the Plan to fail to be considered maintained for the primary purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of ERISA.
Section 2.2 Commencement of Participation.
An Employee shall become a Participant on the date when he first becomes an Eligible Employee, unless the Committee shall, by resolution, establish an earlier or later effective date of participation for a Participant.
Section 2.3 Termination of Participation.
Participation in the Plan shall cease on the earlier of (a) the date of the Participant's Termination of Service or (b) the date on which he ceases to be an Eligible Employee.
ARTICLE III
BENEFITS TO PARTICIPANTS
Section 3.1 Supplemental Savings Benefit.
(a) A Participant whose benefits under the Savings Plan are limited by one or more of the Applicable Limitations shall be eligible for a supplemental savings benefit under this Plan in an amount equal to:
(i) the aggregate amount of Employer Contributions (including any reallocation of amounts forfeited upon the termination of employment of others participating in the Savings Plan) that would have been credited to the Participant's account under the Savings Plan in the absence of the Applicable Limitations if for all relevant periods he had made the maximum amount of elective deferrals, within the meaning of section 402(g)(3) of the Code, or voluntary employee contributions, within the meaning of section 401(a) of the Code, required to qualify for the maximum possible allocation of Employer Contributions (and without regard to the amount of elective deferrals or voluntary employee contributions actually made); over
(ii) the aggregate amount of Employer Contributions (including any reallocation of amounts forfeited upon the termination of employment of others participating in the Savings Plan) actually credited to the Participant's account under the Savings Plan for such periods;
adjusted for earnings and losses as provided in section 3.1(b); provided, however, that if the Participant dies before the payment of such supplemental savings benefit begins, no benefit shall be payable under this section 3.1 and the survivor benefit, if any, which may be payable shall be determined under section 4.1.
(b) The Committee shall cause to be maintained a bookkeeping account to reflect all Employer Contributions (including any reallocation of amounts forfeited upon the termination of employment of others participating in the Savings Plan) that cannot be made to a Participant's account under the Savings Plan due to the Applicable Limitations and shall cause such bookkeeping account to be credited with all such Employer Contributions as of the date on which such Employer Contributions would have been credited to the Participant's account in the Savings Plan in the absence of the Applicable Limitations. The balance credited to such bookkeeping account shall be adjusted for earnings or losses as follows:
(i) except as provided in section 3.1(b)(ii), the balance credited to such bookkeeping account shall be credited with interest as of the last day of each calendar month at a rate for such month equal to one-twelfth of the annual interest rate prescribed by the Commissioner of Internal Revenue for such month pursuant to section 417(e) of the Code; or
(ii) if and to the extent permitted by the Committee, as though such Employer Contributions had been contributed to a trust fund and invested, for the benefit of the Participant, in such investments at such time or times as the Participant shall have designated in such form and manner as the Committee shall prescribe.
(c) The supplemental savings benefit payable to a Participant hereunder shall be paid in a single lump sum on, or as soon as practicable following, the Participant's Termination of Service and shall be equal to the balance credited to his bookkeeping account as of the last day of the last calendar month to end prior to the date of payment. Notwithstanding the foregoing, a Participant may specify that such supplemental savings benefit be paid in a different form or commencing at a different time by filing a written election, in such form and manner as the Committee may prescribe; provided, however, that no such election or change made thereto shall take effect until twelve (12) months after it is received by the Committee and the first payment made under such election shall not occur until at least five (5) years later than such payment would otherwise have been made.
Section 3.2 Supplemental ESOP Benefits.
(a) A Participant whose benefits under the ESOP are limited by one or more of the Applicable Limitations shall be eligible for a supplemental ESOP benefit under this Plan in an amount equal to the sum of:
(i) a number of Stock Units equal to the excess (if any) of (A) the aggregate number of Shares (including any reallocation of Shares forfeited upon the termination of employment of others participating in the ESOP) that would have been credited to the Participant's account under the ESOP in the absence of the Applicable Limitations over (B) the number of Shares actually credited to his account under the ESOP; plus
(ii) if and to the extent that Employer Contributions to the ESOP result in allocations to the Participant's account of assets other than Shares, an amount equal to the excess (if any) of (A) the aggregate amount of Employer Contributions (including any
reallocation of amounts forfeited upon the termination of employment of others participating in the ESOP) that would have been credited to the Participant's account under the ESOP in the absence of the Applicable Limitations over (B) the aggregate amount of Employer Contributions (including any reallocation of amounts forfeited upon the termination of employment of others participating in the ESOP) actually credited to the Participant's account under the ESOP;
adjusted for earnings and losses as provided section 3.2(b); provided, however, that if the Participant dies before the payment of such supplemental ESOP benefit begins, no benefit shall be payable under this section 3.2 and the survivor benefit, if any, which may be payable shall be determined under section 4.2.
(b) The Committee shall cause to be maintained a bookkeeping account to reflect all Shares and Employer Contributions (including any reallocation of amounts forfeited upon the termination of employment of others participating in the ESOP) that cannot be allocated to a Participant's account under the ESOP due to the Applicable Limitations and shall cause such bookkeeping account to be credited with such Employer Contributions and Stock Units reflecting such Shares as of the date on which such Employer Contributions and Shares, respectively, would have been credited to the Participant's account in the ESOP in the absence of the Applicable Limitations. The balance credited to such bookkeeping account shall be adjusted for earnings or losses as follows:
(i) all Stock Units shall be adjusted from time to time so that the value of a Stock Unit on any date is equal to the Fair Market Value of a Share on such date, and the number of Stock Units shall be adjusted as and when appropriate to reflect any stock dividend, stock split, reverse stock split, exchange, conversion, or other event generally affecting the number of Shares held by all holders of Shares; and
(ii) (A) except as provided in section 3.2(b)(ii)(B), the balance credited to such bookkeeping account that does not consist of Stock Units shall be credited with interest as of the last day of each calendar month at a rate for such month equal to one-twelfth of the annual interest rate prescribed by the Commissioner of Internal Revenue for such month pursuant to section 417(e) of the Code; or
(B) if and to the extent permitted by the Committee, the balance credited to such bookkeeping account that does not consist of Stock Units shall be adjusted as though such Employer Contributions had been contributed to a trust fund and invested, for the benefit of the Participant, in such investments at such time or times as the Participant shall have designated in such form and manner as the Committee shall prescribe;
provided, however, that to the extent that the Participant shall receive on a current basis any dividend paid with respect to Shares credited to his account under the ESOP, the bookkeeping account established for him under this Plan shall not be adjusted to reflect such dividend and, instead, the Participant shall be paid an amount per Stock Unit equal to the dividend per Share received by the Participant under the ESOP, at substantially the same time as such dividend is paid under the ESOP.
(c) The supplemental ESOP benefit payable to a Participant hereunder shall be paid in a single lump sum cash payment on, or as soon as practicable following, the Participant's Termination of Service and shall be in an amount equal to the balance credited to his bookkeeping account. Notwithstanding the foregoing, a Participant may specify that such supplemental ESOP benefit be paid in a different form or commencing at a different time by filing a written election, in such form and manner as the Committee may prescribe; provided, however, that no such election or change made thereto shall take effect until twelve (12) months after it is received by the Committee and the first payment made under such election shall not occur until at least five (5) years later than such payment would otherwise have been made.
Section 3.3 Restored ESOP Benefits.
(a) A Participant who satisfies section 2.1 shall be entitled to, upon his Termination of Service upon or after attaining age 55, an unfunded, unsecured promise from the Company to receive an amount determined by:
(i) projecting the total number of Shares that would have been allocated to the Participant's account under the terms of the ESOP (without regard to the Applicable Limitations) had the Participant continued in the employ of the Bank until the ESOP loan was repaid in full and the final allocation of Shares acquired when the ESOP loan was made occurred; and then
(ii) multiplying the number of Shares determined in section 3.3(a)(i) above by the average of the closing prices of such Shares at the end of each fiscal quarter during the four fiscal quarters immediately preceding (or such fewer quarters as the Participant has been a Participant) the Participant's Termination of Service.
(b) The projection of Shares required by section 3.3(a)(i) above shall be performed by a public accountant or other third party selected by the Committee based on assumptions which the Committee has approved as reasonable at the time the calculation of the benefit payable to the Participant is performed.
(c) The restored ESOP benefit payable to a Participant hereunder shall be paid in a single lump sum cash payment on, or as soon as practicable following, the Participant's Termination of Service and shall be in an amount determined pursuant to section 3.3(a) above. Notwithstanding the foregoing, a Participant may specify that such restored ESOP benefit be paid in a different form or commencing at a different time by filing a written election, in such form and manner as the Committee may prescribe; provided, however, that no such election or change made thereto shall take effect until twelve (12) months after it is received by the Committee and the first payment made under such election shall not occur until at least five (5) years later than such payment would otherwise have been made.
ARTICLE IV
DEATH BENEFITS
Section 4.1 Supplemental Savings Plan Death Benefits.
If a Participant who is eligible for a supplemental savings benefit under section 3.1 dies before the payment of such benefit begins, a supplemental savings benefit shall be payable to the Participant's Beneficiary under this Plan in amount equal to the balance credited to the bookkeeping account established for the Participant under section 3.1(b). Such benefit shall be paid in a single lump sum payment as soon as practicable following the death of the Participant and the bookkeeping account established for such Participant pursuant to section 3.1(b) shall continue to be adjusted as provided therein through the last day of the last calendar month to end prior to the date of payment.
Section 4.2 Supplemental ESOP Death Benefits.
If a Participant who is eligible for a supplemental ESOP benefit under section 3.2 dies before the payment of such benefit begins, a supplemental ESOP benefit shall be payable to the Participant's Beneficiary under this Plan in amount equal to the balance credited to the bookkeeping account established for the Participant under section 3.2(b). Such benefit shall be paid in a single lump sum payment as soon as practicable following the death of the Participant, and the bookkeeping account established for such Participant pursuant to section 3.2(b) shall continue to be adjusted as provided therein through the last day of the last calendar month to end prior to the date of payment.
Section 4.3 Restored ESOP Death Benefits.
If a Participant who is eligible for a restored ESOP benefit under section 3.3 (or would be eligible for such a benefit if he terminated employment) dies before the payment of such benefit begins, a restored ESOP benefit shall be payable to the Participant's Beneficiary under this Plan in amount determined pursuant to section 3.3(b). Such benefit shall be paid in a single lump sum payment as soon as practicable following the death of the Participant.
Section 4.4 Beneficiaries.
A Participant or Former Participant may designate a Beneficiary or Beneficiaries to receive any death benefits payable under the Plan upon his death. Any such designation, or change therein or revocation thereof, shall be made in writing in the form and manner prescribed by the Committee, shall be revocable until the death of the Participant, and shall thereafter be irrevocable; provided, however, that any change or revocation shall be effective only if received by the Committee prior to the Participant's or Former Participant's death. If a Participant or Former Participant shall die without having effectively named a Beneficiary, he shall be deemed to have named his estate as his sole Beneficiary. If a Participant or Former Participant and his designated Beneficiary shall die in circumstances which give rise to doubt as to which of them shall have been the first to die, the Participant or Former Participant shall be deemed to have survived the Beneficiary. If a Participant or Former Participant designates more than one
Beneficiary, all shall be deemed to have equal shares unless the Participant or Former Participant shall expressly provide otherwise.
ARTICLE V
TRUST FUND
Section 5.1 Establishment of Trust.
The Company may establish a trust fund which may be used to accumulate funds to satisfy benefit liabilities to Participants, Former Participants and their Beneficiaries under the Plan; provided, however, that the assets of such trust shall be subject to the claims of the creditors of the Company in the event that it is determined that the Company is insolvent; and provided, further, that the trust agreement shall contain such terms, conditions and provisions as shall be necessary to cause the Company to be considered the owner of the trust fund for federal, state or local income tax purposes with respect to all amounts contributed to the trust fund or any income attributable to the investments of the trust fund. The Company shall pay all costs and expenses incurred in establishing and maintaining such trust. Any payments made to a Participant, Former Participant or Beneficiary from a trust established under this section 5.1 shall offset payments which would otherwise be payable by the Company in the absence of the establishment of such trust. Any such trust will conform to the terms of the model trust described in Revenue Procedure 92-64, as the same may be modified from time to time.
Section 5.2 Contributions to Trust.
If a trust is established in accordance with section 5.1, the Company shall make contributions to such trust in such amounts and at such times as may be specified by the Committee or as may be required pursuant to the terms of the agreement governing the establishment and operation of such trust.
Section 5.3 Unfunded Character of Plan.
Notwithstanding the establishment of a trust pursuant to section, the Plan shall be unfunded for purposes of the Code and ERISA. Any liability of the Bank, the Company or another Employer to any person with respect to benefits payable under the Plan shall be based solely upon such contractual obligations, if any, as shall be created by the Plan, and shall give rise only to a claim against the general assets of the Bank, the Company or such Employer. No such liability shall be deemed to be secured by any pledge or any other encumbrance on any specific property of the Bank, the Company or any other Employer.
ARTICLE VI
ADMINISTRATION
Section 6.1 The Committee.
Except for the functions reserved to the Bank or the Board, the administration of the Plan shall be the responsibility of the Committee. The Committee shall have the power and the duty to take all actions and to make all decisions necessary or proper to carry out the Plan. The determination of the Committee as to any question involving the general administration and interpretation of the Plan shall be final, conclusive and binding. Any discretionary actions to be taken under the Plan by the Committee shall be uniform in their nature and applicable to all persons similarly situated. Without limiting the generality of the foregoing, the Committee shall have the following powers:
(a) to furnish to all Participants, upon request, copies of the Plan and to require any person to furnish such information as it may request for the purpose of the proper administration of the Plan as a condition to receiving any benefits under the Plan;
(b) to make and enforce such rules and regulations and prescribe the use of such forms as it shall deem necessary for the efficient administration of the Plan;
(c) to interpret the Plan, and to resolve ambiguities, inconsistencies and omissions, and the determinations of the Committee in respect thereof shall be binding, final and conclusive upon all interested parties;
(d) to decide on questions concerning the Plan in accordance with the provisions of the Plan;
(e) to determine the amount of benefits which shall be payable to any person in accordance with the provisions of the Plan, to hear and decide claims for benefits, and to provide a full and fair review to any Participant whose claim for benefits has been denied in whole or in part;
(f) to designate a person, who may or may not be a member of the Committee, as "plan administrator" for purposes of the ERISA;
(g) to allocate any such powers and duties to or among individual members of the Committee; and
(h) the power to designate persons other than Committee members to carry out any duty or power which would otherwise be a responsibility of the Committee or Administrator, under the terms of the Plan.
Section 6.2 Liability of Committee Members and their Delegates
To the extent permitted by law, the Committee and any person to whom it may delegate any duty or power in connection with administering the Plan, the Bank, the Company,
any Employer, and the officers and directors thereof, shall be entitled to rely conclusively upon, and shall be fully protected in any action taken or suffered by them in good faith in the reliance upon, any actuary, counsel, accountant, other specialist, or other person selected by the Committee, or in reliance upon any tables, valuations, certificates, opinions or reports which shall be furnished by any of them. Further, to the extent permitted by law, no member of the Committee, nor the Bank, the Company, any Employer, nor the officers or directors thereof, shall be liable for any neglect, omission or wrongdoing of any other members of the Committee, agent, officer or employee of the Bank, the Company or any Employer. Any person claiming benefits under the Plan shall look solely to the Employer for redress.
Section 6.3 Plan Expenses
All expenses that shall arise in connection with the administration of the Plan (including, but not limited to administrative expenses, proper charges and disbursements, compensation and other expenses and charges of any actuary, counsel, accountant, specialist, or other person who shall be employed by the Committee in connection with the administration of the Plan), shall be paid by the Company.
Section 6.4 Facility of Payment.
If the Company is unable to make payment to any Participant, Former Participant Beneficiary, or any other person to whom a payment is due under the Plan, because it cannot ascertain the identity or whereabouts of such Participant, Former Participant Beneficiary, or other person after reasonable efforts have been made to identify or locate such person (including a notice of the payment so due mailed to the last known address of such Participant, Former Participant Beneficiary, or other person shown on the records of the Employer), such payment and all subsequent payments otherwise due to such Participant, Former Participant, Beneficiary or other person shall be forfeited 24 months after the date such payment first became due; provided, however, that such payment and any subsequent payments shall be reinstated, retroactively, without interest or other investment return attributable to the intervening period no later than 60 days after the date on which the Participant, Former Participant, Beneficiary, or other person is identified or located.
ARTICLE VII
AMENDMENT AND TERMINATION
Section 7.1 Amendment by the Company.
The Company reserves the right, in its sole and absolute discretion, at any time and from to time, by action of the Board, to amend the Plan in whole or in part. In no event, however, shall any such amendment adversely affect the right of any Participant, Former Participant or Beneficiary to receive any benefits under the Plan in respect of participation for any period ending on or before the later of the date on which such amendment is adopted or the date on which it is made effective.
Section 7.2 Termination.
The Company also reserves the right, in its sole and absolute discretion, by action of the Board, to terminate the Plan. In such event, undistributed benefits attributable to participation prior to the date of termination shall be distributed as though each Participant terminated employment with the Bank, the Company and all other Employers as of the effective date of termination of the Plan.
Section 7.3 Amendment or Termination by Other Employers.
In the event that a corporation or trade or business other than the Bank shall adopt this Plan, such corporation or trade or business shall, by adopting the Plan, empower the Bank to amend or terminate the Plan, insofar as it shall cover employees of such corporation or trade or business, upon the terms and conditions set forth in sections 7.1 and 7.2; provided, however, that any such corporation or trade or business may, by action of its board of directors or other governing body, amend or terminate the Plan, insofar as it shall cover employees of such corporation or trade or business, at different times and in a different manner. In the event of any such amendment or termination by action of the board of directors or other governing body of such a corporation or trade or business, a separate plan shall be deemed to have been established for the employees of such corporation or trade or business, and any amounts set aside to provide for the satisfaction of benefit liabilities with respect to Employees of such corporation or trade or business shall be segregated from the assets set aside for the purposes of this Plan at the earliest practicable date and shall be dealt with in accordance with the documents governing such separate plan.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Construction and Language.
Wherever appropriate in the Plan, words used in the singular may be read in the plural, words in the plural may be read in the singular, and words importing the masculine gender shall be deemed equally to refer to the feminine or the neuter. Any reference to an Article or section shall be to an Article or section of the Plan, unless otherwise indicated.
Section 8.2 Headings.
The headings of Articles and sections are included solely for convenience of reference. If there is any conflict between such headings and the text of the Agreement, the text shall control.
Section 8.3 Non-Alienation of Benefits.
Except as may otherwise be required by law, no distribution or payment under the Plan to any Participant, Former Participant or Beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, whether
voluntary or involuntary, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void; nor shall any such distribution or payment be in any way liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to such distribution or payment. If any Participant, Former Participant or Beneficiary is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge encumber or charge any such distribution or payment, voluntarily or involuntarily, the Committee, in its sole discretion, may cancel such distribution or payment or may hold or cause to be held or applied such distribution or payment, or any part thereof, to or for the benefit of such Participant, Former Participant or Beneficiary, in such manner as the Committee shall direct; provided, however, that no such action by the Committee shall cause the acceleration or deferral of any benefit payments from the date on which such payments are scheduled to be made.
Section 8.4 Indemnification.
The Bank shall indemnify, hold harmless and defend each Participant, Former Participant and Beneficiary, against their reasonable costs, including legal fees, incurred by them or arising out of any action, suit or proceeding in which he may be involved, as a result of his efforts, in good faith, to defend or enforce the obligation of the Bank, the Company and any other Employer under the terms of the Plan.
Section 8.5 Severability.
A determination that any provision of the Plan is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.
Section 8.6 Waiver.
Failure to insist upon strict compliance with any of the terms, covenants or conditions of the Plan shall not be deemed a waiver of such term, covenant or condition. A waiver of any provision of the Plan must be made in writing, designated as a waiver, and signed by the party against whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.
Section 8.7 Governing Law.
The Plan shall be construed, administered and enforced according to the laws of the Commonwealth of Massachusetts without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by the federal laws of the United States. Any payments made pursuant to this Plan are subject to and conditioned upon their compliance with 12 U.S.C. [SECTION] 1828(k) and any regulations promulgated thereunder.
Section 8.8 Taxes.
The Employer shall have the right to retain a sufficient portion of any payment made under the Plan to cover the amount required to be withheld pursuant to any applicable federal, state and local tax law.
Section 8.9 No Deposit Account.
Nothing in this Plan shall be held or construed to establish any deposit account for any Participant or any deposit liability on the part of the Bank. Participants' rights hereunder shall be equivalent to those of a general unsecured creditor of each Employer.
Section 8.10 No Right to Continued Employment.
Neither the establishment of the Plan, nor any provisions of the Plan nor any action of the Plan Administrator, the Committee or any Employer shall be held or construed to confer upon any Employee any right to a continuation of employment by the Employer. The Employer reserves the right to dismiss any Employee or otherwise deal with any Employee to the same extent as though the Plan had not been adopted.
Section 8.11 Status of Plan Under ERISA.
The Plan is intended to be (a) to the maximum extent permitted under applicable laws, an unfunded, non-qualified excess benefit plan as contemplated by section 3(36) of ERISA for the purpose of providing benefits in excess of the limitations imposed under section 415 of the Code, and (b) to the extent not so permitted, an unfunded, non-qualified plan maintained primarily for the purpose of providing deferred compensation for highly compensated employees, as contemplated by sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. The Plan is not intended to comply with the requirements of section 401(a) of the Code or to be subject to Parts 2, 3 and 4 of Title I of ERISA. The Plan shall be administered and construed so as to effectuate this intent.
Section 8.12 Restrictions on Payments to Key Employees.
Notwithstanding anything in the Plan to the contrary, to the extent required under section 409A of the Code, no payment to be made to a key employee (within the meaning of section 409A of the Code) on or after the date of his termination of service shall be made sooner than six (6) after such termination of service.
Section 8.13 Compliance with Section 409A of the Code.
The Plan is intended to be a non-qualified deferred compensation plan described in section 409A of the Code. The Plan shall be operated, administered and construed to give effect to such intent. In addition, the Plan shall be subject to amendment, with or without advance notice to Participants and other interested parties, and on a prospective or retroactive basis, including but not limited amendment in a manner that adversely affects the rights of participants and other interested parties, to the extent necessary to effect such compliance.
Exhibit 10.7
DIRECTORS' DEFERRED COMPENSATION PLAN
OF
WESTFIELD FINANCIAL, INC.
Adopted on December 20, 2005 Effective as of December 20, 2005
TABLE OF CONTENTS
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Article I
Definitions
Section 1.1 Acceleration Event 1
Section 1.2 Administrator 1
Section 1.3 Beneficiary 1
Section 1.4 Board 1
Section 1.5 Code 1
Section 1.6 Company 1
Section 1.7 Change in Control Event 1
Section 1.8 Cash Compensation 1
Section 1.9 Committee 1
Section 1.10 Compensation 1
Section 1.11 Disability 2
Section 1.12 Effective Date 2
Section 1.13 Equity Compensation 2
Section 1.14 Fair Market Value 2
Section 1.15 Investment Benchmark 2
Section 1.16 ISO Share 2
Section 1.17 Memorandum Account 3
Section 1.18 Memorandum Subaccount 3
Section 1.19 Non-Employee Director 3
Section 1.20 Option-Related Compensation 3
Section 1.21 Participant 3
Section 1.22 Participating Company 3
Section 1.23 Phantom Share 3
Section 1.24 Plan 3
Section 1.25 Previously Acquired Share 3
Section 1.26 Share 3
Section 1.27 Service Recipient 3
Section 1.28 Unforeseeable Emergency 4
Article II
Participation
Section 2.1 Election to Participate 4
Section 2.2 Election to Defer Cash Compensation 4
Section 2.3 Election to Defer Equity Compensation 5
Section 2.4 Election to Defer Option-Related Compensation 5
Section 2.5 Changes in Participation 5
Section 2.6 Revocability of 2005 Elections 6
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Article III
Accounting for Deferred Amounts
Section 3.1 In General 6
Section 3.2 Adjustments to Memorandum Accounts 7
Section 3.3 Vesting 8
Article IV
Trust
Section 4.1 Establishment of Trust 8
Section 4.2 Contributions to Trust; Investments 9
Section 4.3 Unfunded Character of Plan 9
Article V
Life Insurance
Section 5.1 Authority to Purchase Life Insurance 9
Section 5.2 Cooperation to Effect Purchases 9
Section 5.3 Ownership of Policies 10
Section 5.4 Effect of Termination of Participation 10
Article VI
Distributions
Section 6.1 Early Distributions 10
Section 6.2 Scheduled Distributions to Participants 11
Section 6.3 Distributions to Beneficiaries 12
Section 6.4 Mandatory Cashout of Small Balances 13
Section 6.5 Restrictions on Payments to Key Employees 13
Article VII
Administration
Section 7.1 Administrator 13
Section 7.2 Committee Responsibilities 14
Section 7.3 Claims Procedure 15
Section 7.4 Claims Review Procedure 15
Section 7.5 Other Administrative Provisions 16
Article VIII
Amendment And Termination
Section 8.1 Amendment by the Company 16
Section 8.2 Termination 17
Section 8.3 Amendment or Termination by Other Companies 17
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Article IX
Miscellaneous Provisions
Section 9.1 Notice and Election 18
Section 9.2 Construction and Language 18
Section 9.3 Headings 18
Section 9.4 Non-Alienation of Benefits 18
Section 9.5 Indemnification 19
Section 9.6 Severability 19
Section 9.7 Waiver 19
Section 9.8 Governing Law 19
Section 9.9 Withholding 19
Section 9.10 No Deposit Account 20
Section 9.11 Rights of Participants 20
Section 9.12 Status of Plan Under ERISA 20
Section 9.13 Successors and Assigns 20
Section 9.14 Non-dilution Provisions 20
Section 9.15 Compliance with Section 409A of the Code 21
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OF
The following definitions shall apply for the purposes of this Plan unless a different meaning is clearly indicated by the context:
Section 1.1 Acceleration Event means, with respect to a Participant, any of the events described in section 6.1 on the basis of which the Administrator may permit acceleration of the payment of the balance credited to the Participant's Memorandum Account.
Section 1.2 Administrator means any person, committee, corporation or organization appointed by the Committee to perform the responsibilities assigned to the Administrator hereunder.
Section 1.3 Beneficiary means the person or persons designated by a Participant under section 6.3 of the Plan.
Section 1.4 Board means the Board of Directors of the Company.
Section 1.5 Code means the Internal Revenue Code of 1986 (including the corresponding provisions of any succeeding law).
Section 1.6 Company means Westfield Financial, Inc. or any successor thereto.
Section 1.7 Change in Control Event means, with respect to a Participant: (a) a change in ownership of the Participant's Service Recipient; (b) a change in effective control of the Participant's Service Recipient; or (c) a change in the ownership of a substantial portion of the assets of the Participant's Service Recipient. The existence of a Change in Control Event shall be determined by the Administrator in accordance with section 409A of the Code and the regulations thereunder.
Section 1.8 Cash Compensation means the monetary compensation payable to a Non-Employee Director for service as a member of the board of directors of a Participating Company, including retainer payments and fees for attendance at board and committee meetings.
Section 1.9 Committee means the Compensation Committee of the Board.
Section 1.10 Compensation means, during any period, the compensation payable to a Non-Employee Director by any Participating Company that is reportable to the Internal Revenue Service as compensation for such period on Form 1099 in the absence of an
election to defer receipt thereof under the terms of this Plan. Compensation shall include Cash Compensation, Equity Compensation and Option-Related Compensation. Compensation shall not include amounts that become payable under this Plan.
Section 1.11 Disability means, with respect to a Participant, any
medically determinable physical or mental impairment which can be expected
to result in death or to last for a continuous period of at least twelve
(12) months and as a result of which either: (a) the Participant is unable
to engage in any substantial gainful activity or (b) the Participant has
been receiving income replacement benefits for a period of at least three
(3) months under an accident and health plan covering employees of the
Participant's employer. The existence of a Disability shall be determined
by the Administrator in accordance with section 409A and the regulations
thereunder.
Section 1.12 Effective Date means December 20, 2005.
Section 1.13 Equity Compensation means, with respect to any Participant, that portion of the Participant's Compensation, other than Option-Related Compensation, that is paid to him in Shares or the amount of which is based upon the value, or increase in value, of a Share.
Section 1.14 Fair Market Value means, with respect to a Share on a specified date:
(a) the final reported sales price on the date in question (or if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) as reported in the principal consolidated reporting system with respect to securities listed or admitted to trading on the principal United States securities exchange on which the Shares are listed or admitted to trading; or
(b) if the Shares are not listed or admitted to trading on any such exchange, the closing bid quotation with respect to a Share on such date on the National Association of Securities Dealers Automated Quotations System, or, if no such quotation is provided, on another similar system, selected by the Committee, then in use; or
(c) if sections 1.14(a) and (b) are not applicable, the fair market value of a Share as the Administrator may determine.
Section 1.15 Investment Benchmark means a hypothetical investment classification in which a Participant's Memorandum Account shall be deemed to be invested for purposes of crediting or charging earnings, losses, appreciation or depreciation with respect to the Participant's Memorandum Account, in accordance with section 3.2. The Investment Benchmark shall be interest at an annual rate equal to the rate on the highest yielding certificate of deposit issued by Westfield Bank during the year or any other investment classification set as an option by the Committee for this Plan.
Section 1.16 ISO Share means a Share acquired upon exercise of an incentive stock option (within the meaning of section 422 of the Code).
Section 1.17 Memorandum Account means, with respect to a Participant, a bookkeeping account maintained by the Company to which is credited the amount of the Participant's deferred Compensation, together with any earnings and appreciation thereon, and against which are charged any losses, depreciation or distributions thereof, pursuant to Article III.
Section 1.18 Memorandum Subaccount means, with respect to a Participant, a portion of the Participant's Memorandum Account that is separately accounted for by the Company due to the application of unique provisions relating to the applicable distribution schedule or Investment Benchmark(s).
Section 1.19 Non-Employee Director means a voting member of the board of directors of a Participating Company who is not an officer or employee of any Participating Company.
Section 1.20 Option-Related Compensation means, with respect to an option to purchase Shares that is exercised by paying the entire exercise price therefor by actual or constructive delivery of Previously Acquired Shares, a number of Shares equal to the excess of (a) the total number of Shares as to which the option is exercised, over (b) the number of Shares actually or constructively delivered in payment of the exercise price.
Section 1.21 Participant means a Non-Employee Director or former Non-Employee Director who has a Memorandum Account under the Plan.
Section 1.22 Participating Company means the Company, Westfield Bank, and any other company which, with the prior approval of the Board, may adopt this Plan.
Section 1.23 Phantom Share a unit of value that, at any relevant date, corresponds to the Fair Market Value of a Share.
Section 1.24 Plan means the Directors' Deferred Compensation Plan of Westfield Financial, Inc.
Section 1.25 Previously Acquired Share means, with respect to a
Participant on any date: (a) a Share (other than an ISO Share) that was
acquired by the Participant more than six (6) months prior to such date and
has been held by the Participant continuously since such acquisition and
(b) an ISO Share that was acquired by the Participant upon the exercise, at
least one year prior to such date, of an incentive stock option (within the
meaning of section 422 of the Code) that was granted to him at least two
(2) years prior to such date and has been held by the Participant
continuously since such acquisition.
Section 1.26 Share means a share of Common Stock, par value $.01 per share, of the Company.
Section 1.27 Service Recipient means with respect to a Participant on any date: (a) the corporation for which the Participant is performing services on such date; (b) all corporations that are liable to the Participant for the benefits due to him under the Plan; (c) a corporation that is a majority shareholder of a corporation described in section 1.27(a) or (b); or
(d) any corporation in a chain of corporations each of which is a majority shareholder of another corporation in the chain, ending in a corporation described in section 1.27(a) or (b).
Section 1.28 Unforeseeable Emergency means, with respect to a Participant, a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant's spouse or a dependent (within the meaning of section 152(e) of the Code) of the Participant, loss of the Participant's property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The existence of an Unforeseeable Emergency shall be determined by the Administrator in accordance with section 409A of the Code and the regulations hereunder.
Section 2.1 Election to Participate.
Any Non-Employee Director may elect to become a Participant in the Plan by submitting to the Administrator a written election, on a form prescribed by the Administrator, to defer the receipt of all or any portion of his Compensation; provided, however, that no Non-Employee Director shall be permitted to defer receipt of Compensation that is required to be withheld and remitted to any federal, state or local taxing authority pursuant to any requirement for the collection of tax at the source or that is required to fund any contribution or premium payment or co-payment required of the Non-Employee Director as a condition of participation in any employee benefit plan maintained by the Company or any other Participating Company at the time the election is made. A Non-Employee Director who elects to become a Participant may make separate deferral elections with respect to Cash Compensation, Equity Compensation and Option-Related Compensation. The Administrator may deny participation to any Non-Employee Director whose initial election to become a Participant does not contemplate the deferral of a minimum of $2,000 on an annualized basis.
Section 2.2 Election to Defer Cash Compensation.
An election to defer Cash Compensation shall specify the amount or percentage of each payment of Cash Compensation to be deferred, shall be made on or before the last day of any calendar year and shall be effective for the calendar year following the calendar year in which such election is made and all subsequent calendar years unless status as a Non-Employee Director ceases or a change in the rate of deferral is elected pursuant to section 2.5; provided, however, that an initial election to defer Cash Compensation made by a Non-Employee Director and filed with the Administrator during the thirty (30) day period immediately following the later of the Effective Date of the Plan or the date the Non-Employee Director first becomes eligible to participate in the Plan shall take effect with the first payment of Compensation that relates to a period of service that begins after such election is made, or such later date as the Non-Employee Director shall specify in his election.
Section 2.3 Election to Defer Equity Compensation.
An election to defer Equity Compensation shall specify the amount or percentage of each payment of Equity Compensation that is to be deferred, shall be made on or before the first day of the calendar year in which such Equity Compensation will be paid and prior to the first day of the period of service for which such Equity Compensation is earned, and shall be effective for all subsequent calendar years and service periods, unless status as a Non-Employee Director ceases or a change in the rate of deferral is elected pursuant to section 2.5; provided, however, that an initial election to defer Equity Compensation made by a Non-Employee Director and filed with the Administrator during the thirty (30) day period immediately following the later of the Effective Date or the date the Non- Employee Director first becomes eligible to participate in the Plan shall take effect with the first payment of Equity Compensation that relates to a period of service that begins after such election is made, or such later date as the Non-Employee Director shall specify in his election. Acceptance of an election to defer Equity Compensation shall not be held or construed as a guarantee that any conditions precedent to the payment thereof (including but not limited to continued employment) will be met or the amount to be deferred will in fact be earned. In the event the dollar amount of Equity Compensation actually paid is less than the dollar amount for which a deferral election has been made, the election shall be deemed effective to defer the maximum permissible amount. Notwithstanding anything in this Plan to the contrary, no person shall elect to defer Equity Compensation until the Board shall permit such deferral by resolution.
Section 2.4 Election to Defer Option-Related Compensation.
Notwithstanding anything in this Plan to the contratry, no person shall elect to defer Option-Related Compensation until such time as the Plan is amended to provide for such elections.
Section 2.5 Changes in Participation.
(a) An election by a Participant pursuant to section 2.2 shall continue in effect until termination of status as a Participant; provided, however, that the Participant may, by written election filed with the Administrator, increase or decrease the portion of his Cash Compensation to be deferred, or discontinue such deferral altogether. Such election shall be effective with respect to Cash Compensation payable for services rendered after the end of the calendar year in which such election is filed with the Administrator; provided, however, that if an election provides for the decrease or discontinuance of the Participant's deferral of Cash Compensation and is made on account of Disability or an Unforeseeable Emergency or an Acceleration Event, such election shall, to the extent permitted under section 409A of the Code, be effective with respect to Cash Compensation payable after the filing of such election.
(b) An election by a Participant pursuant to section 2.3 or 2.4 shall continue in effect until termination of status as a Participant; provided, however, that the Participant may, by written election filed with the Administrator, increase or decrease the portion of his Equity Compensation to be deferred, or discontinue such deferral altogether. Such election shall be effective with respect to Equity Compensation payable after the calendar year in which, and on account of a period of service that begins after, such election is filed with the Administrator;
provided, however, that if an election provides for the decrease or discontinuance of the Participant's deferral of Equity Compensation and is made on account of Disability or an Unforeseeable Emergency or an Acceleration Event, such election shall be effective with respect to Equity Compensation, payable after the filing of such election.
(c) In the event that a Participant ceases to be a Non-Employee Director or in the event that a Non-Employee Director ceases to defer receipt of his Compensation, the balance in his Memorandum Account shall continue to be adjusted in accordance with Article III. A Non-Employee Director who has filed a written election to cease deferring receipt of any portion of his Compensation may thereafter again file an election to defer receipt of his Compensation in the manner described in sections 2.2 through 2.5.
Section 2.6 Revocability of 2005 Elections.
Notwithstanding anything in the Plan to the contrary, every election under the Plan to defer Compensation earned and payable in 2005 shall, to the maximum extent permitted and subject to the terms and conditions set forth in Internal Revenue Service Notice 2005-1, be revocable at any time during 2005. Such a revocation shall be effected by written notice given to and actually received by the Administrator on or before December 31, 2005 and shall result in the distribution of the entire balance credited to the Memorandum Account of the person revoking the election and in the inclusion of the entire amount distributed in gross income for federal income tax purposes in the 2005 taxable year.
Section 3.1 In General.
The Administrator shall maintain a separate Memorandum Account for each Participant and may establish within such Memorandum Account two or more Memorandum Subaccounts as may be necessary or appropriate to properly administer the Plan, including, but not limited to:
(a) A separate Memorandum Subaccount for each portion of a Participant's Memorandum Account to which a unique distribution schedule is applicable;
(b) A separate Memorandum Subaccount for that portion of a Participant's Memorandum Account that is attributable to Equity Compensation or Option-Related Compensation that has been deferred; and
(c) A separate Memorandum Subaccount for that portion of a Participant's Memorandum Account that is required to be adjusted for earnings and losses on the basis of an Investment Benchmark that is different from the Investment Benchmark(s) applicable to other portions of the Memorandum Account.
Credits, charges, and other adjustments to each Participant's Memorandum Account and any Memorandum Subaccounts shall be made in accordance with this Article III. Neither the Company nor any Participating Company shall fund its liability for the balances credited to a Memorandum Account or Memorandum Subaccount, but each shall reflect its liability for such balances on its books.
Section 3.2 Adjustments to Memorandum Accounts.
(a) Each Participant's Memorandum Account and applicable Memorandum Subaccount(s) shall be credited with amounts of Compensation deferred by the Participant as of the date on which such Compensation would have been paid to the Participant in the absence of a deferral election. For purposes of this section 3.2(a):
(i) Equity Compensation consisting of Shares or other property which would be taxable for federal income tax purposes pursuant to section 83 of the Code that is being deferred shall be credited as of the date on which such Shares or other property become vested or, if later, the date on which such Shares or other property are contractually required to be transferred to the Participant; and
(ii) Option-Related Compensation that is being deferred shall be credited as of the earliest date on which all actions have been taken and conditions satisfied to effectively exercise the related options;
all as determined by the Administrator, whose determination shall be conclusive and binding in the absence of manifest error.
(b) Each Participant's Memorandum Account shall be adjusted to reflect the amount of earnings, losses, appreciation or depreciation, as appropriate that would result if the balances credited to the Participant's Memorandum Account, were actually invested in Investment Benchmarks according to the following guidelines:
(i) That portion of a Participant's Memorandum Account that is attributable to the deferral of Option-Related Compensation shall at all times be deemed to be invested in Phantom Shares. The number of Phantom Shares credited in connection with each deferral of Option-Related Compensation shall be equal to the number of Shares corresponding to the Option-Related Compensation that is being deferred. Additional Phantom Shares shall be credited to account for any stock dividends to holders of record of Shares in an amount equal to the product of (A) the number of Shares issued as a stock dividend to the holder of record of one Share, multiplied by (B) the number of Phantom Units credited to the Participant's Memorandum Account as of the record date for the stock dividend. Additional Phantom Shares shall be credited to account for cash dividends paid to holders of record of Shares in an amount equal to the quotient of (A) the cash dividend per Share multiplied by the number of Phantom Shares credited to the Participant's Memorandum Account as of the record date for the cash dividend, divided by (B) the Fair Market Value of a Share on the payment date for the cash dividend.
(ii) That portion of a Participant's Memorandum Account that is attributable to the deferral of Equity Compensation shall be deemed to be invested in Phantom Shares for so long as the Administrator may require.
(iii) Any portion of the Participant's Memorandum Account that is not subject to section 3.2(b)(i) or (ii) shall be deemed to be invested in such Investment Benchmarks as the Participant, by notice given in such form and manner and subject to such terms, conditions and procedures as the Administrator may prescribe, shall designate from time to time. If one of the Investment Benchmarks is Phantom Shares, such terms, conditions and procedures shall be designed to prevent the occurrence of non-exempt short-swing transactions described in section 16 of the Securities Exchange Act of 1934, as amended, to assure compliance with the Company's securities trading policy and applicable federal and state securities laws, and unless otherwise determined by the Administrator, to permit the Company to account for its liability with respect to such portion of the Memorandum Account on the basis of EITF 94-6 or corresponding guidance in subsequent accounting standards.
(c) The Memorandum Account established for each Participant shall be adjusted from time to time, but in no event less frequently than monthly, to reflect:
(i) credits of deferred Compensation;
(ii) credits reflecting income, dividends and appreciation attributable to the applicable Investment Benchmarks;
(iii) charges for losses or depreciation attributable to the applicable Investment Benchmarks; and
(iv) charges for payments to the Participant or his Beneficiary.
Except to the extent otherwise provided by the Administrator, all such adjustments in respect of activity during a month shall be made as of the last business of each month.
Section 3.3 Vesting.
Subject to section 5.3, all amounts credited to a Participant's Memorandum Account shall be 100% vested at all times.
Section 4.1 Establishment of Trust.
The Company may establish a trust fund which may be used to accumulate funds to satisfy benefit liabilities to Participants, former Participants and their Beneficiaries under the Plan; provided, however, that the assets of such trust shall be subject to the claims of the
creditors of the Company in the event that it is determined that the Company is insolvent; and provided, further, that the trust agreement shall contain such terms, conditions and provisions as shall be necessary to cause the Company to be considered the owner of the trust fund for federal, state or local income tax purposes with respect to all amounts contributed to the trust fund or any income attributable to the investments of the trust fund. The Company shall pay all costs and expenses incurred in establishing and maintaining such trust. Any payments made to a Participant, former Participant or Beneficiary from a trust established under this section 4.1 shall offset payments which would otherwise be payable by the Company in the absence of the establishment of such trust. Any such trust will conform to the terms of the model trust prescribed by Revenue Procedure 92-64, as the same may be modified from time to time.
Section 4.2 Contributions to Trust; Investments.
If a trust is established in accordance with section 4.1, each Participating Company shall make contributions to such trust in such amounts and at such times as may be specified by the Committee or required pursuant to the terms any trust agreement between the Company and the trustee that has been authorized by the Committee.
Section 4.3 Unfunded Character of Plan.
Notwithstanding the establishment of a trust pursuant to section 4.1, the Plan shall be unfunded. Any liability of the Company or another Participating Company to any person with respect to benefits payable under the Plan shall be based solely upon such contractual obligations, if any, as shall be created by the Plan, and shall give rise only to a claim against the general assets of the Company or such Participating Company. No such liability shall be deemed to be secured by any pledge or any other encumbrance on any specific property of the Company or a Participating Company.
Section 5.1 Authority to Purchase Life Insurance.
To assist it in meeting its financial obligations under the Plan, the Company may purchase and hold, or may cause the trustee of a trust described in Article IV to purchase and hold, insurance on the life or lives of such Participant or Participants in such amounts as the Committee may determine. By electing to defer Compensation under the Plan, a Participant shall be deemed to have authorized and consented to such purchase.
Section 5.2 Cooperation to Effect Purchases.
Each Participant shall take such actions (including but not limited to submitting to such physical examinations, providing such medical information and executing such applications, consents to the purchase of insurance and other documents and instruments) as the Administrator may reasonably request to facilitate the purchase of insurance authorized by the Committee. Any person who fails or refuses to cooperate in the purchase of such insurance may, in the discretion of the Committee, be denied the right of future participation in the Plan, such
denial to be effected in a manner that complies with the requirements of section 409A of the Code. No person shall be denied eligibility to participate in the Plan solely because he is deemed uninsurable by the carrier or carriers designated by the Committee.
Section 5.3 Ownership of Policies.
The Company (or, if applicable, a trust described Article IV) shall be the legal owner of any life insurance policies purchased under the Plan and shall have and enjoy all of the incidents of ownership, including, but not limited to, the right to cancel, surrender, extend or assign the policy in whole or in part, the right to exercise borrowing privileges against the cash value of the policy, the right designate the beneficiary of any death benefit proceeds that may become payable thereunder, the right to receive policy dividends, the right exercise voting rights with respect to all matters on which the holder of the policy may vote, and, in the case of a mutual insurance company, the right to participate in and receive and hold any proceeds distributed in relation to the policy in connection with any demutualization transaction. In no event shall the Participant, his Beneficiary or his heirs, successors or assigns have any rights in, to or under any such policy, including but not limited to the right to receive any portion of any death benefit proceeds that may be payable upon the death of the Participant. In the event that the Participant, his designated Beneficiary or any of his heirs, successors or assigns attempts to challenge the rights of the Company (or, if applicable, a trust described Article IV), then, in addition to any other rights and remedies that may be available, any balance credited to the Participant's Memorandum Account that is then unpaid shall be forfeited.
Section 5.4 Effect of Termination of Participation.
Neither the cessation of a Participant's performance of services for the Company or any Participating Employer, nor the cessation of a Participant's deferrals of Compensation under the Plan, nor the complete distribution of the balance credited to the Participant's Memorandum Account shall have any effect on the authority of the Company (or, if applicable, a trust described Article IV) to continue any life insurance policy then in effect on the life of such Participants for such future period as the Committee may determine, including but limited to the period extending through the date of the Participant's death.
Section 6.1 Early Distributions.
(a) In the event that a Participant has suffered an Unforeseeable Emergency, the Administrator may, in its sole discretion and to the extent permitted under section 409A of the Code, allow such Participant to obtain a lump sum withdrawal of an amount credited to his Memorandum Account that does not exceed the amount necessary to alleviate the Unforeseeable Emergency.
(b) In the event of a Participant's Disability, the Administrator may, in its sole discretion and to the extent permitted under section 409A of the Code, allow the Participant to obtain a lump sum withdrawal of the entire balance credited to his Memorandum Account.
(c) To the extent required to comply with the terms of a domestic relations order (within the meaning of section 414(p) of the Code) directed to and served upon the Plan, the Administrator may direct the payment of all or any portion of the balance credited to a Participant's Memorandum Account at any time or in accordance with any payment schedule set forth in said order.
(d) To the extent necessary to effect compliance with a certificate of divestiture (within the meaning of section 1043(b)(2) of the Code), the Administrator may permit the distribution of all or a portion of the balance credited to a Participant's Memorandum Account earlier than the times determined under section 6.2.
Section 6.2 Scheduled Distributions to Participants.
(a) Upon a Participant's termination of service with the Company and all Participating Companies, an amount equal to the balance credited to such Participant's Memorandum Account shall be paid to the Participant in a single payment within thirty (30) days after the end of the calendar year in which such termination of service occurs; provided, however, that if a Participant so elects in his initial election to participate or in any subsequent deferral election, payment of balances attributable to amounts deferred pursuant to such election may be made:
(i) in a single payment as of some other date specified by the Participant in his election; or
(ii) in annual installments over such number of years (not to exceed fifteen (15)) and payable beginning on such date (not earlier than the first day of the calendar year following the calendar year that includes the third anniversary of the effective date of the election) specified by the Participant in his election. In the event payment is to be made in installments, each installment shall be equal to the balance credited to the Participant's Memorandum Account (or, if applicable, Memorandum Subaccount) as of the last business day of the month ending immediately prior to the date on which payment is to be made, divided by the number of installment payments remaining to be paid (including the payment then being computed). Any portion of the balance credited to the Participant's Memorandum Account with respect to which a payment has not been made shall continue to be adjusted pursuant to Article IV, in accordance with the Investment Benchmarks in which the Participant's Memorandum Account is deemed to be invested, until a distribution with respect to such amount has been made.
(b) Notwithstanding section 6.2(a), each Participant may, by written election given in such form and manner as the Administrator may prescribe, elect to change the time and manner of distribution of the balance credited to any Memorandum Subaccount; provided, however, that
(i) Any such election shall not take effect until twelve (12) months after it is received by the Administrator; and
(ii) In the case of an election to defer a payment to be made on account of an event other than the Participant's death, Disability or Unforeseeable Emergency, the first payment made under such election shall not occur until at least five (5) years later than such payment would otherwise have been made; and
(iii) In the case of an election to defer a payment to be made on account of a Change in Control Event, such election shall be made at least twelve (12) months prior to the date of the first payment scheduled to be made on account of the Change in Control Event.
(c) Distributions shall be made, or commence, within 30 days after the date the Participant becomes entitled to payment pursuant to this section 6.2. Distributions of balances attributable to the deferral of Option-Related Compensation shall be made in whole Shares (with cash paid in lieu of fractional shares), distributions of the balances deemed to be invested in Phantom Shares shall, unless the Administrator determines otherwise, be made in whole Shares (with cash paid in lieu of fractional Shares); and all other distributions shall be made in cash unless the Administrator, in its discretion, permits other forms of distribution.
Section 6.3 Distributions to Beneficiaries.
(a) A Participant may designate a Beneficiary or Beneficiaries by filing a written notice with the Administrator prior to the Participant's death, in such form and manner as the Administrator may prescribe. A Participant who has designated a Beneficiary or Beneficiaries may change or revoke such designation prior to the Participant's death by means of a similar written instrument.
(b) In the event that a Participant dies before receiving payment
of his entire Memorandum Account, payment of the value of the deceased
Participant's Memorandum Account shall be made in a lump sum to his
Beneficiary or Beneficiaries within ninety (90) days after the
Administrator receives satisfactory evidence of the Participant's death.
If no Beneficiary shall have been designated or if any such designation
shall be ineffective, or in the event that no designated Beneficiary
survives the Participant, payment of the value of the Participant's
Memorandum Account shall be made to the Participant's personal
representative, or if no personal representative is appointed within six
(6) months after the Participant's death or such longer period as the
Administrator deems reasonable in its discretion, to his surviving spouse,
or if he has no surviving spouse, to his then living descendants, per
stirpes, in the same manner and at the same time as the Participant's
Memorandum Account would have been paid to a Beneficiary. If any
Participant and any one or more of his designated Beneficiary(ies) shall
die in circumstances that leave substantial doubt as to who shall have been
the first to die, the Participant shall be deemed to have survived the
deceased Beneficiary(ies). The presence of substantial doubt for such
purposes shall be determined by the Administrator in its sole and absolute
discretion.
Section 6.4 Mandatory Cashout of Small Balances.
Notwithstanding anything in the Plan to the contrary, except as provided in section 6.5, if, as of December 31 of any calendar year following a Participant's termination of service with all Participating Companies, the balance credited to his Memorandum Account is $10,000 or less, the entire balance credited to his Memorandum Account shall be distributed in a single lump sum payment as soon as practicable during the immediately following calendar year.
Section 6.5 Restrictions on Payments to Key Employees.
Notwithstanding anything in the Plan to the contrary, to the extent required under section 409A of the Code, no payment to be made to a key employee (within the meaning of section 409A of the Code) on or after the date of his termination of service shall be made sooner than six (6) after such termination of service.
Section 7.1 Administrator.
The Administrator shall, subject to the responsibilities of the Committee and the Board, have the responsibility for the day-to-day control, management, operation and administration of the Plan. The Administrator shall have the following responsibilities:
(a) To maintain records necessary or appropriate for the administration of the Plan;
(b) To give and receive such instructions, notices, information, materials, reports and certifications as may be necessary or appropriate in the administration of the Plan;
(c) To prescribe forms and make rules and regulations consistent with the terms of the Plan and with the interpretations and other actions of the Committee;
(d) To require such proof or evidence of any matter from any person as may be necessary or appropriate in the administration of the Plan;
(e) To determine any question arising in connection with the Plan, including any question of Plan interpretation, and the Administrator's decision or action in respect thereof shall be final and conclusive and binding upon all persons having an interest under the Plan; provided however, that any question relating to inconsistency or omission in the Plan, or interpretation of the provisions of the Plan, shall be referred to the Committee by the Administrator and the decision of the Committee in respect thereof shall be final;
(f) To review and dispose of claims under the Plan filed pursuant to section 7.3 and appeals of claims decisions pursuant to section 7.4;
(g) If the Administrator shall determine that by reason of illness, senility, insanity, or for any other reason, it is undesirable to make any payment to the person entitled thereto, to direct the application of any amount so payable to the use or benefit of such person in any manner that the Administrator may deem advisable or to direct in the Administrator's discretion the withholding of any payment under the Plan due to any person under legal disability until a representative competent to receive such payment in his behalf shall be appointed pursuant to law;
(h) To discharge such other responsibilities or follow such directions as may be assigned or given by Committee or the Board; and
(i) To perform any duty or take any action which is allocated to the Administrator under the Plan.
The Administrator shall have the power and authority necessary or appropriate to carry out his responsibilities. The Administrator may resign only be giving at least 30 days' prior written notice of resignation to the Committee, and such resignation shall be effective on the date specified in such notice.
Section 7.2 Committee Responsibilities.
The Committee shall, subject to the responsibilities of the Board, have the following responsibilities:
(a) To review the performance of the Administrator;
(b) To hear and decide appeals, pursuant to the claims procedure contained in section 7.4 of the Plan, taken from the decisions of the Administrator;
(c) To hear and decide questions, including interpretation of the Plan, as may be referred to the Committee by the Administrator;
(d) To report and make recommendations to the Board regarding changes in the Plan, including changes in the operation and management of the Plan;
(e) To designate an alternate Administrator to serve in the event that the Administrator is absent or otherwise unable to discharge his responsibilities;
(f) To remove and replace the Administrator or alternate, or both of them, and to fill a vacancy in either office;
(g) To discharge such other responsibilities or follow such directions as may be assigned or given by the Board; and
(h) To perform any duty or to take any action which is allocated to the Committee under the Plan.
The Committee shall have the power and authority necessary or appropriate to carry out its responsibilities. The Committee may take action under the Plan by vote of a majority of the members present at any meeting of the Committee at which a quorum is present or by unanimous written consent in lieu of meeting. No member of the Committee shall participate in any action or decision in which he has a personal interest unless all members of the Committee voting on such matter are similarly interested. The Committee may delegate to one of its members, to the Administrator or to any Non-Employee Director of the Company or any other Participating Company the power and responsibility, to the extent not expressly allocated under the Plan to the Administrator, to sign instruments and other communications in its behalf and to take appropriate action to implement the Committee's decisions.
Section 7.3 Claims Procedure.
Any claim relating to benefits under the Plan shall be filed with the Administrator on a form prescribed by it. If a claim is denied in whole or in part, the Administrator shall give the claimant written notice of such denial, which notice shall specifically set forth:
(a) The reasons for the denial;
(b) The pertinent Plan provisions on which the denial was based;
(c) Any additional material or information necessary for the claimant to perfect his claim and an explanation of why such material or information is needed; and
(d) An explanation of the Plan's procedure for review of the denial of the claim.
In the event that the claim is not granted and notice of denial of a claim is not furnished by the 30th day after such claim was filed, the claim shall be deemed to have been denied on that day for the purpose of permitting the claimant to request review of the claim.
Section 7.4 Claims Review Procedure.
Any person whose claim filed pursuant to section 7.3 has been denied in whole or in part by the Administrator may request review of the claim by the Committee, upon a form prescribed by the Administrator. The claimant shall file such form (including a statement of his position) with the Committee no later than 60 days after the mailing or delivery of the written notice of denial provided for in section 7.3, or, if such notice is not provided, within 60 days after such claim is deemed denied pursuant to section 7.3. The claimant shall be permitted to review pertinent documents. A decision shall be rendered by the Committee and communicated to the claimant not later than 30 days after receipt of the claimant's written request for review.
However, if the Committee finds it necessary, due to special circumstances (for example, the need to hold a hearing), to extend this period and so notifies the claimant in writing, the decision shall be rendered as soon as practicable, but in no event later than 120 days after the claimant's request for review. The Committee's decision shall be in writing and shall specifically set forth:
(a) The reasons for the decision; and
(b) The pertinent Plan provisions on which the decision is based.
Any such decision of the Committee shall be binding upon the claimant and the Participating Company, and the Administrator shall take appropriate action to carry out such decision.
Section 7.5 Other Administrative Provisions.
(a) Any person whose claim has been denied in whole or in part must exhaust the administrative review procedures provided in section 7.4 prior to initiating any claim for judicial review.
(b) neither the members of the Committee, the Administrator, nor any Non-Employee Director or employee of a Participating Company to whom responsibilities are assigned under the Plan shall be liable for any act of omission or commission by himself or by another person, except for his own individual willful and intentional malfeasance.
(c) The Administrator or the Committee may, shorten, extend or waive the time (but not beyond 60 days) required by the Plan for filing any notice or other form with the Administrator or Committee, or taking any other action under the Plan; provided, however, that no such shortening, extension or waiver shall be done that would cause any Participant to be in constructive receipt of the balance credited his Memorandum Account prior to the date on which such balance is scheduled to be paid.
(d) Any person, group of persons, committee, corporation or organization may serve in more than one fiduciary capacity with respect to the Plan.
(e) Any action taken or omitted by the Administrator or the Committee or any delegate of the Committee with respect to the Plan, including any decision, interpretation, claim denial or review on appeal, shall be conclusive and binding on and all interested parties and shall be subject to judicial modification or reversal only to the extent it is determined by a court of competent jurisdiction that such action or omission was arbitrary and capricious and contrary to the terms of the Plan.
Section 8.1 Amendment by the Company.
The Company reserves the right, in its sole and absolute discretion, at any time and from to time, by action of the Board, to amend the Plan in whole or in part. In no event,
however, shall any such amendment adversely affect the right of any Participant, former Participant or Beneficiary to receive any benefits under the Plan in respect of participation for any period ending on or before the later of the date on which such amendment is adopted or the date on which it is made effective.
Section 8.2 Termination.
(a) The Company reserves the right, in its sole and absolute discretion, by action of the Board, to terminate the Plan, but only in the following circumstances:
(i) Within twelve (12) months of any Change in Control Event; and
(ii) At such other time and in such other circumstances as may be permitted under section 409A of the Code.
In such event, undistributed benefits attributable to participation prior to the date of termination shall be distributed in lump sum payments as soon as practicable following the effective date of termination.
(b) The Company reserves the right, in its sole and absolute discretion, by action of the Board, to suspend the operation of the Plan, but only in the following circumstances:
(i) With respect to Compensation to be earned and paid in calendar years beginning after the date of adoption of the resolution suspending the operation of the Plan; and
(ii) At such other time and in such other circumstances as may be permitted under section 409A of the Code.
In such event, no further Compensation shall be deferred following the effective date of the suspension and memorandum Accounts in existence prior to such date shall continue to be maintained, and payments shall continue to be made, in accordance with the provisions of the Plan.
Section 8.3 Amendment or Termination by Other Companies.
In the event that a corporation or trade or business other than the Company shall adopt this Plan, such corporation or trade or business shall, by adopting the Plan, empower the Company to amend or terminate the Plan, insofar as it shall cover employees of such corporation or trade or business, upon the terms and conditions set forth in sections 8.1 and 8.2; provided, however, that any such corporation or trade or business may, by action of its board of directors or other governing body, amend or terminate the Plan, insofar as it shall cover employees of such corporation or trade or business, at different times and in a different manner. In the event of any such amendment or termination by action of the board of directors or other governing body of such a corporation or trade or business, a separate plan shall be deemed to have been established for the employees of such corporation or trade or business, and any amounts set aside to provide
for the satisfaction of benefit liabilities with respect to employees of such corporation or trade or business shall be segregated from the assets set aside for the purposes of this Plan at the earliest practicable date and shall be dealt with in accordance with the documents governing such separate plan.
Section 9.1 Notice and Election.
The Administrator shall provide a copy of this Plan and the resolutions of adoption to each Non-Employee Director who becomes eligible to participate, together with a form on which the Non-Employee Director may notify the Administrator of his election whether to become a Participant, which form, if he so elects, he may complete, sign and return to the Administrator.
Section 9.2 Construction and Language.
Wherever appropriate in the Plan, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and the masculine gender may be read as referring equally to the feminine gender or the neuter.
Section 9.3 Headings.
The headings of Articles and sections are included solely for convenience of reference. If there is any conflict between such headings and the text of the Plan, the text shall control.
Section 9.4 Non-Alienation of Benefits.
Except as may otherwise be required by law, no distribution or payment under the Plan to any Participant, former Participant or Beneficiary shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, whether voluntary or involuntary, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void; nor shall any such distribution or payment be in any way liable for or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to such distribution or payment. If any Participant, former Participant or Beneficiary is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge encumber or charge any such distribution or payment, voluntarily or involuntarily, the Committee, in its sole discretion, may cancel such distribution or payment or may hold or cause to be held or applied such distribution or payment, or any part thereof, to or for the benefit of such Participant, former Participant or Beneficiary, in such manner as the Committee shall direct; provided, however, that no such action by the Committee shall cause the acceleration or deferral of any benefit payments from the date on which such payments are scheduled to be made.
Section 9.5 Indemnification.
The Company shall indemnify, hold harmless and defend each Participant, former Participant and Beneficiary, against their reasonable costs, including legal fees, incurred by them or arising out of any action, suit or proceeding in which they may be involved, as a result of their efforts, in good faith, to defend or enforce the obligations of the Company and any other Participating Employer under the terms of the Plan.
Section 9.6 Severability.
A determination that any provision of the Plan is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.
Section 9.7 Waiver.
Failure to insist upon strict compliance with any of the terms, covenants or conditions of the Plan shall not be deemed a waiver of such term, covenant or condition. A waiver of any provision of the Plan must be made in writing, designated as a waiver, and signed by the party against whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.
Section 9.8 Governing Law.
The Plan shall be construed, administered and enforced according to the laws of the Commonwealth of Massachusetts without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. The federal and state courts having jurisdiction in Hampden County, Massachusetts shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan or in any way relating to the rights or obligations of any person under, or the acts or omissions of the Company, the Board, the Administrator, the Committee on any duly authorized person acting in their behalf in relation to, the Plan. By electing to participate in this Plan, the Participant, for himself and any other person claiming any rights under the Plan through him, agrees to submit himself, and any such legal action described herein that he shall bring, to the sole jurisdiction of such courts for the adjudication and resolution of such disputes. Any payments made pursuant to this Plan are subject to and conditioned upon their compliance with 12 U.S.C. [SECTION] 1828(k) and any regulations promulgated thereunder.
Section 9.9 Withholding.
Payments from this Plan shall be subject to all applicable federal, state and local income withholding taxes. The Company, Westfield Bank, any other Participating Company or the Committee shall have the right to require any person entitled to receive a distribution in Shares under this Plan to pay the amount of any tax which is required to be withheld with respect to such Shares, or, in lieu thereof, to cancel without notice, a sufficient number of Phantom Shares to cover the amount required to be withheld.
Section 9.10 No Deposit Account.
Nothing in this Plan shall be held or construed to establish any deposit account for any Participant or any deposit liability on the part of the Company or any Participating Company. Participants' rights hereunder shall be equivalent to those of a general unsecured creditor of each Participating Company.
Section 9.11 Rights of Participants.
No Participant shall have any right or claim to any benefit under the Plan except in accordance with the provisions of the Plan. The establishment of the Plan shall not be construed as conferring upon any Participant or other person any legal right to a continuation of service or to any terms or conditions of service, nor as limiting or qualifying the right of a Participating Company, its board of directors or its stockholders to remove any Non-Employee Director or to fail to re-elect him or her or decline to nominate him or her for re-election.
Section 9.12 Status of Plan Under ERISA.
The Plan is intended to be a non-qualified deferred compensation plan maintained exclusively for non-employees. The Plan is not intended to comply with the requirements of section 401(a) of the Code or to be subject to Parts 2, 3 and 4 of Title I of ERISA. The Plan shall be administered and construed so as to effectuate this intent.
Section 9.13 Successors and Assigns.
The provisions of the Plan will inure to the benefit of and be binding upon the Participants and their respective legal representatives and testate or intestate distributes, and each Participating Company and their respective successors and assigns, including any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the assets and business of any Participating Company may be sold or otherwise transferred.
Section 9.14 Non-dilution Provisions.
In the event of any merger, consolidation, or other business reorganization involving the Company, and in the event of any stock split, stock dividend or other event generally affecting the number of Shares held by each person who is then a holder of record of Shares, and in the event of any other occurrence which, in the judgment of the Committee warrants an adjustment to avoid unintended enhancement or dilution of the rights of one or more Participants under the Plan, the number of Phantom Units credited to each Participant's Memorandum Account, and the unit value thereof, shall be adjusted to account for such event. Such adjustment shall be effected in such manner as the Committee shall determine to e appropriate in order to prevent the enlargement or diminution of any Participant's rights under the Plan.
Section 9.15 Compliance with Section 409A of the Code.
The Plan is intended to be a non-qualified deferred compensation plan described in section 409A of the Code. The Plan shall be operated, administered and construed to give effect to such intent. In addition he Plan shall be subject to amendment, with or without advance notice to Participants and other interested parties, and on a prospective or retroactive basis, including but not limited amendment in a manner that adversely affects the rights of participants and other interested parties, to the extent necessary to effect such compliance.
Exhibit 10.10
AMENDED AND RESTATED DEFERRED COMPENSATION AGREEMENT
This Agreement (as amended and restated) entered into this 20th day of December 2005 by and between Westfield Bank, a banking corporation duly organized and existing under the laws of the Commonwealth of Massachusetts with its principal place of business at 141 Elm Street, Westfield, Hampden County, Massachusetts, its successors and assigns (hereinafter called the "Corporation") and Donald A. Williams (hereinafter called the "Employee").
W I T N E S S E T H :
WHEREAS, the Employee has been employed by the Corporation for a substantial period of time; and
WHEREAS, the Employee has performed his duties as President and Chief Executive Officer in a capable and efficient manner, resulting in substantial growth and profits to the Corporation; and
WHEREAS, the experience of the Employee is such that assurance of his continued service is important to continued growth and profits of the Corporation; and
WHEREAS, the Corporation desires to retain the continued loyalties and services of the Employee; and
WHEREAS, the Corporation hereby agrees to pay to him or to his designated beneficiary or beneficiaries, certain benefits in accordance with the provisions and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the sum of One ($1.00) Dollar paid to each of the parties hereto by the other, the receipt of which is hereby acknowledged, and in consideration of the mutual covenants contained herein, the parties covenant and agree as follows;
1. ANNUAL BENEFITS. For purposes of this Agreement the term "annual benefits" shall be defined as being that sum which is equal to seventy percent (70%) of the annual salary being paid to the Employee during the last year the Employee has been in the Corporation's employ prior to his retirement date as hereinafter set forth, or prior to his death or disability as hereinafter set forth, reduced by a sum equal to the total amount otherwise being received by the Employee each year from the Savings Bank Employees Retirement Association and the portion of Social Security related solely to contributions made by the Corporation, and the term "salary" shall not include any total disability payments under the Corporation's long term disability program. The adjustment is to be made annually by reducing the following year's annual benefits by the total sums received by the Employee during the previous twelve (12) months from both the Savings Bank Employees Retirement Association and the portion of Social security related solely to contributions made by the Corporation. The period of employment that shall, be utilized to determine the aforegoing is the continuous period of employment of the Employee with the Corporation as it is presently constituted and subsequent to any merger with another banking institution or take-over of any type of the Corporation.
2. DEATH PRIOR TO RETIREMENT OR DISABILITY. In the event that the Employee shall die before the first day of the month following his sixty- fifth (65th) birthday, hereinafter sometimes called the "Retirement Date", while in the employ of the Corporation, the Corporation beginning at a date to be determined by the Corporation but within six (6) months from the date of death, time being of the essence, will commence to pay the annual benefits as hereinbefore defined, in equal monthly installments for a continuous period of one hundred and twenty (120) months to such beneficiary or beneficiaries as the Employee may designate by filing with the Corporation a notice in writing in a form as set forth in Exhibit A attached hereto. In the absence of any such designation, such amounts shall be so paid to the executors or administrators of the estate of the Employee. The beneficiaries named as aforesaid may be changed any time by the Employee by such fort as set forth in Exhibit A being forwarded to the Corporation.
3. RETIREMENT. Notwithstanding anything to the contrary herein contained, the Employee may, while in the employ of the Corporation, at any time after his sixty-second (62nd) birthday, terminate his employment with the Corporation. This termination date for all purposes of this Agreement shall then be deemed to be his "Retirement Date".
In the event that the Employee is continuously employed by the
Corporation from the date of this Agreement until his sixty-fifth (65th)
birthday, his employment by the Corporation shall then terminate, this
being his "Retirement Date". Upon the Employee's Retirement Date, the
Corporation shall be obligated to pay to the Executive an amount that would
be sufficient to fund (utilizing reasonable actuarial assumptions) a
payment stream to the to the Employee in equal monthly installments the
annual benefits as hereinbefore defined commencing upon the fifteenth
(15th) day of the month following the month in which such Retirement Date
occurs and paid thereafter on the fifteenth (15th) day of each month for
the remainder of his life, but for not less than two hundred and forty
(240) months (such amount the "Accrued Benefit"). The Accrued Benefit
amount shall be paid to the Employee in a single lump sum as soon as
practicable after the Retirement Date.
Upon the Employee's death, subsequent to his Retirement Date, and after the Employee has commenced receiving the Accrued Benefit hereunder, but prior to his having received the entirety of the Accrued Benefit, the payments as hereinbefore set forth will be continued to be paid to his designated beneficiary or beneficiaries, or in the absence thereof to the executors or administrators of his estate, as the case may be until the full Accrued Benefit has been paid in the aggregate to the Employee and such beneficiary, beneficiaries, executors, or administrators.
4. DISABILITY. A. In the event the Employee, prior to his retirement date as set forth in Paragraph 3. hereinbefore, while in the employ of the Corporation, becomes totally and permanently disabled as defined by, and entitling the Employee for payment of total disability payments under, the Corporation's long-term disability program, and then subsequently dies prior to his retirement date as set forth in Paragraph 3 herein before while still receiving said total, disability payments, the Corporation will commence to pay the annual benefits referred to in, and in the manner provided for by, Paragraph 2 hereinbefore.
B. In the event the Employee, prior to his retirement date as set forth in Paragraph 3. hereinbefore, while in the employ of the Corporation, becomes totally and permanently disabled
as defined by, and entitling the Employee for payment of total disability payments under, the Corporation's long-term disability program, and then, subsequently, having reached a certain age, becomes ineligible to receive further benefits under the Corporation's long-term disability program, the Corporation will commence to pay the annual benefits referred to in, and in the manner provided for by, Paragraph 3 hereinbefore.
5. NON-ASSIGNABILITY. Except as may otherwise be provided herein, neither the Employee, his beneficiary or beneficiaries nor his executors and administrators will have any right to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the right thereto are expressly declared to be non-assignable and non-transferable.
6. INDEPENDENT EXISTENCE. The benefits payable under this Agreement are independent of, and in addition to, any other employment Agreement that may exist from time to time between the parties hereto, any other compensation payable by the Corporation to the Employee whether it is salary or bonus, or otherwise. This Agreement will not be deemed to constitute a contract of employment between the parties hereto, nor will any revision hereof restrict the right of the Corporation to discharge the Employee or restrict the right of the Employee to terminate his employment.
7. UNSECURED OBLIGATION. The rights of the Employee and any beneficiary or beneficiaries under this Agreement will be solely those of any unsecured creditor of the Corporation. If the Corporation acquires insurance policy or policies or any other asset in connection with the obligations assumed by it hereunder, such policy or other asset will not be deemed to be held under any trust for the benefit of the Employee or his beneficiary or beneficiaries or to be collateral security for the performance of the obligations of the Corporation hereunder, and will be, and remain, the general, unpledged, unrestricted asset of the Corporation.
8. NON-COMPETITION. While the Employee is receiving any annual
benefits from the Corporation hereunder, the Employee shall not directly or
indirectly, for any reason or in any way or in any capacity whatsoever,
either on his own account or through or for any other person, firm,
corporation, association, or other entity, enter into, accept employment
from, become affiliated or connected with, or in any manner take part in,
any business, profession, or other endeavor either as an Employee, agent,
independent contractor, owner, or otherwise, which shall be in the same or
similar competitive business with that of the Corporation, In the event
that the Employee shall enter into any such competitive activity as
hereinbefore described and shall continue therein for a period of fifteen
(15) days after the Corporation shall have notified him in writing that the
Trustees of the Corporation have decided that such activity is in
competition with the Corporation, then no further payments under this
Agreement shall be due or payable by the Corporation hereunder, and the
Corporation shall have no further liability hereunder.
9. TERMINATION OF EMPLOYMENT. In the event that the Employee voluntarily terminates his employment with the Corporation prior to his sixty-second (62nd) birthday or the employment of the Employee is terminated by the Corporation for serious misconduct by the Employee on the job, this Agreement, upon such termination, shall immediately terminate and the Employee shall from that date forth have no rights to any benefits hereunder whatsoever. In the event that the Employee's employment, with the Corporation is
terminated by the Corporation for reasons other than serious misconduct by the Employee on the job, this Agreement shall still be effective according to its terms, regardless of the fact that the Employee shall engage in any such competitive act as hereinbefore set forth in Paragraph 7 hereof, payment not to commence until the earlier of the Employee reaching age 62 or his death.
10. DUTY TO SEEK BENEFITS. As a condition for the payment of the annual benefits as hereinbefore defined, the Employee or his beneficiary, beneficiaries, executors, or administrators, as the case may be, must apply for, and take all actions and execute all documents necessary and appropriate to obtain, all the monies from the Savings Bank Employees Retirement Association and Social Security referred to in Paragraph 1 hereinbefore.
11. BINDING EFFECT. This Agreement shall be binding upon the parties hereto, their heirs, executors, administrators, or successors, including, but not limited to, any successor resulting from a merger with another banking institution or take-over, of any type, of the Corporation.
12. SEPARABILITY. The invalidity and unenforceability of any part of this Agreement shall in no way affect the validity of any other provisions.
13. ENTIRE AGREEMENT. This instrument contains the entire agreement of the parties hereto and the same shall not be changed except by written instrument executed by the parties hereto.
14. STATUS OF AGREEMENT UNDER ERISA. This Agreement is intended to be an unfunded, non-qualified plan maintained primarily for the purpose of providing deferred compensation for a highly compensated employee, as contemplated by sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). This Agreement is not intended to comply with the requirements of section 401(a) of the Code or to be subject to Parts 2, 3 and 4 of Title I of ERISA. This Agreement shall be administered and construed so as to effectuate this intent.
15. RESTRICTIONS ON PAYMENTS TO KEY EMPLOYEES. Notwithstanding anything in this Agreement to the contrary, to the extent required under section 409A of the Internal Revenue Code of 1986 ("Code"), no payment to be made to a key employee (within the meaning of section 409A of the Code) on or after the date of his termination of service shall be made sooner than six (6) after such termination of service.
16. COMPLIANCE WITH SECTION 409A OF THE CODE. This Agreement is intended to be a non-qualified deferred compensation plan described in section 409A of the Code. This Agreement shall be operated, administered and construed to give effect to such intent. In addition, this Agreement shall be subject to amendment, with or without advance notice to the Employee and other interested parties, and on a prospective or retroactive basis, including but not limited amendment in a manner that adversely affects the rights of participants and other interested parties, to the extent necessary to effect such compliance.
IN WITNESS WHEREOF, said Corporation has caused this Agreement to be signed in its corporate name and by its duly authorized officer and impressed with its corporate seal, attested by its Clerk and the said Employee has hereunto set his hand and seal, all on the day and year first above written.
WESTFIELD SAVINGS BANK
By: ____________________________
Harry C. Lane
ATTEST: