AMENDED AND RESTATED EXECUTIVE
SUPPLEMENTAL RETIREMENT
INCOME AGREEMENT
FOR
CHRIS C. GAGAS
PATHFINDER BANK
Amended and Restated Effective
January 1, 2005
Financial Institution Consulting
Corporation
700 Colonial Road, Suite
260
Memphis, Tennessee
38117
WATS:
1-800-873-0089
FAX: (901)
684-7411
(901) 684-7400
AMENDED AND
RESTATED
EXECUTIVE SUPPLEMENTAL
RETIREMENT
INCOME AGREEMENT FOR CHRIS
GAGAS
This Amended and Restated Executive Supplemental
Retirement Income Agreement (the “Agreement”) updates
and revises the Restated Executive Supplemental Retirement Income
Agreement (the “Original Agreement”) for Chris C. Gagas
(the “Executive”), which was originally effective as of
September 1, 1998. The Bank has herein amended and
restated the Agreement with the intention that the Agreement shall
at all times satisfy Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and the regulations
thereunder. Any reference herein to the “Holding
Company” shall mean Pathfinder Bancorp, Inc. and any
reference herein to the “Mutual Holding Company” shall
mean Pathfinder Bancorp, M.H.C.
WITNESSETH:
WHEREAS, the Executive and the Bank entered into the
Agreement dated as of September 1, 1998; and
WHEREAS , Section 409A of the Internal Revenue Code (the
“Code”), effective January 1, 2005, requires deferred
compensation arrangements to comply with its provisions and
restrictions and limitations on payments of deferred compensation;
and
WHEREAS , Code Section 409A and the final regulations
issued thereunder necessitate changes to the Agreement;
and
WHEREAS , the Executive has agreed to such changes;
and
WHEREAS , the parties hereto desire to set forth the
terms of the amended and restated Agreement and the continuing
employment relationship of the Bank and the Executive;
and
WHEREAS , the Bank and the Executives intend this
Agreement to be considered an unfunded arrangement, maintained
primarily to provide supplemental retirement income for such
Executives, members of a select group of management or highly
compensated employees of the Bank, for tax purposes and for
purposes of the Employee Retirement Income Security Act of 1974, as
amended.
NOW, THEREFORE , in consideration of the premises and of the
mutual promises herein contained, the Bank and the Executive agree
as follows:
SECTION I
DEFINITIONS
When used herein, the following words and
phrases shall have the meanings below unless the context clearly
indicates otherwise:
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“Accrued
Benefit Account” means that portion of the Supplemental
Retirement Income Benefit which is required to be expensed and
accrued under generally accepted accounting principles (GAAP) by
any appropriate method which the Bank’s Board of Directors
may require in the exercise of its sole discretion.
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“Act” means the Employee Retirement
Income Security Act of 1974, as amended from time to
time.
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“Administrator” means the
Bank.
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“Bank” means PATHFINDER BANK and any
successor thereto.
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“Beneficiary” means the person or
persons (and their heirs) designated as Beneficiary in Exhibit B of
this Agreement to whom the deceased Executive’s benefits are
payable. If no Beneficiary is so designated, then the
Executive’s Spouse, if living, will be deemed the
Beneficiary. If the Executive’s Spouse is not living, then
the Children of the Executive will be deemed the Beneficiaries and
will take on a per stirpes basis. If there are no
Children, then the Estate of the Executive will be deemed the
Beneficiary.
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“Benefit
Age” means the Executive’s seventieth (70th)
birthday. Notwithstanding the above, in the event of a
Change in Control, followed within thirty-six (36) months by the
Executive’s voluntary termination of employment on or after
his sixty-second birthday for one of the reasons set forth in
Section 2.2 below, the Executive’s termination shall not be
considered a retirement for purposes of lowering the
Executive’s Benefit Age.
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“Benefit
Eligibility Date” means the date on which the Executive is
entitled to receive maximum Supplemental Retirement Income Benefit
available under this plan. It shall be the first day of
the month following the month in which the Executive attains his
Benefit Age.
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“Board of
Directors” means the board of directors of the
Bank.
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“Cause” means personal dishonesty,
willful misconduct, willful malfeasance, breach of fiduciary duty
involving personal profit, intentional failure to perform stated
duties, willful violation of any law, role, regulation (other than
traffic violations or similar offenses), or final cease-and-desist
order, material breach of any provision of this Agreement, or gross
negligence in matters of material importance to the
Bank.
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“Change
in Control” shall mean and include the following with respect
to the Mutual Holding Company, the Bank, or the Holding
Company:
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a
reorganization, merger, merger conversion, consolidation or sale of
all or substantially all of the assets of the Bank, the Mutual
Holding Company or the Holding Company, or a similar transaction in
which the Bank, the Mutual Holding Company or the Holding Company
is not the resulting entity; or
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individuals who
constitute the board of directors of the Bank, the Mutual Holding
Company or the Holding Company on the date hereof (the
“Incumbent Board”) cease for any reason to constitute
at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved
by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election was approved
by the Holding Company’s nominating committee which is
comprised of members of the Incumbent Board, shall be, for purposes
of this clause (ii) considered as though he were a member of the
Incumbent Board.
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Notwithstanding the foregoing, a “Change
in Control” of the Bank or the Holding Company shall not be
deemed to have occurred if the Mutual Holding Company ceases to own
at least 51% of all outstanding shares of stock of the Holding
Company in connection with a liquidation of the Mutual Holding
Company into the Holding Company or a conversion of the Mutual
Holding Company from mutual to stock form.
In addition, “Change in Control”
shall mean and include the following with respect to the Bank or
the Holding Company in the event that the Mutual Holding Company
converts to stock form or in the event that the Holding Company
issues shares of its common stock to stockholders other than the
Mutual Holding Company:
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a change in
control of a nature that would be required to be reported in
response to Item 5.01 of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (hereinafter the “Exchange
Act”); or
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an acquisition
of “control” as defined in the Home Owners
Loan Act, as amended, and applicable rules and regulations
promulgated thereunder, as in effect at the time of the Change in
Control (collectively, the “HOLA”), as determined by
the Board of Directors of the Bank or the Holding Company;
or
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any
“person” (as the term is used in Sections 13(d) and
14(d) of the Exchange Act) or “group acting in concert”
is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Bank representing Twenty Percent (20%) or more of
the combined voting power of the Bank’s or Holding
Company’s outstanding securities ordinarily having the right
to vote at the elections of directors, except for any stock
purchased by the Bank’s Employee Stock Ownership Plan and/or
the trust under such plan; or
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a proxy
statement is issued soliciting proxies from the stockholders of the
Holding Company by someone other than the current management of the
Holding Company, seeking stockholder approval of a plan of
reorganization, merger, or consolidation of the Holding Company
with one or more corporations as a result of which the outstanding
shares of the class of the Holding Company’s securities are
exchanged for or converted into cash or property or securities not
issued by the Holding Company.
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The term “person” includes an
individual, a group acting in concert, a corporation, a
partnership, an association, a joint venture, a pool, a joint stock
company, a trust, an unincorporated organization or similar
company, a syndicate or any other group formed for the purpose of
acquiring, holding or disposing of securities. The term
“acquire” means obtaining ownership, control, power to
vote or sole power of disposition of stock, directly or indirectly
or through one or more transactions or subsidiaries, through
purchase, assignment, transfer, exchange, succession or other
means, including (1) an increase in percentage ownership resulting
from a redemption, repurchase, reverse stock split or a similar
transaction involving other securities of the same class; and (2)
the acquisition of stock by a group of persons and/or companies
acting in concert which shall be deemed to occur upon the formation
of such group, provided that an investment advisor shall not be
deemed to acquire the voting stock of its advisee if the advisor
(a) votes the stock only upon instruction from the beneficial owner
and (b) does not provide the beneficial owner with advice
concerning the voting of such stock. The term
“security” includes nontransferable subscription rights
issued pursuant to a plan of conversion, as well as a
“security,” as defined in 15 U.S.C. §78c(2)(1);
and the term “acting in concert” means (1) knowing
participation in a joint activity or interdependent conscious
parallel action towards a common goal whether or not pursuant to an
express agreement, or (2) a combination or pooling of voting or
other interests in the securities of an issuer for a common purpose
pursuant to any contract, understanding, relationship, agreement or
other arrangement, whether written or otherwise. Further, acting in
concert with any person or company shall also be deemed to be
acting in concert with any person or company that is acting in
concert with such other person or company.
Notwithstanding the above definitions, the
boards of directors of the Bank or the Holding Company, in their
absolute discretion, may make a finding that a Change in Control of
the Bank or the Holding Company has taken place without the
occurrence of any or all of the events enumerated above.
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Children”
means the Executive’s children, both natural and adopted,
then living at the time payments are due the Children under this
Agreement.
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“Code” means the Internal Revenue
Code of 1986, as amended from time to time.
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“Disability Benefit” means the
benefit payable to the Executive following a determination, in
accordance with Section VII.
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“Effective Date” of this Agreement
is January 1, 2005.
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“Estate” means the estate of the
Executive.
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“Interest
Factor” for purposes of the Accrued Benefit Account, shall be
eight percent (8%) per annum, compounded monthly, as set forth in
Exhibit A.
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“Payout
Period” means the time frame during which certain benefits
payable hereunder shall be distributed. Payments shall
be made in equal monthly installments commencing on the first day
of the month following the occurrence of the event which triggers
distribution and continuing for one hundred eighty (180)
months. Should the Executive make a Timely Election to
receive a lump sum benefit payment, the Executive’s Payout
Period shall be deemed to be one (1) month.
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“Plan
Year” shall mean the calendar year. However,
“Plan Year” shall mean September 1, 1998 through
December 31, 1998, for the first Plan Year.
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“Retirement Age” means the
Executive’s seventieth (70 th ) birthday.
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“Spouse” means the individual to
whom the Executive is legally married at the time of the
Executive’s death.
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“Supplemental Retirement Income
Benefit” means an annual amount ( before taking into
account federal and state income taxes), payable in monthly
installments throughout the Payout Period. The
Supplemental Retirement Income Benefit payable to the Executive is
Sixty Thousand Six Hundred and Eighty-six ($60,686) Dollars, as set
forth in Exhibit A.
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“Survivor’s Benefit” means an
annual amount payable to the Beneficiary in monthly installments
throughout the Payout Period, equal to the amount set forth in
Exhibit A and according to Subsection 2.5.
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“Timely
Election” means the Executive has made an election to change
the form of his benefit payment(s) by filing with the Administrator
a Notice of Election to Change Form of Payment (Exhibit C of this
Agreement). Such election must be made on or before
December 31, 2008.
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SECTION II
BENEFITS-GENERALLY
If the
Executive is in service with the Bank until reaching his Benefit
Age, the Executive shall be entitled to the Supplemental Retirement
Income Benefit. Such benefit shall commence on the
Executive’s Benefit Eligibility Date and shall be payable in
equal monthly installments throughout the Payout
Period. In the event the Executive dies at any time
after attaining his Benefit Age, but prior to completion of all
such payments due and owing hereunder, the Bank shall pay to the
Executive’s Beneficiary a continuation of the monthly
installments for the remainder of the Payout Period.
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Termination
Following a Change in Control
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If a Change in
Control occurs, and within thirty-six (36) months following such
Change in Control, the Executive’s employment is either (i)
involuntarily terminated, or (ii) voluntarily terminated by the
Executive after: (A) a material change in the Executive’s
function, duties, or responsibilities, which change would cause the
Executive’s position to become one of lesser responsibility,
importance, or scope from the position the Executive held at the
time of the Change in Control, (B) a relocation of the
Executive’s principal place of employment by more than thirty
(30) miles from its location prior to the Change in Control, or (C)
a material reduction in the benefits and perquisites to the
Executive from those being provided at the time of the Change in
Control, the Executive shall be entitled to the full Supplemental
Retirement Income Benefit set forth in Exhibit A that Executive
would have received had Executive continued employment up through
reaching his Benefit Eligibility Date, regardless of the
Executive’s actual age on date of
termination. Such benefit shall commence within thirty
(30) days following the Executive reaching his Benefit Age and
shall be payable in equal monthly installments throughout the
Payout Period. Notwithstanding the foregoing, in the
event the Executive is a Specified Employee, as defined in Treasury
Regulation Section 1.409A-1(i), the Supplemental Retirement Income
Benefit shall commence upon the later of: (i) the first day of the
seventh month following the executive’s termination of
employment or (ii) the date on which the Executive attains his
Benefit Age. In the event that the Executive dies at any
time after termination of employment, but prior to commencement or
completion of all such payments due and owing hereunder, the Bank,
or its successor, shall pay to the Executive’s Beneficiary a
continuation of the monthly installments for the remainder of the
Payout Period within thirty (30) days of Executive’s
death. For purposes of this Section 2.2, the
Executive’s termination of employment shall be construed to
require a Separation from Service as defined in Code Section 409A
and the Treasury Regulations promulgated thereunder, such that the
Bank and Executive reasonably anticipate that the level of bona
fide services the Executive would perform after termination would
permanently decrease to a level that is less than 50% of the
average level of bona fide services performed (whether as an
employee or an independent contractor) over the immediately
preceding 36-month period.
If the
Executive is terminated for Cause, all benefits under this
Agreement shall be forfeited and this Agreement shall become null
and void.
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Involuntary
Termination of Employment
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If the
Executive’s employment with the Bank is involuntarily
terminated for any reason, including a termination due to
Disability, but excluding termination for Cause, or termination
following a Change in Control within thirty-six (36) months
following such Change in Control, within thirty (30) days following
such involuntary termination of employment, the Executive (or his
Beneficiary) shall be entitled to the full Supplemental Retirement
Income Benefit set forth in Exhibit A that the Executive would have
received had the Executive continued employment up through reaching
his Benefit Eligibility Date, regardless of the Executive’s
actual age at termination of employment. Such benefit
shall commence within thirty (30) days following the Executive
reaching his Benefit Age and shall be payable in monthly
installments throughout the Payout Period. In the event
the Executive dies prior to commencement or completion of all such
payments due and owing hereunder, the Bank shall pay to the
Executive’s Beneficiary a continuation of the monthly
installments for the remainder of the Payout Period.
If the
Executive dies while employed by the Bank, the Executive’s
Beneficiary shall be entitled to the Survivor’s
Benefit. The Survivor’s Benefit shall commence
within thirty (30) days after the Executive’s death and shall
be payable in monthly installments throughout the Payout
Period.
SECTION III
RETIREMENT
BENEFIT
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(a)
Normal form of payment .
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If (i) the
Executive is employed with the Bank until reaching his Retirement
Age, and (ii) the Executive has not made a Timely Election to
receive a lump sum benefit, this Subsection 3.1(a) shall be
controlling with respect to retirement benefits.
The Executive
shall be entitled to the Supplemental Retirement Income
Benefit. Such benefit shall commence on the
Executive’s Benefit Eligibility Date and shall be payable in
monthly installments throughout the Payout Period. In
the event the Executive dies at any time after attaining his
Benefit Age, but prior to completion of all the payments due and
owing hereunder, the Bank shall pay to the Executive’s
Beneficiary a continuation of the monthly installments for the
remainder of the Payout Period.
(b)
Alternative payout option .
If (i) the
Executive is employed with the Bank until reaching his Retirement
Age, and (ii) the Executive has made a Timely Election to receive a
lump sum benefit, this Subsection 3.1(b) shall be controlling with
respect to retirement benefits.
The balance of
the amount represented by the Executive’s Accrued Benefit
Account, measured as of the Executive’s Benefit Age, shall be
paid to the Executive in a lump sum on his Benefit Eligibility
Date. In the event the Executive dies after becoming
eligible for such payment (upon attainment of his Benefit Age), but
before the actual payment is made, his Beneficiary shall be
entitled to receive the lump sum benefit in accordance with this
Subsection 3.1(b) within thirty (30) days following the date of the
Executive’s death.
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Additional
Death Benefit - Burial Expense . In addition to the above-des
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