Exhibit 10.3
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES
GEORGETOWN SAVINGS BANK
Georgetown, Massachusetts
Effective June 30, 2008
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SUPPLEMENTAL RETIREMENT PLAN FOR SENIOR EXECUTIVES
This Supplemental Retirement Plan for Senior Executives (the
"Plan") is
effective June 30,
2008. This Plan
formalizes
the agreements by and between
GEORGETOWN SAVINGS
BANK (the "Bank"), a
federally chartered
savings bank, and
certain key employees, hereinafter referred to as "Executive(s)",
who have been
selected and
approved by the Bank to participate in this Plan and who have
evidenced their
participation
by execution of a
Supplemental
Retirement Plan
Participation
Agreement
("Participation
Agreement") in a form provided by the
Bank. This Plan
replaces the individual Executive Supplemental Retirement
Agreements between the Bank and certain Executives who are participants
herein
and is intended to comply with Internal Revenue Code ("Code") Section 409A and
any regulatory or other guidance issued under such Section. Any
reference herein
to the "Company" shall mean GEORGETOWN BANCORP, INC., the stock holding
company
of the Bank.
The Company has executed this Plan for the sole purpose of
guaranteeing the payment of benefits hereunder.
W I T N E S S E T H :
WHEREAS, Executives are employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore
performed
for it by such Executives and wishes to encourage their continued
employment and
to provide them with additional incentive to achieve corporate
objectives; and
WHEREAS, the Bank and certain of the Executives previously entered
into
Executive Supplemental
Retirement
Plans pursuant to which the Bank offered
retirement benefits; and
WHEREAS, the Bank
desires to replace the
individual agreements
with
this Plan and to modify the benefit formula under the Plan; and
WHEREAS, the Bank
desires to draft the
Plan to comply with
Section
409A of the Internal Revenue Code ("Code"); and
WHEREAS, the Bank
intends this Plan to be considered an unfunded
arrangement,
maintained primarily to provide supplemental retirement income
for
its 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; and
WHEREAS, the Bank has
adopted this Plan which controls all issues
relating to
Supplemental
Benefits as described herein and supersedes the
individual arrangement with certain of the Executives.
NOW, THEREFORE,
in consideration of the premises and of the mutual
promises herein contained, the Bank and Executives 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:
1.1 "Accrued
Annuity Benefit" means that portion of the Annuity
Benefit
which is expensed
and accrued by the Bank under
generally accepted
accounting principles (GAAP) at the date of measurement.
1.2 "Act"
means the Employee
Retirement Income
Security Act of 1974,
as
amended from time to time.
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1.3
"Administrator" means the Bank and/or its Board.
1.4 "Annuity
Benefit" means a stream of payments to an Executive payable as
a single life annuity with 20 years certain, commencing on the Annuity
Commencement Date.
1.5 "Annuity
Commencement Date"
means, unless
otherwise set forth herein,
the Executive's Benefit Age.
1.6 "Bank"
means GEORGETOWN SAVINGS BANK and any successor thereto.
1.7
"Beneficiary" means
the person or persons (and their heirs) designated
as Beneficiary by Executive to whom the deceased Executive's benefits
are payable. Such
beneficiary
designation
shall be made on the
form
attached hereto as Exhibit A and filed with the Plan Administrator.
If
no Beneficiary is so designated, then Executive's Spouse, if living,
will be deemed the
Beneficiary. If
Executive's Spouse is
not living,
then the Children of
Executive will be
deemed the
Beneficiaries and
will take on a per stirpes basis. If there are no living Children,
then
the Estate of Executive will be deemed the Beneficiary.
1.8 "Benefit
Age" shall be the birthday on which Executive attains the age
set forth in Executive's Participation Agreement.
1.9 "Board"
shall mean the Board of Directors of the Bank, unless
specifically noted otherwise.
1.10
"Cause" shall
mean Executive's personal dishonesty, incompetence,
willful misconduct,
any breach of
fiduciary duty
involving personal
profit, material
breach of the Bank's Code of Ethics, material
violation of the
Sarbanes-Oxley
requirements
for officers of
public
companies that in the reasonable opinion of the Chief Executive
Officer
("CEO") or the Board will likely cause substantial financial harm or
substantial injury to the reputation of the Bank, intentional failure
to perform stated
duties, willful violation of any law, rule, or
regulation (other than minor traffic violations or similar
offenses) or
final cease-and-desist
order, or material breach of Section 7.14 of
this Plan. In determining incompetence, the acts or omissions shall be
measured against
standards generally prevailing in the savings
institutions industry.
For purposes of this paragraph, no act or
failure to act on
the part of the Executive shall be considered
"willful" unless done,
or omitted to be done, by Executive not in good
faith and without reasonable belief that Executive's action or
omission
was in the best interest of the Bank. Any act, or failure to act,
based
upon authority given pursuant to a resolution duly adopted by the
Board
or based upon the advice of counsel for the Bank shall be
conclusively
presumed to be done,
or omitted to be done, by Executive in good faith
and in the best
interests of the Bank.
The cessation of employment of
Executive shall not be
deemed to be for Cause
unless and until
there
shall have been
delivered to
Executive a copy of a
resolution
duly
adopted by the affirmative vote of not less than three-fourths of the
entire membership
of the Board of the
Bank at a meeting of such Board
called and held for such purpose (after reasonable notice is provided
to Executive and
Executive is given an opportunity, together with
counsel, to be heard
before such Board),
finding that, in the good
faith opinion
of such Board, Executive is guilty of the conduct
described above, and specifying the particulars thereof in
detail.
1.11
A "Change in
Control" of the Bank or the Company shall mean (1) a
change in ownership
of the Bank or the
Company under
paragraph (i)
below, or (2) a change in effective control of the Bank or the
Company
under paragraph
(ii) below, or (3) a change in the
ownership of a
substantial portion
of the assets of the Bank or the
Company under
paragraph (iii) below:
(i) Change in
the ownership of the Bank or the Company. A
change in the
ownership of the Bank
or the Company
shall occur on the date that any one person, or more
than one
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person acting as a
group (as defined in Treasury
Regulation Section
1.409A-3(i)(5)(v)(B)),
acquires
ownership of stock of the corporation that, together
with stock held by such person or group, constitutes
more than 50% of the total fair market value or total
voting power of the stock of such corporation.
(ii)
Change in the
effective control
of the Bank or the
Company. A change in
the effective
control of the
Bank or the Company
shall occur on the date that
either (A) any one
person, or more than one person
acting as a group (as defined in Treasury Regulation
Section
1.409A-3(i)(5)(v)(B)), acquires (or has
acquired during the
12-month period ending on the
date of the most recent acquisition by such person or
persons) ownership
of stock of the Bank or the
Company possessing
30% or more of the
total voting
power of the stock of the Bank or the Company; or (B)
a majority of
members of the Bank or
the Company's
Board of Directors
is replaced
during any
12-month
period by Directors whose appointment or election is
not endorsed
by a majority of the members of the
corporation's Board of Directors prior to the date of
the appointment
or election, provided that this
sub-section (B) is
inapplicable
where a majority
shareholder of the
Bank or the Company
is another
corporation.
(iii)
Change in the ownership of a substantial portion of
the Bank's or the Company's assets. A change in the
ownership of a
substantial portion of
the Bank's or
the Company's assets shall occur on the date that any
one person, or more than one person acting as a group
(as defined
in Treasury Regulation
Section
1.409A-3(i)(5)(vii)(C)), acquires (or has acquired
during the 12-month
period ending on the date of the
most recent
acquisition
by such person or
persons)
assets from the Bank or the Company that have a total
gross fair market value equal to more than 40% of the
total gross fair market value of all of the assets of
the Bank or the
Company immediately prior to such
acquisition. For this
purpose, gross fair market
value means
the value of the assets of the
corporation, or
the value of the assets being
disposed of,
determined
without
regard to any
liabilities associated with such assets.
(iv)
For all purposes hereunder, the definition of Change
in Control shall be construed to be consistent with
the requirements
of Treasury Regulation Section
1.409A-3(i)(5),
except to the extent that such
regulations are superseded by subsequent guidance. A
Change in Control shall not be deemed to have
occurred upon
the second-step conversion of the
Company to a fully converted stock company.
1.12
"Children" means
Executive's
children, or the issue of any deceased
Children, then living
at the time payments are due the Children under
this Plan. The term
"Children" shall
include both natural and adopted
Children.
1.13
"Code" means the Internal Revenue Code of 1986, as amended.
1.14
"Death Benefit"
shall mean a Lump Sum
payment equal to the Present
Value of the Accrued Annuity Benefit as of the date of death,
without
any Pre-Retirement Reductions.
1.15
"Disability Benefit"
means a Lump Sum
payment, equal to the Annuity
Benefit, payable at
Benefit Age, as if Executive had continued to work
until Benefit Age and
Executive's base
salary increased five
percent
(5%) per year for each
fiscal year
until Executive's Benefit Age.
Alternatively, an Executive may elect in his Participation
Agreement to
receive the benefit payment in another form or at another time.
1.16
"Effective Date" of this Plan shall be June 30, 2008.
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1.17
"Estate" means the estate of Executive.
1.18
"Executive" means the
executive officer who has been selected and
approved by the Board to participate in the Plan and who
has agreed to
participation by completing a Participation Agreement.
1.19
"Final Average
Compensation"
shall mean the total
base salary
plus
bonus paid during a fiscal year, including salary deferrals into a
401(k)
Plan or cafeteria
plan. Final
Average Compensation shall be
averaged over the
highest three (3)
fiscal years of the
Executive's
final five (5) fiscal years of employment with the Bank.
1.20
"Good Reason," shall mean (a) failure to elect or reelect or to
appoint
or reappoint
Executive to his Executive Position (as defined in
Executive's employment
agreement),
unless consented to by
Executive;
(b) a substantial adverse and material change in Executive's
function,
duties, or responsibilities; (c) a material reduction to base
salary or
benefits of Executive from that being provided as of the Effective
Date
(except for any reduction that is part of an employee-wide
reduction in
pay or benefits); (d)
a liquidation or
dissolution
of the Bank; (e)
material breach
of this Plan by the Bank; or (f) a relocation of
Executive's principal
place of employment more than twenty-five (25)
miles from the principal office on the Effective Date.
1.21
"Lump Sum" shall
mean payment in a single sum equal to the
Present
Value of the Annuity Benefit or Accrued Annuity Benefit, as
applicable.
1.22
"Normal Benefit Date" shall be 90 days following Executive's
Separation
from Service (other than due to death or Disability). In the event of
Executive's death, the
Normal Benefit Date shall mean the first day of
the second month following the month in which Executive's death
occurs.
In the event of the
Executive's
Disability, the Normal
Benefit Date
shall be the
Benefit Age set forth in Executive's Participation
Agreement, unless the
Executive has elected to have the Disability
Benefit commence on
the first day of the second month following the
determination of Disability.
1.23
"Normal Benefit
Form" means a Lump Sum
payment equal to the Present
Value, as of the time of payment, of the Annuity Benefit.
1.24
"Participation Agreement" means the agreement between Executive and
the
Bank which sets
forth the particulars of Executive's Supplemental
Benefit and/or
other benefits to which Executive or Executive's
Beneficiary becomes entitled under the Plan.
1.25
"Plan Year" shall mean July 1 to June 30.
1.26
"Pre-Retirement
Reduction" shall
mean the reductions in benefit
required under the
Plan in the event the
Participant Separates
from
Service prior to the
Participant's
Benefit Age.
The Pre-Retirement
Reduction in benefit may result from Separation from Service prior to
the occurrence of one or more of the following: (i) the date on which
the Participant's
Vesting Rate equals 100%, (ii) the date on which the
Prorate Fraction
equals "1" and (iii) the commencement of the
Supplemental Benefit prior to the Participant's attainment of age
62.
1.27
"Present Value" shall mean the actuarial present value (calculated as
of the payment date) of a payment stream. Unless otherwise set forth
herein, the Present
Value shall be determined using a six percent (6%)
interest rate and 1994 Group Annuity Reserving Table.
1.28
"Prorate Fraction"
shall be a fraction,
the numerator of which is the
Executive's years of
employment from the Executive's original date of
hire and the denominator of which shall be set forth in the
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Executive's
Participation
Agreement,
provided, however,
that the
Prorate Fraction shall never exceed "one".
1.29
"Separation from Service" means Executive's death, retirement or other
termination of
employment
with the Bank
within the
meaning of Code
Section 409A. No
Separation from
Service shall be deemed to occur due
to military
leave, sick leave or other bona fide
leave of absence if
the period of such
leave does not exceed six months or, if longer, so
long as Executive's right to reemployment is provided by law or
contract. If the leave
exceeds six months and Executive's right to
reemployment is not
provided by law or by
contract, then Executive
shall have a
Separation from
Service on the first date immediately
following such six-month period.
Whether a Separation
from Service has occurred is determined based on
whether the
facts and circumstances indicate that the Bank and
Executive reasonably
anticipated
that no further
services would be
performed after a
certain date or that the level of bona fide services
the employee would
perform after such
date (whether as an employee or
as an independent
contractor) would
permanently
decrease to no
more
than 49% of the average level of bona fide services performed over the
immediately preceding 36 months (or such lesser period of time in
which
Executive performed
services for the Bank). The determination of
whether Executive
has had a Separation
from Service shall be
made by
applying the presumptions set forth in the Treasury Regulations under
Code Section 409A.
1.30
"Specified Employee"
means, in the event the Bank or the Company is or
becomes publicly
traded, a "Key Employee" as such term is
defined in
Code Section
416(i)
without
regard
to paragraph 5 thereof.
Notwithstanding anything to the contrary herein, in the event
Executive
is a Specified Employee and becomes entitled to a payment hereunder
due
to Separation
from Service for any reason (other than death or
Disability), the
payments to such
Executive shall not
commence until
the first day of the
seventh month
following such Separation from
Service. Whether
and the extent to which a person is a Specified
Employee shall be determined on the "Specified Employee Determination
Date" which shall be
December 31 of each
calendar year and shall be
applicable commencing
on the following April 1, in accordance with the
rules set forth in the Treasury Regulations under Code Section
409A.
1.31
"Spouse" means the
individual to whom Executive is legally married at
the time of
Executive's
death, provided, however, that the term
"Spouse" shall not
refer to an individual to whom Executive is legally
married at the time of
death if Executive
and such individual have
entered into
a formal separation agreement (provided that such
separation agreement
does not provide otherwise or state that such
individual is
entitled to a portion of the benefit hereunder) or
initiated divorce proceedings.
1.32
"Supplemental Benefit"
means a benefit
(before taking into account
federal and state income taxes) payable to an Executive who
satisfies
the conditions to receive a benefit as described in this Plan.
1.33
"Treasury Regulations"
means the final
regulations
promulgated under
Section 409A of the Code.
1.34
"Vesting Rate"
shall be the rate set forth in the Executive's
Participation Agreement.
1.35
"Yearly Benefit Amount" means the annual amount contingently
payable as
an Annuity Benefit.
The Yearly
Benefit Amount shall be equal to the
percentage of the Executive's Final Average Compensation set forth in
the Executive's Participation Agreement.
SECTION II
ESTABLISHMENT OF RABBI TRUST
The Bank may establish a rabbi trust into which the Bank may
contribute
assets which
shall be held therein, subject to the claims of the Bank's
creditors in the event of the Bank's "Insolvency" as defined in the
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agreement which establishes such rabbi trust, until the contributed assets are
paid to Executives and their Beneficiaries in such manner and at such times
as
specified in this Plan. Contributions to a rabbi trust would
provide the Bank
with a source of funds to assist it in meeting the liabilities of this Plan. To
the extent the
language in this Plan is modified by the language in the rabbi
trust agreement,
the rabbi trust agreement shall supersede this Plan.
Contributions to the rabbi trust may be made during each Plan Year
in accordance
with the rabbi trust agreement. It is expected that the amount of such
contribution(s), if any, would be equal to the full present value
of all benefit
accruals under this
Plan, if any,
less: (i) previous contributions made on
behalf of Executive to the rabbi trust, and (ii) earnings to date on all such
previous
contributions. In the
event of a Change in
Control, the Bank
shall
transfer to the rabbi
trust within thirty (30) days prior to such Change
in
Control, the present
value (applying the Interest Factor applicable to a Change
in Control) of an amount sufficient to fully fund the
Supplemental Benefit
for
each Executive covered by this Plan.
SECTION III
BENEFITS
3.1 Separation
from Service On or
After Benefit
Age. If Executive
has a
--------------------------------------------------
Separation from
Service on or after
Benefit Age, Executive
shall be
entitled to a Supplemental Benefit determined in the manner set
forth
herein. The
Supplemental
Benefit shall be determined as an Annuity
Benefit equal to the Yearly Benefit Amount multiplied by the Prorate
Fraction. The Supplemental Benefit shall commence on Executive's
Normal
Benefit Date and shall be payable in a Lump Sum, unless Executive has
elected at the time of
execution of the
Participation
Agreement to
receive another form of benefit.
3.2 Separation
from Service Prior to Benefit Age. If Executive has a
------------------------------------------------
voluntary or
involuntary Separation
from Service
(other than due to
Cause, death or
Disability)
after the Executive
has a vested Accrued
Annuity Benefit but
prior to the attainment of his or her Benefit Age,
Executive shall be
entitled to a Supplemental Benefit, calculated in
the manner set forth in Section 3.1. If applicable, the Supplemental
Benefit shall
be multiplied by the Executive's Vesting Rate. In
addition, if Executive
is less than age 62 at time of commencement of
the Supplemental
Benefit, the Supplemental Benefit will be further
reduced by 5% per year for each year prior to age 62 that the
benefit
payment
commences. The
Supplemental
Benefit
shall commence on
Executive's Normal
Benefit Date and shall be payable in a Lump Sum,
unless Executive
has elected at the time of execution of the
Participation Agreement to receive an Annuity Benefit.
3.3 Death
Benefit.
-------------
(a) If
Executive dies prior to attaining his Benefit Age but while
employed at
the Bank, Executive's Beneficiary shall be
entitled to
the Death Benefit. The Death Benefit shall
commence on the Normal
Benefit Date and shall be payable in
the Normal Benefit Form.
(b) If
Executive dies following Separation from Service and
after
becoming vested in an Accrued Annuity Benefit but prior to the
commencement of
benefit payments, Executive's Beneficiary
shall be entitled
to the payment of the amount otherwise
payable to Executive under the applicable Sub-section of this
Section III, commencing on the Normal Benefit Date and payable
in a Lump Sum.
(c) If
Executive dies
following the
commencement of his
benefit
payments but
prior to receiving the entire Supplemental
Benefit, any remaining
benefits shall be paid
to Executive's
Beneficiary in the
same manner as paid to Executive prior to
his death.
3.4.
Benefit Payable Following a Change in Control.
---------------------------------------------
(a) If a
Change in Control occurs and, Executive has a involuntary
Separation from
Service or voluntary
Separation from Service
for Good Reason
within two years following a Change in
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Control, Executive shall be entitled to a Supplemental Benefit
calculated as if
Executive had attained
Executive's
Benefit
Age at the time of the Change in Contr
