NORTHWEST SAVINGS BANK AND
AFFILIATES UPPER
MANAGERS’ BONUS DEFERRED
COMPENSATION PLAN
This Amended and
Restated Northwest Savings Bank and Affiliates Upper
Managers’ Bonus Deferred Compensation Plan (the
“Plan”), effective January 1, 2005 (the
“Effective Date”) updates and revises the
Managers’ Bonus Deferred Compensation Plan of Northwest
Savings Bank and Affiliates (the “Predecessor Plan”),
which was effective as of July 1, 2000 and was amended
effective as of July 1, 2001 solely to comply with
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and regulations thereunder. The Plan was
frozen, effective December 31, 2005, with the effect that the
Participants’ existing and outstanding elections to defer
compensation shall be subject to the terms of this Plan. The Board
has designated the following affiliates of the Bank as eligible to
participate in the Plan effective from July 1, 2000: Northwest
Consumer Discount Company; Jamestown Savings Bank.
“Board” means the Board of Directors of
Northwest Savings Bank.
“Bank” or “Northwest” means
Northwest Savings Bank, a Pennsylvania corporation, and its
corporate successors, and such of its affiliated corporations as
the Board determines to make eligible for the Plan, by duly adopted
resolution.
“Disability” means the Participant (a) is
unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can
be
- 1 -
expected to
result in death, or last for a continuous period of not less than
12 months; (b) by reason of any medically determinable
physical or mental impairment which can be expected to result in
death, or last for a continuous period of not less than
12 months, is receiving income replacement benefits for a
period of not less than three months under an accident and health
plan covering employees of the Bank; or (c) is determined to
be disabled by the Social Security Administration.
“Eligible Affiliate” means an affiliated
corporation of the Bank which the Board has determined by duly
adopted resolution to be eligible for the Plan.
“Eligible Employee” means a member of the upper
management of the Bank or of an Eligible Affiliate at Grade Level
16 or above who is eligible to receive an annual management
incentive bonus.
“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended.
“Event
of Distribution” means the earlier of the
Participant’s (a) voluntary Separation from Service;
(b) involuntary Separation from Service for a period of six
consecutive months; (c) death; or
(d) Disability.
“Participant” means an Eligible Employee who
elects to defer compensation pursuant to the Plan and who retains,
or whose beneficiaries retain, benefits under the Plan in
accordance with its terms.
“Plan” means the Amended and Restated Northwest
Savings Bank and Affiliates Upper Managers’ Bonus Deferred
Compensation Plan as it may be amended from time to
time.
“Plan
Administrator” means the human resources department of
the Bank.
- 2 -
“
Separation from Service” or “ Separates from
Service ” means the Participant’s retirement,
Disability, death 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 6 months or, if longer, so long as the
Participant’s right to reemployment is provided by law or
contract. If the leave exceeds six (6) months and the
Participant’s right to reemployment is not provided by law or
by contract, then the Participant shall have a Separation from
Service on the first date immediately following such six (6)-month
period. Whether a Separation from Service has occurred is
determined based on whether the facts and circumstances indicate
that the Bank and the Participant reasonably anticipated that no
further services would be performed after a certain date or that
the level of bona fide services the Participant would perform after
such date (whether as an employee or as an independent contractor)
would permanently decrease to less than 50% of the average level of
bona fide services performed over the immediately preceding
36 months (or such lesser period of time in which the
Participant performed services for the Bank).
“Specified Employee” means a “key
employee” of the Bank within the meaning of Code Section
416(i) without regard to paragraph 5 thereof (i.e., generally,
employees making more than $150,000 per year, as adjusted annually
by the IRS), determined in accordance with Treasury Regulation
1.409A-1(i).
“Year” (unless otherwise specified) means the
Bank’s fiscal year, which runs from July 1 through
June 30.
- 3 -
Section 2.01 . Deferral Elections
. Each Eligible Employee may elect
each year to defer the dollar amount or percentage of his annual
bonus which he specifies in a Deferral Election Form which he
executes in the form of Exhibit 1 hereto and files with the
Plan Administrator. Such Deferral Election shall apply only to the
annual bonus which the Eligible Employee earns in the fiscal year
which follows that in which he executes and files his Deferral
Election Form. In addition, in the year in which an employee first
becomes eligible to participate in the Plan, including the year in
which the Plan is first adopted by the Bank, if the Eligible
Employee executes and files his Deferral Election within
30 days of first becoming Eligible to participate, such
Deferral Election shall also apply to the annual bonus which the
Eligible Employee earns in the fiscal year in which his Deferral
Election is filed. Once made, a Deferral Election shall be
irrevocable and shall remain in effect for the fiscal year with
respect to which it was executed, except that the Participant shall
retain the right to change his designation of beneficiaries with
respect to any Deferral Election at any time, upon filing a duly
executed beneficiary designation form with the Plan Administrator
in accordance with Section 5.02. Notwithstanding the
foregoing, effective December 31, 2005, the Plan is hereby
frozen so that no further elections to defer compensation shall be
permitted under the Plan.
Accumulation of Deferred
Compensation
Section 3.01 . Participant Accounts . The
dollar amount of annual bonus deferred pursuant to each Deferral
Election executed and filed by each Participant hereunder shall be
credited as of
- 4 -
the end of the
calendar month in which such bonus is payable to such Participant
to an unfunded book reserve account (the “Deferred
Compensation Account”) and shall be recorded on the financial
books and records of the Bank as a deferred compensation liability
in the names of the respective Participants.
Section 3.02 . Interest on Accounts
. The Deferred Compensation Accounts
of each Participant having a credit balance shall earn interest at
the annual earnings rate paid on the Bank’s five
(5) year certificates of deposit as of the end of the
preceding fiscal year. Such interest shall be credited on or before
the last business day of each calendar quarter on the average
credit balance held in each Participant’s Deferred
Compensation Account during that quarter.
Section 4.01 . Event of Distribution
. Within 30 days following the
Event of Distribution, the aggregate amount of his Deferred
Compensation Account shall become payable to the Participant (or
his designated beneficiary) in accordance with
Article V.
Section 4.02 . Unforeseeable Emergency
. In addition to the Event of
Distribution, a portion of the Deferred Compensation Account of any
Participant shall be payable to him or to any of his beneficiaries
in the event of an unforeseeable emergency that is caused by an
event beyond the control of the Participant or beneficiary and that
would result in severe financial hardship to the individual if
early withdrawal were not permitted. Any early withdrawal pursuant
to this section is limited to the amount necessary to meet the
emergency, which cannot be met from other
- 5 -
resources, such
as insurance, savings or borrowing.. Such withdrawal shall be made
within 30 days following the date on which the Bank determines
that the Participant has suffered an unforeseeable
emergency.
Section 4.03 . Definition of Unforeseeable
Emergency .
Conditions which warrant approval of a Participant’s (or
beneficiary’s) application for early withdrawal on account of
unforeseeable emergency are limited to cases of severe financial
hardship to the Participant (or to his spouse, beneficiary, or
dependent as defined in Code Section 152 without regard to
Code Section 152(b)(1), (b)(2), and (d)(1)(B)) resulting from a
sudden and unexpected illness or accident, 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. Early withdrawal
may not be made to the extent that the financial hardship to the
Participant (or to his beneficiary) is or may be relieved
—
|
|
(a)
|
|
through reimbursement or
compensation by insurance or otherwise;
|
|
|
|
|
|
|
|
(b)
|
|
by
liquidation of the Participant’s assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship, or
|
|
|
|
|
|
|
|
(c)
|
|
cessation of deferrals under this
Plan.
|
The need to
send a Participant’s dependent to college or to purchase a
home are not considered an unforeseeable emergency. Amounts
withdrawn may not be returned to the Plan. Withdrawals will be
subject to Federal income tax. A Participant may include in his
hardship withdrawal the amount of taxes he will incur as a result
of it.
Participants
who make a hardship withdrawal may not make Elective Deferrals or
other contributions to the Plan for twelve months following receipt
of a hardship distribution.
- 6 -
Payment of Deferred
Compensation
Section 5.01 . Payment of Account Balances .
The current balance of the Participant’s Deferred
Compensation
|