AMENDMENT AND RESTATEMENT
OF
DEFERRED COMPENSATION PLAN FOR
OUTSIDE DIRECTORS
OF NORTHWEST SAVINGS BANK AND
ELIGIBLE AFFILIATES
Effective as of January 1,
2005
This
Plan is an unfunded deferred compensation arrangement to enable
members of the Board of Directors of Northwest Savings Bank
(“Bank”) and its Eligible Affiliates who are not
employed on a full-time basis by the Bank or an Eligible Affiliate
who receive compensation for their services as Directors in the
form of fees, to elect, prior to the period in which such fees are
earned, to defer all or part of such fees for payment in a later
taxable period. This Plan was adopted by the Board of Directors of
the Bank’s predecessor, Northwest Mutual Savings Association
in March of 1979, and was amended effective June 17, 1987,
February 21, 1996 , July 1, 2003 ,
April 1, 2004 and July 1, 2004. Deferral Elections made
by Eligible Directors prior to July 1, 2004 shall be governed
by the terms of their Deferral Elections and of this Plan as in
effect prior to July 1, 2004. The Plan is being amended and
restated as of January 1, 2005 to correct typographical
errors, conform with past practice and maintain compliance with
Section 409A of the Internal Revenue Code.
“Bank”
means Northwest Savings Bank, a Pennsylvania corporation, and its
corporate successors.
“Beneficiary”
means the person whom the Participant has designated pursuant to
Section 5.03 and Exhibit III to receive any amounts
remaining in his/her Director’s Deferred Compensation account
at the Participant’s death.
“Board”
means the Board of Directors of Northwest Savings Bank or any
committee of the Board to which the Board has delegated its
authority with respect to the Plan.
“Director’s
Deferred Compensation Account” is defined in
Section 3.01.
“Director’s
Fees” means all remuneration for service on the Board of the
Bank or any Eligible Affiliate, including retainers, meeting fees
and other payments.
“Disability”
means mental or physical disability of at least six months which
prevents a Participant from engaging in the principal duties of
his/her position as an Eligible Director, provided that such
disability qualifies as a “Disability” under Treasury
Regulations Section 1.409A-3(i)(4).
“Eligible
Affiliate” means the parent corporation or an affiliated
corporation of the Bank which the Board has determined by duly
adopted resolution to be eligible for the Plan including Northwest
Bancorp Mutual Holding Company and Northwest Bancorp,
Inc.
“Eligible
Director” means a member of the Board of Directors of the
Bank or of an Eligible Affiliate, who receives compensation for
his/her services as a Director in the form of fees and who is not
employed by the Bank or an Eligible Affiliate on a full-time
basis.
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“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“Event
of Distribution” means any of the events of distribution
included in the Deferral Election form executed by an Eligible
Director hereunder, and any of the other events of distribution
permitted under Article IV hereof .
“Fiscal
Year” means the Bank’s fiscal year, which ran from July
1 through June 30 until June 30, 2005. The period July 1
— December 31, 2005 was a short Fiscal Year. Effective
January 1, 2006 the Bank’s Fiscal Year corresponds with
the calendar year.
“Participant”
means an Eligible Director 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 this Deferred Compensation Plan as it may be amended from
time to time.
“Plan
Administrator” means the Committee comprised of William
Wagner, Gregory LaRocca and Julie McTavish or their respective
successors on such Committee as may be appointed from time to time
by the Board or by the Compensation Committee of the Board of the
Bank.
“Retire”
or “Retirement” means termination for any reason of the
Participant’s service as a Director following the
Participant’s attainment of 59 1 / 2
, but not later than the
Participant’s age 72.
“Year”
(unless otherwise specified) means the Bank’s Fiscal
Year.
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Deferral of Compensation
Payable as Director’s Fees
Section 2.01 . Deferral Elections . Each Eligible
Director may elect annually to defer the dollar amount or
percentage of his annual compensation payable in the form of
Director’s Fees which he/she specifies in a Deferral Election
which he/she executes in the form of Exhibit I hereto and
files with the Plan Administrator in the Fiscal Year prior to that
in which such Director’s Fees are earned. A Deferral Election
becomes irrevocable (subject to the exceptions set forth below) as
of the December 31 immediately preceding the Fiscal Year with
respect to which it is executed. A Participant may cancel or change
a Deferral Election by filing a later dated one with the Plan
Administrator prior to the time it becomes irrevocable .
Such final , irrevocable Deferral Election shall apply to
the Director’s Fees which the Eligible Director earns in the
Fiscal Year which immediately follows that in which he/she executes
and files his/her Deferral Election. Such Deferral Election shall
also apply to Director’s Fees which the Eligible Director
earns in subsequent Fiscal Years for which no contrary Deferral
Election, or cancellation thereof, is filed with the Plan
Administrator. In addition, in the Year in which a Director first
becomes eligible to participate in the Plan, if the Eligible
Director executes and files his/her Deferral Election within
30 days of first becoming Eligible to participate, such
Deferral Election shall also apply to the Director’s Fees
which the Eligible Director earns in the remainder of the Fiscal
Year after filing his/her Deferral Election with the Plan
Administrator. A Deferral Election shall be irrevocable as of the
December 31 immediately preceding the Fiscal Year with respect
to which it was executed, except that the Participant shall retain
the right (a) to accelerate the time of payment scheduled
under any previously filed Deferral Election in the event of an
unforeseeable emergency in accordance with Sections 4.02
through 4.04 hereof, (b) to change his/her
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designation of
beneficiaries with respect to any previously filed Deferral
Election, upon filing a duly executed beneficiary designation form
with the Plan Administrator in accordance with Section 5.02 and
(c) to further defer the payment of Director’s Fees
scheduled under any Deferral Election previously filed by executing
a Postponement of Deferral Election in accordance with
Section 2.02 hereof.
Section 2.02 Change in Time and Form of Payment . A
Participant may elect to change the form of payment or to further
defer the payment of Director’s Fees subject to a Deferral
Election previously filed, by executing a Change of a Deferral
Election in the form of Exhibit II hereto with the Plan
Administrator, subject to the following conditions:
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(a)
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the
Participant’s Change of Deferral Election shall not be
effective until the first day of the 13 th month after it is filed with the
Plan Administrator, and shall not apply to any payment or series of
installment payments treated as a single payment scheduled to be
paid under any previously filed Deferral Election prior to the
first day of the 13 th month after the Participant’s
Change of Deferral Election is filed with the Plan Administrator;
and
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(b)
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the
Change of Deferral Election postpones the date of payment of the
Deferral Election to which it relates for a period of at least five
years from the date such payment was previously scheduled to be
paid, or in the case of a series of installment payments treated as
a single payment, five years from the date the first payment in the
series was previously scheduled to be paid.
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(c)
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any
Change of Deferral Election that changes only the form of payment
must delay the starting date of the originally scheduled payment by
at least five years.
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The right to a
series of substantially equal periodic installment payments over a
predetermined number of years is not a right to a life annuity and
is treated as the right to a single payment under this Plan.
Accordingly, filing of a Change of Deferral Election delaying for
five years the right to receive installment payments scheduled
under a previously filed Deferral Election to be made over a
five-year period will result in all of such scheduled installment
payments to be paid in a lump sum in the fifth year, and filing of
a Change of Deferral Election delaying for five years the right to
receive installment payments scheduled under a previously filed
Deferral Election to be made over a ten-year period will result in
the first five of such scheduled installments to be paid in a lump
sum in the fifth year, and the remaining five annual installments
to be paid as previously scheduled in the fifth through the
10 th
years.
Accumulation of Deferred
Compensation
Section 3.01 . Participant Accounts . The dollar
amount of Director’s Fees deferred pursuant to each Deferral
Election executed and filed by each Participant hereunder shall be
credited as of the end of the calendar month in which such Fees are
payable to such Participant to an unfunded book reserve account
(the “Director’s Deferred Compensation Account”)
and shall be recorded on the financial books and records of the
Bank or the Eligible Affiliate, as applicable, as a deferred
compensation liability in the names of the respective
Participants.
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Section 3.02 . Interest on Accounts . Unless the Bank
allows Participants to direct the investment of their Deferred
Compensation Accounts, the Director’s Deferred Compensation
Account of each Participant having a credit balance shall be
credited with interest at the end of each calendar quarter at the
rate equal to the average crediting rate for the insurance policies
which the Bank carried on the lives of the Directors in the
preceding Fiscal Year, grossed up by dividing it by one
(1) minus the Bank’s highest marginal income tax rate
for the preceding Fiscal Year. For example, if the average
crediting rate on the Directors’ life insurance policies in
the preceding Fiscal Year was 5% and the Bank’s highest
marginal tax rate for that Fiscal Year was 35%, the interest
payable on the Directors’ Deferred Compensation Account for a
calendar quarter in the current Fiscal Year would be one-fourth of
7.69% (5%/(1 minus 35%)), or 1.92%. Such interest shall be credited
on or before the last business day of each calendar quarter in the
current Fiscal Year on the average credit balance held in each
Participant’s Director’s Deferred Compensation Account
during that quarter. If Participants direct the investment of their
Deferred Compensation Accounts, the net earnings or losses shall be
attributable to those investments and no interest shall be paid on
such Accounts.
Section 3.03 . Additional Benefit Upon Death Before Age
72 . In the event that a Participant dies while an Eligible
Director but before attaining age 72, his/her beneficiary shall
receive an additional death benefit payable in a lump sum within
60 days following death calculated as the present value of the
additional balance that the Participant would have accrued in
his/her Director’s Deferred Compensation Account assuming
that (1) he/she had not died but had continued as a
Participant to his/her age 72, (2) he/she had continued the
same Deferral Election of Director’s Fees to age 72 that
he/she had been making at the date of death, and (3) interest
had
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continued to be
credited on such deferred Director’s Fees pursuant to
Section 3.02 to his/her age 72 at the same rate as was in
effect at the Participant’s date of death.
Section 4.01 . Selection of Event of Distribution .
Within 30 days following the first to occur of the Events of
Distribution selected by each Participant in each Deferral Election
filed with the Plan Administrator, the amount of his/her
Director’s Deferred Compensation Account governed by each
Deferral Election shall become payable to the Participant (or
his/her designated beneficiary) in accordance with
Article V.
Section 4.02 . Unforeseeable Emergency . In addition
to the Events of Distribution selected by the Participant in
his/her Deferral Election, as referred to in Section 5.01, a
portion of the Director’s Deferred Compensation Account of
any Participant shall be payable to him/her or to any of his/her
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 Participant or beneficiary if early withdrawal were not
permitted , upon a withdrawal request duly filed and
documented with the Plan Administrator. Any early withdrawal
pursuant to this section is limited to the amount necessary to meet
the emergency, which cannot be met from other resources of the
Participant or of his/her spouse, beneficiary or dependent, such as
insurance, savings or borrowing, plus an amount equal to the taxes
that must be paid as a result of such early distribution. For the
purposes of this Article IV “dependent”
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shall mean as
defined in Code Section 152, without regard to Code
Section 152(b)(1), (b)(2) and (d)(1)(B).
Section 4.03 . Definition of Unforeseeable Emergency .
Conditions which warrant approval of a Participant’s (or
beneficiary’s) application for early withdrawal from a
Directors’ Deferred Compensation Account because of
unforeseeable emergency are limited to cases of severe financial
hardship to the Participant (or to his/her beneficiary) resulting
from an illness or accident of the Participant, his/her spouse,
beneficiary or dependent, loss of the property of the Participant
or of his/her spouse, beneficiary or dependent due to casualty
(including the need to rebuild a home following damage not
otherwise covered by insurance), or other similar and extraordinary
and unforeseeable circumstances arising out of events beyond the
control of the Participant or of his/her spouse, beneficiary or
dependent. Examples of what may constitute unforeseeable
emergencies, depending on the relevant facts and circumstances,
include: imminent foreclosure of or eviction from the primary
residence; medical expenses, prescription drug medications and
funeral expenses. The purchase of a home and the payment of college
tuition are not unforeseeable emergencies.
Section 4.04. Amount of Payment Permitted and Conditions of
Payment Upon an Unforeseeable Emergency . Distributions because
of an unforeseeable emergency may not exceed the amount reasonably
necessary to satisfy the emergency need, which may include amounts
necessary to pay any Federal, State, local or foreign income taxes
or penalties reasonably anticipated to result from the
distribution. Distributions because of an unforeseeable emergency
may not be made to
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the extent that
the financial hardship to the Participant (or to his/her spouse,
beneficiary, or dependent) is or may be relieved —
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(a)
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through reimbursement or
compensation by insurance or otherwise; or
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(b)
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by
liquidation of the Participant’s assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship; or
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(c)
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by
cessation of deferrals under the Plan.
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Amounts
withdrawn may not be returned to the Plan. Withdrawals will be
subject to Federal income tax. Participants who make a hardship
withdrawal may elect to cancel Elective Deferrals or other
contributions to the Plan for the remainder of the Plan Year
following receipt of a hardship distribution.
Section 4.05 . Other Events of Distribution . In
addition to the Events of Distribution selected by the Participant
in his/her Deferral Election, as referred to in Section 5.01,
payments from the Director’s Deferred Compensation Account of
any Participant shall be accelerated (within the limits of Code
§409A and the regulations thereunder) to the extent that the
Plan Administrator determines to be necessary to:
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(a)
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pay
an individual other than the Participant to fulfill a domestic
relations order, as defined in Code
Section 414(p)(1)(B);
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(b)
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comply with Federal, State, local or
foreign ethics laws or conflicts of interest laws;
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(c)
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provide cashouts of the entirety of
the Participant’s interest under this and related plans of
nonqualified deferred compensation of the Bank and its
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Eligible
Affiliates where such entire interest is not in excess of the
applicable dollar amount under Code
Section 402(g)(1)(B);
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