Exhibit 10.8
SAVINGS INSTITUTE BANK &
TRUST COMPANY
DIRECTOR DEFERRED FEE
AGREEMENT
THIS AGREEMENT is
made this 1 st day of December, 2008 by and
between the Savings Institute Bank & Trust Company (the
“Bank”), a savings bank headquartered in Willimantic,
Connecticut, and
(the “Director”).
INTRODUCTION
In an effort to reward past service,
encourage continued service on the Bank’s Board of Directors,
and as a method to attract future Directors, the Bank is willing to
provide to the Director a deferred fee opportunity. The Bank will
pay each Director’s benefits from the Bank’s general
assets.
AGREEMENT
The Director and the Bank agree as
follows:
Article 1
Definitions
1.1 Definitions. Whenever
used in this Agreement, the following words and phrases shall have
the meanings specified:
1.1.1 “Anniversary
Date” means December 31 of each year.
1.1.2 “Change in
Control” means any one of the following events
occur:
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(i)
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Merger : The Bank merges into or consolidates with
another corporation, or merges another corporation into the Bank,
and as a result less than a majority of the combined voting power
of the resulting corporation immediately after the merger or
consolidation is held by persons who were stockholders of the Bank
immediately before the merger or consolidation.
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(ii)
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Acquisition
of Significant Share Ownership : The Bank files, or is required to file, a
report on Schedule 13D or another form or schedule (other than
Schedule 13G) required under Sections 13(d) or 14(d) of the
Securities Exchange Act of 1934, if the schedule discloses that the
filing person or persons acting in concert has or have become the
beneficial owner of 25% or more of a class of the Bank’s
voting securities, but this clause (b) shall not apply to
beneficial ownership of Bank voting shares held in a fiduciary
capacity by an entity of which the Bank directly or indirectly
beneficially owns 50% or more of its outstanding voting
securities.
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(iii)
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Change in Board
Composition : During any period of two
consecutive years, individuals who constitute the Bank’s
Board of Directors at the beginning of the two-year period cease
for any reason to constitute at least a majority of the
Bank’s Board of Directors; provided, however, that for
purposes of this clause (iii), each director who is first elected
by the board (or first nominated by the board for election by the
stockholders) by a vote of at least two-thirds (
2
/
3 ) of the directors who were
directors at the beginning of the two-year period shall be deemed
to have also been a director at the beginning of such period;
or
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(iv)
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Sale of
Assets : The Bank sells
to a third party all or substantially all of its assets.
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Notwithstanding anything in this
Agreement to the contrary, in no event shall the conversion of the
Bank from mutual to stock form (including without limitation,
through the formation of a stock holding company) or the
reorganization of the Bank into the mutual holding company form of
organization constitute a “Change in Control” for
purposes of this Agreement.
1.1.3 “Code”
means the Internal Revenue Code of 1986, as amended.
1.1.4 “Deferral
Account” means the Bank’s accounting of the
Director’s accumulated Deferrals plus accrued
interest.
1.1.5 “Deferrals”
means the amount of the Director’s Fees, which the Director
elects to defer according to this Agreement.
1.1.6
“Disability” means the Director’s
inability to perform substantially all normal duties of a Director,
as determined by the Bank’s Board of Directors in its sole
discretion. As a condition to any benefits, the Bank may require
the Director to submit to such physical or mental evaluations and
tests as the Board of Directors deems appropriate.
1.1.7 “Effective
Date” means December 1, 2008.
1.1.8 “Election
Form” means the Form attached as Exhibit A.
1.1.9 “Fees”
means the total Director’s fees payable to the
Director.
1.1.10 “Plan
Year” means the calendar year.
1.1.11 “Prime
Rate” means the Prime Interest Rate reported in the Wall
Street Journal on the business day immediately prior to the
Anniversary Date.
1.1.12 “Termination of
Service” shall mean a “Separation from
Service” as defined under Section 409A of the Code.
Section 409A defines a Separation of Service as a termination
of a Director’s services (whether as director, employee or as
an independent contractor) to the Company and the Bank for reasons
other than death or disability. Whether a Separation from Service
has occurred shall be determined in accordance with the
requirements of Section 409A of the Code based on whether the
facts and circumstances indicate that the Company, the Bank and the
Director reasonably anticipated that no further services would be
performed after a certain date or that the level of bona fide
services the Director would perform after such date (whether as a
director, employee or as an independent contractor) would
permanently decrease to no more than twenty percent (20%) of
the average level of bona fide services performed (whether as a
director, employee or an independent contractor) over the
immediately preceding thirty-six (36) month period.
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Article 2
Deferral Election
2.1 Election
. A Director must file a Director Fee Deferral Election Form prior
to the December 15 th immediately preceding the Plan
Year in which the Director wishes to defer Fees.
2.2 Election
Changes.
2.2.1 Generally. The Director
may modify the amount of Fees to be deferred annually by filing a
new Election Form with the Bank prior to the beginning of the Plan
Year in which the Fees are to be deferred. The modified deferral
election shall not be effective until the Plan Year following the
year in which the subsequent Election Form is received and approved
by the Bank. The new Election Form may be used to change the
Director’s distribution option; however, the change:
(i) may not accelerate the payment of the Director’s
Deferral Account, (ii) must be made at least 12 months prior
to the scheduled distribution date, and (iii) must postpone
payment (or the commencement of payments) for at least 5 years from
the scheduled distribution date
2.2.2 Hardship. If an
unforeseeable financial emergency (as defined under
Section 409A of the Code) occurs, the Director, by written
instructions to the Bank, may reduce future deferrals under this
Agreement in accordance with Section 409A of the
Code.
Article 3
Deferral Account
3.1 Establishing and
Crediting. The Bank shall establish a Deferral Account on its
books for the Director and shall credit to the Deferral Account the
following amounts:
3.1.1 Deferrals. The Fees
deferred by the Director as of the time the Fees would have
otherwise been paid to the Director.
3.1.2 Interest. On the first
day of each month and immediately prior to the payment of any
benefits, interest on the Deferral Account balance since the
preceding credit under this Section 3.1.1, if any, at an
annual rate, compounded monthly, equal to the Prime Rate for the
previous Anniversary Date. However, the actual crediting rate will
equal the Prime Rate unless the Prime Rate is less than Six
(6%) or greater than Twelve (12%). In which case the maximum
crediting rate shall be Twelve (12%) and the minimum shall be
Six (6%).
3.2 Statement of Accounts.
The Bank shall provide to the Director, within one hundred twenty
(120) days after each Anniversary Date, a statement setting
forth the Deferral Account balance.
3.3 Accounting Device Only.
The Deferral Account is solely a device for measuring amounts to be
paid under this Agreement. The Deferral Account is not a trust fund
of any kind. The Director is a general unsecured creditor of the
Bank for the payment of benefits. The benefits represent the mere
promise by the Bank to pay such benefits. The Director’s
rights are not subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by the Director’s creditors.
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Article 4
Distribution of
Benefits
4.1 Termination of Service
Benefit. Upon the Director’s Termination of Service, the
Bank shall pay to the Director the benefit described in this
Section 4.1 in lieu of any other benefit under this
Agreement.
4.1.1 Amount of Benefit. The
benefit under this Section 4.1 is the Deferral Account balance
at the Director’s Termination of Service date.
4.1.2 Payment of Benefit. The
Bank shall pay the benefit to the Director in the form elected by
the Director on the Election Form. If the Director elected to
receive his benefit in the form of installments, the Bank shall
continue to credit interest on the remaining Deferral Account
balance during any applicable installment perio
