Exhibit 10.1
Ponce Bank
Employee Stock Ownership Plan
With 401(k) Provisions
(Effective January 1, 2021)
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Table of Contents
ARTICLE I INTRODUCTION | 3 |
ARTICLE II DEFINITIONS | 3 |
ARTICLE III ELIGIBILITY | 12 |
ARTICLE IV VESTING | 13 |
ARTICLE V CONTRIBUTIONS AND ALLOCATIONS | 15 |
ARTICLE VI MAXIMUM LIMITATION ON CONTRIBUTIONS | 18 |
ARTICLE VII INVESTMENT OF TRUST ASSETS | 24 |
ARTICLE VIII COMPANY STOCK VALUATION AND INVESTMENTS IN COMPANY STOCK | 25 |
ARTICLE IX PARTICIPANT LOANS | 25 |
ARTICLE X IN-SERVICE WITHDRAWALS | 27 |
ARTICLE XI DISTRIBUTIONS | 29 |
ARTICLE XII RIGHT TO SELL COMPANY STOCK | 33 |
ARTICLE XIII VOTING AND TENDER OF COMPANY STOCK | 35 |
ARTICLE XIV ADMINISTRATION | 36 |
ARTICLE XV AMENDMENTS | 39 |
ARTICLE XVI TERMINATION | 39 |
ARTICLE XVII MISCELLANEOUS | 40 |
ARTICLE XVIII TOP-HEAVY PROVISIONS | 41 |
ARTICLE XIX EXEMPT LOANS | 44 |
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Ponce Bank Employee Stock Ownership Plan
(with 401(k) Provisions)
WHEREAS, Ponce Bank, a federally chartered savings association (the “Bank”), previously adopted the Ponce Bank Employee Stock Ownership Plan (the “Plan”), effective January 1, 2017; and
WHEREAS, the Bank desires to merge the Ponce Bank 401(k) Profit Sharing Plan (the “401(k) Plan”) into this Plan, such that this Plan includes both: (1) a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”); (2) a discretionary employer contribution feature; (3) a qualified nonelective contribution feature to qualify as a safe harbor plan under Section 401(k)(12)(C) of the Code; and (4) an employee stock ownership plan portion that is intended to qualify as both a stock bonus plan under Section 401(a) of the Code and an employee stock ownership plan under Section 4975(e)(7) of the Code.
NOW, THEREFORE, in consideration of the foregoing, the Bank hereby amends and restates this Plan, effective as of January 1, 2021.
ARTICLE I
INTRODUCTION
ARTICLE II
DEFINITIONS
The following initially capitalized words and phrases when used in the Plan shall have the following meanings unless the context clearly requires otherwise.
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(ii) results in a Change in Control of Bancorp within the meaning of the Bank Holding Company Act of 1956, as amended, or the Change in Bank Control Act and the Rules and Regulations of the Board of Governors of the Federal Reserve System (“FRS”) promulgated pursuant thereto (provided, that in applying the definition of change in control as set forth under the Rules and Regulations of the FRS, the Board shall substitute its judgment for that of the FRS); or (iii) results in a Change in Control of the Bank within the meaning of the Home Owners’ Loan Act, as amended, the Federal Deposit Insurance Act, or the Rules and Regulations promulgated by the Office of the Comptroller of the Currency (the “OCC”), as in effect on the date hereof (provided, that in applying the definition of change in control as set forth under the rules and regulations of the OCC, the Board shall substitute its judgment for that of the OCC); or (iv) without limitation such a Change in Control shall be deemed to have occurred at such time as:
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In no event, however, shall a Change in Control be deemed to have occurred as a result of (1) any acquisition of securities or assets of Bancorp or the Bank, by any employee benefit plan maintained by the Bank, by the Ponce De Leon Foundation, or by Ponce Bank Mutual Holding Company; or (2) the conversion of Ponce Bank Mutual Holding Company to stock form and/or a contemporaneous stock offering of a newly-formed stock holding company.
Payments made within 2-1/2 months after severance from employment (within the meaning of Code section 401(k)(2)(B)(i)(I)) will be Compensation if they are payments that, absent a severance from employment, would have been paid to the Participant while the Participant continued in employment with the Employer and are regular compensation for services during the Participant’s regular working hours, compensation for services outside the Participant’s regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar compensation, and payments for accrued bona fide sick, vacation or other leave, but only if the Participant would have been able to use the leave if employment had continued. Any payments not described above are not considered Compensation if paid after severance from employment, even if they are paid within 2-1/2 months following severance from employment, except for payments to an individual who does not currently perform services for the Employer by reason of qualified military service (within the meaning of Code section 414(u)(1)) to the extent these payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the Employer rather than entering qualified military service.
Notwithstanding the foregoing, Compensation shall not include any amounts earned prior to becoming a Participant in the Plan. The annual compensation for each Participant taken into account under the Plan shall not exceed $290,000, as adjusted by the Internal Revenue Service at the same time and in the same manner as under Code Section 415(d).
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Exclusions. Compensation excludes the following amounts as follows:
Source | Exclusion(s) |
Elective Contributions; Qualified Nonelective Contributions | Bonuses, Commissions, Bonus 2; Car Allowance; Misc., Employee Incentive, Rep Expense In/Out, Representative Expense, Retro Pay; Differential Wages, Unused Leave |
Matching Contributions | Differential Wages; Unused Leave |
401(k) Safe Harbor Contributions | Differential Wages; Unused Leave |
Other Discretionary Contributions | Differential Wages; Unused Leave |
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(iv) caring for the child during the period immediately following the birth or placement for adoption. Hours of Service shall also, for these limited purposes, include each hour for which an Employee who has worked for the Bank or an Affiliate for at least 12 months and for at least 1,250 Hours of Service during the year preceding the start of the leave, is absent from employment on an unpaid family leave for up to 12 weeks, as provided for in the Family and Medical Leave Act of 1993 (the “FMLA Leave”), by reason of (A) the birth or adoption of a child, (B) the care of a spouse, child or parent with a serious health condition, or (C) the Employee’s own serious health condition, provided that such an Employee provides the Bank with a 30-day advance notice if the leave is foreseeable, and/or medical certification satisfactory to support the Employee’s request for leave because of a serious health condition. For purposes of determining whether an Employee’s leave qualifies as a “FMLA Leave” in order to be credited with Hours of Service under this Plan, the Family and Medical Leave Act of 1993 (“FMLA”) and the regulations promulgated thereunder shall apply. During the period of absence, the Employee shall be credited with the number of hours that would be generally credited but for such absence or if the general number of work hours is unknown, eight Hours of Service for each normal workday during the leave (whether or not approved). These hours shall be credited to the computation period in which the leave of absence commences if crediting of such hours is required to prevent the occurrence of a one-year Break in Service in such computation period, and in other cases, in the immediately following computation period. The computation period shall be the same as the relevant period for determining eligibility computation periods and vesting computation periods. Unless otherwise required under the FMLA and the regulations promulgated thereunder,
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no more than 501 Hours of Service shall be credited under this paragraph for any single continuous period (whether or not such period occurs in a single computationperiod).
Participants on military leaves of absence who are not directly or indirectly compensated or entitled to be compensated by the Bank while on such leave shall be credited with Hours of Service as required by the Uniformed Services Employment and Reemployment Rights Act.
Notwithstanding any other provision of this Plan to the contrary, an Employee shall not be credited with Hours of Service more than once with respect to the same period of time.
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ARTICLE III
ELIGIBILITY
“Eligibility Year” means an applicable eligibility period (as defined below) in which the Employee has completed 1,000 hours of service or has worked at least 500 hours during three consecutive 12-month periods beginning on January 1, 2021. For this purpose, an Eligible Employee’s first “eligibility period” is the 12-consecutive month period beginning on the first day on which the Participant has completed an Hour of Service; and his or her subsequent eligibility periods will be 12-consecutive month periods beginning on each January 1 after the first day of service.
Notwithstanding the foregoing, the following individuals shall not be eligible to participate in the
Plan:
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employment with the Bank terminates for any reason, including death or Disability; (c) the date on which the Employee’s employment with the Bank is governed by a collective bargaining agreement that does not provide for participation in this Plan; or (d) the date on which the Employee becomes a “leased employee” as defined in Code section 414(n).
ARTICLE IV
VESTING
Years of Service | Vesting Percentage |
Less Than Two Years of Service | 0% |
Two Years of Service | 20% |
Three Years of Service | 40% |
Four Years of Service | 60% |
Five Years of Service | 80% |
Six Years of Service or More | 100% |
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Years of Service | Vesting Percentage |
Less Than Three Years of Service | 0% |
Three or More Years of Service | 100% |
If any former Participant shall be reemployed by the Employer before incurring five consecutive Breaks in Service, and such former Participant had received, or was deemed to have received, a distribution of the Participant’s entire vested interest prior to reemployment, the forfeited account shall be
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reinstated upon the reemployment of such Participant. In the event of a deemed distribution, the undistributed portion of the Participant’s account must be restored in full, unadjusted by any gains or losses occurring subsequent to the Valuation Date coinciding with or next following the Participant’s termination of employment. The source for such reinstatement shall be any forfeitures occurring during the Plan Year. If such source is insufficient, then the Employer shall contribute an amount which is sufficient to restore any such forfeited account provided, however, that if a discretionary contribution is made for such Plan Year pursuant to Section 5.1, such contribution shall first be applied to restoring such accounts and the remainder shall be allocated in accordance with Section 5.5.
ARTICLE V
CONTRIBUTIONS AND ALLOCATIONS
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In the event shares of Company Stock are sold to the Trustee for a Plan Year, the fair market value of such Company Stock shall be determined in accordance with the provisions of Article VIII.
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Distributions from the Plan shall include income, gains, and losses accrued as of the coincident or immediately preceding Valuation Date and shall not be adjusted proportionately to reflect any income, gains, or losses accrued after that Valuation Date. All valuations shall be based on the fair market value of the assets in the Trust on the Valuation Date.
ARTICLE VI
MAXIMUM LIMITATION ON CONTRIBUTIONS
If a Participant would exceed the limitation of this Section 6.1 when the amount the Participant elects to contribute to his or her Elective Contribution Sub-Account is aggregated with the amounts deferred by the Participant under other plans or arrangements described in Sections 401(k), 408(k), 408(p), 403(b), 457 or 501(c)(18) of the Code, the Participant may request that the Committee distribute the excess deferrals to him. Such
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excess deferrals and income or loss allocable thereto will be distributed no later than April 15 of the calendar year following the calendar year in which any such excess deferrals are contributed to Participants who claim such allocable deferral contributions for the preceding calendar year. The Participant’s claim shall be in writing; shall be submitted to the Committee no later than April 1; shall specify the Participant’s deferral contribution amount for the preceding calendar year; and shall be accompanied by the Participant’s written statement that if such amounts are not distributed, such deferral contributions, when added to amounts deferred under other plans or arrangements described in Sections 401(k), 408(k), 408(p), 403(b), 457 or 501(c)(18) of the Code, exceed the limit imposed on the Participant in accordance with the applicable provisions of the Code for the calendar year in which the deferral occurred. To the extent the excess deferral arises under this Plan when combined with other plans of the Employer, the individual will be deemed to have notified the Committee of the excess deferral and requested distribution of the excess deferral.
The income or loss allocable to the excess deferrals shall be calculated in accordance with Section 6.3(c). Excess deferrals shall be treated as Annual Additions, unless such amounts are distributed to the Participant no later than April 15 of the calendar year following the year in which any such excess deferrals are contributed.
In the event the Elective Contributions (excluding amounts characterized as Catch-Up Contributions) are used to satisfy the Average Contribution Percentage test under Section 6.3, the Actual Deferral Percentage test must be satisfied both with and without the inclusion of such Elective Contributions.
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In computing the Average Contribution Percentages, the Committee shall not include Matching Contributions that are forfeited excess deferrals under Section 6.1, Excess Contributions under Section 6.3(a), or Excess Aggregate Contributions under Section 6.3(b).
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If no more than one-third of Bank contributions to the Plan for a Plan Year which are deductible under Code section 404(a)(9) are allocated to the Accounts of Participants who are Highly Compensated Employees, there shall be excluded in determining the Maximum Permissible Amount of each Participant for such Plan Year (A) the contributions applied to the payment of interest on an Exempt Loan; and (B) any forfeitures of Bank contributions if the forfeited contributions were Company Stock acquired with the proceeds of an Exempt Loan.
ARTICLE VII
INVESTMENT OF TRUST ASSETS
The Plan is intended constitute a plan described in ERISA Section 404(c)(1) and the regulations issued thereunder. The fiduciaries of the Plan shall be relieved of any liability of any losses that are the direct and necessary result of investment instructions given by the Participant, his or her Beneficiary, or an alternate payee under a Qualified Domestic Relations Order.
Expenses attributable to the acquisition of investments shall be charged to the Account of the Participant for which such investment is made. The Committee may appoint an investment advisor in accordance with ERISA.
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ARTICLE VIII
COMPANY STOCK VALUATION AND INVESTMENTS IN COMPANY STOCK
ARTICLE IX
PARTICIPANT LOANS
$50,000 reduced by the excess (if any) of the highest outstanding balance of plan loans during the one- year period ending on the day before the loan is made over the outstanding balance of plan loans on the date the loan is made, or (b) the present value of the Participant’s vested interest in his or her Account. For purposes of the above limitation, plan loans include all loans from all plans maintained by the Employer.
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9.5. Security. Loans must be secured by the “participant’s” vested interest in his or her Account. If the qualified joint and survivor annuity and qualified preretirement survivor annuity requirements pursuant to the Code apply to a Participant, a Participant must obtain the consent of his or her Spouse, if any, to use his vested interest in his Account as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 180-day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a Plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting Spouse or any subsequent Spouse with respect to that loan. Any revision of such a loan permitted by Q & A 24(c) of Section 1.401(a)-20 of the Treasury Regulations and the Plan’s separate loan procedures shall be treated as a new loan made on the date of such revision for purposes of spousal consent.
9.6 Loan Repayments. If a Participant’s loan is being repaid through payroll withholding, the Employer shall remit any such loan repayment to the Trustee as of the earliest date on which such amount can reasonably be segregated from the Employer’s general assets, but not later than the earlier of (a) the close of the period specified in the separate loan procedures for preventing a default or (b) the 15th business day of the calendar month following the month in which such amount otherwise would have been paid to the Participant.
9.7. Default. The Committee shall treat a loan in default if: (a) any scheduled repayment remains unpaid at the end of the cure period specified in the separate loan procedures (unless payment is not made due to a waiver of the amortization schedule for a Participant who is on a leave of absence, as described in Section 9.4, or (b) there is an outstanding principal balance existing on a loan after the last scheduled repayment date. Upon default, the entire outstanding principal and accrued interest shall be immediately due and payable. If a distributable event (as defined by the Code) has occurred, the Committee shall direct the Trustee to foreclose on the promissory note and offset the Participant’s vested interest in his Account by the outstanding balance of the loan. If a distributable event has not occurred, the Committee shall direct the Trustee to foreclose on the promissory note and offset the Participant’s vested interest in his or her Account as soon as a distributable event occurs.
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ARTICLE X
IN-SERVICE WITHDRAWALS
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For purposes of this Section, the term “primary beneficiary” means a Beneficiary under the Plan who has an unconditional right to all or a portion of the Participant’s Account upon the death of the Participant.
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ARTICLE XI
DISTRIBUTIONS
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Such distributions with respect to the Company Stock Account shall be the fair market value of each share multiplied by the number of shares credited to the Participant’s Company Stock Account, with appropriate adjustments to reflect intervening stock dividends, stock splits, stock redemptions, or similar changes to the number of outstanding shares. The fair market value of a share shall be determined as of the Valuation Date coinciding with or immediately following the date of the distribution request or, in the case of a transaction between the Plan and a Disqualified Person, determined as of the date of the transaction.
state and which agrees to separately account for amounts transferred into such plan from this Plan, an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code section 408(b), an annuity plan described in Code Section 403(a), an annuity contract described in Code Section 403(b), a qualified plan described in Code section 401(a), or a Roth IRA described in Code Section 408A, that accepts the distributee’s eligible rollover distribution. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a Qualified Domestic Relations Order, as defined in Code Section 414(p).
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Any amount payable to a child pursuant to the death of a Participant or former Participant shall be treated as if it were payable to the Participant’s or former Participant’s surviving spouse if such amount would become payable to the surviving spouse upon such child reaching majority (or other designated event permitted by regulations).
Any distribution required under the incidental death benefit requirements of Code section 401(a)(9) shall be treated as a distribution required under this Section of 11.9.
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ARTICLE XII
RIGHT TO SELL COMPANY STOCK
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ARTICLE XIII
VOTING AND TENDER OF COMPANY STOCK
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ARTICLE XIV
ADMINISTRATION
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All decisions and interpretations of the Administrative Committee shall be binding and shall be entitled to the maximum deference permitted under the law.
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ARTICLE XV
AMENDMENTS
ARTICLE XVI
TERMINATION
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ARTICLE XVII
MISCELLANEOUS
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ARTICLE XVIII
TOP-HEAVY PROVISIONS
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The accrued benefit of a Participant other than a Key Employee shall be determined under (1) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the employer, or (2) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of Code section 411(b)(1)(C).
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Years of Service After the Effective Date | Vesting Percentage |
0-1 Years of Service | 0% |
2 Years of Service | 20% |
3 or more Years of Service | 100% |
ARTICLE XIX
EXEMPT LOANS
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First, there shall be released from the Suspense Account a number of shares of Company Stock with an aggregate cost basis equal to the 401(k) Safe Harbor Nonelective Contributions, if any, of the Participants, that have been applied to the repayment of principal and interest due on the Exempt Loan for each Plan Year. Thereafter, such the Company Stock shall be released from the Suspense Account on a pro rata basis according to the amount of the payment on the Exempt Loan for the Plan Year, determined under one of the following two alternative formulas in the discretion of the Administrative Committee:
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[Signature Page to Follow]
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IN WITNESS WHEREOF, Ponce Bank has caused this Plan to be duly executed on its behalf this 27day of April , 2021 .
Ponce Bank | ||
By: | /s/Carlos P. Naudon | |
| Name: | Carlos P. Naudon |
| Title: | President |
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