Exhibit 10(iii)(b)
SUPPLEMENTAL RETIREMENT AGREEMENT
AGREEMENT, made as of January 1, 1995 by and between PEC Israel
Economic Corporation, a Maine corporation having its principal place of
business at 511 Fifth Avenue, New York, N.Y. 10017 (the "Corporation"), and
Frank J. Klein, residing at 33 Country Ridge Circle, Rye Brook, New York
10573 (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive commenced employment with the Corporation
as President effective January 1, 1995; and
WHEREAS, the Corporation desires to provide the Executive with
additional retirement benefits intended to supplement the benefits payable
under certain tax-qualified and non-qualified retirement plans and to
assure the Corporation of the Executive's continued services.
NOW, THEREFORE, in consideration of the promises and covenants
between the Corporation and the Executive, the parties hereto agree as
follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
meaning set forth below:
(a) "Actuarial Equivalent" shall mean, with regard to the Bank
Pension Plan, "Actuarial Equivalent" as defined in Section 1.20 of the Bank
Pension Plan, and with regard to the Corporation Pension Plan and to
calculations under Section 2(a)(i) of this Agreement, "Actuarial
Equivalent" as defined in Section 2.3(j) of the Corporation Pension Plan.
(b) "Affiliate" shall mean the Corporation and any entity
affiliated with the Corporation within the meaning of Code Sections 414(b)
with respect to controlled group of corporations, 414(c) with respect to
trades or businesses under common control with the Corporation, 414(m) with
respect to affiliated service groups, and any other entity required to be
aggregated with the Corporation under Section 414(o) of the Code. No
entity shall be treated as an Affiliate for any period during which it is
not part of the controlled group, under common control or otherwise
required to be aggregated under Code Section 414.
(c) "Bank Pension Plan" shall mean the Israel Discount Bank of
New York Pension Plan for Employees, as in effect November 1994 and as
thereafter amended from time to time, and any other qualified defined
benefit pension plan sponsored by the Israel Discount Bank of New York
under which the Executive is entitled to receive benefits in any form.
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(d) "Bank SERP" shall mean the Israel Discount Bank of New York
Supplemental Executive Retirement Plan, originally effective January 1,
1991 and amended and restated as of January 1, 1995.
(e) "Beneficiary" shall mean the Executive's legal spouse and,
if the Executive is unmarried, the person or person (if any) designated by
the Executive in a written election filed with the Committee, or, in the
event no such designation is made, the Executive's estate.
(f) "Board" shall mean the board of directors of the
Corporation.
(g) "Cause" shall mean the Executive's personal dishonesty or
defalcation of money or property causing a loss to, or having a negative
effect on, the Corporation.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(i) "Compensation" shall mean the Executive's base salary paid
by the Corporation to the Executive plus an amount equal to any bonus
earned by the Executive. For purposes of this Agreement, a bonus shall be
earned on the date when it is declared by the Board or any duly authorized
committee thereof.
(j) "Committee" shall mean the Committee, if any, appointed by
the Board to administer the terms of this Agreement on behalf of the
Corporation. If no Committee is appointed, the Board shall be deemed the
Committee. Notwithstanding the foregoing, in no event shall the Executive
serve on the Committee with respect to this Agreement.
(k) "Corporation Pension Plan" shall mean the Employees'
Retirement Plan of PEC Israel Economic Corporation, as in effect on January
1, 1995, and as thereafter amended from time to time, and any other
qualified defined benefit pension plan sponsored by the Corporation under
which the Executive is entitled to receive benefits in any form.
(l) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
(m) "Normal Retirement Date" shall mean, with regard to the Bank
Pension Plan, the "Normal Retirement Date" specified under Section 1.25 of
the Bank Pension Plan and with regard to the Corporation Pension Plan, the
"Normal Retirement Date" specified under Section 2.3(c) of the Corporation
Pension Plan.
(n) "Supplemental Benefits" shall mean the benefits payable
under Section 2 herein, if any.
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(o) "Termination Date" shall mean the Executive's actual date
of termination of employment with the Corporation and its Affiliates for
any reason including, without limitation, retirement, death, disability,
resignation or any termination of employment without Cause.
(p) "Years of Service" shall mean all years of service
recognized for benefit accrual purposes under either the Bank Pension Plan
or the Corporation Pension Plan; provided, that, for purposes of this
Agreement, if the Executive is credited with a year of service under one
such pension plan he shall not be entitled to receive credit for an
additional year of service under the other pension plan with respect to the
same year of service.
2. SUPPLEMENTAL BENEFITS AND PAYMENT.
(a) Subject to Sections 2(e) and 2(f) below, the amount of the
Supplemental Benefit under this Agreement, payable at the date specified in
Section 2(b) below, shall be equal to:
(i) the Actuarial Equivalent lump sum value, as of
the date specified in Section 2(b) below, of an annual pension of 1.5%
of the average of the Executive's five (5) highest years of annual
Compensation multiplied by the Executive's Years of Service,
commencing at Normal Retirement Date (as defined in the Corporate
Pension Plan) in the form of a single life annuity, less
(ii) the sum of:
(x) the Actuarial Equivalent lump sum value
as of the date specified in Section 2(b) below
of the benefit the Executive would receive
under the Bank Pension Plan at Normal
Retirement Date or, if the Executive receives
a lump sum distribution from the Bank Pension
Plan prior to distribution of Supplemental
Benefits hereunder, the value of the benefit
the Executive actually received under the Bank
Pension Plan, increased with interest at 7.0%
per annum, compounded annually from the date
paid to the date of commencement under Section
2(b) below, plus
(y) the Actuarial Equivalent lump sum value
as of the date specified in Section 2(b) below of
the benefit the Executive would receive under the
Corporate Pension Plan at Normal Retirement Date,
plus
(z) $144,070, which was the benefit the
Executive actually received under the Bank SERP,
excluding amounts paid to the Executive
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as a gross-up for any income taxes due on the
benefit paid to him under the Bank SERP, increased
with interest at 3.5% per annum, compounded
annually from the date paid to the date of
commencement under Section 2(b) below.
For purposes of calculating the amount under Section
2(a)(i), if the Executive is employed for less than five (5) years,
Compensation shall be averaged over the number of years during which the
Executive performed services for the Corporation.
(b) Subject to Section 17 below, the Supplemental Benefit
described above shall be paid in a lump sum, which shall commence following
the Executive's Termination Date, but in no event earlier than thirty (30)
days or later than twelve (12) months following the Executive's Termination
Date, as determined by the Committee in its sole discretion.
(c) The Supplemental Benefit payable hereunder shall be subject
to the same vesting rules as apply under the Corporation Pension Plan.
(d) In the event that Supplemental Benefits hereunder commence
being paid as of a date other than the Participant's Normal Retirement Date
(as defined in the Corporation Pension Plan), the amount determined under
Section 2(a) shall be subject to adjustment to reflect such early or
delayed commencement, if and to the extent that the Corporation Pension
Plan provides for such adjustment with respect to amounts payable under
such plan.
(e) Notwithstanding the provisions contained in Sections 2(a)
through 2(d) above, if the Executive is discharged for Cause, as determined
by the Board in its sole discretion, the Executive (and his Beneficiary)
shall forfeit all unpaid Supplemental Benefits under this Agreement.
(f) In the event of the death of the Executive with a vested
Supplemental Benefit hereunder, such Supplemental Benefit shall be paid to
the Executive's Beneficiary in a lump sum as soon as administratively
practical following such Executive's death, except that no Supplemental
Benefit shall be paid to the Executive's Beneficiary if he is unmarried at
the time of his death and he dies prior to his Normal Retirement Date (as
defined in the Corporation Pension Plan). Notwithstanding the foregoing, if
the Executive reaches his Termination Date for any reason other than death,
and the Executive dies unmarried after his Termination Date but prior to
the date of payment of his Supplemental Benefit, the vested Supplemental
Benefit shall be paid to his designated Beneficiary in a lump sum as soon
as administratively practical following his death.
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3. PAYMENT FROM GENERAL ASSETS.
This Agreement is "unfunded" and Supplemental Benefits payable
hereunder shall be paid by the Corporation out of its general assets.
Neither the Executive nor his Beneficiary shall have any interest in any
specific asset of the Corporation as a result of this Agreement.
4. NON-ALIENATION OF BENEFITS.
To the maximum extent permitted by law, Supplemental Benefits
payable under this Agreement shall not be subject to assignment, transfer,
sale, pledge, encumbrance, alienation or charge by the Executive (or a
Beneficiary).
5. ADMINISTRATION OF AGREEMENT.
(a) The Committee shall have the authority and responsibility
for the administration and interpretation of this Agreement and may appoint
an officer of the Corporation to act as the administrator and to attend to
the regular administrative details of this Agreement.
(b) All expenses incurred in administering this Agreement shall
be paid by the Corporation and none shall be paid by the Executive.
6. WITHHOLDING.
All payments under this Agreement shall be subject to the
withholding of such amounts relating to Federal, state or local taxes as
the Corporation may reasonably determine it should withhold based on
applicable law or regulations.
7. AMENDMENT OR TERMINATION OF AGREEMENT.
This Agreement may be amended, suspended or terminated at any
time pursuant to a written resolution adopted by a majority of the members
of the Board in their sole discretion. However, no amendment, suspension
or termination of this Agreement may have a material adverse effect upon
the Executive's accrued rights under this Agreement based on the
Executive's Years of Service and Compensation up to the date of such
amendment, suspension or termination, unless the Executive consents to such
amendment, suspension or termination in writing. In the event of such
termination, the Corporation may distribute to the Executive his accrued
benefit hereunder and shall have no further obligation hereunder.
8. NON-EXCLUSIVITY.
The execution of this Agreement shall not affect the
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Executive's right to participate in any other employee benefit plan or
program sponsored by the Corporation, if the Executive is otherwise
eligible to participate.
9. LIMITATION OF RIGHTS.
Nothing contained herein shall confer upon the Executive the
right to be retained in the service of the Corporation, nor shall it
interfere with the right of the Corporation to discharge the Executive at
any time for any reason whatsoever.
10. GOVERNING LAW.
To the extent not governed by the Code and ERISA, this Agreement
is governed by and shall be construed in accordance with the laws of the
State of New York, applied without regard to conflict of law principles.
11. CLAIMS PROCEDURE.
(a) The Committee shall be responsible for determining all
claims for benefits under this Agreement by the Executive or his
Beneficiaries. Within ninety (90) days after receiving a claim (or within
up to one hundred eighty (180) days, if the claimant is so notified,
including notification of the reason for the delay), the Committee shall
notify the Executive or Beneficiary of its decision in writing, giving the
reasons for its decision if adverse to the claim. If the decision is
adverse to the claimant, the Committee shall advise the claimant of the
provisions of this Agreement that are involved, of any additional
information which the claimant must provide to perfect his claim and why,
and of his right to request a review of the decision.
(b) A claimant may request a review of an adverse decision by
written request to the Committee made within sixty (60) days after receipt
of the decision. The claimant, or his duly authorized representative, may
review pertinent documents and submit written issues and comments.
(c) Within sixty (60) days after receiving a request for
review, the Committee shall notify the claimant in writing of (i) its
decision, (ii) the reasons therefore, and (iii) the provisions of this
Agreement upon which it is based.
(d) The Committee may at any time alter the claims procedure
set forth above, so long as the revised claims procedure complies with
ERISA and the regulations issued thereunder.
(e) The Committee shall have the full power and authority to
interpret, construe and administer this Agreement in its sole discretion
based on the provisions of this Agreement and to decide any
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questions and settle all controversies that may arise in connection with
this Agreement. Both the Committee's and the Board's interpretations and
construction thereof, and actions thereunder, including the amount of the
payment to be made hereunder, shall be final, binding and conclusive on all
persons for all persons. No member of the Committee shall be liable to any
person for any action taken or omitted in connection with the
interpretation and administration of this Agreement.
12. CONSTRUCTION OF AGREEMENT.
Nothing contained in this Agreement and no action taken pursuant
to the provisions of this Agreement shall create a fiduciary relationship
between the Corporation and the Executive, his designated Beneficiaries or
any other person. Any funds which may be invested under the provisions of
this Agreement shall continue for all purposes to be part of the general
funds of the Corporation and no person other than the Corporation shall by
virtue of the provisions of this Agreement have any interest in such funds.
To the extent that any person acquires a right to receive payments from the
Corporation under this Agreement, such right shall be no greater than the
right of any unsecured general creditor of the Corporation.
13. MINORS AND INCOMPETENTS.
If the Committee shall find that any person to whom amounts are
payable under this Agreement is unable to care for his or her affairs
because of illness or accident, or is a minor, any payment due (unless a
prior claim therefore shall have been made by a duly appointed guardian,
committee or other legal representative) may be paid to the spouse, a
child, parent, or brother or sister, or to any person deemed by the
Committee to have incurred expense for such person otherwise entitled to
payment, in such manner and proportions as the Committee may determine in
its sole discretion. Any such payment shall be a complete discharge of the
liabilities of the Corporation, the Committee and the Board under this
Agreement.
14. PAYMENT NOT SALARY.
Any benefit payable under this Agreement shall not be deemed
salary or other compensation to the Executive for the purposes of computing
benefits to which he may be entitled under any pension plan or other
arrangement of the Corporation, an Affiliate or Israel Discount Bank of New
York for the benefit of their respective employees, except as may be
specifically set forth in such plan or arrangement.
15. SEVERABILITY.
In case any provision of this Agreement shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect
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the remaining parts hereof, but this Agreement shall be construed and
enforced as if such illegal and invalid provision never existed.
16. SALE OF ASSETS.
In the event that the Corporation sells all or substantially all
of the assets of its business and the acquiror of such assets assumes the
obligations hereunder, the Corporation shall be released from any liability
imposed herein and shall have no obligation to provide any benefits payable
hereunder.
17. SECTION 162(m) DEDUCTION LIMITATION.
Notwithstanding anything else herein, the Committee at any time
may, in its sole discretion, and, after taking into account all amounts
payable by the Corporation to the Executive (whether or not payable under
this Agreement), limit the amount of Supplemental Benefits payable
hereunder during any taxable year of the Corporation solely to the extent
necessary to prevent the application of Section 162(m) of the Code (or any
similar or successor provision) and to preserve the deductibility of the
Supplemental Benefits payable hereunder by the Corporation. To the extent
that any amount of the Supplemental Benefits is not paid to the Executive
as a result of this Section, such additional amount shall be paid to the
Executive in the Corporation's subsequent taxable year.
18. HEADINGS.
The headings in this Agreement are inserted for convenience of
reference only and shall have no effect upon the meaning of the provisions
hereof.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to
be duly executed and the Executive has hereunto set his hand as of the 1st
day of January, 1995.
PEC ISRAEL ECONOMIC CORPORATION
By: /s/RAPHAEL RECANATI
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Title: Chairman
/s/FRANK J. KLEIN
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Frank J. Klein
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