EXHIBIT 10.32
THE MAHOPAC NATIONAL BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
THIS AGREEMENT is made this _____ day of _____________, 2000, by and between THE
MAHOPAC NATIONAL BANK, a national bank located in Mahopac, New York (the
"Bank"), and Stephen E. Garner (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Bank, the Bank is
willing to provide supplemental retirement benefits to the Executive. The Bank
will pay the benefits from its general assets.
AGREEMENT
The Executive and the Bank agree as follows:
Article I
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1 "Benefit Percentage" means 75%.
1.1.2 "Change of Control" means a "Significant Event" followed within
twelve (12) months by the Executive's Termination of Employment for
reasons other than death, Disability, retirement or Termination for
Cause. Appendix A will identify specific events which will not be
considered a Change of Control.
1.1.3 "Disability" means the Executive suffering a sickness, accident
or injury which, in the judgment of a physician satisfactory to the
Bank, prevents the Executive from performing substantially all of the
Executive's normal duties for the Bank. As a condition to any benefits,
the Bank may require the Executive to submit to such physical or mental
evaluations and tests as the Bank's Compensation Committee deems
appropriate.
1.1.4 "Election Form" means the Form attached as Exhibit 1.
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1.1.5 "Early Retirement Date" means the date that the Executive has
terminated employment after attaining his 55th birthday but before his
65th birthday provided he has completed at least 12 Years of Service.
1.1.6 "Early Termination" means the Termination of Employment before
Early Retirement Date for reasons other than Death, Disability or
Termination for Cause.
1.1.7 "Final Pay" means the total annual base salary payable to the
Executive at the rate in effect on the date specified. Final Pay shall
not be reduced for any salary reduction contributions: (i) to cash or
deferred arrangements under Section 401(k) of the Code; (ii) to a
cafeteria plan under Section 125 of the Code; or (iii) to a deferred
compensation plan that is not qualified under Section 401 (a) of the
Code.
1.1.8 "Insurance Death Benefit" means an amount equal to the product
of $50,000 and the number of the Executive's Years of Service,
provided, however, that in no event shall the Insurance Death Benefit
exceed $500,000.
1.1.9 "Normal Retirement Age" means the Executive's 65th birthday.
1.1.10 "Normal Retirement Date" means the later of the Normal
Retirement Age or Termination of Employment.
1.1.11 "Plan Year" means a twelve-month period commencing on April
15th and ending on April 14th of each year. The initial Plan Year shall
commence on the effective date of this Agreement.
1.1.12 "Rabbi Trust" means an irrevocable trust that is established
for the benefit of the Executive and is subject to the claims of the
Bank's general bankruptcy and insolvency creditors in accordance with
Article 4 of this Agreement.
1.1.13 "Significant Event" means the transfer of 51% or more of the
Bank's outstanding voting common stock.
1.1.14 "Termination for Cause" see Section 6.1.
1.1.15 "Termination without Cause" means the Executive ceasing to be
actively employed by the Bank involuntarily for any reason whatsoever,
other than death, Disability, Change of Control or Termination for
Cause.
1.1.16 "Termination of Employment" means the Executive's ceasing to be
actively employed by the Bank for any reason whatsoever, voluntary or
involuntary, other than by reason of an approved leave of absence.
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1.1.17 "Years of Service" means the computation of the number of
periods of 12 consecutive months, herein set forth, during which the
Executive has been continuously employed by the Bank. The initial
computation period shall begin with the Executive's date of hire and
end 12 consecutive months later. Additional computation periods, if
any, will be counted for each 12 consecutive month period thereafter
that begins on the same month and day as the initial computation period
in the following years and end 12 consecutive months thereafter. If
there are any approved leaves of absence, the Executive shall be
considered continuously employed for purposes of this Agreement.
Article 2
Retirement Benefits
2.1 Normal Retirement Benefit. If the Executive terminates employment on or
after the Normal Retirement Age, the Bank shall pay to the Executive the benefit
described in Section 2.1.1. in monthly installments for the greater of 180
months or the Executive's lifetime, or in a lump sum as described in Section
2.1.4. as elected by the Executive on the Election Form.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
an amount equal to the difference between (a) the product of the
Executive's Final Pay and the Benefit Percentage, and (b) the sum of
the following:
2.1.1.1 Social Security Benefits. The monthly unreduced
primary (not family) retirement benefit under the United
States Social Security Act that the Executive would be
eligible if the application were made as of the Executive's
65th birthday, assuming the Executive had earnings at or above
maximum contribution and benefit base under Section 230 of the
United States Social Security Act for his working career; and
2.1.1.2 Bank's Qualified Pension Plan Benefits. The
Executive's accrued normal retirement benefit amount due the
Executive from the Bank's defined benefit pension plan, when
stated as the actuarial equivalent single life annuity.
2.1.2 Payment of Benefit. The Bank shall pay the benefit to the
Executive commencing in equal monthly installments on the first day of
each month following the Executive's 65th birthday unless an effective
lump sum election was made by the Executive on the Election Form.
2.1.3 Election Changes. The Executive may modify his benefit payment
election prior to retirement or termination of employment by filing a
subsequent signed Election Form with the Bank. The modified Election
Form will not be effective until 12 months following the date in which
the modified Election Form is received by the Bank.
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2.1.4 Lump Sum Benefit. In the event that a lump sum payment is to be
made, the computation of a single sum benefit will be determined as
follows: i) the monthly benefit will be determined under the
appropriate paragraph of Article 2 herein, and ii) the single sum
benefit will be determined by computing the present value of the
projected stream of benefit payments using a discount rate equal to the
then current 10 Year treasury rate, and a 180 month term of benefit
payments.
2.2 Early Retirement Benefit. If the Executive terminates employment on or
after the Early Retirement Date and before the Normal Retirement Age, and for
reasons other than death or Disability, the Bank shall pay to the Executive the
benefit described in Section 2.2., in monthly installments for the greater of
180 months or the Executive's lifetime, or in a lump sum as described in Section
2.2.4 as elected by the Executive on the Election Form.
2.2.1 Amount of Benefit. The annual benefit under this Section 2.2
shall be an amount equal to the annual benefit calculated under Section
2.1.1 as if the date of the Executive's Termination of Employment was
the Executive's Normal Retirement Date, multiplied by the applicable
percentage from Schedule B.
2.2.2 Payment of Benefit. The Bank shall pay the benefit to the
Executive in equal monthly installments commencing on the first day of
the month following the Executive's 65th birthday unless an effective
lump sum election was made by the Executive on the Election Form.
2.2.3 Election Changes. The Executive may modify his benefit payment
election as provided in Section 2.1.3.
2.2.4 Lump Sum Benefit. In the event that a lump sum election was
made and is in effect, the computation of a single sum benefit shall be
determined as provided in Section 2.1.4.
2.3 Early Termination Benefit. If the Executive terminates employment
voluntarily before the Early Retirement Date for reasons other than death or
Disability, the Bank shall have no obligation to pay, and the Executive shall
have no right to receive, any retirement benefit under this Agreement
whatsoever.
2.4 Disability Benefit. Upon a Termination of Employment before the Normal
Retirement Age due to Disability, the Bank shall pay to the Executive the
benefit described in Section 2.4.1 in monthly installments for the greater of
180 months or the Executive's lifetime, or in a lump sum as described in Section
2.4.4 as elected by the Executive on the Election Form.
2.4.1 Amount of Benefit. The annual benefit under this Section 2.4
shall be an amount equal to the benefit calculated under Section 2.1.1
as if the date of Termination of Employment was the Normal Retirement
Date, multiplied by the applicable percentage from Schedule B.
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2.4.2 Payment of Benefit. The Bank shall pay the benefit to the
Executive in equal monthly installments commencing on the first day of
the month following the Executive's 65th birthday unless an effective
lump sum election was made by the Executive on the Election Form.
2.4.3 Election Changes. The Executive may modify his benefit payment
election as provided in Section 2.1.3.
2.4.4 Lump Sum Benefit. In the event that a lump sum payment election
was made and is in effect, the computation of a single sum benefit
shall be determined as provided in Section 2.1.4.
2.5 Termination without Cause Benefit. If the Executive's employment is
terminated as a result of a Termination without Cause as defined in Section
1.1.15, then the Bank shall pay to the Executive the benefit described in this
Section 2.5.
2.5.1 Amount of Benefit. The annual benefit under this Section 2.5
shall be an amount equal to the benefit calculated under Section 2.1.1
as if the date of Termination of Employment was the Normal Retirement
Date, multiplied by a fraction (which shall not exceed 1.0), the
numerator of which is the Executive's actual Years of Service and the
denominator of which is 17, and multiplied by the applicable percentage
from Schedule B.
2.5.2 Payment of Benefit. The Bank shall pay the benefit to the
Executive in equal monthly installments commencing on the first day of
each month following the Executive's 65th birthday unless an effective
lump sum election was made by the Executive on the Election Form.
2.6 Change of Control Benefit. If the Executive is eligible to receive
benefits under Section 2.1 or Section 2.2 or Section 2.5 of this Agreement on
the date of a Change of Control, then the Bank shall pay to the Executive the
benefit described in that Section in lieu of any other benefit due and owing
under this Agreement. The Bank shall have no obligation to pay, and the
Executive shall have no right to receive, any other benefit under this
Agreement.
2.6.1 Payment of Benefit. In the event of a Change of Control or if
it is imminent that a Change of Control will occur within six (6)
months, the Bank shall establish a Rabbi Trust and shall place in the
Rabbi Trust the present value of the amounts necessary to fully fund
the Bank's benefit obligation to the Executive, reduced by the amounts,
if any, which the Bank has paid to the Executive (or his beneficiary)
in accordance with the Agreement. The trustee of the Rabbi Trust shall
pay the benefit to the Executive commencing on the first day of the
month following the Executive's 65th birthday in the form elected by
the Executive on the Election Form.
2.6.2 Election Changes. The Executive may modify his benefit payment
election as provided in Section 2.1.3.
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2.6.3 Lump Sum Benefit. The computation of a single sum benefit shall
be determined as provided in Section 2.1.4.
Article 3
Death Benefits
3.1 Death During Active Service. If the Executive dies while in the active
service of the Bank provided that the death occurs prior to the Executive's
Normal Retirement Age, the Bank shall pay to the Executive's beneficiary the
benefit described in this Section 3.1.
3.1.1 Amount of Benefit. The annual benefit under this Section 3.1 is
an amount equal to the Executive's projected annual retirement benefit
as per the attached Schedule A.
3.1.2 Payment of Benefit. The Bank shall pay the annual benefit to
the Executive's beneficiary in 12 equal monthly installments payable on
the first day of each month commencing with the month following the
Executive's date of death. The Executive shall receive the monthly
installments for a total of 180 months.
3.2 Death During Benefit Period. If the Executive dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Bank shall pay the remaining benefits to the Executive's
beneficiary at the same time they would have been paid to the Executive had the
Executive survived; provided, however, that the Executive (and beneficiary)
shall have no right to receive, and the Bank shall have no obligation to pay,
more than 180 monthly payments (including all payments made prior to the
Executive's death).
3.3 Death After Termination of Employment But Before Benefit Payments
Commence. If the Executive is entitled to benefit payments under this Agreement,
but dies prior to the commencement of said benefit payments, the Bank shall pay
the benefit payments to the Executive's beneficiary that the Executive was
entitled to prior to death in 180 monthly payments commencing on the first day
of the month following the date of the Executive's death.
3.4 Death After Effective Date of this Agreement. If the Executive dies
after the effective date of this Agreement and the Insurance Death Benefit
exceeds the benefits that the Executive has earned under Articles 2 or 3, then,
in lieu of the earned benefits under Article 2 or 3, the Bank shall pay the
Executive's beneficiary an amount equal to the Insurance Death Benefit. In such
an event, the Bank shall have no obligation to pay, and the Executive shall have
no right to receive, any other benefit under this Agreement. All such amounts
shall be paid in 180 monthly payments commencing on the first day of the month
following the date of the Executive's death. It shall be the obligation of the
beneficiary to notify the Bank in the event of the Executive's death.
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Article 4
Rabbi Trust
4.1 Establishment of Rabbi Trust. The Bank may establish a Rabbi Trust into
which the Bank may contribute assets which shall be held therein, subject to the
claims of the Bank's creditors in the event of the Bank's "Insolvency" as
defined in the document which establishes such Rabbi Trust, until the
contributed assets are paid to the Executive and the Executive's beneficiaries
in such manner and at such times as specified in this Agreement. The Bank may
make contributions to the Rabbi Trust to provide the Bank with a source of funds
to assist it in meeting the liabilities of this plan. The Rabbi Trust shall be a
grantor trust, the assets of the trust shall be carried on the Bank's balance
sheet and said trust assets shall only be invested in assets which the FDIC
allows. In the event of a Change of Control, sufficient assets may be
contributed to the Rabbi Trust to fully fund the Bank's benefit obligation to
the Executive, reduced by the amounts, if any, which the Bank has paid to the
Executive or the Executive's beneficiary in accordance with this Agreement. The
Rabbi Trust and any assets held therein shall conform to the terms of the Rabbi
Trust agreement which may be established. To the extent the language in this
Agreement is modified by the language in the Rabbi Trust agreement, the Rabbi
Trust agreement shall supersede this Agreement.
Article 5
Beneficiaries
5.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Bank. The Executive may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and accepted by
the Bank during the Executive's lifetime. The Executive's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Executive or if the Executive names a spouse as beneficiary and the marriage
is subsequently dissolved. If the Executive dies without a valid beneficiary
designation, all payments shall be made to the Executive's estate.
5.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Bank may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Bank may require proof of incompetence, minority
or guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Bank from all liability with
respect to such benefit.
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Article 6
General Limitations
Notwithstanding any provision of this Agreement to the contrary, the Bank shall
have no obligation to pay, and the Executive shall have no right to receive, any
benefit under this Agreement upon the occurrence of any of the following:
6.1 Termination for Cause. If the Bank terminates the Executive's
employment for:
6.1.1 Gross dereliction of duties; or
6.1.2 Conduct that offends the standards of the community to such an
extent that the good name and reputation of the Bank and/or The Bank of
Castile and/or Tompkins County Trust Company and/or Tompkins Trustco,
Inc. and/or any other subsidiary or affiliate of Tompkins Trustco, Inc.
is significantly damaged within any of the communities served by such
entities.
6.2 Suicide or Misstatement. No benefits shall be payable if the Executive
commits suicide within two years after the date of this Agreement, or if the
Executive has made any material misstatement of fact on any application for life
insurance purchased by the Bank.
Article 7
Claims and Review Procedures
7.1 Claims Procedure. The Bank shall notify any person or entity that makes
a claim under this Agreement (the "Claimant") in writing, within ninety (90)
days of Claimant's written application for benefits, of his or her eligibility
or ineligibility for benefits under the Agreement. If the Bank determines that
the Claimant is not eligible for benefits or full benefits, the notice shall set
forth (1) the specific reasons for such denial, (2) a specific reference to the
provisions of the Agreement on which the denial is based, (3) a description of
any additional information or material necessary for the Claimant to perfect his
or her claim, and a description of why it is needed, and (4) an explanation of
the Agreement's claims review procedure and other appropriate information as to
the steps to be taken if the Claimant wishes to have the claim reviewed. If the
Bank determines that there are special circumstances requiring additional time
to make a decision, the Bank shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety-day period.
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7.2 Review Procedure. If the Claimant is determined by the Bank not to be
eligible for benefits, or if the Claimant believes that he or she is entitled to
greater or different benefits, the Claimant shall have the opportunity to have
such claim reviewed by the Bank by filing a petition for review with the Bank
within sixty (60) days after receipt of the notice issued by the Bank. Said
petition shall state the specific reasons which the Claimant believes entitle
him or her to benefits or to greater or different benefits. Within sixty (60)
days after receipt by the Bank of the petition, the Bank shall afford the
Claimant (and counsel, if any) an opportunity to present his or her position to
the Bank orally or in writing, and the Claimant (or counsel) shall have the
right to review the pertinent documents. The Bank shall notify the Claimant of
its decision in writing within the sixty-day period, stating specifically the
basis of its decision, written in a manner calculated to be understood by the
Claimant and the specific provisions of the Agreement on which the decision is
based. If, because of the need for a hearing, the sixty-day period is not
sufficient, the decision may be deferred for up to another sixty-day period at
the election of the Bank, but notice of this deferral shall be given to the
Claimant. The terms of this Section do not limit the ability of either party to
pursue a claim in court or through arbitration.
Article 8
Amendments and Termination
8.1 This Agreement may be amended or terminated only by a written agreement
signed by the Bank and the Executive, or their respective successors and may not
be otherwise terminated except as provided herein.
Article 9
Miscellaneous
9.1 Binding Effect. This Agreement shall bind the Executive and the Bank,
and their beneficiaries, survivors, executors, administrators and transferees.
9.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee of
the Bank, nor does it interfere with the Bank's right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive's right to terminate employment at any time.
9.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
9.4 Tax Withholding. The Bank shall withhold any taxes that are required to
be withheld from the benefits provided under this Agreement.
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9.5 Applicable Law. This Agreement and all rights hereunder shall be
governed by and construed according to the laws of New York, except to the
extent preempted by the laws of the United States of America; provided, however,
that with respect to the Policies owned by the Bank or any insurable interest
issues, the laws of Delaware shall govern.
9.6 Unfunded Arrangement. The Executive and beneficiary are general
unsecured creditors of the Bank for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Bank to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Executive's life is a general
asset of the Bank to which the Executive and beneficiary have no preferred or
secured claim.
9.7 Entire Agreement. This Agreement constitutes the entire agreement
between the Bank and the Executive as to the subject matter hereof. No rights
are granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.
9.8 Administration. The Bank shall have powers which are necessary to
administer this Agreement, including but not limited to:
9.8.1 Interpreting the provisions of the Agreement;
9.8.2 Establishing and revising the method of accounting for the
Agreement;
9.8.3 Maintaining a record of benefit payments; and
9.8.4 Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
9.9 Named Fiduciary. For purposes of the Employee Retirement Income
Security Act of 1974, if applicable, the Bank shall be the named fiduciary and
plan administrator under the Agreement. The named fiduciary may delegate to
others certain aspects of the management and operation responsibilities of the
plan including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
IN WITNESS WHEREOF, the Executive and a duly authorized Bank officer have signed
this Agreement to be effective as of the date first above written.
Executive: Bank:
THE MAHOPAC NATIONAL BANK
- ---------------------------------
By
--------------------------------
Title
-----------------------------
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Stephen E. Garner
EXHIBIT I TO
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
Normal Retirement Benefits
--------------------------
I elect to receive my Normal Retirement Benefits under Section 2.1.2 of the
Agreement in the following form:
[Initial One]
_____ Lump sum
_____ Monthly installments for the greater of: (1) 180 months; or (2) my
lifetime.
Early Retirement Benefits
-------------------------
I elect to receive my Early Retirement Benefits under Section 2.2.2 of the
Agreement in the following form:
[Initial One]
_____ Lump sum
_____ Monthly installments for the greater of: (1) 180 months; or (2) my
lifetime.
Disability Benefits
-------------------
I elect to receive my Disability Benefits under Section 2.4.3 of the Agreement
in the following form:
[Initial One]
_____ Lump sum
_____ Monthly installments for the greater of: (1) 180 months; or (2) my
lifetime.
Change of Control Benefits
--------------------------
I elect to receive my Change of Control Benefits under Section 2.6.1 of the
Agreement in the following form:
[Initial One]
_____ Lump sum
_____ Monthly installments for the greater of: (1) 180 months; or (2) my
lifetime.
I understand that I may change the form of benefit elected as described in
Article 2 under the Agreement.
Signature ____________________________________
Date ________________________________________
Accepted by the Bank this ________ day of _______________ , _____.
By ________________________________________
Title _______________________________________
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THE MAHOPAC NATIONAL BANK
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
BENEFICIARY DESIGNATION FOR Stephen E. Garner
I designate the following as beneficiary of any death benefits under The Mahopac
National Bank Supplemental Executive Retirement Agreement:
Primary: ___________________________________________________________________
____________________________________________________________________________
Contingent: ________________________________________________________________
____________________________________________________________________________
Note: To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.
I understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.
Signature: __________________________________________________
Date: _____________________________________________________
Accepted by the Bank this__________ day of _____________ , ______.
By: _______________________________________________________
Title: ______________________________________________________
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Schedule A
---------------------------------------------------------
Name Projected Retirement Benefit
---------------------------------------------------------
Stephen E. Garner 144,167
---------------------------------------------------------
* Assumes a 3% salary scale and 3% inflation for social security calculation.
Benefit formula is 75% of Final Pay offset by 100% of Social Security and 100%
of any Qualified Pension Plan benefits.
The amount will be automatically updated for actual salary changes as they
occur.
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Schedule B
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Age at Early Retirement or Applicable
Termination Percentage
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55 or Younger 70%
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56 73%
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57 76%
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58 79%
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59 82%
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60 85%
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61 88%
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62 91%
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63 94%
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64 97%
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SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
APPENDIX A
"Change of Control" as defined at Paragraph 1.1.2 and described further at
Paragraph 2.6 hereof shall not be deemed to have occurred should (i) members of
the Spain family elect to purchase all or any portion of the shares of capital
stock of The Mahopac National Bank owned by Tompkins Trustco Inc. or (ii)
Tompkins Trustco Inc. elect to purchase all of the shares of capital stock of
The Mahopac National Bank owned by the members of the Spain family and their
affiliates. Should the parties elect to mutually sell their shares to a third
party, then a "Change of Control" shall be deemed to have occurred.
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