Item 1.01. Entry into a Material Definitive Agreement.
Supplemental Executive Retirement Plan. Effective January 1, 2008, Beacon
Federal (the "Bank"), the wholly owned subsidiary of Beacon Federal Bancorp,
Inc. (the "Company"), adopted a Supplemental Executive Retirement Plan (the
"Plan") for the purpose of providing additional retirement benefits to certain
members of the Bank's senior management who have contributed significantly to
the success and growth of the Bank and whose services are vital to the Bank's
continued growth and success. The Compensation Committee of the Bank will
administer the Plan and will, from time to time, designate participants in the
Plan.
The Plan is a nonqualified deferred compensation plan, where the Bank
accrues amounts annually in order to fund a future stream of retirement payments
for each participant. The benefits provided under the Plan are not based on any
salary reduction by the participants. The Bank will establish an accrued
liability reserve account for the benefit of each participant into which
appropriate reserves will be accrued for the participant until the participant
has attained normal retirement age. Any asset used or acquired by the Bank
(including insurance policies) in connection with the liabilities it has assumed
under the Plan will not be deemed to be held under any trust for the benefit of
any participant or his or her beneficiaries. It will be a general, unpledged,
and unrestricted asset of the Bank.
Pursuant to the Plan, each participant will be entitled to a personalized
retirement benefit, generally based upon a percentage of his annual salary. Each
participant will become vested in his Plan benefits at the rate of 20% per year
(and become fully vested on death or disability). Upon a participant's
separation from service (i) on or after his normal retirement age, (ii)
involuntarily (except for cause) prior to his normal retirement age, or (iii)
voluntarily for "good reason" (as defined in the Plan), the Bank will begin
paying the Participant's retirement benefit in monthly installments starting on
the first day of the second calendar month immediately following the
participant's separation from service and continuing for the participant's
lifetime; provided, however, that in the event the participant dies before
receiving 180 monthly installments (i.e., 15 years of retirement benefits), the
Bank will pay the present value of the remainder of such payments to the
participant's beneficiary as a lump sum no later than the first day of the
second calendar month following the participant's date of death. However, in the
event the participant is a "Specified Employee" (as defined in Section 409A of
the Internal Revenue Code), then, to the extent necessary to avoid penalties, no
payment will be made to the participant prior to the first day of the seventh
month following his separation from service.
If a participant becomes disabled before reaching his normal retirement
age, he will be entitled to a lump sum payment of his vested accrued balance,
determined as of the date the participant became disabled. If a participant dies
before reaching his normal retirement age, his beneficiaries will be entitled to
a lump sum payment equal to the participant's highest base salary during the
current year or any of the previous three years, including compensation deferred
at his election. In the event of voluntary separation from service prior to
normal retirement age, he will be entitled to a lump sum payment of his vested
accrued balance. If his employment is terminated for cause, he will forfeit all
benefits under the Plan.
In the event that the aggregate payments or benefits to be made to the
participant in the event of a change in control of the Bank or the Company would
be deemed to include an "excess parachute payment" as defined in the Internal
Revenue Code, then at the election of the participant, (i) such payments or
benefits will be payable or provided to the participant over the minimum period
necessary to reduce the present value of such payments or benefits to an amount
that is one dollar ($1.00) less than three times the participant's "base
amount," or (ii) the payments or benefits to be provided under the Plan will be
reduced to the extent necessary to avoid treatment as an excess parachute
payment, with the allocation of the reduction among such payments and benefits
to be determined by the participant.
The Committee has designated Ross J. Prossner, President and Chief
Executive Officer of the Company and the Bank, a participant in the Plan. Under
Mr. Prossner's benefits schedule, he is entitled to an annual benefit equal to
40% of his annual compensation, payable for the remainder of his lifetime, with
a guaranteed payment of 180 monthly payments, provided, however, that if he dies
before receiving all monthly payments, his beneficiary will be paid the present
value of the remaining payments in a lump sum.
The Plan is attached as Exhibit 10.1 to this Current Report on Form 8-K.
The above description of the Plan is qualified by reference to the Plan itself.