Document:

Exhibit 10.3

 

Exhibit 10.3

FEDERAL HOME LOAN BANK OF PITTSBURGH

LONG-TERM INCENTIVE COMPENSATION PLAN

JANUARY 1, 2001

(Revised 3/1/05)

 

 

Purpose and Objectives

The Federal Home Loan Bank of Pittsburgh (the Bank) has established a Long-Term Incentive
Compensation Plan (the Plan) for eligible executives. The purpose of the plan is to focus senior
management on the achievement of key strategic objectives and reward long-term business success.
The specific objectives of the plan include:

	•  	Rewarding long-term customer/shareholder value creation and
community mission achievement;

	•  	Attracting and retaining high-performing staff by providing
long-term compensation opportunities which are reasonable relative
to the financial services marketplace; and

	•  	Putting a portion of the total executive compensation package at
risk and dependent upon performance results.

Performance Period

The Plan covers a three-year performance period. A new cycle, or performance period, commences
every three years, coterminous with the Strategic Planning cycle.

Eligibility

Plan participants include those who, in the opinion of the President and as confirmed by the Human
Resources Committee (the Committee) and the Board of Directors (the Board), hold positions having
the capacity to significantly impact long-term Bank performance.

Any individual hired or promoted into (or transferred out of) an eligible position during the
performance period may be eligible to receive a pro-rated award under the plan based upon his/her
tenure in the eligible position. Eligibility for a pro-rated award is subject to approval by the
Board.

Performance Goals

Performance goals are established at the onset of each three-year performance period and will be
finalized no later than the end of the first quarter of the first year in the performance period.
Goals are established by the Board. In the event that multiple performance goals are selected, it
is the responsibility of the Board to establish an appropriate weighting for each goal.

The performance goals are established in conjunction with the Bank’s Strategic Plan and encompass
the Bank’s performance relative to shareholders, customers, and mission achievement. A performance
schedule is established for each goal to indicate potential awards payable at various levels of
performance:

	 	•  	the threshold is the minimally acceptable level of performance below which no award
is paid;

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	 	•  	the target is a realistic level of performance representing a stretch beyond
current performance levels; and
	 
	 	•  	the maximum represents truly outstanding performance and defines the limit of
incentive compensation payable under the plan.

Once set, performance goals are intended to continue without change throughout the performance
period.

Award Potential

Award opportunities are established by the Board. The award range for each position includes a
threshold, target, and maximum award opportunity. Eligible positions are grouped into award levels
based upon competitive compensation levels as well as position responsibilities and impact on the
Bank’s long-term business success.

In the event that performance falls between threshold and target or between target and maximum,
award payment will be determined by interpolation. Awards are defined as a percentage of the
incumbent’s base salary in effect at the end of the performance period.

Award Determination

A participant must achieve at least a successful performance evaluation in each year of the plan
cycle to be eligible for any award under the plan. If a participant receives an overall
developmental performance evaluation, the participant will be ineligible for any award for that
calendar year.

In the event a Federal Housing Finance Board examination identifies an unsafe or unsound practice
or condition in a participant’s area of responsibility, the participant will not be eligible for an
award for the period of the unsafe and unsound condition and until Internal Audit has confirmed
that corrective action has been put in place.

In the event the Federal Housing Finance Board examination results in regulatory enforcement action
during the performance period, there will be no payout for any participant.

In the event a critical internal audit issue is identified in a participant’s area of
responsibility, the participant will be ineligible for an award until the issue is resolved and
confirmed by Internal Audit review. In any case, the period of ineligibility will be a minimum of
six months.

At the conclusion of each performance period, performance results will be presented to the Board.
Final performance results and corresponding calculation of award payments are subject to Board
approval.

2

 

Award Payment

Unless otherwise directed by the Board, payment of awards will be made as soon as possible after
Board approval. Participants may voluntarily elect to defer a portion of their award payment under
the terms of the Bank’s Supplemental Thrift Plan. All award payments will be subject to required
tax withholdings.

Plan participants who terminate employment with the Bank by reason of normal retirement, death, or
disability prior to the conclusion of a three-year performance period will receive a pro-rated
award payment based on the months of completed service as a plan participant. Eligibility for a
pro-rated award in the event of a participant’s early retirement is subject to approval by the
Board. Pro-rated payments will be made at the same time as all other award payments upon
completion of the three-year performance period. Any beneficiary of such payments will be the same
as identified in the Bank’s qualified Retirement Plan.

Participants who terminate employment with the Bank during the three-year performance period (for
reasons other than retirement, death, or disability) forfeit any award under the plan.

In the event a participant terminates employment after the end of the three-year performance period
but prior to payment of the award (e.g. terminate after December 31 but before awards are
determined and paid), the Board, in its sole discretion, may approve an award if it deems
appropriate.

Termination or Amendment

The plan, in whole or in part, may at any time or from time-to-time be amended, suspended, or
reinstated and may at any time be terminated by action of the Board. Until a determination of
award payment has been made by the Board, no participant has a vested right to an award under the
plan.

No amendment, suspension, or termination of the plan by the Board shall, without the consent of the
participant, affect the rights of the participant to any award previously determined by the Board
which has not yet been paid to the participant.

Miscellaneous Provisions

Neither the adoption of the Plan or its operation shall in any way affect the right and power of
the Bank to dismiss any employee or otherwise terminate the employment or take other action
including, but not limited to, removing the employee from the incentive-eligible position, at any
time, for any reason, with or without cause.

Award payments under this plan shall have no impact on a participant’s level of benefit coverage
under any of the Bank’s benefits plans including, but not limited to, qualified or non-qualified
thrift or retirement benefits, life and accident insurance, or disability coverage.

Participants in this plan are ineligible to participate in the Bank’s Performance Sharing Plan.

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No participant will have the right to alienate, assign, encumber, hypothecate, or pledge his or her
interest in any Award under the Plan, voluntarily or involuntarily, and any attempt to so dispose
of any such interest will be void.

This document is a complete statement of the Plan and as of the date below, supersedes all prior
plans, representations and proposals written or oral relating to its subject matter. The Bank will
not be bound by or liable to any employee for any representation, promise, or inducement made by
any person which is not embodied in this document.

The Board has the power and authority to construe, interpret, and administer the Plan. Any
decision arising out of or in connection with the construction, interpretation or administration of
the Plan will lie within the Board’s absolute discretion and will be binding on all parties.

Effective date: January 1, 2001

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FEDERAL HOME LOAN BANK OF PITTSBURGH

LONG-TERM INCENTIVE COMPENSATION PLAN

TERMS OF THE 2003-2005 PERFORMANCE PERIOD

5

 

Performance Period

The performance period commences on January 1, 2003 and ends on December 31, 2005.

Award Opportunity

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Eligibility	 	 	 	 	 	Annualized	 	 	 	 	 	Over 3-Year Performance Period
	Level	 	Threshold	 	Target	 	Maximum	 	Threshold	 	Target	 	Maximum
	1
	 	 	12.5	%	 	 	25	%	 	 	50	%	 	 	37.5	%	 	 	75	%	 	 	150	%
	2
	 	 	10	%	 	 	20	%	 	 	40	%	 	 	30	%	 	 	60	%	 	 	120	%
	3
	 	 	7.5	%	 	 	15	%	 	 	30	%	 	 	22.5	%	 	 	45	%	 	 	90	%

Note that the annualized award opportunities are provided for illustration only since awards will
be paid only following completion of the full performance period. The award opportunity represents
a percentage of base salary at the end of the performance period.

6Exhibit 10.4

 

Exhibit 10.4

Federal Home Loan Bank of Pittsburgh

Supplemental Thrift Plan

 

 

Table of Contents

	 	 	 	 	 	 	 
	Article	 	 	 	Page
	

	 	Preamble
	 	 	1	 
	 
	 	 	 	 	 	 
	I.

	 	Definitions
	 	 	2	 
	 
	 	 	 	 	 	 
	II.

	 	Participation and Vesting
	 	 	4	 
	 
	 	 	 	 	 	 
	III.

	 	Employee Deferrals; Bank Deferrals
	 	 	5	 
	 
	 	 	 	 	 	 
	IV.

	 	Accounts and Investment Vehicles
	 	 	6	 
	 
	 	 	 	 	 	 
	V.

	 	Distribution of Benefits
	 	 	7	 
	 
	 	 	 	 	 	 
	VI.

	 	Administration of the Plan
	 	 	8	 
	 
	 	 	 	 	 	 
	VII.

	 	General Provisions
	 	 	10	 

 

 

Preamble

The Federal Home Loan Bank of Pittsburgh (the “Bank”) participates in the Financial
Institutions Thrift Plan (the “Thrift Plan”), a retirement savings plan qualified under the
Internal Revenue Code (the “Code”) for employees of the Federal Home Loan Bank of Pittsburgh. The
Thrift Plan permits eligible employees to elect to reduce and defer a percentage of their
compensation, contributing the same to the Thrift Plan. The Bank matches employee contributions
based on length of service and the amount of employee contributions.

However, as a result of the limitations imposed upon the aggregate amount of contributions which
can be made to the Thrift Plan under Section 415 and other sections of the Code, such limitations
causing a reduction in the benefits otherwise provided to certain of the Bank’s executives, the
Bank has adopted this nonqualified, unfunded Supplemental Thrift Plan (the “Plan”). The purpose of
this plan is to allow those employees whose benefits under the Thrift Plan would otherwise be
significantly restricted by the terms of the Thrift Plan itself or the Code to make elective pretax
deferrals and to receive the Bank match relating to such deferrals. Additionally, under the Plan,
the Bank will match 200% of such employee’s contributions, not to exceed 3% of the employee’s
compensation (as defined in the Plan), less the Bank’s contribution to the Thrift Plan.

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Article I

Definitions

	1.1  	“Account” means the book reserve account established and maintained hereunder to record the
contributions deemed to be made by the Participant and the Bank, as well as the increase in value
attributable to the earnings thereon, all as described hereafter.
	 
	1.2  	“Bank” means the Federal Home Loan Bank of Pittsburgh.
	 
	1.3  	“Bank Deferrals” means the amounts contributed by the Bank under the Plan.
	 
	1.4  	“Board” or “Board of Directors” means the Board of Directors of the Federal Home Loan Bank of
Pittsburgh.”
	 
	1.5  	“Beneficiary” means the person or persons designated by a Participant under the provisions of
this Supplemental Thrift Plan to receive his benefits in the event of his death prior to receipt of all
benefits hereunder.
	 
	1.6  	“Compensation” means the annual base salary plus incentive compensation, excluding any Long
Term Incentive compensation (“LTI”), which would be payable to a Participant for services
rendered to the Bank (before reductions or deductions for any reason) on account of his
employment with the Bank.
	 
	1.7  	“Deferral Election” means a Participant’s election to defer a portion of his Compensation.
	 
	1.8  	“Deferral Period” means the period commencing with the date a Deferred Amount is first
credited
to a Participant’s Account and continuing until payment of the final installment of a Participant’s
Deferred Amount.
	 
	1.9  	“Deferred Amount” means the sum of all amounts deferred pursuant to a Participant’s Deferral
Election, plus the Bank match, plus investment earnings thereon, plus any increments thereof
credited to the Participant’s Account, less any benefit payments made from the Participant’s
Account.
	 
	1.10  	“Disability” means a Participant’s total or partial disability as determined by the Thrift Plan.
	 
	1.11  	“Effective Date” means January 1, 1991.
	 
	1.12  	“Employee Deferrals” means the amounts deferred by the Participant under the Plan.
	 
	1.13  	“Human Resources Committee” means the Human Resources Committee of the Board.
	 
	1.14  	“Participant” means an executive who has been recommended by the President, and confirmed by
the Board, as eligible to participate in the plan.

2

 

	1.15  	“Plan Administrator” means an officer(s) of the Bank who has been appointed by the
Human Resources Committee to administer the Plan as set forth in Section 6.1 of the Plan.

3

 

Article II

Participation and Vesting

	2.1  	Eligibility to Participate. A Participant shall become eligible for Plan participation on
the later of the first day of the calendar month coincident with or next following the date his
participation is approved by the Board or the Effective Date. Once selected as a Participant, the
Participant shall continue as a Participant until the Board determines otherwise. No executive shall
have the right to be continued as a Participant in the Plan.
	 
	   	Upon designation as a Participant, each Participant will be given a copy of the Plan. Upon
becoming eligible to participate in the Plan a Participant shall have the option to make a
Deferral Election to defer a portion of his annual Compensation.
	 
	2.2  	Termination of Participation. Participation under the Plan shall terminate if employment with
the Bank terminates.
	 
	2.3  	Vesting. All benefits under the Plan are fully vested at all times subject only to Forfeiture
for Cause as defined in Section 7.6.

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Article III

Employee Deferrals; Bank Deferrals

	3.1  	Deferral Election. The Plan Administrator shall provide each Participant with a Deferral
Election at least 30 days prior to the commencement of the calendar year in which the
Compensation is to be earned and paid. Each Participant shall execute and deliver the
Deferral
Election to the Plan Administrator no later than the last business day preceding the
calendar year
in which Compensation is to be earned and paid.
	 
	   	An executive who becomes eligible to participate during a calendar year shall have the
option to execute a Deferral Election within 30 days of the date he becomes eligible to
participate, which such election shall only apply to Compensation earned after the execution
of the Deferral Election.
	 
	   	The Deferral Election will state the percentage of Compensation and LTI (if applicable)
which the Participant elects to defer for the forthcoming calendar year. A Deferral Election
by the Participant shall be irrevocable for the calendar year for which the deferral is
elected unless changes occur to the Thrift Plan which require Participant’s reconsideration.
If such an event occurs, the Plan Administrator will communicate in writing with the
Participant to request a new Deferral Election.
	 
	3.2  	Employee Deferrals. Consistent with the Deferral Election, Participant Compensation and LTI
(if applicable) shall deferred by the Bank crediting amounts to the Participant’s Thrift
Plan account and Participant Account under this Plan in accordance with the annual distribution
schedule provided to each Participant. Amounts deferred under this Plan may not exceed
eighty percent (80%) of the sum of the Participant’s Compensation and LTI, less Participant’s
contributions to the Thrift Plan. The maximum amount of contributions allowable under the
Thrift Plan is based on limitations imposed by Section 401(k) and other sections of the
Code, and shall include any employee after-tax contributions to the Thrift Plan. The amounts so
deferred under this Plan shall be referred to as “Employee Deferrals” and shall be credited to the
Participant’s Account as further described in Article IV.
	 
	3.3  	Bank Deferrals. For each Deferral Period, the Bank shall credit to the Participant’s Account,
a matching contribution equal to: (1) 200% of the Employee Deferrals (not to exceed 3% of the
Participant’s Compensation), less (2) the Bank’s matching contribution to the Thrift Plan on
behalf of the Participant. The Bank contributions under this Plan shall be referred to as
“Bank Deferrals” and shall be credited to the Participant’s Account as further described in
Article IV.

5

 

Article IV

Accounts and Investment Vehicles

	4.1  	Accounts. The total of the Employee and Bank Deferrals shall be credited monthly as earned to
the applicable Participant Account and shall be recorded on the financial books and records of the
Bank as a liability owed to the Participant.
	 
	4.2  	Notional Investments. All Employee and Bank Deferrals credited to the Participant’s Account
will be assumed to be notionally invested in the investment funds offered under the Thrift
Plan. Each Participant’s notional share in the investment fund is represented by units as in the
Thrift Plan. Each month the number of new units credited to a Participant in the notional
investment funds is determined by dividing the total amount of Employee and Bank Deferrals invested in
the notional investment funds during the month by the unit value of the notional investment
funds as of the next valuation date (generally the last business day of the month). The allocations
of Employee and Bank Deferrals to the notional investment funds shall be as set forth in the
investment election forms (“Investment Election”) completed by Participant and submitted to
the Plan Administrator from time to time.
	 
	4.3  	Records. The Plan Administrator shall maintain such records as it deems necessary to
administer this Plan and shall direct the calculation of amounts in the Participants’ Accounts. To this
end, the Plan Administrator is authorized to use Bank employees, agents or contractors to calculate
the benefits due hereunder.

6

 

Article V

Distribution of Benefits

	5.1  	Payment of Benefits. The amounts held in a Participant’s Account hereunder shall
become payable to him as of the earliest of the date of his termination of employment,
Disability, or retirement, in accordance with the form of payment described below.
	 
	5.2  	Form of Payment. The Participant’s Account shall be paid in a lump sum, or, if the
Participant elects: a) in yearly installments of up to 10 years or b) in yearly installments over the life of the
Participant, based on actuarial calculations approved by the Plan Administrator. The elections
hereunder will become effective on January 1st of the year that follows the expiration of a twelve-month period following the election. Failure to make an election shall result in a lump sum
payment.
	 
	5.3  	Death Benefits. In the event of a Participant’s death, the amount then held in Participant’s
Account shall become payable to his Beneficiary in the same manner as the Participant
elected in
§5.2.
	 
	5.4  	Amount of Benefits. A Participant’s Account shall be valued as of the last day of the month
preceding each month with respect to which Participant is entitled to receive a distribution
hereunder, assuming no further contributions are made since the last day of the preceding
month.
	 
	5.5  	Hardship and Other Withdrawals. A Participant may at any time submit a request, through the
Plan Administrator, to the Human Resources Committee seeking a distribution of part or all of the
amount credited to such Participant’s Account for reasons of severe financial hardship or other
reasons as permitted under the Thrift Plan. The Human Resources Committee may, in its
absolute discretion, grant or refuse any such request. It is the intention of the Board that hardship
and other withdrawals shall be available for the same reasons as such withdrawals are available
from the Thrift Plan and that the Participant shall provide such proof and documentation as is
required for hardship and other withdrawals from the Thrift Plan.
	 
	5.6  	Loans. No loans are available from the Plan.

7

 

Article VI

Administration of the Plan

	6.1  	Human Resources Committee. The Board has delegated to the Human Resources Committee
authority over, and responsibility for, the interpretation and administration of the Plan; except
that, the power to determine eligibility for participation in the Plan pursuant to Section 2.1, is
reserved to the Board. The Human Resources Committee shall interpret and construe the Plan
and have the responsibility to ensure that its provisions are carried out. The Human Resources
Committee shall exercise such power and responsibilities in its sole and absolute discretion. The
Human Resources Committee shall designate an officer(s) of the Bank to act as administrator of
the operations of the Plan.
	 
	6.2  	Plan Administration. The Plan Administrator shall:

	 	•  	act as the point of contact for submission of claims for benefits due under the Plan;
	 
	 	•  	calculate the benefits due under the Plan or arrange for the calculation of benefits;
	 
	 	•  	inform Participants of the terms of the Plan and respond to their questions regarding the
Plan;
	 
	 	•  	review and process claims for the payment of benefits under the Plan;
	 
	 	•  	provide necessary reporting to Bank management, Participants, the Human Resources
Committee, the Board, and others as necessary; and
	 
	 	•  	take such other action as required to perform the tasks listed hereunder or otherwise
administer the terms of the Plan. In fulfilling the responsibilities in this section the Plan
Administrator may use other Bank staff, other agents or engage contractors.
	 
	6.3  	Claims Procedure. All claims for benefits shall be in writing and shall be filed with the Plan
Administrator. If the Plan Administrator wholly or partially denies a Participant’s or
Beneficiary’s claim for benefits, the Plan Administrator shall, within 90 days after the
Plan’s receipt of the claim, give the claimant written notice setting forth in understandable
language:

	 	(i)  	the specific reason(s) for the denial;
	 
	 	(ii)  	specific reference to pertinent plan provisions on which the denial is based;
	 
	 	(iii)  	a description of any additional material or information which must be submitted to
perfect the claim, and an explanation of why such material or information is
necessary; and
	 
	 	(iv)  	an explanation of the Plan’s review procedure.

	 
	 	
The claimant shall have 60 days after the day on which such written notice of denial is
handed or

8

 

mailed to him, in which to apply (in person or by authorized representative) to the Human
Resources Committee, in writing, for a full and fair review of the denial of his claim. In
connection with such review, the claimant (or his representative) shall be afforded reasonable
opportunity to review pertinent documents, and may submit issues and comments in writing.

The Human Resources Committee shall issue its decision on review promptly and within 60 days after
the Plan’s receipt of the request for review, unless special circumstances require an extension to
not later than 120 days after receipt of the request for review. (Written notice of any such
extension shall be furnished to the claimant before the commencement of such extension.) The
decision shall be in writing and shall in understandable language set forth specific reasons for
the decision and specific references to pertinent Plan provisions on which the decision is based.

9

 

Article VII

General Provisions

	7.1  	Rights to Employment. The establishment of the Plan, and selection of an executive for
inclusion as a Participant in the Plan, shall not be construed as conferring any legal
rights upon any Participant or other person for the continuation of employment, nor shall it interfere
with the rights of the Bank to discharge any Participant and to treat him without regard to the
effect such treatment might have upon him as a Participant in the Plan.
	 
	7.2  	Source of Funding—Participant as General Creditor. The Bank shall not establish any form of
trust or funded account for the purpose of providing benefits under this Plan. Any Participant
who may have or claim any interest in or right to any payable hereunder, shall rely solely upon
the unsecured promise of the Bank as set forth herein, for the payment of the claim. Nothing
herein contained should be construed to give to or vest in any Participant, now or at any time in
the future, any right, title, interest or claim in or to any specific asset, fund, reserve, account or
property of any kind whatever owned by the Bank, or in which the Bank may have any right, title
or interest, now or at any time in the future. The Plan is not intended to be a qualified plan within
the meaning of Section 401 (a) of the Code and the Bank shall not be required to qualify the Plan
under the Code.
	 
	7.3  	Incapacity. In the event that the Human Resources Committee shall find that a Participant is
unable to care for his affairs because of illness or accident, the Human Resources Committee may
direct that any payment due him, unless claim shall have been made therefore by a duly appointed
legal representative, be paid to his spouse, a child, a parent or other blood relative, or to a person
with whom he resides, and any such payment so made shall be a complete discharge of the
liabilities of the Plan therefore.
	 
	7.4  	Taxes. The Bank shall have the right to deduct from each payment to be made under the Plan
any required withholding taxes and shall withhold or cause to be withheld from all payments or
accruals of benefits under the Plan (if applicable), all federal, state or local taxes required to be
withheld by law. The Participant shall be liable for the payment of all taxes on the benefits under
the Plan that are the Participant’s responsibility under the laws establishing such taxes.
	 
	7.5  	Alienation of Benefits under the Plan. Benefits payable under this Plan shall not be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, whether voluntary or involuntary, including any such liability which is for alimony or other
payments for the support of a spouse or former spouse, or for any other relative of the
Participant, prior to actually being received by the person entitled to the benefits under the terms of
the Plan, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge
the same shall be void; nor shall any such distribution or payment be in any way liable for or
subject to the debts, contracts, liabilities, engagements or torts of any person entitled to such
distribution or payment. If any Participant or Beneficiary is adjudicated bankrupt or purports to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any such distribution or
payment voluntarily or involuntarily, the Bank, in its discretion, may hold or cause to be held or
applied such distribution or payment or any part thereof to or for the benefit of such Participant
or Beneficiary in such manner as the Bank shall direct.

10

 

	7.6  	Forfeiture for Cause. The Bank Deferrals and the earnings on the Bank Deferrals
otherwise payable by the Plan may be subject to forfeiture for cause at any time. “Cause”
shall mean:

	 	(i)  	the perpetration by a Participant of a defalcation involving the Bank or any affiliate;
	 
	 	(ii)  	willful, reckless or grossly negligent conduct of a Participant entailing a
substantial violation of any material provision of the laws, rules, regulations or
orders of any governmental agency applicable to the Bank or an affiliate;
	 
	 	(iii)  	the repeated and deliberate failure by a Participant to comply with reasonable policies
or directives of the Board of Directors; or
	 
	 	(iv)  	the breach by a Participant of a noncompetitive covenant or agreement with the Bank
or affiliate.

Whether the facts in any given case amount to “Cause” shall be determined by the Board
of Directors.

	7.6  	Compliance with Laws. The provisions of the Plan shall be construed, administered and
governed under the laws of the United States and, to the extent they defer to state law, the
laws of the Commonwealth of Pennsylvania. Whenever any words are used herein in the
masculine gender, they shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and whenever any words are used herein in the
singular form, they shall be construed as though they were also used in the plural form in
all cases where they would so apply. Titles of Articles and Sections hereof are for
convenience of reference only and are not to be taken into account in construing the
provisions of this Plan. In case any provision of the Plan shall be held illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining parts of the
Plan, but the Plan shall be construed and enforced as if said illegal and invalid provision
had never been inserted herein.
	 
	7.8  	Amendment and Termination. The Bank specifically reserves the right, in the sole and
unfettered discretion of its Board, at any time, to amend, in whole or in part, any or all
of the provisions of the Plan and to terminate the Plan in whole or in part; provided, however,
that no such amendment or termination shall reduce or eliminate the rights of a Participant accrued
hereunder to the date of such amendment or termination.
	 
	7.9  	Binding on Successors. The Plan shall be binding upon and inure to the benefit of the Bank
and its successors and assigns. The Plan shall also be binding upon and inure to the benefit of
any successor organization succeeding to substantially all of the assets and business of the
Bank, but nothing in the Plan shall preclude the Bank from merging or consolidating into or with, or
transferring all or substantially all of its assets to, another organization which assumes
the Plan and all obligations of the Bank hereunder. The Bank agrees that it will make appropriate
provision for the preservation of Participants’ rights under the Plan in any agreement or
plan which it may enter into to effect any merger, consolidation, reorganization or transfer of
assets. Upon such a merger, consolidation, reorganization, or transfer of assets and assumption of
Plan obligations of the Bank, the term “Bank” shall refer to such other organization and the
Plan shall continue in full force and effect.

11

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