Document:

Exhibit 10.14

 

 

 

 

 

 

 

 

 

 

 

 

 

BROADWAY FEDERAL BANK

 

DEFERRED COMPENSATION

 

(Effective July 1, 2006)

 

 

 

1

 

 

TABLE OF CONTENTS

 

 

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1
    	
DEFINITIONS
    	
3
    
	
 
    	
 
    	
 
    
	
SECTION 2
    	
PARTICIPATION
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 3
    	
SALARY DEFERRAL ELECTIONS
    	
6
    
	
 
    	
 
    	
 
    
	
SECTION 4
    	
ACCOUNTING
    	
7
    
	
 
    	
 
    	
 
    
	
SECTION 5
    	
DISTRIBUTIONS
    	
7
    
	
 
    	
 
    	
 
    
	
SECTION 6
    	
PARTICIPANT’S INTEREST IN ACCOUNT
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 7
    	
ADMINISTRATION OF THE PLAN
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 8
    	
FUNDING
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 9
    	
MODIFICATION OR TERMINATION OF PLAN
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 10
    	
GENERAL PROVISIONS
    	
12
    

 

 

 

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BROADWAY FEDERAL BANK

DEFERRED COMPENSATION PLAN

 

(Effective July 1, 2006)

 

BROADWAY FEDERAL BANK, a California corporation, hereby establishes the Broadway Federal Bank Deferred Compensation Plan, effective July 1, 2006, for the benefit of (i) a select group of management and highly compensated employees of the Company and its participating Affiliates (“Directors”) and (ii) the members of the Board of Directors of the Company and its participating affiliates, in order to provide such employees and Directors with certain deferred compensation benefits. The Plan is an unfunded deferred compensation plan that is intended to qualify for the exemptions provided in sections 201, 301, and 401 of ERISA.

 

SECTION 1

DEFINITIONS

 

The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context:

 

1.2         “Affiliate” shall have the same meaning as that assigned from time to time to the identical term under the Investment Plan.

1.3         “Beneficiary” shall mean the person or persons entitled to receive benefits under the Plan upon the death of a Participant, as provided in Section 5.4.

1.4         “Board” shall mean the Board of Directors of Broadway Federal Bank, as from time to time constituted.

1.5         “Code” shall mean the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code shall include such section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation amending, supplementing or superseding such section.

1.6         “Committee” shall mean the committee appointed by the Board to administer the Plan. Any member of the Committee may resign at any time by notice in writing mailed or delivered to the Secretary of the Company. The Board may remove any member of the Committee at any time and for any reason, and may fill any vacancy which exists.

1.7         “Company” shall mean Broadway Federal Bank, a California corporation.

1.8         “Compensation” shall mean the base salary and the annual salary of an Eligible Employee and all compensation earned by a Director as a Director.

1.9         “Compensation Deferrals” shall mean the amounts credited to Participants’ Accounts under Section 3.1.

1.10      “Director” shall mean a member of the Board.

1.11      “Disability” shall mean the mental or physical inability of an eligible employee to perform the regularly assigned duties of his or her employment, provided that such inability (a) has continued or is expected to continue for a period of at least 12 months and (b) is evidenced by the certificate of a medical examiner satisfactory to the Committee stating that such inability exists and is likely to be permanent.

 

 

 

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1.12      “Eligible Employee” shall mean an employee of an Employer who has been selected for participation in the Plan by the Committee.

1.13      “Employers” shall mean the Company and each of its Affiliates that adopts the Plan. With respect to an individual Participant, Employer shall mean the Company or its Affiliate that has adopted the Plan and that directly employs such Participant.

1.14      “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended. Reference to a specific section of ERISA shall include such section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation amending, supplementing or superseding such section.

1.15      “Normal Retirement Date” shall mean the date on which the Participant attains age 65.

1.16      “Participant” shall mean Eligible Employees and Directors who (a) have become a Participant in the Plan pursuant to Section 2.1 and (b) have not ceased to be a Participant pursuant to Section 2.3.

1.17      “Participant’s Account” or “Account” means as to any Participant the separate account maintained on the books of the Employers in order to reflect his or her interest under the Plan.

1.18      “Plan” shall mean Broadway Federal Bank Deferred Compensation Plan, as set forth in this instrument and as heretofore and hereafter amended from time to time.

1.19      “Plan Year” shall mean the calendar year.

1.20      “Supplemental Allocations” means any amounts credited to a Participant’s Account under Section 3.2.

 

SECTION 2

PARTICIPATION

 

2.1         Participation. Each Eligible Employee’s and Director’s decision to become a Participant shall be entirely voluntary.

2.1.1    Initial Election. An Eligible Employee and a Director may elect to become a Participant in this Plan for the Plan Year beginning on July 1, 2006.  An election to make Compensation Deferrals under this Section 2.1.1 shall be irrevocable as to the amounts already deferred as of the effective date of any suspension in accordance with Section 2.2.

2.1.2    Election for Subsequent Plan Years. An Eligible Employee and Director (whether or not he or she previously elected to make Compensation Deferrals) may elect to become a Participant (or to reinstate his or her active participation) in the Plan for any Plan Year, not covered by Section 2.1 by electing at least 30 days prior to the beginning of each plan year, and subject to Section 2.1.4, to make Compensation Deferrals under the Plan. An election under this Section 2.1.2 to make Compensation Deferrals shall be effective only for the Plan Year with respect to which the election is made. An election to make Compensation Deferrals under this Section 2.1.2 shall be irrevocable as to amounts deferred as

 

 

 

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of the effective date of any suspension in accordance with Section 2.2.  An Eligible Employee who is newly hired by an Employer during a Plan Year may elect to become a Participant in the Plan for that Plan Year by electing, within thirty days of the date of his or her hire, appointment or election and subject to Section 2.1.4, to make Compensation Deferrals under the Plan. An election under this Section 2.1.2 to make Compensation shall be effective only for the Plan Year with respect to which the election is made. An election to make Compensation Deferrals under this Section 2.1.2 shall be irrevocable as to amounts deferred as of the effective date of any suspension in accordance with Section 2.2.

2.1.3    No Election Changes During Plan Year. A Participant shall not be permitted to change or revoke his or her election for a Plan Year after the beginning of such Plan Year, except as provided in Section 2.2.

2.1.4    Specific Timing and Method of Election. Notwithstanding the foregoing, the Committee, in its sole discretion, shall determine the manner and deadlines for Participants to make Compensation Deferral elections. The deadlines prescribed by the Committee may be earlier than the deadlines specified in Section 2.1.1 and 2.1.2, but shall not be later than the deadlines prescribed in such Sections.

2.2         Hardship Suspension of Participation.

2.2.1    Automatic Suspension.  In the event that a Participant receives a distribution from the Investment Plan on account of a financial hardship during a Plan Year for which he or she has elected to make Compensation Deferrals, the Participant’s Compensation Deferrals under this Plan shall be suspended for the same period that his or her pre-tax contributions to the Investment Plan are suspended pursuant to the provisions of the Investment Plan.

2.2.2    Permissible Suspension.  In the event that a Participant incurs a “financial hardship” (as defined in this Section 2.2.2), the Committee, in its sole discretion, may suspend the Participant’s Compensation Deferrals for the remainder of the Plan Year. A “financial hardship” for purposes of the Plan shall mean a severe financial emergency which is caused by a sudden and unexpected accident, illness or other event beyond the control of the Participant which would, if no suspension of deferrals (or accelerated distribution under Section 5.5) were made, result in severe financial hardship to the Participant or a member of his or her immediate family. This standard is more difficult to satisfy than the standard for financial hardship withdrawals under the Investment Plan. For example, a Participant’s desire to send his or her child to college or to purchase a home would not constitute a financial hardship. Also, a financial hardship does not exist to the extent that the hardship may be relieved by (a) reimbursement or compensation by insurance, or (b) by liquidation of the Participant’s other assets (to the extent such liquidation would not itself cause severe financial hardship).

2.3         Termination of Participation.  An Eligible Employee or Director who has become a Participant shall remain a Participant until his or her entire vested Account balance is distributed. However, an Eligible Employee or Director who has become a Participant may or may not be an active Participant making Compensation Deferrals for a particular Plan Year, depending upon whether he or she has elected to make Compensation Deferrals for such Plan Year.

 

 

 

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SECTION 3

COMPENSATION DEFERRALS AND SUPPLEMENTAL ALLOCATIONS

 

3.1         Compensation Deferrals.  At the times and in the manner prescribed in Section 2.1, each Eligible Employee and Director may elect to defer portions of his or her Compensation and to have the amounts of such deferrals credited on the books of the Employer to his or her Account under the Plan. For each Plan Year, an Eligible Employee may elect to defer an amount equal to a percentage of the Participant’s Compensation for the Plan Year. The percentage elected by a Participant shall be a multiple of 5%.  An eligible employee shall not elect to defer more than 50% of his or her base salary.   An Eligible Employee may elect to defer up to 100% of his or her annual bonus and a Director may elect to defer up to 100% of his or her Compensation earned as a Director.

3.2         Crediting of Compensation Deferrals. The amounts deferred pursuant to Section 3.1 shall reduce the Participant’s Compensation during the Plan Year and shall be credited to the Participant’s Account as of the last day of the months in which the deferral occurs.

3.4         Interest.  As of the close of each Plan Year, interest shall be credited to the Account of each Participant.  The interest shall be based on the average balance in each Account during the Plan Year.  The interest shall become a part of the Account and shall be paid at the time or times as the balance of the Account.   The prime rate of interest, or similar standards, selected by the Committee in its discretion, applicable from time to time plus one hundred basis points.

3.5         Form of Payment.  Each Participant shall indicate on his or her deferral election made pursuant to Section 3.1 the form of payment for his or her Account. A Participant may elect either (a) a lump sum payment, or (b) substantially equal annual installments payments not exceeding 10 in number. A Participant’s election as to the form of payment shall be irrevocable.

3.6         Time for Payment.  Each Participant shall indicate on his or her first deferral election made pursuant to Section 3.1 the time for payment for his or her Account. A Participant may elect either:

(a)          The Participant’s termination of employment with all Employers and Affiliates; or

(b)          The later (i) the Participant’s termination of employment with all Employers and Affiliates, or (ii) the Participant’s Normal Retirement Date.

A Participant’s election as to the time for payment shall be irrevocable and shall apply to all amounts credited to the Participant’s Account, without regard to the Plan Year in which such amounts are credited.

 

 

 

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SECTION 4

ACCOUNTING

 

4.1         Participant’s Accounts.         At the direction of the Committee, an Agreement shall be established and maintained on the books of the Employer for each Participant to which there shall be credited all Compensation Deferrals under Section 3.1.

4.2         Accounting Methods.             The accounting methods or formulae to be used under the Plan for the purpose of maintaining the Participants’ Accounts, including but not limited to the crediting intent under Section 3.3, shall be determined by the Committee.  The accounting methods or formulas may be revised from time to time.

4.3         Reports.            Each Participant shall be furnished with periodic statements of his or her Account, reflecting the status of his or her interest in the Plan, at least annually.

 

SECTION 5

DISTRIBUTIONS

 

5.1         Normal Time of Distribution.             Subject to Section 5.2 and 5.3, distribution of the vested balance credited to a Participant’s Account shall be commence as soon as administratively practicable after the date elected by the Participant pursuant to Section 3.5. If pursuant to Section 3.4, the Participant elected to receive a lump sum payment, his or her lump sum shall be paid to him or her as soon as administratively practicable after the date specified in the first sentence of this Section 5.1. If pursuant to Section 3.4, the Participant elected to receive annual installment payments, his or her first installment shall be equal to 1/10th of the balance then credited to his or her Account divided by the number of annual installment to be paid.  The first installment shall be paid to him or her as soon as administratively practicable after the date specified in the first sentence of this Section 5.1. Each subsequent annual installment shall be paid to the Participant as near as administratively practicable to each anniversary of the first installment payment. The amount of each subsequent installment shall be equal to the balance then credited to the Participant’s Account, divided by the number of installments remaining to be made.

5.2         Death Distribution.  If a Participant dies before his or her entire Account has been distributed (whether or not the Participant had previously terminated employment), the vested balance credited to his or her Account shall be distributed to his or her Beneficiary (or Beneficiaries) in a lump sum as soon as administratively practicable after the date of death.

5.3         Effect of Disability.  If the active employment of a Participant ceases at any time on account of his or her Disability, the vested balance credited to his or her Account shall be distributed to him or her in a lump sum as soon as administratively practicable after the date of Disability.

5.4         Beneficiary Designations.  Each Participant may, pursuant to such procedures as the Committee may specify, designate one or more Beneficiaries.

 

 

 

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5.4.1    Spousal Consent.     If a Participant designates a person other than or in addition to his or her spouse as a primary Beneficiary, the designation shall be ineffective unless the Participant’s spouse consents to the designation. Any spousal consent required under this Section 5.4 shall be ineffective unless it (a) is set forth in writing, (b) acknowledges the effect of the Participant’s designation of another person as his or her Beneficiary under the Plan, and (c) is signed by the spouse and witnessed by and authorized agent of the Committee or a notary public. Notwithstanding this consent requirement, if the Participant establishes to the satisfaction of the Committee that spousal consent may be obtained, his or her designation shall be effective without a spousal consent. Any spousal consent required under this Section 5.4 shall be valid only with respect to the spouse who signs the consent. A Participant may revoke his or her Beneficiary designation in writing at any time, regardless of his or her spouse’s previous consent to the Beneficiary designation being revoked, and any such revoked designation shall be ineffective.

5.4.2    Changes and Failed Designations.  A Participant may designate different Beneficiaries (or may revoke a prior Beneficiary designation) at any time by delivering a new designation (or revocation of a prior designation) in like manner.  Any designation shall become effective only upon its receipt by the Committee and when so received, whether the Participant is living or not, shall be operative as of the date the notice is executed, but without prejudice to the Committee on account of any payment made before the change is recorded.  Any designation shall cease to be effective when a revocation of that designation by the Participant is received by the Committee. The last effective designation received by the Committee shall supersede all prior designations.  If a Participant dies without having effectively designated a Beneficiary, or if no Beneficiary survives his or her surviving spouse, or, if the Participant is not survived by his or her spouse, the vested Account shall be paid to his or her estate.

5.5         Financial Hardship.  In the event that a Participant incurs a “financial hardship” (as defined in Section 2.2.2), the Committee, in its sole discretion and notwithstanding any contrary provision of the Plan, may determine that all or part of the Participant’s vested Account shall be paid to him or her immediately; provided, however, that the amount paid to the Participant pursuant to this Section 5.5 shall be limited to the amount reasonably necessary to alleviate the Participant’s hardship. Also, payment under this Section 5.5 may not be made to the extent that the hardship may be relieved by suspension of the Participant’s Compensation Salary Deferrals in accordance with Section 2.2.2.

5.6         Payment to Incompetents.  If any individual to whom a benefit is payable under the Plan is a minor or legally incompetent, the Committee shall determine whether payment shall be made directly to the individual, any person acting as his or her custodian under the California Uniform Transfers to Minors Act, his or her legal representative or a near relative, or directly for his or her support, maintenance or education.

 

 

 

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5.7         Undistributable Account.  Each Participant and (in the event of death) his or her Beneficiary shall keep the Committee advised of his or her current address. If the Committee is unable to locate a Participant or Beneficiary to whom the vested portion of a Participant Account is payable under this Section 5, the Participant’s Account shall continue to be credited with interest under Section 3.3. Accounts that have been undistributable for a period of thirty-five months shall be forfeited as of the end of the thirty-fifth month. If a Participant whose Account was forfeited under this Section 5.7 (or his or her beneficiary) files a claim for distribution of the Account after the date that it was forfeited, and if the Committee determines that such claim is valid, then the vested forfeited balance shall be paid to the Employer in a lump sum cash payment as soon as practicable thereafter.

5.8         Committee Discretion.           Within the specific time periods described in this Section 5, the Committee shall have sole discretion to determine the specific timing of the payment of any Account balance under the Plan.

 

SECTION 6

PARTICIPANT’S INTEREST IN ACCOUNT

 

6.1         Salary Deferral Contributions.         Subject to Section 8.1 (relating to creditor status) and 9.2 (relating to amendment and/or termination of the Plan), a Participant’s vested interest in the balance credited to his or her Account (as adjusted by deemed earnings, gains, and losses) at all times shall be 100% owned by him or her; provided, however, that if the Participant’s employment is terminated on account of “cause” (as defined in this Section 6.1), the portion of the Participant’s Account attributable to interest credited to the Account under Section 3.3 shall be permanently forfeited. For purposes of this Section 6.1, “cause” means conviction of a felony or any other crime that involves fraud, embezzlement, dishonestly or moral turpitude.

 

SECTION 7

ADMINISTRATION OF THE PLAN

 

7.1         Plan Administrator.  The Committee is hereby designated as the administrator of the Plan (within the meaning of section 3(16) (A) of ERISA).

7.2         Committee.  The Plan shall be administered by the Committee. The Committee shall have the authority to control and manage the operation and administration of the Plan.

7.3         Actions by Committee.          Each decision of a majority of the members of the Committee then in office shall constitute the final and binding act of the Committee. The Committee may act with or without a meeting being called or held and shall keep minutes of all meetings held and a record of all actions taken by written consent.

7.4         Powers of Committee.           The Committee shall have all powers necessary to supervise the administration of the Plan and to control its operation in accordance with its terms, including but not limited to, the following powers:

(a)          To interpret and determine the meaning and validity of the provisions of the Plan and to determine any question arising under, or in connection with, the administration, operation or validity of the Plan or any amendment thereto;

 

 

 

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(b)          To select the Eligible Employees who shall be eligible for the Plan, and to determine any and all other considerations affecting the eligibility of any employee to become a Participant or remain a Participant in the Plan;

(c)          To cause one or more separate Accounts to be maintained for each Participant;

(d)          To cause Compensation Deferrals and intent under Section 3.4 to be credited to Participants’ Account;

(e)          To establish and revise an accounting method or formula for the Plan, as provided in Section 4.2;

(f)           To determine the manner and form in which any distribution is to be made under the Plan;

(g)          To determine the status and rights of Participants and their spouses, beneficiaries or estates;

(h)         To employ such counsel, agents and advisers, and to obtain such legal, clerical and other services, as it may deem necessary or appropriate in carrying out the provisions of the Plan;

(i)           To establish, from time to time, rules for the performance of its powers and duties and for the administration of the Plan;

(j)           To arrange for annual distribution to each Participant of a statement of benefits accrued under the Plan;

(k)          To publish a claims and appeal procedure satisfying the minimum standards of section 503 of ERISA pursuant to which individuals or estates may claim Plan benefits and appeal denials of such claims;

(l)           To delegate to any one or more of its members or to any other person, severally or jointly, the authority to perform for and on behalf of the Committee one or more of the functions of the Committee under the Plan; and

(m)        To decide all issues regarding Account balances, and time, form, manner, and amount of distributions to Participants.

7.5         Decisions of Committee.  All actions, interpretations, and decisions of the Committee shall be conclusive and binding on all persons, and shall be given the maximum possible deference allowed by law.

7.6        Administrative Expenses.  All expenses incurred in the administration of the Plan by the Committee, or otherwise, including but not limited to legal fees and expenses, shall be paid and borne by the Employers.

7.7         Eligibility to Participate.         No member of the Committee who is also an employee shall be excluded from participating in the Plan if otherwise eligible, but he or she shall not be entitled, as a member of the Committee, to act or pass upon any matters pertaining specifically to his or her own Account under the Plan.

7.8         Indemnification.         Each of the Employers shall, and hereby does, indemnify and hold harmless the members of the Committee, from and against any and all losses, claims, damages or liabilities (including attorneys’ fees and amounts paid, with the approval of the Board of Directors, in settlement of any claim) arising out of or resulting from the implementation of a duty, act or decision with respect to the Plan, so long as such duty, act or decision does not involve gross negligence or willful misconduct on the part of any such individual.

 

 

 

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SECTION 8

FUNDING

 

8.1         Unfunded Plan.         All amounts credited to a Participant’s Account under the Plan shall continue for all purposes to be a part of the general assets of the Employer. The interest of the Participant in his or her Account, including his or her right to distribution thereof, shall be an unsecured claim against the general assets of the Employer.

 

SECTION 9

MODIFICATION OR TERMINATION OF PLAN

 

9.1         Employers’ Obligations Limited.  The Plan is voluntary on the part of the Employers, and the Employers do not guarantee to continue the Plan. The Company at any time may, by amendment of the Plan, suspend Compensation Deferrals or may discontinue Compensation Deferrals, with or without cause. Complete discontinuance of all Compensation Deferrals shall be deemed a termination of the Plan.

9.2         Plan Termination Generally.  The Bank may unilaterally terminate this Agreement at any time.  The termination of this Agreement shall not cause a distribution of benefits under this Agreement.  Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 4 or Article 5.

 

9.3         Plan Terminations Under Section 409A.  Notwithstanding anything to the contrary, if the Bank terminates this Agreement in the following circumstances:

 

(a)          Within thirty (30) days before, or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of the Agreement and further provided that all the Bank’s arrangements which are substantially similar to the Agreement are terminated so the Director and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the arrangements;

(b)          Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Director’s gross income in the latest of (i) the calendar year in which the Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

 

 

 

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(c)          Upon the Bank’s termination of this and all other account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Bank does not adopt any new non-account balance plans for a minimum of five (5) years following the date of such termination; the Bank may distribute the Deferral Account balance, determined as of the date of the termination of the Agreement to the Director, in a lump sum subject to the above terms.

9.4       Effect of Termination.            If the Plan is terminated, the vested balances credited to the Accounts of the affected Participants shall be distributed to them at the time and in the manner set forth in Section 5; provided, however, that the Committee, in its sole discretion may authorize accelerated distribution of Participant’s Accounts as of any earlier date.

9.5         Termination by Change in Control.   In the event of a change in control of the Company, the Plan shall terminate and all balances credited to the Accounts of Participants shall vest and shall be distributed to the Participants as soon as practical.  For this purpose, a change in control means any of the following transactions, or series of such transactions that are related, wherein the stockholders of the Company immediately before such transaction or transactions do not retain immediately after such transaction or transactions direct or indirect beneficial ownership of more than 51% of the total combined voting power of the outstanding voting stock of the Company or the corporation or corporations to which assets of the Company were transferred: (i) the direct or indirect sale or exchange by stockholders of the Company of the voting stock of the Company, (ii) a merger or consolidation in which the Company is a party, (iii) the sale, exchange or transfer or all or substantially all of the assets of the Company, or (iv) a liquidation or dissolution of the Company.

 

SECTION 10

GENERAL PROVISIONS

 

10.1      Participation by Affiliates.   One or more Affiliates of the Company may become participating Employers by adopting the Plan and obtaining approval for such adoption from the Board. By adopting the Plan, an Affiliate is deemed to agree to all of its terms, including, (but not limited to) the provisions granting exclusive authority to the Board to amend the Plan and to the Committee to administer and interpret the Plan. Any Affiliate may terminate its participation in the Plan at any time. The liabilities incurred under the Plan to the Participants employed by each Employer shall be solely the liabilities of that Employer, and no other Employer shall be liable for benefits accrued by Participant during any period when he or she was not employed by such Employer. A list of participating Employers, and the effective dates of their participation, is attached hereto as Exhibit A.

10.2      Inalienability. In no event may either a Participant, a former Participant or his or her Beneficiary, spouse or estate sell, transfer, anticipate, assign, hypothecate or otherwise dispose of any right or interest under the Plan; and such rights and interests shall not at any time be subject to the claims of creditors nor be liable to attachment, execution or other legal process. Accordingly, for example, a Participant’s interest in the Plan is not transferable pursuant to a domestic relations order.

 

 

 

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10.3      Rights and Duties.  Neither the Employers nor the Committee shall be subject to any liability or duty under the Plan except as expressly provided in the Plan, or for any action taken, omitted or suffered in good faith.

10.4      No Enlargement of Employment Rights. Neither the establishment or maintenance of the Plan, the making of any Compensation Deferrals nor any action of any Employer or Committee, shall be held or construed to confer upon any individual any right to continued employment by any Employer, nor any right or interest in any specific assets of the Employers other than as provided in the Plan. Each Employer expressly reserves the right to discharge any Eligible Employee at any time.

10.5      Apportionment of Costs and Duties.          All acts required of the Employers under the Plan may be performed by the Company for itself and its Affiliates, and the costs of the Plan may be equitably apportioned by the Committee among the Company and the other Employers. Whenever an Employer is permitted or required under the terms of the Plan to do or perform any act, matter or thing, it shall be done and performed by any officer or employee of the Employer who is thereunto duly authorized by the board of directors of the Employer.

10.6      Compensation Deferrals Not Counted Under Other Employee Benefit Plans.  Salary Deferrals under the Plan will not be considered for purposes of contributions or benefits under any other employee benefit plan sponsored by the Employers, except as expressly provided otherwise in any such other employee benefit plan.

10.7      Applicable Law.          The provisions of the Plan shall be constructed, administered and enforced in accordance with ERISA, and to the extent not preempted by ERISA, with the laws of the State of California.

10.8      Severability.   If any provision of the Plan is held invalid or unenforceability, its invalidity or unenforceability shall not affect any other provisions of the Plan, and in lieu of each provision which is held invalid or unenforceable, there shall be added as part of this Plan a provision that shall be as similar in terms to such invalid or unenforceable provision as may be possible and be valid, legal and enforceable.

10.9      Captions.         The captions contained in and the table of contents prefixed to the Plan are inserted only as a matter of convenience and of reference and in no way define, limit, enlarge or describe the scope or intent of the Plan nor in any way shall affect the construction of any provision of the Plan.

 

 

 

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EXECUTION

 

IN WITNESS WHEREOF, Broadway Federal Bank, by its duly authorized officer, has executed this Plan on the date indicated below.

 

BROADWAY FEDERAL BANK

 

 

	
Dated                   
    	
By:    /s/ Robert C.   Davidson                
    
	
 
    	
Title:  Chairman of the Compensation    
            Committee of the   Board
    

 

 

 

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EXHIBIT A

 

List of Participating Employers

 

 

 

	
 
    	
 
    	
Effective Date
    
	
 
    	
Employer
    	
of Participation
    
	
 
    	
 
    	
 
    
	
 
    	
Broadway Federal Bank
    	
July 1, 2006
    

 

 

 

15Exhibit 10.15

 

BROADWAY FEDERAL BANK, F.S.B.

SALARY CONTINUATION AGREEMENT

 

 

THIS SALARY CONTINUATION AGREEMENT (the “Agreement”) is adopted this 6th day of October, 2006, by and between BROADWAY FEDERAL BANK, F.S.B., a California corporation located in Los Angeles, California (the “Bank”) and PAUL HUDSON (the “Executive”).

 

The purpose of this Agreement is to provide specified benefits to the Executive, a member of a select group of management or highly compensated employees who contribute materially to the continued growth, development, and future business success of the Bank.  This Agreement shall be unfunded for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended from time to time.

 

Article 1

Definitions

 

Whenever used in this Agreement, the following words and phrases shall have the meanings specified:

 

1.1         “Account Value” means the amount shown on Schedule A under the heading Account Value.  The parties expressly acknowledge that the Account Value may be different than the liability that should be accrued by the Bank, under Generally Accepted Accounting Principles (“GAAP”), for the Bank’s obligation to the Executive under this Agreement.  The Account Value on any date other than the end of a Plan Year shall be determined by adding the prorated increase attributable for the current Plan Year to the Account Value for the previous Plan Year.

 

1.2         “Beneficiary” means each designated person, or the estate of the deceased Executive, entitled to benefits, if any, upon the death of the Executive determined pursuant to Article 4.

 

1.3         “Beneficiary Designation Form” means the form established from time to time by the Plan Administrator that the Executive completes, signs, and returns to the Plan Administrator to designate one or more Beneficiaries.

 

1.4         “Board” means the Board of Directors of the Bank as from time to time constituted.

 

1.5         “Change in Control” means a change in the ownership or effective control of the Bank, or in the ownership of a substantial portion of the assets of the Bank, as such change is defined in Section 409A of the Code and regulations thereunder.

 

 

1.6         “Code” means the Internal Revenue Code of 1986, as amended.

 

1.7         “Disability” means Executive: (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Bank.  Medical determination of Disability may be made by either the Social Security Administration or by the provider of an accident or health plan covering employees of the Bank.  Upon the request of the Plan Administrator, the Executive must submit proof to the Plan Administrator of the Social Security Administration’s or the provider’s determination.

 

1.8         “Early Involuntary Termination” means the Executive has been notified in writing by the Bank of a Separation from Service before Normal Retirement Age except when such Separation from Service occurs due to death, Disability, Early Voluntary Termination or Termination for Cause.

 

1.9         “Early Voluntary Termination” means Separation from Service before Normal Retirement Age except when such Separation from Service occurs: (i) within twelve (12) months following a Change in Control; or (ii) due to death, Disability, Early Involuntary Termination, or Termination for Cause.

 

1.10       “Early Voluntary Termination With Good Reason” means Separation from Service before Normal Retirement Age when such Separation from Service occurs within twelve (12) months following a Change in Control and where such Separation from Service results from any of the following:

 

(a)          Failure to provide Executive a substantially equivalent or better position, without regard to the new title given to Executive by any successor, with the Bank and/or a Subsidiary (or any successor thereto by operation of law of or otherwise), which the Executive held immediately prior to a Change in Control, or the removal of the Executive as a Director of the Bank and/or a Subsidiary (or any successor thereto) if the Executive shall have been a Director of the Bank and/or a Subsidiary immediately prior to the Change in Control;

 

(b)          Failure of the Bank to remedy any of the following within 10 calendar days after receipt by the Bank of written notice thereof from the Executive: (A) a significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position with the Bank and any Subsidiary which the Executive held immediately prior to the Change in Control, (B) a 20% reduction in the Executive’s Base Pay received from the Bank or any Subsidiary, or (D) the termination or denial of the Executive’s rights to Employee Benefits or a reduction in the scope or value thereof;

 

 

(c)          The liquidation, dissolution, merger, consolidation or reorganization of the Bank or the transfer of all or substantially all of its business and/or assets, unless the successor or successors (by liquidation, merger, consolidation, reorganization, transfer or otherwise) to which all or substantially all of its business and/or assets have been transferred (by operation of law or otherwise) assumed all duties and obligations of the Bank under this Agreement;

 

(d)          The Bank requires the Executive to have his principal location of work changed to any location that is in excess of 50 miles from the location thereof immediately prior to the Change in Control, or requires the Executive to travel away from his office in the course of discharging his responsibilities or duties hereunder at least 20% more (in terms of aggregate days in any calendar year or in any calendar quarter when annualized for purposes of comparison to any prior year) than was required of Executive in any of the three full years immediately prior to the Change in Control without, in either case, his prior written consent; or

 

(e)          Without limiting the generality or effect of the foregoing, any material breach of this Agreement by the Bank or any successor thereto which is not remedied by the Bank within 10 calendar days after receipt by the Bank of written notice from the Executive of such breach.

 

1.11       “Effective Date” means March 1, 2006.

 

1.12       “Normal Retirement Age” means the Executive attaining age sixty-five (65).

 

1.13       “Normal Retirement Date” means the later of Normal Retirement Age or Separation from Service.

 

1.14       “Plan Administrator” means the plan administrator described in Article 6.

 

1.15       “Plan Year” means each twelve-month period commencing on March 1st and ending on the last day of February of each year.

 

1.16       “Schedule A” means the schedule attached to this Agreement and made a part hereof.  Schedule A shall be updated upon a change in any of the benefits under Articles 2 or 3.

 

1.17       “Separation from Service” means the termination of the Executive’s employment with the Bank for reasons other than death or Disability.  Whether a Separation from Service takes place is determined based on the facts and circumstances surrounding the termination of the Executive’s employment and whether the Bank and the Executive intended for the Executive to provide significant services for the Bank following such termination.  A termination of employment will not be considered a Separation from Service if:

 

 

(a)          the Executive continues to provide services as an employee of the Bank at an annual rate that is twenty percent (20%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or, if employed less than three years, such lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the average annual remuneration earned during the final three full calendar years of employment (or, if less, such lesser period), or

 

(b)          the Executive continues to provide services to the Bank in a capacity other than as an employee of the Bank at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the average annual remuneration earned during the final three full calendar years of employment (or if less, such lesser period).

 

1.18       “Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Bank if any stock of the Bank is publicly traded on an established securities market or otherwise.

 

1.19       “Termination for Cause” means Separation from Service for:

 

(a)          Gross negligence or gross neglect of duties to the Bank; or

 

(b)          Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or

 

(c)          Fraud, disloyalty, dishonesty or willful violation of any law or significant Bank policy committed in connection with the Executive’s employment and resulting in a material adverse effect on the Bank.

 

1.20       “Years of Participation” means the consecutive 12-month period beginning on the Effective Date of this Agreement and any 12-month anniversary thereof, during the entirety of which time the Executive is a participant in the Agreement.

 

Article 2

Distributions During Lifetime

 

2.1         Normal Retirement Benefit.  Upon the Normal Retirement Date, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article.

 

2.1.1     Amount of Benefit.  The annual benefit under this Section 2.1 is One Hundred Thousand Dollars ($100,000).

 

 

2.1.2     Distribution of Benefit.  The Bank shall distribute the annual benefit to the Executive in twelve (12) equal monthly installments commencing on the first day of the month following Separation from Service.  The annual benefit shall be distributed to the Executive for fifteen (15) years.

 

2.2         Early Involuntary Termination Benefit.  Upon Early Involuntary Termination, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article.

 

2.2.1     Amount of Benefit.  The benefit under this Section 2.2 is one hundred percent (100%) of the Account Value determined as of the end of the Plan Year preceding Separation from Service.

 

2.2.2     Distribution of Benefit.  The Bank shall distribute the benefit to the Executive in one hundred eighty (180) consecutive equal monthly installments commencing on the first day of the month following Separation from Service.

 

2.3         Early Voluntary Termination Benefit.  In the case of Early Voluntary Termination, the Executive shall not be entitled to any benefit hereunder.

 

2.4         Disability Benefit.  If the Executive experiences a Disability prior to Normal Retirement Age the Bank shall distribute to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Article.

 

2.4.1     Amount of Benefit.  The benefit under this Section 2.4 is one hundred percent (100%) of the Account Value determined as of the end of the Plan Year preceding such Disability.

 

2.4.2     Distribution of Benefit.  The Bank shall distribute the benefit to the Executive in one hundred eighty (180) consecutive equal monthly installments commencing on the first day of the month following Separation from Service.

 

2.5         Change in Control Benefit.  Upon a Change in Control, followed within twelve (12) months by a Early Involuntary Termination or Early Voluntary Termination with Good Reason, the Bank shall distribute to the Executive the benefit described in this Section 2.5 in lieu of any other benefit under this Article.

 

2.5.1     Amount of Benefit.  The benefit under this Section 2.5 is one hundred percent (100%) of the Account Value determined as of the end of the Plan Year preceding Separation from Service.

 

2.5.2     Distribution of Benefit.  The Bank shall distribute the benefit to the Executive in a lump sum within ninety (90) days following Separation from Service.

 

 

2.6         Restriction on Timing of Distribution.  Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at Separation from Service under such procedures as established by the Bank in accordance with Section 409A of the Code, benefit distributions that are made upon Separation from Service may not commence earlier than six (6) months after the date of such Separation from Service. Therefore, in the event this Section 2.6 is applicable to the Executive, any distribution which would otherwise be paid to the Executive within the first six months following the Separation from Service shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following the Separation from Service.  All subsequent distributions shall be paid in the manner specified.

 

2.7         Distributions Upon Income Inclusion Under Section 409A of the Code.  Upon the inclusion of any portion of the Account Value into the Executive’s income as a result of the failure of this non-qualified deferred compensation plan to comply with the requirements of Section 409A of the Code, to the extent such tax liability can be covered by the Executive’s vested Account Value, a distribution shall be made as soon as is administratively practicable following the discovery of the plan failure.

 

2.8         Change in Form or Timing of Distributions.  For distribution of benefits under this Article 2, the Executive and the Bank may, subject to the terms of Section 8.1, amend the Agreement to delay the timing or change the form of distributions.  Any such amendment:

 

(a)          may not accelerate the time or schedule of any distribution, except as provided in Section 409A of the Code and the regulations thereunder;

 

(b)          must, for benefits distributable under Sections 2.1, 2.2, 2.3 and 2.5, delay the commencement of distributions for a minimum of five (5) years from the date the first distribution was originally scheduled to be made; and

 

(c)          must take effect not less than twelve (12) months after the amendment is made.

 

Article 3

Distribution at Death

 

3.1         Death During Active Service.  If the Executive dies while in the active service of the Bank, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of the benefits under Article 2.

 

3.1.1     Amount of Benefit.  The benefit under this Section 3.1 is the Normal Retirement Benefit amount described in Section 2.1.1.

 

3.1.2     Distribution of Benefit.  The Bank shall distribute the annual benefit to the Beneficiary in twelve (12) equal monthly installments for fifteen (15) years commencing the first day of the month following receipt by the Bank of the Executive’s death certificate.

 

 

3.2         Death During Distribution of a Benefit.  If the Executive dies after any benefit distributions have commenced under this Agreement but before receiving all such distributions, the Bank shall distribute to the Beneficiary the remaining benefits at the same time and in the same amounts that would have been distributed to the Executive had the Executive survived.

 

3.3         Death After Separation from Service But Before Benefit Distributions Commence.  If the Executive is entitled to benefit distributions under this Agreement, but dies prior to the commencement of said benefit distributions, the Bank shall distribute to the Beneficiary the same benefits that the Executive was entitled to prior to death except that the benefit distributions shall commence within thirty (30) days following receipt by the Bank of the Executive’s death certificate.

 

Article 4

Beneficiaries

 

4.1         Beneficiary.  The Executive shall have the right, at any time, to designate a Beneficiary to receive any benefit distributions under this Agreement upon the death of the Executive.  The Beneficiary designated under this Agreement may be the same as or different from the beneficiary designation under any other plan of the Bank in which the Executive participates.

 

4.2         Beneficiary Designation: Change; Spousal Consent.  The Executive shall designate a Beneficiary by completing and signing the Beneficiary Designation Form, and delivering it to the Plan Administrator or its designated agent.  If the Executive names someone other than his or her spouse as a Beneficiary, a spousal consent, in the form designated by the Plan Administrator, must be signed by the Executive’s spouse and returned to the Plan Administrator.  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.  The Executive shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Plan Administrator’s rules and procedures, as in effect from time to time.  Upon the acceptance by the Plan Administrator of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled.  The Plan Administrator shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive and accepted by the Plan Administrator prior to the Executive’s death.

 

4.3         Acknowledgment.  No designation or change in designation of a Beneficiary shall be effective until received, accepted and acknowledged in writing by the Plan Administrator or its designated agent.

 

4.4         No Beneficiary Designation.  If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the Executive’s spouse shall be the designated Beneficiary.  If the Executive has no surviving spouse, the benefits shall be made to the personal representative of the Executive’s estate.

 

 

4.5         Facility of Distribution.  If the Plan Administrator determines in its discretion that a benefit is to be distributed to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of that person’s property, the Plan Administrator may direct distribution of such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person.  The Plan Administrator may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit.  Any distribution of a benefit shall be a distribution for the account of the Executive and the Executive’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Agreement for such distribution amount.

 

Article 5

General Limitations

 

5.1         Termination for Cause.  Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if the Executive’s employment with the Bank is terminated due to a Termination for Cause.

 

5.2         Suicide or Misstatement.  No benefits shall be distributed if the Executive commits suicide within two years after the Effective Date of this Agreement, or if an insurance company which issued a life insurance policy covering the Executive and owned by the Bank denies coverage (i) for material misstatements of fact made by the Executive on an application for such life insurance, or (ii) for any other reason.

 

5.3         Removal.  Notwithstanding any provision of this Agreement to the contrary, the Bank shall not distribute any benefit under this Agreement if the Executive is subject to a final removal or prohibition order issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.

 

Article 6

Administration of Agreement

 

6.1         Plan Administrator Duties.  This Agreement shall be administered by a Plan Administrator which shall consist of the Board, or such committee or person(s) as the Board shall appoint.  The Plan Administrator shall administer this Agreement according to its express terms and shall also have the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration of this Agreement and (ii) decide or resolve any and all questions including interpretations of this Agreement, as may arise in connection with the Agreement to the extent the exercise of such discretion and authority does not conflict with Section 409A of the Code and regulations thereunder.

 

 

6.2         Agents.  In the administration of this Agreement, the Plan Administrator may employ agents and delegate to them such administrative duties as it sees fit, (including acting through a duly appointed representative), and may from time to time consult with counsel who may be counsel to the Bank.

 

6.3         Binding Effect of Decisions.  The decision or action of the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation and application of the Agreement and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Agreement.

 

6.4         Indemnity of Plan Administrator.  The Bank shall indemnify and hold harmless the members of the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.

 

6.5         Bank Information.  To enable the Plan Administrator to perform its functions, the Bank shall supply full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the retirement, Disability, death, or Separation from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.

 

6.6         Annual Statement. The Plan Administrator shall provide to the Executive, within one hundred twenty (120) days after the end of each Plan Year, a statement setting forth the benefits to be distributed under this Agreement.

 

Article 7

Claims And Review Procedures

 

7.1         Claims Procedure.  An Executive or Beneficiary (“claimant”) who has not received benefits under the Agreement that he or she believes should be distributed shall make a claim for such benefits as follows:

 

7.1.1     Initiation – Written Claim.  The claimant initiates a claim by submitting to the Plan Administrator a written claim for the benefits.  If such a claim relates to the contents of a notice received by the claimant, the claim must be made within sixty (60) days after such notice was received by the claimant.  All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred.  The claim must state with particularity the determination desired by the claimant.

 

7.1.2     Timing of Plan Administrator Response.  The Plan Administrator shall respond to such claimant within 90 days after receiving the claim.  If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional 90 days by notifying the claimant in writing, prior to the end of the initial 90-day period, that an additional period is required.  The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

 

 

7.1.3     Notice of Decision.  If the Plan Administrator denies part or all of the claim, the Plan Administrator shall notify the claimant in writing of such denial.  The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant.  The notification shall set forth:

 

(a)          The specific reasons for the denial;

 

(b)          A reference to the specific provisions of the Agreement on which the denial is based;

 

(c)          A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed;

 

(d)          An explanation of the Agreement’s review procedures and the time limits applicable to such procedures; and

 

(e)          A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

 

7.2         Review Procedure.  If the Plan Administrator denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Plan Administrator of the denial, as follows:

 

7.2.1     Initiation – Written Request.  To initiate the review, the claimant, within 60 days after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.

 

7.2.2     Additional Submissions – Information Access.  The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim.  The Plan Administrator shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

 

7.2.3     Considerations on Review.  In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 

 

7.2.4     Timing of Plan Administrator Response.  The Plan Administrator shall respond in writing to such claimant within 60 days after receiving the request for review.  If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional 60 days by notifying the claimant in writing, prior to the end of the initial 60-day period, that an additional period is required.  The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

 

7.2.5     Notice of Decision.  The Plan Administrator shall notify the claimant in writing of its decision on review.  The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant.  The notification shall set forth:

 

(a)          The specific reasons for the denial;

 

(b)          A reference to the specific provisions of the Agreement on which the denial is based;

 

(c)          A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits; and

 

(d)          A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).

 

Article 8

Amendments and Termination

 

8.1         Amendments.  This Agreement may be amended only by a written agreement signed by the Bank and the Executive.  However, the Bank may unilaterally amend this Agreement to conform with written directives to the Bank from its auditors or banking regulators or to comply with legislative or tax law, including without limitation Section 409A of the Code and any and all regulations and guidance promulgated thereunder.

 

8.2         Plan Termination Generally.  The Bank may unilaterally terminate this Agreement at any time.  The benefit shall be the Account Value as of the date the Agreement is terminated.  Except as provided in Section 8.3, the termination of this Agreement shall not cause a distribution of benefits under this Agreement.  Rather, upon such termination benefit distributions will be made at the earliest distribution event permitted under Article 2 or Article 3.

 

8.3         Plan Terminations Under Section 409A.  Notwithstanding anything to the contrary in Section 8.2, if the Bank terminates this Agreement in the following circumstances:

 

 

(a)          Within thirty (30) days before, or twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such termination of the Agreement and further provided that all the Bank’s arrangements which are substantially similar to the Agreement are terminated so the Executive and all participants in the similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the termination of the arrangements;

 

(b)          Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Agreement are included in the Executive’s gross income in the latest of (i) the calendar year in which the Agreement terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or

 

(c)          Upon the Bank’s termination of this and all other non-account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Bank does not adopt any new non-account balance plans for a minimum of five (5) years following the date of such termination;

 

the Bank may distribute the Account Value, determined as of the date of the termination of the Agreement, to the Executive in a lump sum subject to the above terms.

 

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 a contract for employment.  It does not give the Executive the right to remain as 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 and Reporting.  The Bank shall withhold any taxes that are required to be withheld, including but not limited to taxes owed under Section 409A of the Code and regulations thereunder, from the benefits provided under this Agreement.  The Executive acknowledges that the Bank’s sole liability regarding taxes is to forward any amounts withheld to the appropriate taxing authority(ies).  Further, the Bank shall satisfy all applicable reporting requirements, including those under Section 409A of the Code and regulations thereunder.

 

 

9.5         Applicable Law.  The Agreement and all rights hereunder shall be governed by the laws of the State of California, except to the extent preempted by the laws of the United States of America.

 

9.6         Unfunded Arrangement.  The Executive and the Beneficiary are general unsecured creditors of the Bank for the distribution of benefits under this Agreement.  The benefits represent the mere promise by the Bank to distribute 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 or other informal funding asset is a general asset of the Bank to which the Executive and Beneficiary have no preferred or secured claim.

 

9.7         Reorganization.  The Bank shall not merge or consolidate into or with another bank, or reorganize, or sell substantially all of its assets to another bank, firm, or person unless such succeeding or continuing bank, firm, or person agrees to assume and discharge the obligations of the Bank under this Agreement.  Upon the occurrence of such event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor bank.

 

9.8         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.

 

9.9         Interpretation.  Wherever the fulfillment of the intent and purpose of this Agreement requires, and the context will permit, the use of the masculine gender includes the feminine and use of the singular includes the plural.

 

9.10       Alternative Action.  In the event it shall become impossible for the Bank or the Plan Administrator to perform any act required by this Agreement, the Bank or Plan Administrator may in its discretion perform such alternative act as most nearly carries out the intent and purpose of this Agreement and is in the best interests of the Bank, provided that such alternative acts do not violate Section 409A of the Code.

 

9.11       Headings.  Article and section headings are for convenient reference only and shall not control or affect the meaning or construction of any of its provisions.

 

9.12       Validity.  In case any provision of this Agreement shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Agreement shall be construed and enforced as if such illegal and invalid provision has never been inserted herein.

 

 

9.13       Notice.  Any notice or filing required or permitted to be given to the Bank or Plan Administrator under this Agreement shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address below:

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

 

Any notice or filing required or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Executive.

 

9.14      Compliance with Section 409A.  This Agreement shall at all times be administered and the provisions of this Agreement shall be interpreted consistent with the requirements of Section 409A of the Code and any and all regulations thereunder, including such regulations as may be promulgated after the Effective Date of this Agreement.

 

IN WITNESS WHEREOF, the Executive and a duly authorized representative of the Bank have signed this Agreement.

 

 

	
EXECUTIVE:
    	
 
    	
BANK:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
BROADWAY   FEDERAL BANK, F.S.B.
    
	
 
    	
 
    	
 
    
	
         /s/   Paul   Hudson
    	
 
    	
By         /s/_Robert   C.   Davidson_Jr.                   
    
	
           Paul   Hudson
    	
 
    	
Title     Chairman – Compensation   Committee  
                   of the Board

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