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Share Name | Share Symbol | Market | Type |
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Lake Shore Bancorp Inc | NASDAQ:LSBK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.22 | 1.78% | 12.55 | 12.08 | 12.98 | 12.55 | 12.55 | 12.55 | 0 | 21:00:20 |
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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10.1 |
10.2 |
104 |
Cover Page Interactive Data File (Embedded within Inline XBRL document)
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Lake Shore Bancorp, Inc.
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Date: July 22, 2024
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By:
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/s/ Taylor Gilden |
Taylor Gilden
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Title: Chief Financial Officer and Treasurer
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(i)
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Failure of the Bank to continue the Executive in the positions of President and Chief Executive Officer (other than a
change in position to which the Executive consents) during the Term;
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(ii)
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Material adverse change by the Bank, not consented to by the Executive, in the nature or scope of the Executive’s
responsibilities, title, authorities, powers, functions or duties from the responsibilities, title, authorities, powers, functions or duties normally exercised by an executive in the positions of President and Chief Executive Officer of the
Bank;
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(iii)
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An involuntary reduction in the Executive’s Base Salary except across-the-board salary reductions based on the Bank’s
deteriorating financial performance similarly affecting substantially all executive management employees;
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(iv)
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The involuntary relocation of the office at which the Executive is principally employed to a location more than
twenty-five (25) miles’ driving distance from such office as of the Effective Date hereof (unless the relocated office is closer to the Executive’s then principal residence); or
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(v)
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Material breach by the Bank of Section 3 hereof or of any other provision of this Agreement, which breach continues for
more than ten (10) days following written notice given by the Executive to the Bank, such written notice to set forth in reasonable detail the nature of such breach.
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(i)
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personal dishonesty;
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(ii)
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willful misconduct;
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(iii)
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breach of fiduciary duty involving personal profit;
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(iv)
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intentional and material failure to perform stated duties;
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(v)
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willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order; or
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(vi)
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material breach by Executive of Section 9 of this
Agreement.
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(vii)
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willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order; or
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(viii)
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material breach by Executive of any provision of this Agreement.
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(i)
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Severance Payments. The Bank
shall pay the Executive a severance payment in an amount equal to the sum of: (A) the Executive’s Base Salary plus (B) the average annual incentive cash compensation awarded to the Executive, pursuant to Section 3(b), with respect to the
three (3) most recent fiscal years ending before the year of termination (the “Severance Amount”). The Severance Amount shall be paid to the Executive
in a single lump sum cash payment within thirty (30) days of the Termination Date, subject to the receipt of the signed release within such thirty (30) day period (unless the Executive’s termination occurs under circumstances requiring the
Executive to execute a release of claims within forty-five (45) days of termination, in which case the thirty (30) day period shall be extended to sixty (60) days); and further subject to the delay specified in Section 8(a) hereof, solely
to the extent necessary to avoid penalties under Section 409A of the Code in the event the Executive is a specified employee (as defined therein); provided, however, that if the 30-day (or 60-day) period begins in one calendar
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(ii)
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Other Post-Termination Benefits.
In the event of any termination without Cause of the Executive’s employment under Section 5(d), above, or any termination for Good Reason by the Executive of his own employment under Section 5(e), above, the Bank shall pay an additional
cash lump sum payment to the Executive equal to the Bank’s applicable percentage of such cost (i.e., the Bank’s co-payment percentage) that would have been payable for a period of twelve (12) months on behalf of Executive (and, to the
extent eligible under the terms of the applicable plans, the Executive’s family members), for continuing life, medical and dental coverage, based on the costs in effect for the Executive on the Termination Date. To the extent that the
Executive and/or his family members elect COBRA continuation coverage for any period after the Executive’s termination, such cost will be paid by the Executive. Such amount shall be paid to the Executive within the thirty (30) day period
(or sixty (60) day period, as applicable) following the Termination Date, provided however, if, at the Termination Date, the Executive is a specified employee as defined in Section 8(a) hereof, then, solely to the extent required to avoid
taxes and penalties under Section 409A of the Code, such payment shall be made within the first thirty (30) days after the first day of the seventh calendar month commencing after such Termination Date.
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(i)
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The Bank shall pay to the Executive a Change in Control severance payment (“Change in Control Severance Payment”) in an amount equal to three (3) times the sum of (A) the Executive’s current Base Salary (or the Executive’s Base Salary in effect immediately prior to
the Change in Control, if higher), plus (B) the highest annual incentive cash compensation earned by the Executive pursuant to Section 3(b) with respect to the three (3) most recent fiscal years ending before the year of the Change in
Control. The Change in Control Severance Payment shall be paid out in a lump sum payment no later than five (5) business days after the Termination Date, subject to Section 8(a) hereof, solely to the extent required to avoid penalties
under Section 409A of the Code;
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(ii)
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The Bank shall pay an additional cash lump sum payment to the Executive equal to the cost of providing for a period of thirty-six (36)
months, at no expense to the Executive (and, to the extent eligible under the terms of the applicable plans, the Executive’s family members), continuing life, medical and dental coverage to the Executive and, as applicable, his family
members, based on the aggregate cost of such coverage in effect for the Executive on the Termination Date. Such payment shall be made at the same time as the payment under Section 7(a)(i) above. To the extent that the Executive and/or
his family members elect COBRA continuation coverage for any period after the Executive’s termination, such cost will be paid by the Executive.
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(i)
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Merger: The Company or the Bank merges into or
consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or
consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;
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(ii)
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Acquisition of Significant Share Ownership: There
is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that
the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership
of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;
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(iii)
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Change in Board Composition: During any period of
two consecutive years, individuals who constitute the Company’s or the Bank’s board of directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s board of
directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the
directors who were directors at the beginning of the two-year period or who is appointed to the board as the result of a directive, supervisory agreement or order issued by the primary regulator of the Company or the Bank or by the
Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such period; or
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(iv)
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Sale of Assets: The Company or the Bank sells to a
third party all or substantially all of its assets.
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ATTEST:
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LAKE SHORE SAVINGS BANK
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By: /s/ Eric Hohenstein
Corporate Secretary
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By: /s/ Kevin M. Sanvidge
Chairman of the Board
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ATTEST:
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LAKE SHORE BANCORP, INC.
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By: /s/ Eric Hohenstein
Corporate Secretary
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By: /s/ Kevin M.
Sanvidge
Chairman of the Board
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EXECUTIVE
/s/ Kim C. Liddell
Kim C. Liddell
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1.1
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“Accrual Balance” means the liability that should be
accrued by the Bank under generally accepted accounting principles (“GAAP”), as consistently applied in accordance with past practices at the Bank, for the Bank’s obligation to the Executive under this Agreement.
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1.2
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“Annuity Contract” means the following: For purposes
of satisfying its obligations to provide benefits under the Agreement and any Amendment, the Bank has invested in Deferred Annuity Contracts as provided for in Exhibit
A to this Agreement, (the “Annuity Contracts”), which includes lifetime benefit riders or similar lifetime benefit
features. The Bank is the sole owner of the Annuity Contracts and shall have the right to exercise all incidents of ownership, shall be the beneficiary of any death proceeds and shall at all times be entitled to the Annuity Contract's cash
surrender value. Notwithstanding any provision hereof to the contrary, the Bank shall have the right to sell or surrender any Annuity Contract without terminating the Agreement and any Amendments, provided the Bank replaces the Annuity
Contract with a comparable annuity policy or asset of comparable value which provides for a similar lifetime benefit feature. Without limitation, the Annuity Contracts at all times shall be the exclusive property of the Bank and shall be
subject to the claims of the Bank's creditors.
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1.3
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“Beneficiary” means each designated person or entity,
or the estate of the deceased Executive, entitled to any benefits upon the death of the Executive pursuant to Article 4.
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1.4
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“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.
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1.5
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“Board” means the Board of Directors of the Bank as
from time to time constituted.
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1.6
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“Change in Control” shall have the meaning specified
in any effective severance or employment agreement existing on the date hereof or hereafter entered into between the Executive and the Bank and/or Lake
Shore Bancorp, Inc. If the Executive is not a party to a severance or employment
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1.7
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“Code” means the Internal Revenue Code of 1986, as
amended, and all regulations and guidance thereunder, including such regulations and guidance as may be promulgated after the Effective Date.
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1.8
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“Disability” shall have the meaning specified in any
effective severance or employment agreement existing on the date hereof or hereafter entered into between the Executive and the Bank and/or Lake Shore
Bancorp, Inc. If the Executive is not a party to a severance or employment agreement containing a definition for termination for disability, then Disability, for purposes of this Agreement, means the 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 or directors of the Bank. Medical determination of Disability may be made by either the Social Security Administration or by the provider of
disability insurance covering employees or directors of the Bank provided that the definition of “disability” applied under such insurance program complies with the requirements of the preceding sentence. 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.
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1.9
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“Early Termination” means Separation from Service
before attainment of Normal Retirement Age except when such Separation from Service occurs within twelve (12) months following a Change in Control or due to death, Disability or Termination for Cause.
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1.10
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“Effective Date” means April 19, 2023.
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1.11
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“Normal Retirement Age” means age sixty-seven (67).
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1.12
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“Plan Administrator” means the Board of the Bank or
such committee or person as the Board shall appoint.
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1.13
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“Plan Year” means each twelve (12) month period
commencing on January 1 and ending on December 31 of each year. The initial Plan Year shall commence on the Effective Date of this Agreement and end on the following December 31.
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1.14
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“Separation from Service” means termination of the
Executive’s employment with the Bank for reasons other than death. Whether a Separation from Service has occurred is determined in accordance with the requirements of Code Section 409A based on whether the facts and circumstances indicate
that the Bank and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an
independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately
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preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services to the Bank less
than thirty-six (36) months).
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1.15
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“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 Article 2 or 3.
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1.16
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“Specified Employee” means an employee who at the time
of Separation from Service is a key employee of the Bank, if any stock of the Bank is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the
requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the twelve (12) month period ending on December 31 (the
“identification period”). If the employee is a key employee during an identification period, the employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of April
following the close of the identification period.
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1.17
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“Termination for Cause” shall have the meaning
specified in any effective severance or employment agreement existing on the date hereof or hereafter entered into between the Executive and the Bank and/or Lake
Shore Bancorp, Inc. If the Executive is not a party to a severance or employment agreement containing a definition for termination for cause, then Termination for Cause, for purposes of this Agreement, means the Bank and/or Lake Shore
Bancorp, Inc. terminates the Executive’s employment causing a Separation from Service for any of the following reasons –
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(a)
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Gross negligence or gross neglect of duties to the Bank;
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(b)
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Conviction of a felony or of a gross misdemeanor involving moral turpitude in connection with the Executive’s employment with the Bank; or
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(c)
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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.
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2.1
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Normal Retirement Benefit. Upon Separation from
Service after attaining Normal Retirement Age, the Bank shall distribute to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Article, if at such time the Bank and the Company are not in
“troubled condition” as defined in 12 C.F.R. § 359.1(f)(1)(ii).
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2.1.1
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Amount of Benefit. The annual benefit under this
Section 2.1 is the annual amount that is paid from the Annuity Contracts, as defined herein, through the lifetime benefit rider or similar lifetime benefit feature as of the date of Separation from Service.
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2.1.2
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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, unless
extended pursuant to Section 2.8 hereof.
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2.2
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Early Termination Benefit. If Early Termination
occurs, the Bank shall distribute to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Article, if at such
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time the Bank and the Company are not in “troubled condition” as defined in 12 C.F.R. § 359.1(f)(1)(ii). |
2.2.1
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Amount of Benefit. The annual benefit under this
Section 2.2 is an amount equal to a percentage of the amount that is paid from the Annuity Contracts, as defined herein, through the lifetime benefit rider or similar lifetime benefit feature. The percentage is the ratio of the accrued
liability on the books of the Bank on the date of Separation from Service to the projected accrued liability at Normal Retirement Age. This percentage is then applied to the amount that is paid from the Annuity Contracts through the
lifetime benefit rider as of the date of Separation from Service.
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2.2.2
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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, unless
extended pursuant to Section 2.8 hereof.
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2.3
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Disability Benefit. If the Executive experiences a
Disability prior to Normal Retirement Age which results in Separation from Service, the Bank shall distribute to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Article.
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2.3.1
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Amount of Benefit. The annual benefit under this
Section 2.3 is an amount equal to a percentage of the amount that is paid from the Annuity Contracts, as defined herein, through the lifetime benefit rider or similar lifetime benefit feature. The percentage is the ratio of the accrued
liability on the books of the Bank on the date of Separation from Service to the projected accrued liability at Normal Retirement Age. This percentage is then applied to the amount that is paid from the Annuity Contracts through the
lifetime benefit rider as of the date of Separation from Service.
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2.3.2
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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, unless
extended pursuant to Section 2.8 hereof.
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2.4
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Change in Control Benefit. If a Change in Control
occurs prior to Normal Retirement Age and is followed within twelve (12) months by the Executive’s Separation from Service without Cause or for Good Reason (as that term is defined in any effective severance or employment agreement existing
on the date hereof or hereafter entered into between the Executive and the Bank and/or Lake Shore Bancorp, Inc.), the Bank shall distribute to the Executive
the benefit described in this Section 2.4 in lieu of any other benefit under this Article, if at such time the Bank and the Company are not in “troubled condition” as defined in 12 C.F.R. § 359.1(f)(1)(ii).
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2.4.1
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Amount of Benefit. The annual benefit under this
Section 2.4 is an amount equal to the greater of (a) Two Hundred Seventy-Five Thousand Nine Hundred Seventy-Eight Dollars ($275,978); or (b) the amount that is payable from the Annuity Contracts, as defined herein, through the lifetime
benefit rider or similar lifetime benefit feature.
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2.4.2
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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, unless
extended pursuant to Section 2.8 hereof.
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2.5
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Restriction on Commencement of Distributions.
Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee, the provisions of this Section 2.5 shall govern all distributions hereunder. If benefit distributions which would
otherwise be made to the Executive due to Separation from Service are limited because the Executive is a Specified Employee, then such distributions shall not be made during the first six (6) months following Separation from Service.
Rather, any distribution which would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the seventh month following Separation from Service. All subsequent
distributions shall be paid in the manner specified.
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2.6
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Distributions Upon Taxation of Amounts Deferred. If,
pursuant to Code Section 409A, the Federal Insurance Contributions Act or other state, local or foreign tax, the Executive becomes subject to tax on the amounts deferred hereunder, then the Bank may make a limited distribution to the
Executive in a manner that conforms to the requirements of Code section 409A. Any such distribution will decrease the Executive’s benefits distributable under this Agreement.
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2.7
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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 this Agreement to delay the timing or change the form of distributions. Any such amendment:
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(a)
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may not accelerate the time or schedule of any distribution, except as provided in Code Section 409A;
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(b)
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must, for benefits distributable under Sections 2.1, 2.2, 2.3 and 2.4, 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
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(c)
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must take effect not less than twelve (12) months after the amendment is made.
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2.8 |
Extension of Benefits. In the event that benefits become payable in
accordance with the Agreement under Sections 2.1, 2.2, 2.3 or 2.4 and (i) if such benefit payments have been paid for a total of One Hundred Eighty (180) payments (the “Original Payment Period”) and (ii) the Executive is currently living at the end of the Original Payment Period, then such benefit payments shall continue beyond the Original Payment Period for the remainder of the
Executive’s life. Such additional benefit payments will be made in equal monthly installments commencing on the first day of the month following the final payment of the Original Payment Period. The Bank and Executive both acknowledge that
the continuation of benefits hereunder beyond the Original Payment Period is a new and separate benefit and such benefit shall only be payable following the Original Payment Period if the Executive is alive at such time and shall cease at the
Executive’s death.
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3.1
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Death During Active Service. If the Executive dies
prior to Separation from Service, the Bank shall distribute to the Beneficiary the benefit described in this Section 3.1. This benefit shall be distributed in lieu of any benefit under Article 2.
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3.1.1
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Amount of Benefit. The annual benefit under this
Section 3.1 is the Pre-Retirement Death Annual Benefit set forth on Schedule A. If death occurs in the middle of a Plan Year, the annual benefit amount shall be increased by a pro-rated amount relative to the Executive’s
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3.1.2
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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 fourth month following the Executive’s death. The annual benefit shall be distributed to the Beneficiary for fifteen (15) years.
The Beneficiary shall be required to provide to the Bank the Executive’s death certificate.
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3.2
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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
they would have been distributed to the Executive had the Executive survived.
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4.1
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In General. 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 designated
under any other plan of the Bank in which the Executive participates.
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4.2
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Designation. 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 the Executive’s spouse as a Beneficiary, the Plan
Administrator may, in its sole discretion, determine that spousal consent is required to be provided in a form designated by the Plan Administrator, executed 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. 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.
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4.3
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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.
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4.4
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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, any benefit shall be paid to
the Executive’s estate.
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4.5
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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
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benefit. Any distribution of a benefit shall be a distribution for the account of the Executive and the Beneficiary, as the case may be, and shall completely discharge any liability under this Agreement for such distribution amount. |
5.1
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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 by the Bank or an applicable regulator due to a Termination for Cause.
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5.2
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Suicide or Misstatement. No benefit shall be
distributed if the Executive commits suicide within two (2) years after the Effective Date, 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.
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5.3
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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.
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5.4
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Regulatory Restrictions. Notwithstanding anything
herein to the contrary, any payments made to the Executive pursuant to this Agreement, or otherwise, shall be subject upon compliance with 12 U.S.C. 1828 and FDIC Regulation 12 CFR Part 359, Golden Parachute Indemnification Payments and any
other regulations or guidance promulgated thereunder.
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5.5
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Forfeiture Provision. The Executive shall forfeit any
non-distributed benefits under this Agreement if within twelve (12) months following a Separation from Service, the Executive, violates the applicable restrictive covenants found in any effective severance or employment agreement existing
on the date hereof or hereafter entered into between the Executive and the Bank and/or Lake Shore Bancorp, Inc. If the Executive is not a party to a
severance or employment agreement containing a definition for change in control, then the Executive shall forfeit any non-distributed benefits under this Agreement if within twelve (12) months following a Separation from Service, the
Executive, directly or indirectly, either as an individual or as a proprietor, stockholder, partner, officer, director, employee, agent, consultant or independent contractor of any individual, partnership, corporation or other entity
(excluding an ownership interest of three percent (3%) or less in the stock of a publicly-traded company):
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6.1
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Plan Administrator Duties. 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 this Agreement to the extent the exercise of such discretion and authority does not conflict with Code Section 409A.
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6.2
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Agents. In the administration of this Agreement, the
Plan Administrator may employ agents and delegate to them such administrative duties as the Plan Administrator 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.
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6.3
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Binding Effect of Decisions. Any decision or action of
the Plan Administrator with respect to any question arising out of or in connection with the administration, interpretation or application of this Agreement and the rules and regulations promulgated hereunder shall be final and conclusive
and binding upon all persons having any interest in this Agreement.
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6.4
|
Indemnity of Plan Administrator. The Bank shall
indemnify and hold harmless 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.
|
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 Executive’s death, Disability or Separation from Service, 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.
|
7.1
|
Claims Procedure. An Executive or Beneficiary
(“claimant”) who has not received benefits under this 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 ninety (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 ninety (90) days by notifying the claimant in writing, prior to the end of the initial ninety (90) day period, which 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 this 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 this 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 the entire 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 sixty (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 sixty (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 sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period, which 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 this 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).
|
7.3.1 |
Each person having or claiming an interest in this Agreement shall have the right to submit a claim with respect to a benefit under this Section 7.3 if the benefit is
Disability-related or under Section 7.1 if not Disability-related. Such claim shall be in writing addressed to the Bank and shall be delivered personally or by certified or registered mail, return receipt requested. The claim shall state with
particularity:
|
(a)
|
the benefit claimed;
|
(b)
|
the provisions of the Agreement upon which the claimant relies in support of his claim; and
|
(c)
|
all facts believed to be relevant in connection with such claim.
|
7.3.2 |
In the event that the decision amounts to a denial of the claim in whole or in part, such decision shall be in writing, written in a culturally and linguistically
appropriate manner, addressed to the claimant and shall be delivered personally or by certified or registered mail, return receipt requested, setting forth the following:
|
(a)
|
the reason or reasons for rejection of the claim;
|
(b)
|
the particular provisions of the Agreement relied upon in reaching such adverse benefit determination and including specific internal rules,
guidelines, protocols, standards or other similar criteria of the Agreement relied upon in making the adverse benefit determination;
|
(c)
|
a description of any additional information needed from the claimant to perfect such claim and the reason as to why such additional information
is needed;
|
(d)
|
a statement outlining the review procedure available hereunder; and
|
(e)
|
a discussion of the decision, including an explanation of the basis for disagreeing with or not following:
|
(i)
|
the views presented by the claimant to the Bank of health care professionals treating the claimant and vocational professionals who evaluated the
claimant;
|
(ii)
|
the view of medical or vocational experts whose advice was obtained on behalf of the Bank in connection with a claimant’s adverse benefit
determination, without regard to whether the advice was relied upon in making the benefit determination; and
|
(iii)
|
a disability determination regarding the claimant presented by the claimant to the Bank and made by the Social Security Administration.
|
7.3.3 |
Where a claim has been rejected, or where the claimant has not received notice of a decision as provided under Section 7.3.2 within the forty-five (45) day period (and
any extension thereof) specified in Section 7.3.2, the claimant shall have the right, within forty-five (45) days after either the date he receives the notice that his claim has been rejected in whole or in part or the last day of the
forty-five (45) day period if he received no notice (provided that this shall not release the Bank from the duty to give such notice):
|
(a)
|
to appeal therefrom by delivering a written request to the Bank, either personally or by certified or registered mail, return receipt requested;
|
(b)
|
to request pertinent documents; and
|
(c)
|
to submit issues and comments in writing.
|
7.3.4 |
The Bank shall fully and fairly review the claim and shall have complete discretion to render a decision with respect to the merits of the claim and a notice of the
decision, written in a culturally and linguistically appropriate manner, shall be delivered personally or by certified or registered mail, return receipt requested, to the claimant. The entire review will be completed within a 45-day period.
An extension of up to forty-five (45) days beyond the initial 45-day period may be made if the Bank determines that such extension of time is required. The decision shall include:
|
(a)
|
the specific reason or reasons for the adverse benefit determination;
|
(b)
|
reference to the specific Agreement provisions on which the benefit determination 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 to the claimant’s claim for benefits;
|
(d)
|
a statement of the claimant’s right to bring an action under Section 502(a) of ERISA and a description of any applicable contractual limitations
period that applies to the claimant’s right to bring to such an action, including the calendar date on which the contractual limitations period expires for the claim;
|
(e)
|
a discussion of the decision, including an explanation of the basis for disagreeing with or not following:
|
(i)
|
the views presented by the claimant to the Bank of health care professionals and vocational professionals who evaluated the claimant;
|
(ii)
|
the views of medical or vocational experts whose advice was obtained on behalf of the Bank in connection with a claimant’s adverse benefit
determination, without regard to whether the advice was relied upon in making the benefit determination; and
|
(iii)
|
a disability determination regarding the claimant presented by the claimant to the Bank and which was made by the Social Security Administration.
|
7.3.5 |
If the claimant believes the Bank has failed to adhere to the requirements of this section with respect to his claim, and that the claimant should be relieved of any
duty to exhaust all administrative remedies, then the claimant may request a written explanation of the violation from the Bank, to be provided by the Bank within ten (10) days of receipt of the request.
|
7.3.6 |
For purpose of this Section 7.3 and Sections 7.1 and 7.2, the term “adverse benefit determination” has the meaning provided under the applicable law or regulation.
|
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 changes or
tax law, including without limitation Code Section 409A.
|
8.2
|
Plan Termination Generally. This Agreement may be
terminated only by a written agreement signed by the Bank and the Executive. The benefit shall be the Accrual Balance as of the date this 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 Code Section 409A.
Notwithstanding anything to the contrary in Section 8.2, if the Bank terminates this Agreement in the following circumstances:
|
(a) |
Simultaneously with or within twelve (12) months after a Change in Control, provided that all distributions are made no later than twelve (12) months following such
termination of this Agreement and further provided that all the Bank’s arrangements which are substantially similar to this 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 such termination. Upon such a termination, the Bank shall distribute the benefit set forth in Section 2.4 to the Executive in a lump sum subject
to the above terms; or
|
(b)
|
Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under this Agreement are included in
the Executive’s gross income in the latest of (i) the calendar year in which this 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. Upon such a termination, the Bank shall distribute the Accrual Balance, determined as of the date of the termination of this Agreement, to the Executive in a lump sum subject to the
above terms; or
|
(c)
|
Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Agreement pursuant to Treasury Regulations
Section 1.409A-1(c) if the Executive participated in such arrangements (“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) all
termination distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and (iii) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a
minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Agreement. Upon such a termination, the Bank shall distribute the Accrual Balance, determined as of the date of the
termination of this Agreement, to the Executive in a lump sum subject to the above terms.
|
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 interfere with the Bank’s right to discharge the Executive. It 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 Code Section 409A from the benefits provided under this Agreement. The Executive acknowledges that the Bank’s sole liability regarding taxes is to
|
9.5
|
Applicable Law. This Agreement and all rights
hereunder shall be governed by the laws of the State of New York, 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 an event, the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor entity.
|
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 due to regulatory or other constraints, the Bank or Plan Administrator may 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 act does not violate Code Section 409A.
|
9.11
|
Headings. Article and section headings are for
convenient reference only and shall not control or affect the meaning or construction of any provision herein.
|
9.12
|
Validity. If 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 or invalid provision had never been included 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:
|
Lake Shore Savings Bank
128 East Fourth Street
Dunkirk, New York 14048
|
9.14
|
Deduction Limitation on Benefit Payments. If the Bank
reasonably anticipates that the Bank’s deduction with respect to any distribution under this Agreement would be limited or eliminated by application of Code Section 162(m), then to the extent deemed necessary by the Bank to ensure that the
entire amount of any distribution from this Agreement is deductible, the Bank may delay payment of any amount that would otherwise be distributed under this Agreement. The delayed amounts shall be distributed to the Executive (or the
Beneficiary in the event of the Executive’s death) at the earliest date the Bank reasonably anticipates that the deduction of the payment of the amount will not be limited or eliminated by application of Code Section 162(m).
|
9.15
|
Compliance with Section 409A. Each payment made under Section 2 shall be treated as a “separate payment”, as defined in Treasury Regulation 1.409A-2(b)(2), for purposes of Code Section 409A. None of the
payments under this Agreement are intended to result in an inclusion in Executive’s federal gross income on account of a failure under Section 409A(a)(1) of the Code. The parties intend to administer and interpret this Agreement to carry
out such intentions. However, the Bank does not represent, warrant or guarantee that any payments that may be made pursuant to this Agreement will not result in inclusion in the Executive’s gross income, or any penalty, pursuant to Section
409A(a)(1) of the Code or any similar state statute or regulation.
|
EXECUTIVE
|
LAKE SHORE SAVINGS BANK
|
|
/s/ Kim Liddell
|
By:
|
/s/ Kevin M. Sanvidge
|
Kim Liddell
|
Title:
|
Chairman of the Board
|
Document and Entity Information |
Jul. 16, 2024 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Amendment Flag | false |
Document Period End Date | Jul. 16, 2024 |
Entity File Number | 000-51821 |
Entity Registrant Name | LAKE SHORE BANCORP, INC. |
Entity Central Index Key | 0001341318 |
Entity Incorporation, State or Country Code | X1 |
Entity Tax Identification Number | 20-4729288 |
Entity Address, Address Line One | 31 East Fourth Street |
Entity Address, City or Town | Dunkirk |
Entity Address, State or Province | NY |
Entity Address, Postal Zip Code | 14048 |
City Area Code | 716 |
Local Phone Number | 366-4070 |
Title of 12(b) Security | Common stock, par value $0.01 per share |
Trading Symbol | LSBK |
Security Exchange Name | NASDAQ |
Entity Emerging Growth Company | false |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
1 Year Lake Shore Bancorp Chart |
1 Month Lake Shore Bancorp Chart |
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