Investors Bancorp, Inc. Deferred Directors Fee Plan Effective July 1, 2005

Summary

This agreement between Investors Bancorp, Inc. and its non-employee directors allows directors to defer payment of their board and committee fees until they leave the board or experience another qualifying event, such as death or disability. Directors can choose how much to defer, designate beneficiaries, and revoke future deferrals under certain conditions. The company may discontinue or terminate the plan, especially in the event of a change in control, subject to tax law requirements. Deferred amounts are paid out with interest according to the director's election or upon plan termination.

EX-10.7 8 w09756a1exv10w7.txt EXHIBIT 10.7 EXHIBIT 10.7 INVESTORS BANCORP, INC. DEFERRED DIRECTORS FEE PLAN EFFECTIVE JULY 1, 2005 DEFERRED DIRECTORS FEE PLAN This Deferred Directors Fee Plan (the "Plan"), effective as of the 1st day of July, 2005, formalizes the understanding by and between Investors Bancorp, Inc. (the "Company"), and its non-employee directors, hereinafter referred to as "Director(s)." WHEREAS, the Directors serve the Company as members of the Board of Directors; and WHEREAS, the Company wishes to provide the Directors with an opportunity to defer the amounts earned by the Directors as members of the Company's Board of Directors until the Directors separation from service on the Board; and WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended ("Code"), requires that certain types of deferred compensation arrangements comply with its terms or be subject to current taxes and penalties. NOW, THEREFORE, in consideration of the premises and of the mutual promises herein contained, the Company and the Directors agree as follows: 1. Effective July 1, 2005 (the "Effective Date"), each Director of the Company shall have the right to elect to defer the payment of all or any part of the compensation to which such Director would otherwise be entitled as director's fees or committee fees, with such deferred compensation to be payable at the time or times and in the manner herein stated. 2. Each Director so electing to defer the payment of compensation shall execute and deliver to the Company a "Notice of Election," in the form attached hereto and incorporated herein by reference. Such election shall be applicable only to compensation earned for services rendered after the date of such Notice of Election. 3. An election to defer compensation shall continue in effect until revoked, provided however, that every election to defer compensation shall be irrevocable as to compensation earned for services performed prior to the date of such revocation. Partial or complete revocation as to unearned compensation shall be made in writing upon a form of notice to be furnished by the Company and signed by the Director and shall be effective upon the January 1st of the year stated therein providing the form is executed and delivered to the Company by December 31st of the previous calendar year. 4. Each Director may designate one or more beneficiaries to receive all sums due to such Director upon his/her death. Such beneficiary designation may be revoked or amended by such Director, from time to time, by appropriate notice in writing delivered to the Company. In the absence of any beneficiary designation or in the event that no designated beneficiary shall be living at the time of the death of the Director, all deferred compensation and interest accrued to the date of death of the Director shall be payable to the Director's surviving spouse, or if none, to the estate of such deceased Director. 5. No compensation so deferred shall be payable to a Director until the death, disability, resignation, or removal from office of such Director, whereupon all such deferred compensation, together with interest thereon as hereinafter provided, shall be payable to such Director or his/her beneficiary, within thirty (30) days from the date of death or resignation, unless the Director has designated an optional installment payment method in the Notice of Election as herein provided in which event the first such installment shall be paid within thirty (30) days of such date. A Director shall be deemed to have resigned on the date stated in any oral or written voluntary resignation. 6. Notwithstanding anything herein contained to the contrary, the Company reserves the exclusive right to discontinue this deferred compensation plan, at any time, with respect to compensation to be earned in the future. Notwithstanding anything herein contained to the contrary, in the event of a Change in Control of the Company, the Company reserves the exclusive right to terminate this Plan with respect to any individual Director, so long as such termination as to an individual Director is permissible under Code Section 409A, whether or not he/she is then acting in such capacity, and to distribute promptly, but in no event later than twelve (12) months following termination of the Plan, to such Director all compensation theretofore deferred, together with interest thereon, if it is determined that it is in the best interests of the Company to sever all relations with such individual Director. Notwithstanding the foregoing, in the event that it is not permissible under Code Section 409A to terminate the Plan with respect to an individual Director or Directors, in 2 the event of a Change in Control of the Company, the Company reserves the right, in its sole discretion, to terminate the Plan with respect to all Directors and distribute amounts thereunder within twelve (12) months of such termination. For these purposes, a Change in Control shall mean: (i) a change in ownership of the Company under paragraph (a) below, or (ii) a change in effective control of the Company under paragraph (b) below, or (iii) a change in the ownership of a substantial portion of the assets of the Company under paragraph (c) below: (a) CHANGE IN THE OWNERSHIP OF THE COMPANY. A change in the ownership of the Company shall occur on the date that any one person, or more than one person acting as a group (as defined in paragraph (b)), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation. However, if any one person or more than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation (within the meaning of paragraph (b) below). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this section. This paragraph (a) applies only when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction. (b) CHANGE IN THE EFFECTIVE CONTROL OF THE COMPANY. A change in the effective control of the Company shall occur on the date that either (i) any one person, or more than one person acting as a group (as determined below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing 35 percent or more of the total voting power of the stock of such corporation; or (ii) a majority of members of the corporation's board of Directors 3 is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the corporation's board of Directors prior to the date of the appointment or election, provided that for purposes of this paragraph (b)(ii), the term corporation refers solely to a corporation for which no other corporation is a majority shareholder. In the absence of an event described in paragraph (i) or (ii), a change in the effective control of a corporation will not have occurred. If any one person, or more than one person acting as a group, is considered to effectively control a corporation (within the meaning of this paragraph (b)), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation (or to cause a change in the ownership of the corporation within the meaning of paragraph (a)). Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. (c) CHANGE IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE COMPANY'S ASSETS. A change in the ownership of a substantial portion of the Company's assets shall occur on the date that any one person, or more than one person acting as a group (as determined below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. There is no Change in Control event under this paragraph (c) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer. (d) Each of the sub-paragraphs (a) through (c) above shall be construed and interpreted consistent with the requirements of Code Section 409A and any Treasury regulations or other guidance issued thereunder. 4 7. Interest on compensation deferred hereunder shall be credited and compounded monthly at a rate equivalent to one and one-half percent (1-1/2%) below the Prime Rate as shown in The Wall Street Journal on the third Wednesday of each month. Should the third Wednesday be a holiday, the Prime Rate shown on the third Tuesday (less 1-1/2%) shall be the rate used. 8. Deferred compensation distributable by reason of death, disability, resignation or removal from office of a Director may, at the option of such Director, be payable in approximately equal monthly installments over a period not to exceed ten (10) years, provided however, that on any such installment method of distribution, interest shall continue to be credited on the undistributed sums as hereinabove provided. 9. In the event that any person to whom compensation is distributable under the terms of this Plan shall be unable to properly manage his or her own affairs by reason of physical or mental disability, in the judgment of the management of the Company, payment of all sums due may be made to a duly appointed personal representative, conservator or guardian, or to any person, firm or corporation furnishing or providing support and maintenance to such distributee. The Company and its officers and Directors shall be fully and completely exonerated from all liability to any distributee upon make payment in accordance with the terms of this paragraph. 10. No compensation accrued or payable by virtue of the terms of this Plan shall be assignable or transferable by any Director or any beneficiary, neither of whom shall have any right to anticipate, hypothecate, assign or transfer any rights hereunder except to a trust established by the Director for the benefit of the Director or his/her beneficiary. 11. The terms hereof cannot be amended, modified or supplemented, except to comply with applicable laws of the State and Federal governments and the rules and regulations of any agency or instrumentality thereof having supervisory or regulatory jurisdiction over the Company. The terms hereof shall be binding upon and inure to the benefit of the successors and assigns of the Company and upon each Director so electing to defer compensation pursuant hereto and his/her beneficiary. 5 12. Title to and beneficial ownership of any assets, which the Company may earmark to pay the deferred compensation hereunder, shall at all times remain in the Company; the Director and his/her designated beneficiary shall not have any property interest whatsoever in any specific assets of the Company. 13. The singular number used herein will include the plural number unless the context of the Plan requires otherwise. * * * * * 6 NOTICE OF ELECTION 1. Name of Director:_________________________________________________________ 2. Date of Commencement of Deferral of Compensation:_________________________ 3. Percentage of Compensation to be Deferred:________________________________ 4. Manner of Distribution: (Check one) ______ Monthly Installments of not less than $200 each for ____ months, for a period not to exceed 10 years, or such lesser period as minimum monthly installments of $200 each, except for the final installment that may be required to complete distribution of all sums payable. ______ Lump Sum Distribution 5. Beneficiary Designation in the event Director is deceased: Name and Relationship (If more than one, indicate shares for each; otherwise, paid equally.) __________________________________________________________________________ __________________________________________________________________________ 6. Contingent or Secondary Beneficiary Designation: Name and Relationship (Applicable if all the designated beneficiaries above are not living at the time of death of the Director. If more than one, indicate shares for each; otherwise, paid equally.) __________________________________________________________________________ __________________________________________________________________________ The undersigned Director of Investors Bancorp, Inc. does hereby elect to defer compensation earned by the undersigned after the date hereof to the extend above indicated, pursuant to the Deferred Directors Fee Plan effective July 1, 2005. The undersigned acknowledges that this election is revocable with respect to compensation earned prior to the date of any such revocation, but it is irrevocable with respect to compensation earned prior to the date of any such revocation. Dated this ___________ day of ________________, 200_. ATTEST: __________________________ ________________________________ Corporate Secretary Director ________________________________ Chairman/President NOTICE OF REVOCATION The undersigned Director of Investors Bancorp, Inc. does hereby elect to revoke the deferral of compensation under the Investors Bancorp, Inc. Deferred Directors Fee Plan effective July 1, 2005. The undersigned acknowledges that this election is only revocable with respect to compensation earned after the date of this notice of revocation. Dated this ___________ day of ________________, 200_. ATTEST: ______________________________ _______________________________ Corporate Secretary Director _______________________________ Chairman/President