payments are otherwise due if it determines that the provisions of the Agreement fail to meet the requirements of Code Section 409A and the rules and regulations promulgated thereunder; provided, however, that such payment(s) may not exceed the amount required to be included in income as a result of such failure to comply with the requirements of Code Section 409A and the rules and regulations promulgated thereunder and, to the extent permissible therein, any taxes, penalties, interest and costs attributable thereto.
10. Definitions. Where the following words and phrases appear in the Agreement, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary:
(a) Accrual Balance means the liability that the Bank accrues, under Generally Accepted Accounting Principles (GAAP) as reasonably applied by the Bank, for the Banks obligation to the Executive under this Agreement in accordance with Accounting Principles Board Opinion Number 12, as amended by Statement of Financial Accounting Standards Number 106, and the Discount Rate. Any one of a variety of amortization methods may be used to determine the Accrual Balance. However, once chosen, the method must be consistently applied.
(b) Beneficiary shall mean the person(s) designated by the Executive to receive any death benefits described under Section 2(e) of the Agreement. The Executive shall designate his Beneficiary in writing to the Bank pursuant to procedures as may be established from time to time; provided, however, if no such designation has been made or if the Beneficiary predeceases Executive, the Beneficiary of Executive under this Agreement shall be Executives legally-married spouse, if any, or, if there is no legally-married surviving spouse, the Beneficiary shall be Executives estate.
(c) Cause shall have the same meaning given to the same or similar term in any employment agreement between the parties as may be in effect from time to time; provided, however, if there is no such term or similar term in the employment agreement or if there is no such employment agreement, then the term shall mean (i) intentional misconduct or gross malfeasance, or an act or acts of gross negligence in the course of employment or any material breach of the Executives obligations contained herein, including, without limitation, acts competitive with or deliberately harmful to the business of the Bank; (ii) any intentional misstatement or omission to the directors or executive officers of the Bank with respect to any matter; (iii) the intentional failure of the Executive to follow the reasonable instructions and policies of the Bank; (iv) the Executives conviction, admission or confession of any felony or an unlawful act involving active and willful fraud or moral turpitude; or (v) the violation by the Executive of applicable state and federal banking regulations, rules, or statutes.
(d) Change in Control shall mean (i) any transaction, whether by merger, consolidation, asset sale, recapitalization, reorganization, combination, stock purchase, tender offer, reverse stock split, or otherwise, which results in the acquisition of, or beneficial ownership (as such term is defined under rules and regulations promulgated under the Securities Exchange Act of 1934, as amended) by any entity, person or any group thereof acting in concert, of 50% or more of the outstanding shares of common stock of the Bank; or (ii) the sale of 50% or more of the collective assets of the Bank. For purposes of this Section 10(d), persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Bank. Change in Control shall be construed consistent with its meaning under Section 409A of the Code.
(e) Code means the Internal Revenue Code of 1986, as amended, and all applicable rules and regulations promulgated thereunder.