EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AGREEMENT, made and entered into this 24th day of December, 2002, by
and between American Savings Bank of NJ, a bank organized and existing under the
laws of the State of New Jersey (hereinafter referred to as the "Bank"), and
_________________ an Executive of the Bank (hereinafter referred to as the
"Executive").
WITNESSETH:
WHEREAS, the Executive has been and continues to be a valued Executive of
the Bank, and is now serving the Bank; and
WHEREAS, the Executive's experience, knowledge of the affairs of the Bank,
reputation, and contacts in the industry are so valuable that assurance of the
Executive's continued services is essential for the future growth and profits of
the Bank and it is in the best interests of the Bank to arrange terms of
continued employment for the Executive so as to reasonably assure the
Executive's remaining in the Bank's employment during the Executive's lifetime
or until the age of retirement;
WHEREAS, it is the desire of the Bank that the Executive's services be
retained as herein provided;
WHEREAS, the Executive is willing to continue in the employ of the Bank
provided the Bank agrees to pay the Executive or the Executive's
beneficiary(ies), certain benefits in accordance with the terms and conditions
hereinafter set forth;
ACCORDINGLY, it is the desire of the Bank and the Executive to enter into
this Agreement under which the Bank will agree to make certain payments to the
Executive at retirement or the Executive's beneficiary(ies) in the event of the
Executive's death pursuant to this Agreement;
FURTHERMORE, it is the intent of the parties hereto that this Executive
Plan be considered an unfunded arrangement maintained primarily to provide
supplemental retirement benefits for the Executive, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Security Act
of 1974, as amended ("ERISA"). The
1
Executive is fully advised of the Bank's financial status and has had
substantial input in the design and operation of this benefit plan; and
NOW, THEREFORE, in consideration of services to be performed in the future
as well as of the mutual promises and covenants herein contained it is agreed as
follows:
I. EMPLOYMENT
The Bank agrees to employ the Executive in such capacity as the Bank may
from time to time determine. The Executive will continue in the employ of
the Bank in such capacity and with such duties and responsibilities as may
be assigned to him, and with such compensation as may be determined from
time to time by the Board of Directors of the Bank.
II. FRINGE BENEFITS
The Salary continuation benefits provided by this Agreement are granted by
the Bank as a fringe benefit to the Executive and are not part of any
Salary reduction plan or an arrangement deferring a bonus or a Salary
increase. The Executive has no option to take any current payment or bonus
in lieu of these Salary continuation benefits except as set forth
hereinafter.
III. RETIREMENT DATE AND NORMAL RETIREMENT AGE
A.) Retirement Date:
----------------
If the Executive remains in the continuous employ of the Bank, the
Executive shall retire from active employment with the Bank on the
December 31st nearest the Executive's sixty-fifth (65th) birthday,
unless by action of the Board of Directors this period of active
employment shall be shortened or extended.
B.) Normal Retirement Age:
----------------------
Normal Retirement Age shall mean the date on which the Executive
attains age sixty-five (65).
IV. RETIREMENT BENEFIT
Upon said retirement, the Bank, commencing with the first day of the month
following the date of such retirement, shall pay Executive an annual
benefit equal to __________ percentage (__%)* of the Executive's average
base salary based upon the average of the highest three (3) out of the last
five (5) years of
2
employment. Said benefit shall be paid in equal monthly installments (1/12
of the annual benefit) until the death of the Executive.
*Xxxxxxx Xxxxx 30% Xxxx Xxxxx 30% Xxxxxx Xxxxxxxxx 50%
V. DEATH OF THE EXECUTIVE
In the event of the death of the Executive, this agreement shall terminate
and, if applicable, the Executive's beneficiary(ies) shall be paid a death
benefit under the terms of the Endorsement Method Split Dollar Agreement
between the Executive and the Bank.
VI. BENEFIT ACCOUNTING
The Bank shall account for this benefit using GAAP accounting principles.
The Bank shall establish an accrued liability retirement account for the
Executive into which appropriate reserves shall be accrued.
VII. VESTING
Xxxxxx Xxxxxxxxx and Xxxxxxx Xxxxx
----------------------------------
The Executive shall be one hundred percent (100%) vested in the benefits
provided herein.
Xxxx Xxxxx
----------
Executive's interest in the benefits that are the subject of this Agreement
shall be subject to an annual vesting percentage as set forth hereinbelow
that corresponds to each full year of employment with the Bank from January
1, 2002 (to a maximum of 100%):
Date while Executive Vested
is employed by the Bank only (to a maximum of 100%)
----------------------------- ----------------------
January 1, 2002 33 1/3%
-----------------------------------------------------------------------
January 1, 2003 33 1/3%
-----------------------------------------------------------------------
January 1, 2004 33 1/3%
-----------------------------------------------------------------------
VIII. OTHER TERMINATION OF EMPLOYMENT AND DISABILITY
A.) Other Termination of Employment:
-------------------------------
Subject to Subparagraph VIII (i) hereinbelow, in the event that the
employment of the Executive shall terminate prior to retirement, as
provided in Paragraph III, for reasons other than disability, by the
Executive's voluntary action, or by the Executive's discharge by the
Bank
3
without cause, then this Agreement shall terminate upon the date of
such termination of employment and the Bank shall pay to the Executive
as severance compensation an amount of money equal to the accrued
balance of the Executive's liability reserve account multiplied by the
Executive's cumulative vested percentage (Paragraph VII). This
severance compensation shall be paid in a lump sum.
(i) Discharge for Cause: In the event the Executive shall be
----------------------
discharged for cause at any time, all benefits provided herein
shall be forfeited. The term "for cause" shall be as defined in
the Executive's Employment Agreement between the Executive and
the Bank in effect at the time of said termination. If a dispute
arises as to discharge "for cause," such dispute shall be
resolved by arbitration as set forth in this Executive Plan.
B.) Disability:
-----------
In the event the Executive becomes disabled prior to any
Termination of Service, and the Executive's employment is
terminated because of such disability, the Executive shall be
entitled to receive one hundred percent (100%) of the Executive's
accrued liability balance at the time of said disability. Said
accrued liability balance termination shall be paid to the
Executive, at the sole discretion of the Bank, in either a lump
sum or in fifteen (15) annual payments with an equivalent present
value using a discount rate as the interest rate paid on the
three year US Treasury obligations in effect at the time of such
first payment payable for a period of one hundred and eighty
(180) months (1/12th of the annual benefit) commencing with the
first day of the month following the date of such termination and
continuing each month thereafter until said payments have been
completed.
Disability shall be defined in the Executive's Employment
Agreement in effect at the time of said termination or, if no
Employment Agreement is in effect, then as defined in the Bank's
long term termination policy in effect at the time of said
disability. If neither definition exists at the time of
termination and there is a dispute regarding whether the
Executive is disabled, such dispute shall be resolved by a
physician selected by the Bank, a physician selected by the
Executive, and a third physician selected by each of the other
two (2) physicians. Such resolution shall be binding upon all
parties to this Agreement.
4
IX. CHANGE OF CONTROL
Change of Control shall be as defined in the Executive's Employment
Agreement between the Executive and the Bank in effect at the time of said
Change of Control. Upon a Change of Control, if the Executive subsequently
suffers an involuntary Termination of Service , except for cause, or, upon
a voluntary Termination of Service within twelve (12) months after such
Change of Control, if any of the following events, which have not been
consented to in advance by the Executive in writing, occur: (i) if the
Executive would be required to move his personal residence or perform his
principal executive functions more than forty (40) miles from the
Executive's primary office as of the signing of this Agreement, or (ii) if
the Bank should fail to maintain Executive's base compensation in effect as
of the date of the Change of Control and the existing employee benefits
plans, including material, fringe and retirement plans, then the Executive
shall receive the benefits in Paragraph IV herein upon attaining Normal
Retirement Age (Subparagraph III [B]), as if the Executive had been
continuously employed by the Bank until the Executive's Normal Retirement
Age. Notwithstanding the foregoing, all sums payable hereunder shall be
reduced in such manner and to such extent so that no such payments made
hereunder when aggregated with all other payments to be made to the
Executive by the Bank shall be deemed an "excess parachute payment" in
accordance with Section 280G of the code and be subject to the excise tax
provided at Section 4999(a) of the Code.
X. RESTRICTIONS ON FUNDING
The Bank shall have no obligation to set aside, earmark or entrust any fund
or money with which to pay its obligations under this Executive Plan. The
Executive, their beneficiary(ies), or any successor in interest shall be
and remain simply a general creditor of the Bank in the same manner as any
other creditor having a general claim for matured and unpaid compensation.
The Bank reserves the absolute right, at its sole discretion, to either
fund the obligations undertaken by this Executive Plan or to refrain from
funding the same and to determine the extent, nature and method of such
funding. Should the Bank elect to fund this Executive Plan, in whole or in
part, through the purchase of life insurance, mutual funds, disability
policies or annuities, the Bank reserves the absolute right, in its sole
discretion, to terminate such funding at any time, in whole or in part. At
no time shall any Executive be deemed to have any lien, right, title or
interest in any specific funding investment or assets of the Bank.
If the Bank elects to invest in a life insurance, disability or annuity
policy on the life of the Executive, then the Executive shall assist the
Bank by freely submitting
5
to a physical exam and supplying such additional information necessary to
obtain such insurance or annuities.
XI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
----------------------------------------
Neither the Executive, nor the Executive's surviving spouse, nor any
other beneficiary(ies) under this Executive Plan shall have any power
or right to transfer, assign, anticipate, hypothecate, mortgage,
commute, modify or otherwise encumber in advance any of the benefits
payable hereunder nor shall any of said benefits be subject to seizure
for the payment of any debts, judgments, alimony or separate
maintenance owed by the Executive or the Executive's beneficiary(ies),
nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Executive or any beneficiary
attempts assignment, commutation, hypothecation, transfer or disposal
of the benefits hereunder, the Bank's liabilities shall forthwith
cease and terminate.
B. Binding Obligation of the Bank and any Successor in Interest:
-------------------------------------------------------------
The Bank shall not merge or consolidate into or with another bank or
sell substantially all of its assets to another bank, firm or person
until such bank, firm or person expressly agrees, in writing, to
assume and discharge the duties and obligations of the Bank under this
Executive Plan. This Executive Plan shall be binding upon the parties
hereto, their successors, beneficiaries, heirs and personal
representatives.
C. Amendment or Revocation:
------------------------
It is agreed by and between the parties hereto that, during the
lifetime of the Executive, this Executive Plan may be amended or
revoked at any time or times, in whole or in part, by the mutual
written consent of the Executive and the Bank.
D. Gender:
-------
Whenever in this Executive Plan words are used in the masculine or
neuter gender, they shall be read and construed as in the masculine,
feminine or neuter gender, whenever they should so apply.
6
E. Effect on Other Bank Benefit Plans:
-----------------------------------
Nothing contained in this Executive Plan shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit-sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Bank's existing or future compensation structure.
F. Headings:
--------
Headings and subheadings in this Executive Plan are inserted for
reference and convenience only and shall not be deemed a part of this
Executive Plan.
G. Applicable Law:
---------------
The validity and interpretation of this Agreement shall be governed by
the laws of the State of New Jersey.
H. 12 U.S.C. ss. 1828(k):
----------------------
Any payments made to the Executive pursuant to this Executive Plan, or
otherwise, are subject to and conditioned upon their compliance with
12 U.S.C. ss. 1828(k) or any regulations promulgated thereunder.
I. Partial Invalidity:
-------------------
If any term, provision, covenant, or condition of this Executive Plan
is determined by an arbitrator or a court, as the case may be, to be
invalid, void, or unenforceable, such determination shall not render
any other term, provision, covenant, or condition invalid, void, or
unenforceable, and the Executive Plan shall remain in full force and
effect notwithstanding such partial invalidity.
J. Not a Contract of Employment:
-----------------------------
This Agreement shall not be deemed to constitute a contract of
employment between the parties hereto, nor shall any provision hereof
restrict the right of the Bank to discharge the Executive, or restrict
the right of the Executive to terminate employment.
K. Present Value:
--------------
All present value calculations under this Agreement shall be based on
the following discount rate:
Discount Rate: The discount rate as used in the FASB 87 calculations
for the Executive Plan.
7
L. Effective Date:
---------------
The Effective Date of this Agreement shall be February 26, 2002.
XII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
---------------------------------------
The "Named Fiduciary and Plan Administrator" of this Executive
Plan shall be American Savings Bank of NJ until its resignation
or removal by the Board. As Named Fiduciary and Plan
Administrator, the Bank shall be responsible for the management,
control and administration of the Executive Plan. The Named
Fiduciary may delegate to others certain aspects of the
management and operation responsibilities of the Executive Plan
including the employment of advisors and the delegation of
ministerial duties to qualified individuals.
B. Claims Procedure and Arbitration:
---------------------------------
In the event a dispute arises over benefits under this Executive
Plan and benefits are not paid to the Executive (or to the
Executive's beneficiary(ies) in the case of the Executive's
death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named
Fiduciary and Plan Administrator named above within sixty (60)
days from the date payments are refused. The Named Fiduciary and
Plan Administrator shall review the written claim and if the
claim is denied, in whole or in part, they shall provide in
writing within sixty (60) days of receipt of such claim the
specific reasons for such denial, reference to the provisions of
this Executive Plan upon which the denial is based and any
additional material or information necessary to perfect the
claim. Such written notice shall further indicate the additional
steps to be taken by claimants if a further review of the claim
denial is desired. A claim shall be deemed denied if the Named
Fiduciary and Plan Administrator fail to take any action within
the aforesaid sixty-day period.
If claimants desire a second review they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60)
days of the first claim denial. Claimants may review this
Executive Plan or any documents relating thereto and submit any
written issues and comments they may feel appropriate. In their
sole discretion, the Named Fiduciary and Plan Administrator shall
then review the second claim and provide a written decision
within sixty (60) days of receipt of such claim. This decision
8
shall likewise state the specific reasons for the decision and
shall include reference to specific provisions of the Plan
Agreement upon which the decision is based.
Any controversy or claim arising out of or relating to this
Agreement, or breach thereof, shall be settled exclusively by
arbitration in accordance with the rules then in effect of the
district office of the American Arbitration Association ("AAA")
nearest to the home office of the Bank, and judgment upon the
award rendered may be entered in any court having jurisdiction
thereof, except to the extent that the parties may otherwise
reach a mutual settlement of such issue. The provisions of this
Paragraph shall survive the expiration of this Agreement.
Where a dispute arises as to the Bank's discharge of the
Executive "for cause," such dispute shall likewise be submitted
to arbitration as above described and the parties hereto agree to
be bound by the decision thereunder.
XIII.TERMINATION OR MODIFICATION OF AGREEMENT BY REASON OF CHANGES IN THE LAW,
RULES OR REGULATIONS
Notwithstanding anything herein above to the contrary, the Bank is entering
into this Agreement upon the assumption that certain existing tax laws,
rules and regulations will continue in effect in their current form. If any
said assumptions should change and said change has a detrimental effect on
this Executive Plan, then the Bank reserves the right to terminate or
modify this Agreement accordingly. Furthermore, the Board has the right to
terminate or modify future accruals if so determined within the Board's
business judgment whether or not this Executive Plan has a detrimental
effect on the Bank. Upon any said modification or termination of the plan,
any benefits accrued to the Executive's liability retirement account on the
date of said modification or termination shall be paid to the Executive, at
the sole discretion of the Bank, in either a lump sum or in fifteen (15)
annual payments with an equivalent present value using a discount rate as
the interest rate paid on the three year US Treasury obligations in effect
at the time of such first payment payable for a period of one hundred and
eighty (180) months (1/12th of the annual benefit) commencing with the
first day of the month following the date of such modification or
termination and continue each month thereafter until said payments are
completed. Upon a Change of Control (Paragraph IX), this paragraph shall
become null and void effective immediately upon said Change of Control.
XIV. CONFIDENTIAL INFORMATION
The Executive acknowledges that during his employment he or she will learn
and have access to confidential information regarding the Bank and the
Parent and its
9
customers and businesses ("Confidential Information"). The Executive agrees
and covenants not to disclose or use for his own benefit, or the benefit of
any other person or entity, any such Confidential Information, unless or
until the Bank or the Parent consents to such disclosure or use or such
information becomes common knowledge in the industry or is otherwise
legally in the public domain. The Executive shall not knowingly disclose or
reveal to any unauthorized person any Confidential Information relating to
the Bank, the Parent, or any subsidiaries or affiliates, or to any of the
businesses operated by them, and the Executive confirms that such
information constitutes the exclusive property of the Bank and the Parent.
The Executive shall not otherwise knowingly act or conduct himself (a) to
the material detriment of the Bank or the Parent, or its subsidiaries or
affiliates, or (b) in a manner which is inimical or contrary to the
interests of the Bank or the Parent. Executive acknowledges and agrees that
the existence of this Agreement and its terms and conditions constitutes
Confidential Information of the Bank, and the Executive agrees not to
disclose the Agreement or its contents without prior written consent of the
Bank. Notwithstanding the foregoing, the Bank reserves the right in its
sole discretion to make disclosure of this Agreement as it deems necessary
or appropriate in compliance with its regulatory reporting requirements.
Notwithstanding anything herein to the contrary, failure by the Executive
to comply with the provisions of this Section may result in the immediate
termination of the Agreement within the sole discretion of the Bank,
disciplinary action against the Executive taken by the Bank and other
remedies that may be available in law or in equity.
In witness whereof, the parties hereto acknowledge that each has carefully read
this Agreement and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
AMERICAN SAVINGS BANK
OF NJ
Bloomfield, New Jersey
By:
----------------------------------- ------------------------------------
Witness Title
----------------------------------- ------------------------------------
Witness Executive
10
