FIRST AMENDMENT TO THE TWO RIVER COMMUNITY BANK SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT DATED JANUARY 1, 2005 FOR MICHAEL J. GORMLEY
Exhibit
10.7
TWO
RIVER COMMUNITY BANK
FIRST
AMENDMENT
TO
THE
TWO
RIVER COMMUNITY BANK
DATED
JANUARY 1, 2005
FOR
XXXXXXX
X. XXXXXXX
THIS FIRST
AMENDMENT is executed on this 30th day of October, 2008, to be deemed to have
been effective as of January 1, 2005, by and between Two River Community Bank, a
New Jersey-chartered commercial bank the principal address of which is 0000
Xxxxxxx 00 Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000, and Xxxxxxx X. Xxxxxxx (the
“Executive”).
WHEREAS, Two River
Community Bank and the Executive executed that certain Supplemental Executive
Retirement Agreement (the “Agreement”) dated January 1, 2005, which Agreement
had an Effective Date of November 1, 2004; and
WHEREAS, Two River Community Bank and the Executive wish to
amend the Agreement as, and to the extent, set forth in this First
Amendment for
the purpose of bringing the Agreement into full compliance with Section 409A of
the Internal Revenue Code and the Treasury Regulations which have been
implemented under Section 409A of the Code.
NOW, THEREFORE,
the Agreement is amended as follows:
The following
Section 1.0 shall be added to the Agreement immediately preceding Section
1.1:
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1.0
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“Bank”
means, for all purposes of this Agreement, Two River Community Bank and
all of those entities (including, as of the date of this Amendment,
Community Partners Bancorp and The Town Bank) which are within the same
controlled group of corporations within the meaning of Section 1563(a) of
the Code as is Two River Community Bank and which are, with Two River
Community Bank, deemed to be a single employer by the application of
Section 414(b) of the Code, all of which entities (including Two River
Community Bank) shall be conclusively deemed for all purposes of the
Agreement to be a single entity and a single recipient of the services
provided by the Executive to any such entity, or any combination of such
entities.
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Section
1.13 of the Agreement shall be deleted in its entirety and replaced by the
following:
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1.13
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“Separation
from Service”
means the termination of the Executive’s employment
with
the Bank under circumstances which meet the standards set forth in this
Section 1.13, for reasons other than death. Whether
a Separation from Service takes place shall be determined in accordance
with the applicable provisions of Code Section 409A and all related United
States Department of the Treasury guidance or Regulations, and shall be
based upon whether the facts and circumstances surrounding the termination
of the Executive’s employment indicate that the Bank and the Executive
reasonably anticipate that the Executive either (i)
will provide
no significant services in any capacity for the Bank or any affiliate
following such termination, or (ii)
will,
as an employee or independent contractor, provide services to
the Bank or any affiliate of the Bank following
such termination of employment at
an annual rate which is not more than twenty percent (20%) of the services
rendered, on average, during the immediately preceding thirty six (36)
full calendar months (or
the full period for which the Executive provided services to the Bank
(whether as an employee or as an independent contractor) if the Executive
has, at the time of the termination of the Executive’s employment, been
providing services for a period of less than thirty six (36)
months).
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The
Executive’s employment
relationship will be treated as continuing intact while the Executive is
on military leave, sick leave, or other bona fide leave of absence if the period
of such leave of absence does not exceed six (6) months, or if longer,
for
so
long as the Executive’s right
to reemployment with the Bank is
provided either by statute or by contract. If the period of leave
exceeds six (6) months and there is no right to reemployment, a Separation
from Service will
be deemed to have occurred as of the first day immediately
following such six (6) month period.
The following
Section 1.13a shall be added to the Agreement immediately following Section
1.13:
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1.13a
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“Specified
Employee” means a key employee (as defined in Section 416(i) of the
Code without regard to paragraph 5 thereof) of the Bank if any stock of
the Bank is publicly traded on an established securities market or
otherwise, as conclusively determined by the Plan Administrator based on
the twelve (12) month period ending each December 31 (the “identification
period”). If the Executive is determined to be a Specified
Employee for an identification period, the Executive shall be treated as a
Specified Employee for purposes of this Agreement during the twelve (12)
month period that begins on the first day of the fourth month following
the close of the identification period.
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Sections
2.1 and 2.1.2 of the Agreement shall be deleted in their entirety and replaced
by the following:
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2.1
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Normal
Retirement Benefit. Upon 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.
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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 the Executive’s sixty-fifth (65th)
birthday. The annual benefit shall be distributed for fifteen
(15)
years.
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TWO
RIVER COMMUNITY BANK
Sections
2.3 and 2.3.1 of the Agreement shall be deleted in their entirety and replaced
by the following:
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2.3
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Disability
Benefit. Upon
Disability prior to Normal Retirement Age, 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
benefit under this Section 2.3 is the Disability benefit set forth on
Schedule A for the Plan Year that ended immediately prior to the date on
which Disability
occurs.
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Section 2.4.3 of the Agreement shall
be deleted in its entirety and replaced by the following:
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2.4.3
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Parachute
Payments. The Bank and the Executive (i) acknowledge
that a separate Excise Tax Reimbursement Agreement pertaining to Section
280G of the Code and the excise tax imposed on excess parachute payments
under Section 4999 of the Code has been executed by the Bank and the
Executive, the terms of which are applicable to all compensation payments,
including the compensation payments made under this Agreement, which may
be subject to Section 280G of the Internal Revenue Code of 1986, and (ii)
acknowledge their respective intentions to fully abide by the terms of the
Excise Tax Reimbursement
Agreement.
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Section
2.5 of the Agreement shall be deleted in its entirety and replaced by the
following:
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2.5
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Restriction
on Timing of Distributions. Notwithstanding any provision of
this Agreement to the contrary, if the Executive is considered a Specified
Employee at Separation from Service, the provisions of this Section 2.5
shall govern all distributions hereunder. Benefit distributions
that are made due to a Separation from Service occurring while the
Executive is a Specified Employee 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 the Separation from Service. All
subsequent distributions shall be paid in the manner
specified.
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The
following Sections 2.6 and 2.7 shall be added to the Agreement immediately
following Section 2.5:
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2.6
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Distributions
Upon Income Inclusion Under Section 409A of the Code. If
any amount is required to be included in income by the Executive prior to
receipt due to a failure of this Agreement to meet the requirements of
Code Section 409A and related Treasury guidance or Regulations, the
Executive may petition the Plan Administrator for a distribution of that
portion the amount the Bank has accrued with respect to the Bank’s
obligations hereunder that
is required to be included in the Executive’s income. Upon the
grant of such a petition, which grant shall not be unreasonably withheld,
the Bank shall distribute to the Executive immediately available funds in
an amount equal to the portion of the amount the Bank has accrued with
respect to the Bank’s obligations hereunder required to be included in
income as a result of the failure of this Agreement to meet the
requirements of Code Section 409A and related Treasury guidance or
Regulations, which amount shall not exceed the Executive's unpaid amount
the Bank has accrued with respect to the Bank’s obligations
hereunder. If the petition is granted, such distribution shall
be made within ninety (90) days of the date when the Executive's petition
is granted. Such a distribution shall affect and reduce the
Executive’s benefits to be paid under this
Agreement.
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TWO
RIVER COMMUNITY BANK
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2.7
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Change
in Form or Timing of Distributions. All changes in the
form or timing of distributions hereunder must comply with the following
requirements. The
changes:
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(a)
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may
not accelerate the time or schedule of any distribution, except as
provided in Section 409A of the Code and the regulations
thereunder;
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(b)
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must,
for benefits distributable under Sections 2.1 and 2.3, be made at least
twelve (12) months prior to the first scheduled
distribution;
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(c)
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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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(d)
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must
take effect not less than twelve (12) months after the election is
made.
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Section
5.4 of the Agreement shall be amended as follows:
The words
and parenthetical expression “…twenty four (24)…” shall be deleted, and shall be
replaced by the words and parenthetical expression “…twelve (12)…”, it being the
intention of the Bank and the Executive to shorten the term of the Non-compete
Provision to twelve (12) months.
Article 8 of the
Agreement shall be deleted in its entirety and replaced by the
following:
Article
8
Amendments
and Termination
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8.1
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Amendments. This
Agreement may be amended only by a written agreement signed for Two River
Community Bank and the Executive. However, Two River Community
Bank may unilaterally amend this Agreement to conform with written
directives to the Bank from its counsel, auditors or banking regulators,
or to comply with legislative changes or tax law, including without
limitation Section 409A of the Code and any and all Treasury regulations
and guidance promulgated
thereunder.
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TWO
RIVER COMMUNITY BANK
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8.2
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Plan
Termination Generally. This Agreement may be terminated
only by a written agreement signed for Two River
Community Bank and by the Executive. The benefit hereunder
shall be the amount that Two River Community Bank has accrued with respect
to Two River Community Bank’s obligations hereunder as of the date the
Agreement is terminated. Except as provided in Section 8.3, the
termination of this Agreement shall not cause a distribution of benefits
under this Agreement. Rather, after such termination benefit
distributions will be made at the earliest distribution event permitted
under Article 2 or Article
3.
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8.3
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Plan
Terminations Under Section 409A. Notwithstanding
anything to the contrary in Section 8.2, if this Agreement terminates in
the following
circumstances:
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(a)
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Within
thirty (30) days before or twelve (12) months after a Change in Control,
provided that all distributions are made no later than twelve (12) months
following such termination of the Agreement and further provided that
all the Bank's arrangements which are substantially similar to
the Agreement are terminated so the Executive and all participants in the
similar arrangements are required to receive all amounts of
compensation deferred under the terminated arrangements within twelve (12)
months of the termination of the
arrangements;
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(b)
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Upon
the Bank’s dissolution or with the approval of a bankruptcy court provided
that the amounts deferred under the Agreement are included in the
Executive's gross income in the latest of (i) the calendar year in which
the Agreement terminates; (ii) the calendar year in which the amount is no
longer subject to a substantial risk of forfeiture; or (iii) the first
calendar year in which the distribution is administratively practical;
or
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(c)
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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;
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then
Two River Community Bank may distribute the amount that Two River
Community Bank has accrued with respect to its obligations hereunder,
determined as of the date of the termination of the Agreement, to the
Executive in a lump sum subject to the above
terms.
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The following
Section 9.10 shall be added to the Agreement immediately following Section
9.9:
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9.10
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Compliance
with Code Section 409A. This Agreement shall be
interpreted and administered in a manner consistent with Code Section
409A.
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IN
WITNESS OF THE ABOVE, the Bank and the Executive hereby consent to this
First Amendment.
| EXECUTIVE: | TWO RIVER COMMUNITY BANK | |||
| /s/ Xxxxxxx X. Xxxxxxx |
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By
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/s/ Xxxxxxx X. Xxxxxx | |
| Xxxxxxx X. Xxxxxxx | Title | Chairman | ||
| ATTEST: | ||||
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/s/Xxxxx Xxxxxx
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