EXHIBIT 10.7
EXECUTIVE HEALTH INSURANCE PLAN
AGREEMENT
THIS AGREEMENT is made and entered into this 20th day of December,
2007, by and between Central Co-Operative Bank, a bank organized and existing
under the laws of the Commonwealth of Massachusetts (hereinafter referred to as
the "Bank"), and Xxxxxxx X. Xxxxxxxxx, an Executive of the Bank (hereinafter
referred to as the "Executive").
WHEREAS, the Executive has been and continues to be a valued Executive
of the Bank; and
WHEREAS, the purpose of this Agreement is to further the growth and
development of the Bank by providing the Executive with health care insurance
coverage, and thereby encourage the Executive's productive efforts on behalf of
the Bank; and
ACCORDINGLY, the Board has adopted the Executive Health Insurance Plan
and it is the desire of the Bank and the Executive to enter into this Agreement
under which the Bank will agree to Purchase health care insurance coverage for
the Executive upon the Executive's retirement in the event of the Executive's
death pursuant to the Executive Health Insurance Plan; and
FURTHERMORE, it is the intent of the parties hereto that this Executive
Health Insurance Plan be considered an unfunded arrangement maintained primarily
to provide Health Care Insurance Coverage for the Executive, and be considered a
non-qualified benefit plan for purposes of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The 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 the Executive has performed
in the past and those to be performed in the future, and based upon the mutual
promises and covenants herein contained, the Bank and the Executive agree as
follows:
I. DEFINITIONS
A. Effective Date:
--------------
The Effective Date of the Executive Health Insurance Plan
shall be December 20, 2007.
B. Plan Year:
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Any reference to the "Plan Year" shall mean a calendar year
from January 1st to December 31st. In the year of
implementation, the term "Plan Year" shall mean the period
from the Effective Date to December 31st of the year of the
Effective Date.
C. Termination of Employment:
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Termination of Employment shall mean the Executive's voluntary
resignation of employment by the Executive or the Bank's
discharge of the Executive without cause, prior to the Normal
Retirement Age.
D. Liability Reserve Account:
-------------------------
A Liability Reserve Account shall be established on the books
of the Bank for the purpose of providing a health insurance
benefit and a Medicare Supplement Benefit for the benefit of
the Executive. Prior to the Executive's Termination of
Employment or the Executive's retirement, whichever event
shall first occur, such Liability Reserve Account shall be
credited with the Bank Contribution. The Liability Reserve
Account shall be credited interest monthly at the rate of six
percent (6%), commencing upon the last day of the month of the
first contribution and continuing on the last date of each
month thereafter, as long as there is a balance in the
account. The interest rate shall be increased or decreased at
the discretion of the Bank.
E. Bank Contribution:
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The Bank shall make an annual contribution of Twenty Five
Thousand and 00/100th ($25,000.00) into the Liability Reserve
Account. Such contribution shall be made in monthly
installments.
F. Executive Health Care or Medicare Supplement Benefit:
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The Bank shall, either monthly or annually, expense an amount
in the Liability Reserve Account to pay the premium payments
for post-retirement health care insurance. When the Liability
Reserve Account reaches a balance of zero (0) dollars, the
Executive Health Care or Medicare Supplement Benefit shall
cease. Said benefit shall be for the life of the Executive and
the Executive's spouse.
G. Change in Control:
-----------------
Change of Control shall be defined as the occurrence of any
one of the following:
a. the acquisition of more than fifty percent (50%) of the
value or voting power of the Bank's stock by a person or
group;
b. the acquisition in a period of twelve (12) months or
less of at least thirty-five percent (35%) of the Bank's
stock by a person or group;
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c. the replacement of a majority of the Bank's board in a
period of twelve (12) months or less by Directors who
were not endorsed by a majority of the current board
members; or
d. the acquisition in a period of twelve (12) months or
less of forty percent (40%) or more of the Bank's assets
by an unrelated entity.
For the purposes of this Agreement, transfers made on account
of deaths or gifts, transfers between family members or
transfers to a qualified retirement plan maintained by the
Bank shall not be considered in determining whether there has
been a Change in Control.
H. Normal Retirement Age:
---------------------
Normal Retirement Age shall mean the date on which the
Executive attains age eighty-five (85).
I. Disability or Disabled:
----------------------
"Disability or Disabled" shall mean the Executive 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 of the Bank. Medical
determination of Disability or Disabled will be made by the
provider of an accident or health plan covering employees of
the Bank. Upon the request of the Plan Administrator, the
Executive must submit proof to the Plan Administrator of
Social Security Administration's or the provider's
determination.
II. BENEFITS
A. Benefits:
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Should the Executive remain in the employ of the Bank until
the Normal Retirement Age as stated in Subparagraph I (H), the
Executive shall be entitled to receive the Executive Health
Care or Medicare Supplement Benefit, beginning at Normal
Retirement Age until the Liability Reserve Account has a zero
(0) balance.
B. Termination of Employment:
-------------------------
Should the Executive suffer an Termination of Employment,
voluntary or involuntary, at anytime from the Effective Date
of this Agreement, the Executive shall be entitled to receive
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the Executive Health Care or Medicare Supplement Benefit until
the Liability Reserve Account has a zero (0) balance. Said
coverage shall commence the first day of the first month
following the death of the Executive.
In the event the Executive's death should occur after such
termination and there is a balance in the Liability Reserve
Account, the Executive's spouse shall be entitled to the
Executive Health Care or Medicare Supplement Benefit, until
the Liability Reserve Account has a zero balance. Upon the
spouse's death, subsequent to the Executive, this Agreement
shall terminate and no benefit shall be due. Said coverage
shall commence the first day of the first month following the
death of the Executive.
C. Death Benefit:
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Should the Executive die while there is a balance in the
Liability Reserve Account, said unpaid balance of the
Executive's Liability Reserve Account shall be used to provide
the Executive Health Care or Medicare Supplement Benefit for
the Executive's spouse until said balance is zero dollars
($0). Upon the spouse's death, subsequent to the Executive,
this Agreement shall terminate and no benefit shall be due.
Said coverage shall commence the first day of the first month
following the death of the Executive.
D. Discharge for Cause:
-------------------
Should the Executive be Discharged for Cause at any time, the
Bank Contribution, shall cease on the date of said termination
and no coverage shall be provided. The term "for cause" shall
mean any of the following that result in an adverse effect on
the Bank: (i) the conviction of a felony or gross misdemeanor
involving fraud or dishonesty; (ii) the willful violation of
any Bank law, rule, or regulation; (iii) an intentional
failure to perform stated duties; or (iv) a breach of
fiduciary duty involving personal profit. If a dispute arises
as to discharge "for cause," such dispute shall be resolved by
arbitration as set forth in this Executive Health Insurance
Plan.
III. RESTRICTIONS UPON 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
Health Insurance 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 Health Insurance 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 Health Insurance Plan, in whole or in part, through the
purchase of life insurance, mutual funds, disability policies or
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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 nor right,
title or interest in or to any specific funding investment or to any
assets of the Bank.
If the Bank elects to invest in a life insurance, disability or annuity
policy upon the life of the Executive, then the Executive shall assist
the Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or annuities.
IV. CHANGE IN CONTROL
If the Executive suffers a Termination of Employment (voluntarily or
involuntarily), except for cause, anytime subsequent to a Change in
Control, then the Executive shall be entitled to receive the Executive
Health Care or Medicare Supplement Benefit, commencing within thirty
(30) days of said termination until the Liability Reserve Account has a
zero (0) balance.
In the event the Executive's death should occur after such termination
and there is a balance in the Liability Reserve Account, the
Executive's spouse shall be entitled to the Executive Health Care or
Medicare Supplement Benefit, until the Liability Reserve Account has a
zero balance. Upon the spouse's death, subsequent to the Executive,
this Agreement shall terminate and no benefit shall be due.
V. DISABILITY
In the event that there is a finding of any qualified period of
disability for the Executive, the Bank will pay the Health Care Benefit
until the Liability Reserve Account has a zero (0) balance. Said
benefit shall commence within thirty (30) days of determination of
Disability.
In the event of the Executive's death and there is a balance in the
Liability Reserve Account, the Executive's spouse shall be entitled to
the Executive Health Care or Medicare Supplement Benefit, until the
Liability Reserve Account has a zero balance. Upon the spouse's death,
subsequent to the Executive, this Agreement shall terminate and no
benefit shall be due.
VI. MISCELLANEOUS
A. Alienability and Assignment Prohibition:
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Neither the Executive nor any other beneficiary(ies) under
this Executive Health Insurance 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
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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:
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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 Health Insurance
Plan. This Executive Health Insurance Plan shall be binding
upon the parties hereto, their successors, assignees,
beneficiaries, heirs and personal representatives.
C. Amendment or Revocation:
-----------------------
During the lifetime of the Executive, this Agreement may be
amended or revoked at any time or times, in whole or in part
only, by the mutual written consent of the Executive and the
Bank. Any such amendment shall not be effective to decrease or
restrict the Executive's benefit under this Agreement,
determined as of the date of amendment, unless agreed to in
writing by the Executive. In the event this Agreement is
terminated, such termination shall not cause a distribution of
benefits, except to provide the Executive Health Care or
Medicare Supplement Benefit, if the vesting age is met.
D. Gender:
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Whenever in this Executive Health Insurance Plan words are
used in the masculine or neutral gender, they shall be read
and construed as in the masculine, feminine or neutral gender,
whenever they should so apply.
E. Headings:
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Headings and subheadings in this Executive Health Insurance
Plan are inserted for reference and convenience only and shall
not be deemed a part of this Executive Health Insurance Plan.
F. Applicable Law:
--------------
The validity and interpretation of this Agreement shall be
governed by the laws of the State where the principal
corporate office of the Bank is located.
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G. Partial Invalidity:
------------------
If any term, provision, covenant, or condition of this
Executive Health Insurance 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 Health Insurance Plan shall
remain in full force and effect notwithstanding such partial
invalidity.
H. Employment:
----------
No provision of this Executive Health Insurance Plan shall be
deemed to restrict or limit any existing employment agreement
by and between the Bank and the Executive, nor shall any
conditions herein create specific employment rights to the
Executive nor limit the right of the Employer to discharge the
Executive with or without cause. In a similar fashion, no
provision shall limit the Executive's rights to voluntarily
sever the Executive's employment at any time.
I. Tax Withholding:
---------------
The Bank shall withhold any taxes that are required to be
withheld, under the Code and regulations thereunder, from the
benefits provided under this Agreement. The Executive
acknowledges that the Bank's sole liability regarding taxes is
to forward any amounts withheld to the appropriate taxing
authority(ies).
J. Opportunity to Consult with Independent Advisors:
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The Executive acknowledges that he has been afforded the
opportunity to consult with independent advisors of his
choosing including, without limitation, accountants or tax
advisors and legal counsel regarding both the benefits granted
to him under the terms of this Agreement and the: (i) terms
and conditions which may affect the Executive's right to these
benefits; and (ii) personal tax effects of such benefits
including, without limitation, the effects of any federal or
state taxes, Section 280G of the Code or regulations
thereunder, and any other taxes, costs, expenses or
liabilities whatsoever related to such benefits, which in any
of the foregoing instances the Executive acknowledges and
agrees shall be the sole responsibility of the Executive
notwithstanding any other term or provision of this Agreement.
The Executive further acknowledges and agrees that the Bank
shall have no liability whatsoever related to any such
personal tax effects or other personal costs, expenses, or
liabilities applicable to the Executive and further
specifically waives any right for himself or herself, and his
or her heirs, beneficiaries, legal representative, agents,
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successor and assign to claim or assert liability on the part
of the Bank related to the matters described above in this
paragraph. The Executive further acknowledges that he has
read, understands and consents to all of the terms and
conditions of this Agreement, and that he enters into this
Agreement with a full understanding of its terms and
conditions.
VII. ADMINISTRATIVE AND CLAIMS PROVISIONS
A. Plan Administrator:
------------------
The "Plan Administrator" of this Executive Health Insurance
Plan shall be the Board of Directors of Central Co-Operative
Bank. As Plan Administrator, the Bank shall be responsible for
the management, control and administration of the Executive
Health Insurance Plan. The Plan Administrator may delegate to
others certain aspects of the management and operation
responsibilities of the Executive Health Insurance Plan
including the employment of advisors and the delegation of
ministerial duties to qualified individuals.
B. Claims Procedure:
----------------
a. Filing a Claim for Benefits:
---------------------------
Any insured, beneficiary, or other individual,
("Claimant") entitled to benefits under this
Executive Plan will file a claim request with the
Plan Administrator. The Plan Administrator will, upon
written request of a Claimant, make available copies
of all forms and instructions necessary to file a
claim for benefits or advise the Claimant where such
forms and instructions may be obtained. If the claim
relates to disability benefits, then the Plan
Administrator shall designate a sub-committee to
conduct the initial review of the claim (and
applicable references below to the Plan Administrator
shall mean such sub-committee).
b. Denial of Claim:
---------------
A claim for benefits under this Executive Plan will
be denied if the Bank determines that the Claimant is
not entitled to receive benefits under the Executive
Plan. Notice of a denial shall be furnished the
Claimant within a reasonable period of time after
receipt of the claim for benefits by the Plan
Administrator. This time period shall not exceed more
than ninety (90) days after the receipt of the
properly submitted claim. In the event that the claim
for benefits pertains to disability, the Plan
Administrator shall provide written notice within
forty-five (45) days. However, if the Plan
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Administrator determines, in its discretion, that an
extension of time for processing the claim is
required, such extension shall not exceed an
additional ninety (90) days. In the case of a claim
for disability benefits, the forty-five (45) day
review period may be extended for up to thirty (30)
days if necessary due to circumstances beyond the
Plan Administrator's control, and for an additional
thirty (30) days, if necessary. Any extension notice
shall indicate the special circumstances requiring an
extension of time and the date by which the Plan
Administrator expects to render the determination on
review.
c. Content of Notice:
-----------------
The Plan Administrator shall provide written notice
to every Claimant who is denied a claim for benefits
which notice shall set forth the following:
(i.) The specific reason or reasons for the
denial;
(ii.) Specific reference to pertinent Executive
Plan provisions on which the denial is
based;
(iii.) A description of any additional material or
information necessary for the Claimant to
perfect the claim, and any explanation of
why such material or information is
necessary; and
(iv.) Any other information required by applicable
regulations, including with respect to
disability benefits.
d. Review Procedure:
----------------
The purpose of the Review Procedure is to provide a
method by which a Claimant may have a reasonable
opportunity to appeal a denial of a claim to the Plan
Administrator for a full and fair review. The
Claimant, or his duly authorized representative, may:
(i.) Request a review upon written application to
the Plan Administrator. Application for
review must be made within sixty (60) days
of receipt of written notice of denial of
claim. If the denial of claim pertains to
disability, application for review must be
made within one hundred eighty (180) days of
receipt of written notice of the denial of
claim;
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(ii.) Review and copy (free of charge) pertinent
Executive Plan documents, records and other
information relevant to the Claimant's claim
for benefits;
(iii.) Submit issues and concerns in writing, as
well as documents, records, and other
information relating to the claim.
e. Decision on Review:
------------------
A decision on review of a denied claim shall be made
in the following manner:
(i.) The Plan Administrator may, in its sole
discretion, hold a hearing on the denied
claim. If the Claimant's initial claim is
for disability benefits, any review of a
denied claim shall be made by members of the
Plan Administrator other than the original
decision maker(s) and such person(s) shall
not be a subordinate of the original
decision maker(s). The decision on review
shall be made promptly, but generally not
later than sixty (60) days after receipt of
the application for review. In the event
that the denied claim pertains to
disability, such decision shall not be made
later than forty-five (45) days after
receipt of the application for review. If
the Plan Administrator determines that an
extension of time for processing is
required, written notice of the extension
shall be furnished to the Claimant prior to
the termination of the initial sixty (60)
day period. In no event shall the extension
exceed a period of sixty (60) days from the
end of the initial period. In the event the
denied claim pertains to disability, written
notice of such extension shall be furnished
to the Claimant prior to the termination of
the initial forty-five (45) day period. In
no event shall the extension exceed a period
of thirty (30) days from the end of the
initial period. The extension notice shall
indicate the special circumstances requiring
an extension of time and the date by which
the Plan Administrator expects to render the
determination on review.
(ii.) The decision on review shall be in writing
and shall include specific reasons for the
decision written in an understandable manner
with specific references to the pertinent
Executive Plan provisions upon which the
decision is based.
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(iii.) The review will take into account all
comments, documents, records and other
information submitted by the Claimant
relating to the claim without regard to
whether such information was submitted or
considered in the initial benefit
determination. Additional considerations
shall be required in the case of a claim for
disability benefits. For example, the claim
will be reviewed without deference to the
initial adverse benefits determination and,
if the initial adverse benefit determination
was based in whole or in part on a medical
judgment, the Plan Administrator will
consult with a health care professional with
appropriate training and experience in the
field of medicine involving the medical
judgment. The health care professional who
is consulted on appeal will not be the same
individual who was consulted during the
initial determination or the subordinate of
such individual. If the Plan Administrator
obtained the advice of medical or vocational
experts in making the initial adverse
benefits determination (regardless of
whether the advice was relied upon), the
Plan Administrator will identify such
experts.
(iv.) The decision on review will include a
statement that the Claimant is entitled to
receive, upon request and free of charge,
reasonable access to, and copies of, all
documents, records or other information
relevant to the Claimant's claim for
benefits.
f. Exhaustion of Remedies:
----------------------
A Claimant must follow the claims review procedures
under this Executive Plan and exhaust his or her
administrative remedies before taking any further
action with respect to a claim for benefits.
C. Arbitration:
-----------
If claimants continue to dispute the benefit denial based upon
completed performance of this Executive Plan or the meaning
and effect of the terms and conditions thereof, then claimants
may submit the dispute to an Arbitrator for final arbitration.
The Arbitrator shall be selected by mutual agreement of the
Bank and the claimants. The Arbitrator shall operate under any
generally recognized set of arbitration rules. The parties
hereto agree that they and their heirs, personal
representatives, successors and assigns shall be bound by the
decision of such Arbitrator with respect to any controversy
properly submitted to it for determination.
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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.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the original thereof effective as of
the first day set forth hereinabove, and that, upon execution, each has received
a conforming copy.
CENTRAL CO-OPERATIVE BANK
Somerville, MA
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx, Xx.
---------------------------------- -----------------------------------------------
Witness (Bank Director other than Executive) Title
/s/ Xxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------- -----------------------------------------------
Witness Xxxxxxx X. Xxxxxxxxx
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SPOUSAL DESIGNATION FORM FOR THE EXECUTIVE HEALTH
INSURANCE PLAN AGREEMENT
I. DESIGNATION
-----------
SPOUSE:
------
1. Name: SS#:
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Address:
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(Street) (City) (State) (Zip)
II. SIGN AND DATE
-------------
All benefits received under the Executive Health Insurance Plan Agreement by
reason of my death shall be made for the benefit of my spouse, if he or she
survives me. This beneficiary designation is valid until the participant
notifies the Bank in writing.
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Xxxxxxx X. Xxxxxxxxx Date
