Exhibit 10.6
AMENDED AND RESTATED
EXECUTIVE SALARY CONTINUATION AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT, made and entered into this 17th day of
June, 2008, by and between American Bank of New Jersey, a savings bank organized
and existing under the laws of the United States (hereinafter referred to as the
"Bank"), and Xxxxxxxxx Xxxxxxxxx, an Executive of the Bank (hereinafter referred
to as the "Executive").
W I T N E S S E T H:
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WHEREAS, the Executive and the Bank have previously entered into an
Executive Salary Continuation Agreement; and
WHEREAS, since the execution of the original agreement, certain changes to
Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), have
been enacted; and
WHEREAS, it is necessary to revise the original agreement to reflect these
changes to the Code;
ACCORDINGLY, it is the desire of the Bank and the Executive to enter into
this agreement (sometimes referred to herein as the "Executive Plan") 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 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 her, 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
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payment or bonus in lieu of these salary continuation benefits except
as set forth hereinafter.
III. NORMAL RETIREMENT AGE
Normal Retirement Age shall mean the date on which the Executive
attains age sixty-five (65).
IV. RETIREMENT BENEFIT
Provided said retirement constitutes a Separation from Service (as
that phrase is defined under Section 409A of the Code and the
regulations and guidance of general applicability issued thereunder
(referred to herein as "Section 409A")), the Bank, commencing with the
first day of the month following the later of the date the Executive
actually retires or the date the Executive attains her Normal
Retirement Age, shall pay Executive an annual benefit equal to thirty
percent (30%) of the Executive's average base salary (with each year's
base salary determined on an annualized basis, taking into account any
base salary adjustments occurring during the applicable year) based
upon the average of the highest three (3) out of the last five (5)
years of employment (including the year in which the Separation from
Service occurs). Said benefit shall be paid in equal monthly
installments (1/12 of the annual benefit) until the death of the
Executive.
Notwithstanding the foregoing, if the Executive is, as of the date of
her Separation from Service, a "Specified Employee" (as defined in
Section 409A), then the retirement benefits described in this Section
IV shall commence to be paid on the first day of the month that next
follows the six-month anniversary of the date the Executive
experiences a Separation from Service, or her death, if earlier, with
the first payment including all monthly retirement benefits that would
have been previously paid but for this sentence.
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 and not this
agreement.
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
The Executive shall be one hundred percent (100%) vested in the
benefits provided herein.
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VIII. OTHER TERMINATION OF EMPLOYMENT AND DISABILITY
A. Other Termination of Employment:
Subject to Subsection VIII.A(i) hereinbelow, in the event that the
employment of the Executive shall terminate prior to Normal Retirement
Age, as provided in Section III, for reasons other than "disability"
(as defined in Section VIII.B) or Change of Control (as defined in
Section IX), but including by the Executive's voluntary action or by
the Executive's discharge by the Bank without cause, and such
termination of employment constitutes a Separation of Service (as
defined in Section IV), 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. This
severance compensation shall be paid in a lump sum no later than 2 1/2
months following the date of the Executive's termination of
employment. Notwithstanding the foregoing, if the Executive is as of
the date of Separation from Service a "Specified Employee" (as herein
defined), then payment under this Article VIII shall not be paid
earlier than the 183rd day following the date the Executive incurs a
Separation from Service, or her death, if earlier.
(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 (or if no such
agreement exists, the Employment Agreement most recently in
effect between the Bank and the Executive). 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 her
Separation from Service (as defined in Section IV), and the
Executive's Separation from Service is on account 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 Separation from Service for said
disability. Except as otherwise provided herein, said accrued
liability balance at termination shall be paid to the Executive
in a lump sum no later than 2 1/2 months following the date of
the Executive's Separation from Service.
Disability shall be defined in the Executive's Employment
Agreement in effect at the time of her Separation from Service
or, if no Employment Agreement is then in effect, then as defined
in the Bank's long term disability 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
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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.
Notwithstanding the foregoing, if the disability that gives rise
to the Executive's Separation from Service does not cause the
Executive to be "disabled" within the meaning of Section 409A,
and if, as of the date of such Separation from Service, the
Executive is a "Specified Employee" (as defined in Section 409A),
then her disability benefits payable pursuant to this Section
VIII.B shall commence to be paid on the first day of the month
that next follows the six-month anniversary of the date the
Executive incurs a Separation from Service, or her death, if
earlier.
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, or if no such agreement is then in effect, by
the regulations of the OTS in 12 CFR ss.574. Upon a Change of Control,
if the Executive subsequently suffers an involuntary termination of
service, except for cause, and such termination of service constitutes
a Separation from Service (as defined in Section IV), 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 her personal residence or perform
her 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 Section IV
herein upon attaining Normal Retirement Age (as defined in Section
III), 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.
Notwithstanding the above, if the Executive is as of the date of her
Separation from Service a "Specified Employee" (as herein defined),
then payment under this Article IX shall not be paid earlier than the
183rd day following the date the Executive incurs a Separation from
Service, or her death, if earlier, with any payments not made on
account of this sentence being paid with the Executive's first
payment.
X. RESTRICTIONS ON FUNDING
The 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, her 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.
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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 the Executive be
deemed to have any lien, right, title or interest in any specific
funding investment or assets of the Bank. No manner of funding shall
be permitted that would violate Section 409A.
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 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. No amendment shall be
permitted that would violate, or cause this agreement to violate,
Section 409A.
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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.
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. Effective Date:
The Effective Date of this agreement shall be the date first
above written.
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XII. ERISA PROVISION
A. Named Fiduciary and Plan Administrator:
The "Named Fiduciary and Plan Administrator" of this Executive
Plan shall be American Bank of New Jersey. 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 operational 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, it 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
shall likewise state the specific reasons for the decision and
shall include reference to specific provisions of this agreement
upon which the decision is based.
Any controversy or claim arising out of or relating to this
Executive Plan, 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 Executive Plan.
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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.
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 Executive Plan 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 Executive Plan 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 Executive 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 in a lump sum, subject to the provisions below.
Upon a Change of Control (Section IX), this paragraph shall
become null and void effective immediately upon said Change of
Control. Notwithstanding the foregoing, no amendment shall be
made to this Executive Plan that would violate, or cause the
agreement to violate, Section 409A. Further notwithstanding the
foregoing, the agreement may not be terminated unless all of the
requirements of Section 409A regarding plan terminations are
satisfied. Accordingly, unless Section 409A permits otherwise,
this agreement may be terminated only if (a) all arrangements
sponsored by the Bank and any affiliated entity (within the
meaning of Section 414(b) and 414(c)) that are required to be
aggregated with this agreement under Section 409A are terminated;
(b) no payments other than payments that would be payable under
the terms of the Executive Plan or an aggregated plan if the
termination had not occurred are made within 12 months of the
termination of the arrangements; (c) all payments are made within
24 months of the termination of the Executive Plan and related
arrangements; and (d) the Bank does not adopt a new arrangement
that would be required to be aggregated with this Executive Plan
under Section 409A if the Executive participated in both
arrangements, within three years of the termination of the
agreement.
XIV. CONFIDENTIAL INFORMATION
The Executive acknowledges that during her employment she will
learn and have access to confidential information regarding the
Bank or any affiliate and its customers and businesses
("Confidential Information"). The Executive agrees and covenants
not to disclose or use for her own benefit, or the benefit of any
other person or entity, any such Confidential Information, unless
or until the Bank or any affiliate 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 or any affiliates,
or to any of the businesses operated by them, and the Executive
confirms that such information constitutes the exclusive property
of the Bank or any affiliate. The Executive shall not otherwise
knowingly act or conduct herself (a) to the material detriment of
the Bank or its affiliates, or (b) in a manner which is inimical
or contrary to the interests of the Bank or any affiliate.
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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 Executive Plan 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 Executive Plan and executed the original thereof on the first day set forth
hereinabove, and that, upon execution, each has received a conforming copy.
AMERICAN BANK OF NEW JERSEY
Bloomfield, New Jersey
/s/ Xxxxxxxx Xxxxx By: /s/ W. Xxxxxx Xxxxxx
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Witness
Title: Chairman
/s/ Xxxxxxxx Xxxxx /s/ Xxxxxxxxx Xxxxxxxxx
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Witness Xxxxxxxxx Xxxxxxxxx
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