Continuation of Benefits Agreement
Exhibit
10.3
THIS AGREEMENT (the
“Agreement”) is made on and as of this 31st day of October, 2008, by and between
Community Partners Bancorp (“CPB”), a corporation organized under the laws of
the state of New Jersey which serves as a bank holding company, with its
principal office at 0000 Xxxxxxx 00 Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000; Two
River Community Bank (“TRCB”), a banking corporation organized under the laws of
the state of New Jersey, with its principal office at 0000 Xxxxxxx 00 Xxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000; and Xxxxx X. Xxxxxx (“Executive”), whose business
address is 0000 Xxxxxxx 00 Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000.
RECITALS
WHEREAS,
Executive, CPB and TRCB are parties to that certain Change in Control and
Assumption Agreement dated June 1, 2007, as amended by that certain First
Amendment to Change in Control and Assumption Agreement dated October 31st 2008
(with such Agreement and First Amendment being defined as the “Change in Control
Agreement”); and
WHEREAS,
the First Amendment deleted certain language pertaining to the provision of
continuing coverage for the Executive under medical, disability and life
insurance benefit plans; and
WHEREAS,
Executive, CPB and TRCB recognize that any arrangement for the continuation of
benefits must comply with Section 409A of the Internal Revenue Code, and be
capable of full implementation under the terms of the employee benefit plans;
and
WHEREAS,
Executive, CPB and TRCB wish to enter into this Agreement to preemptively govern
the provision of continuing coverage of the Executive subsequent to a Benefits
Continuation Event, as defined herein, under the medical, disability and life
insurance plans maintained by CPB, TRCB, or any successor to
either.
NOW,
THEREFORE, in consideration of the mutual promises set forth in this Agreement,
which Executive, CPB and TRCB acknowledge to be adequate consideration,
Executive, CPB and TRCB agree as follows:
1. Defined
Terms. All defined terms in this Agreement which are also
defined terms in the Change in Control Agreement shall have the same meaning as
in the Change in Control Agreement.
2. Continuation of
Coverage. In the event that, in accordance with and pursuant
to Section 9 of the Change in Control Agreement, either (i) Employer terminates
Executive without Cause during the Contract Period or (ii) Executive resigns for
Good Reason during the Contract Period (in either case, a “Benefits Continuation
Event” upon the actual termination of Executive’s employment), then Employer
shall, in accordance with the terms of this Agreement, either provide the
Executive with continued benefits under, or defray the cost of continued
benefits which are comparable to those provided by, those medical and dental
benefit plans, life insurance plans, and disability insurance plans (the
“Continuing Coverage Plans”) which are sponsored by the Employer or the
Employer’s successor in a Change in Control and in which Executive is a
participant as of the Benefits Continuation Event.
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As of and
after a Benefits Continuation Event, Employer shall, if and only to the extent
possible under the terms of such plans, continue the Executive’s participation
in the Continuing Coverage Plans for the remainder of the Contract Period after
the Benefits Continuation Event, which continued participation shall be under
all of the costs, terms and conditions that are applicable to or imposed upon
employees of similar title to the Executive, as such costs, terms and conditions
may change from time to time during the remainder of the Contract
Period.
To
the extent that the terms of any of the Continuing Coverage Plans are such that
the actual participation of the Executive cannot be continued after a Benefits
Continuation Event, then Employer shall, as of and after a Benefits Continuation
Event for the remainder of the Contract Period, provide the Executive with a
periodic payment, or periodic payments, in that amount or those amounts which
the Employer determines in the exercise of its reasonable discretion and in good
faith to be fully sufficient to defray the cost to the Executive of
participation in plans which provide benefits that are materially identical to
those benefits provided by those Continuing Coverage Plans in which, by their
terms, the Executive cannot continue to participate subsequent to a Benefits
Continuation Event. Any such payment or payments shall be defined as
Coverage Continuation Reimbursement Payments. Executive and the Employer
specifically agree that the reimbursement by Employer through the remainder of
the Contract Period of the full monthly COBRA amount which would, in the absence
of this Agreement, be charged to Executive for continuing coverage under the
medical benefits plan sponsored by the Employer or the Employer’s successor in a
Change in Control, and in which Executive is a participant as of the Benefits
Continuation Event, shall constitute full tender of performance under this
Agreement with respect to such medical benefits plan. Subject
to the first two paragraphs of Section 3 of this Agreement, all Coverage
Continuation Reimbursement Payments shall be paid by Employer to Executive five
(5) days prior to the date when the expense to be reimbursed is due and payable
by Executive.
Notwithstanding
any term of this Agreement to the contrary, if at any time during the remainder
of the Contract Period, Executive becomes employed by another employer which
provides one or more of the benefits provided under the Continuing Coverage
Plans, then Employer shall, immediately and from the date when such benefits are
made available to the Employee by the successor employer, be relieved of its
obligation to provide such benefits, or Coverage Continuation Reimbursement
Payments for such benefits, to the extent such benefits are duplicative of those
which are provided to Executive by Executive’s new employer.
3. Timing of
Distributions. For all purposes of this Section 3, “Specified
Employee” means a key employee (as defined in Section 416(i) of the Code without
regard to paragraph 5 thereof) of the Employer if any stock of the Employer or
its corporate parent is publicly traded on an established securities market or
otherwise, as conclusively determined by the Employer 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.
2
Notwithstanding
any provision of this Agreement to the contrary, if the Executive is considered
a Specified Employee at the time of the Benefits Continuation Event, any
Coverage Continuation Reimbursement Payments which would otherwise be payable
under Section 2 of this Agreement shall not be made during the first six (6)
months following the Benefits Continuation Event, but rather any such Coverage
Continuation Reimbursement Payments 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 Benefits
Continuation Event. All subsequent Coverage Continuation
Reimbursement Payments shall be paid in the manner specified in this
Agreement.
Under no
circumstances, at the election of Executive or otherwise, shall any Coverage
Continuation Reimbursement Payment be (i) made under this Agreement prior to the
occurrence of a Benefits Continuation Event; (ii) accelerated so as to be
payable at a point in time which is more than five (5) days prior to the date
when the expense to be reimbursed is due and payable by Executive, or (iii)
deferred.
4. Miscellaneous. This
Agreement shall be the joint and several obligation of CPB, TRCB and any
acquiring entity which assumes CPB’s or the TRCB’s obligations under this
Agreement. The terms of this Agreement shall be governed by, and
interpreted and construed in accordance with the provisions of, the laws of New
Jersey and, to the extent applicable, Federal law. Except as
specifically set forth in this Agreement, this Agreement supersedes all prior
agreements and understandings with respect to the matters covered
hereby. The amendment of Section 2, or the termination of this
Agreement, may be made only in a writing executed by CPB, TRCB and the
Executive, and no amendment or termination of this Agreement shall be effective
unless and until made in such a writing. This Agreement shall
terminate ipso
facto upon
the termination of the Change in Control Agreement. Section 3 of this
Agreement cannot be amended, except to reflect changes in, or the elimination
of, Section 409A of the Internal Revenue Code. This Agreement shall
be binding to the extent of its applicability upon any successor (whether direct
or indirect, by purchase, merge, consolidation, liquidation or otherwise) to all
or substantially all of the assets of CPB or TRCB. This Agreement is
personal to the Executive, and the Executive may not assign any of his rights or
duties hereunder, but this Agreement shall be enforceable by the Executive’s
legal representatives, executors or administrators. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart. CPB or TRCB, as the case
may be, shall, as part of any Change in Control involving an acquiring entity or
successor to CPB or TRCB, obtain an enforceable assumption in writing by (i) the
entity which is the acquiring entity or successor to CPB or TRCB, as the case
may be, in the Change in Control and, (ii) if the acquiring entity or successor
to CPB or TRCB, as the case may be, is a bank, the holding company parent of the
acquiring entity or successor, of this Agreement and the obligations of CPB or
TRCB, as the case may be, under this Agreement, and shall provide a copy of such
assumption to the Executive prior to any Change in Control.
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IN WITNESS WHEREOF, CPB and
TRCB have caused this Agreement to be signed by their respective duly authorized
representatives pursuant to the authority of their Boards of Directors, and the
Executive has personally executed this Agreement, all as of the day and year
first written above.
WITNESS:
| /s/ Xxxx Xxxxxx-Xxxxxx | /s/Xxxxx X. Xxxxxx | |||
|
|
Xxxxx X. Xxxxxx, individually | |||
| ATTEST: | COMMUNITY PARTNERS BANCORP | |||
| /s/Xxxxxxx X. Xxxxxxxxx | By: | /s/Xxxxxxx X. Xxxxxx | ||
| Xxxxxxx X. Xxxxxxxxx, Secretary | Xxxxxxx X. Xxxxxx, Chairman | |||
| ATTEST: | TWO RIVER COMMUNITY BANK | |||
| /s/Xxxxxxx X. Xxxxxxxxx | By: | /s/Xxxxxxx X. Xxxx | ||
| Xxxxxxx X. Xxxxxxxxx, Secretary | Xxxxxxx X. Xxxx, President | |||
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