Exhibit 10.7
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 Xxxxxxx Xxxxx, 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 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
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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 his 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
his 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 his 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 his 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 his
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 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 his 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 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.
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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 his 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 his 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 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 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 his
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 his 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 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, his 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 his employment he 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 his 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
himself (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
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any affiliate. 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/ Xxxxxxx Xxxxx
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Witness Xxxxxxx Xxxxx
