Somerset Valley Bank Deferred Compensation Plan
SOMERSET VALLEY BANK
Deferred Compensation Plan
THIS AGREEMENT made this first day of January 1, 2000 by and between SOMERSET
VALLEY BANK, with its principal offices located at ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (herein referred to as the "Bank"),
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ residing at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ (herein referred to as the "Executive").
WITNESSETH THAT:
WHEREAS, the Executive is employed by the Bank; and
WHEREAS, the Bank recognizes the valuable services heretofore performed for it
by the Executive and wishes to encourage his continued employment; and
WHEREAS, the Executive wishes to be assured that he will be entitled to a
certain amount of compensation for some definite period of time from and after
his retirement from active service with the Bank, or other termination of such
employment whether by reason of his death or otherwise; and
WHEREAS, the parties hereto wish to provide the terms and conditions upon which
the Bank shall pay such additional compensation to the Executive or his family
after his retirement or such termination of his employment;
NOW, THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agree as follows:
1. In consideration of the Executive's remaining in its employ, the Bank
agrees that the Bank shall thereafter pay the Executive the sum of $70,000
per annum (the "benefit") for a period of ten (10) years from and after the
occurrence of an event entitling the Executive to payments hereunder,
payable in equal monthly installments, commencing with the first day of the
first month following the occurrence of such event.
2. The benefit payable hereunder shall be paid to each Executive, or
applicable Beneficiary designated by or for such Executive, on account of
any of the following events: (a) termination of employment; (b) death; (c)
retirement; (d) disability; or (e) an approved financial hardship due to an
unforeseeable emergency.
(A) TERMINATION OF EMPLOYMENT.
If an Executive terminates his relationship with the Bank, or is
terminated without cause, before the commencement of Retirement and not
due to a disability, the benefit shall continue to defer
until Retirement.
(B) DEATH BENEFITS.
If an Executive dies before the termination of his relationship with
the Bank and before Retirement and the Executive was not previously
disabled, the participant's then named beneficiary shall be paid the
benefit payable in accordance with Paragraph 1.
Upon the death of an Executive after the commencement of Retirement or
receipt of Disability Retirement benefits, but before the Executive has
received all payments under the Plan, the remaining payments shall
continue to the person or persons designated in the last designation of
beneficiary form received by the Bank from the Executive prior to the
Executive's death.
(C) RETIREMENT.
At Retirement, an Executive shall be entitled to receive payments under
the Plan, provided that the Executive ceases to provide services as an
employee to the Bank after such date. "Retirement" shall be defined as
age sixty-five (65), of which the Board may adjust annually as it sees
fit. A change in the age of retirement shall not be effective until the
calendar year following such change and will not be effective if the
Executive has commenced payments herein.
(D) DISABILITY.
The Executive shall be entitled to receive payments hereunder prior to
Retirement, if the Executive becomes eligible to receive and actually
commences receipt of benefit payments under the Bank's Group Long Term
Disability Insurance Policy. If the Executive is not covered under the
Policy, a determination as to whether the Executive can no longer
perform duties required of an Executive because of ill health,
accident, or general inability because of age of the Executive shall be
made by a duly licensed physician selected by the Bank. Should it be
determined that the Executive is rendered totally or permanently unable
to perform in accordance with the terms and conditions of the
Executive's contract with the Bank and the contract is terminated, the
Bank shall immediately commence payment of benefits to the Executive in
accordance with Paragraph 1.
(E) UNFORESEEABLE EMERGENCY.
An unforeseeable emergency means a severe financial hardship to the
Executive resulting from a sudden and unexpected illness or accident of
the Executive or of a dependent of the Executive, loss of the
Executive's property due to casualty, or other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond
the control of the Executive. The circumstances that constitute an
"Unforeseeable Emergency" would depend upon the facts of each case,
but, in any case, payment may not be made in the event that such
hardship is or may be relieved (1) through reimbursement or
compensation by insurance or otherwise, or (2) liquidation of the
Executive's assets, to the extent that liquidation of such assets would
not itself cause severe financial hardship. The need to send a
Executive's child to college or the desire to purchase a home shall not
be construed as an Unforeseeable Emergency.
An Executive may request a distribution due to an Unforeseeable
Emergency by submitting a written request to the Bank accompanied by
evidence to demonstrate that the circumstances being
2
experienced qualify as an Unforeseeable Emergency. The Bank shall have
the authority to require such evidence as it deems necessary to
determine if a distribution is warranted. If an application for a
hardship distribution due to an Unforeseeable Emergency is approved,
the distribution shall be limited to both the amount sufficient to meet
the emergency and the Executive's accrued account balance. The
allowable distribution shall be payable in a method determined by the
Bank as soon as possible after approval of such distribution.
Distributions made for an Unforeseeable Emergency will directly reduce
the benefit on a proportionate basis over the payment period.
An Executive who has commenced receiving benefits under the Plan may
request acceleration of such payments in the event of an Unforeseeable
Emergency. The Bank may permit accelerated payments to the extent such
accelerated payment does not exceed the amount necessary to meet the
emergency.
3. In consideration of the foregoing agreements of the Bank and of the
payments to be made by the Bank pursuant thereto, the Executive hereby
agrees that, so long as he remains in the active employ of the Bank, he
will devote substantially all of his time, skill, diligence and attention
to the business of the Bank, and will not actively engage, either directly
or indirectly, in any business or other activity which is or may be deemed
to be in any way competitive with or adverse to the best interests of the
business of the Bank.
4. a. Nothing contained in this Agreement, and no action taken pursuant to
its provisions by either party hereto shall create, or be construed to
create, a trust of any kind, or a fiduciary relationship between the
Bank and the Executive, his designated beneficiary, other beneficiaries
of the Executive or any other person.
b. The payments to the Executive or his designated beneficiary or any
other beneficiary hereunder shall be made from assets which shall
continue, for all purposes, to be a part of the general assets of the
Bank, and no person shall have, by virtue of the provisions of this
Agreement, any interest in such assets. To the extent that any person
acquires a right to receive payments from the Bank under the provisions
hereof, such right shall be no greater than the right of any unsecured
general creditor of the Bank.
5. In the event that, in its discretion, the Bank purchases an insurance
policy or policies insuring the life of the Executive to allow the Bank to
recover the cost of providing the benefits, in whole, or in part,
hereunder, neither the Executive, his designated beneficiary nor any other
beneficiary shall have any rights whatsoever therein; the Bank shall be the
sole owner and beneficiary thereof and shall possess and may exercise all
incidents of ownership therein.
6. Nothing contained herein shall be construed to be a contract of employment
for any term of years, nor as conferring upon the Executive the right to
continue in the employ of the Bank in any capacity. It is expressly
understood by the parties hereto that this Agreement relates exclusively to
additional
3
compensation for the Executive's services, payable after termination of his
employment with the Bank, and is not intended to be an employment contract.
7. Neither the Executive, his spouse, nor any other beneficiary under this
Agreement shall have any power or right to transfer, assign, anticipate,
hypothecate or otherwise encumber any part or all of the amounts payable
hereunder, nor shall such amounts be subject to seizure by any creditor of
any such beneficiary, by a proceeding at law or in equity, and no such
benefit shall be transferable by operation of law in the event of
bankruptcy, insolvency or death of the Executive, his spouse, or any other
beneficiary hereunder. Any such attempted assignment or transfer shall be
void and shall terminate this Agreement, and the Bank shall thereupon have
no further liability hereunder.
8. a. The Bank is hereby designated as the named fiduciary under this
Agreement. The named fiduciary shall have authority to control and
manage the operation and administration of this Agreement, and it
shall be responsible for establishing and carrying out a funding
policy and method consistent with the objectives of this
Agreement.
b. The Bank shall make all determinations as to rights to benefits
under this Agreement. Any decision by the Bank denying a claim by
the Executive or his beneficiary for benefits under this Agreement
shall be stated in writing and delivered or mailed to the
Executive or such beneficiary. Such decision shall set forth the
specific reasons for the denial, written to the best of the Bank's
ability in a manner that may be understood without legal or
actuarial counsel. In addition, the Bank shall afford a reasonable
able opportunity to the Executive or such beneficiary for a full
and fair review of the decision denying such claim.
c. Subject to the foregoing, the Board of Directors of the Bank
shall have full power and authority to interpret, construe and
administer this Agreement. The interpretation and construction of
this Agreement by the Board of Directors of the Bank, and any
action taken thereunder, shall be binding and conclusive upon all
parties in interest. No member of the Board of Directors of the
Bank shall, in any event, be liable to any person for any action
taken or omitted to be taken in connection with the
interpretation, construction or administration of this Agreement,
so long as such action or omission to act be made in good faith.
9. This Agreement may not be amended, altered or modified, except by a written
instrument signed by the parties hereto, or their respective successors or
assigns, and may not be otherwise terminated except as provided herein.
10. This Agreement shall be binding upon and inure to the benefit of the Bank
and its successors and assigns, and the Executive, his successors, assigns,
heirs, executors, administrators and beneficiaries.
11. Any notice, consent or demand required or permitted to be given under the
provisions of this Agreement shall be in writing, and shall be signed by
the party giving or making the same. If such notice, consent or demand is
mailed to a party hereto, it shall be sent by United States certified mail,
postage prepaid, addressed to such party's last known address as shown on
the records of the Bank. The date of such mailing shall be deemed the date
of notice, consent or demand.
4
12. This Agreement, and the rights of the parties hereunder, shall be governed
by and construed in accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its
duly authorized officers and Executive has hereunto set his hand and seal as of
the date first above written.
SOMERSET VALLEY BANK
By /s/▇▇▇▇ ▇. Kitchen
------------------
▇▇▇▇ ▇. Kitchen
Chairman
ATTEST:
/s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Assistant Secretary
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
5
Somerset Valley Bank Deferred Compensation Plan
Page 5 of 5
SOMERSET VALLEY BANK
Deferred Compensation Plan
THIS AGREEMENT made this first day of January 1, 2000 by and between SOMERSET
VALLEY BANK, with its principal offices located at ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (herein referred to as the "Bank"),
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ residing at ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ (herein referred to as the "Executive").
WITNESSETH THAT:
In consideration of the agreements hereinafter contained the parties hereto
agree as follows:
1. The Bank agrees to employ the Executive and the Executive agrees to serve
the Bank in such capacity as the Board of Directors of the Bank (the
"Board") may designate from time to time, beginning from the date of this
agreement and continuing until terminated by either party on at least 90
days prior written notice to the other.
2. During the term of his employment, the Executive shall devote all of his
time, attention skill and efforts to the performance of his duties for the
Bank.
3. The Bank shall pay the Executive, during the term of his employment
hereunder, such salary payable monthly as the Board may from time to time
determine, together with deferred compensation payable as provided in
paragraph 5 below, unless forfeited by the occurrence of any of the events
of forfeiture specified in paragraph 7, below.
4. (a) The Bank shall credit to a book reserve to a Deferred Compensation
Account (the "Account") established for this purpose, $27,000 on the
last day of December, 1999, and on the last day of December each year
thereafter continuing until the Executive's retirement. "Retirement"
shall be defined as age sixty-five (65), of which the Board may adjust
annually as it sees fit. A change in the age of retirement shall not be
effective until the calendar year following such change.
(b) Any such funds so credited to the Account may be kept in cash or
invested and reinvested in mutual funds, stocks, bonds, securities or
any other assets as may be selected by the Board in its discretion. In
the exercise of the foregoing discretionary investment powers, the
Board may engage investment counsel and, if it so desires, may delegate
to such counsel full or limited authority to select the assets in which
the funds are to be invested.
(c) The Bank agrees to credit a fixed rate of interest equal to 7%,
compounded at least monthly, to the Executive's Account. Such interest
rate may be adjusted annually as the Board shall determine.
(d) Title to and beneficial ownership of any assets, whether cash or
investments which the Bank may earmark to pay the contingent deferred
compensation hereunder, shall at all times remain in the Bank and the
Executive and his designated beneficiary shall not have any property
interest whatsoever in any specific assets of the Bank.
5. The benefits to be paid as deferred compensation (unless they are forfeited
by the occurrence of any of the events of forfeiture specified in paragraph
7, below) are as follows:
TERMINATION PRIOR TO RETIREMENT
(a) If the Executive's employment hereunder is terminated for any reason
other than death and disability before the Executive shall have reached
retirement, then the Executive shall receive the Account in 10 annual
installments, said installments to be adjusted annually in accordance
with paragraph 5(b). Notwithstanding the foregoing, if before reaching
retirement the Executive should die, or if before reaching retirement
the Executive should become disabled, then payments shall be made in
the same manner and to the same extent as set forth in paragraph 5(e)
and 5(f), respectively.
RETIREMENT
(b) In the calendar year prior to reaching retirement, the Executive shall
have the option either to receive the full value of the Account in one
lump sum or to receive the Account in 10 annual installments in an
amount equal to the fair market value of the assets in the Account as
of such date. If the Executive fails to make a timely election, he will
receive the Account in 10 annual installments in accordance with the
provisions contained herein.
Notwithstanding anything to the contrary, if the Executive chooses to
receive annual payments the total amount payable to the Executive shall
be appropriately increased or decreased as the case may be, but not
more than semi-annually, to reflect the appreciation or depreciation in
value and the net income or loss on the funds which remain invested in
the Account.
DEATH OR DISABILITY
(c) If the Executive's employment is terminated because of disability or
death before any payments from the Account have been made, then the
Bank shall pay in one lump sum an amount equal to the fair market value
of the assets in the Account as of such date, to the Executive (in the
event of his disability) or his designated beneficiary (in the event of
his death).
If the Executive is receiving payments and should die before a total of
10 annual payments are made by the Bank, then the remaining value of
the Account shall be determined as of the date of the death and shall
be paid as promptly as possible in one lump sum to the Executive's then
designated beneficiary.
If the Executive is receiving payments and should become disabled
before a total of 10 annual payments are made by the Bank, then said
payments shall continue and be adjusted until all payments have been
made in accordance with paragraph 5(b).
2
The beneficiary referred to in this paragraph may be designated or
changed by the Executive (without the consent of any prior beneficiary)
on a form provided by the Bank and delivered to the Bank before his
death. If no such beneficiary shall have been designated, or if no
designated beneficiary shall survive the Executive, the lump sum
payable under paragraph 5(c) shall be payable to the Executive's
estate.
The Executive shall be deemed to have become disabled for purposes of
paragraph 5(c) if said Executive is deemed disabled under the Bank's
group long-term disability plan (if any) or if the Board shall find on
the basis of medical evidence satisfactory to the Board that the
Executive is totally disabled, mentally or physically, so as to be
prevented from engaging in further employment by the Bank and that such
disability will be permanent and continuous during the remainder of his
life.
UNFORESEEABLE EMERGENCY
(d) The Executive may request a distribution due to an Unforeseeable
Emergency by submitting a written request to the Bank accompanied by
evidence to demonstrate that the circumstances being experienced
qualify as an Unforeseeable Emergency. The Bank shall have the
authority to require such evidence as it deems necessary to determine
if a distribution is warranted. If an application for a hardship
distribution due to an Unforeseeable Emergency is approved, the
distribution shall be limited to both the amount sufficient to meet the
emergency and the Executive's accrued account balance. The allowable
distribution shall be payable in a method determined by the Bank as
soon as possible after approval of such distribution.
An Executive who has commenced receiving benefits under the Plan may
request acceleration of such payments in the event of an Unforeseeable
Emergency. The Bank may permit accelerated payments to the extent such
accelerated payment does not exceed the amount necessary to meet the
emergency.
An "Unforeseeable Emergency" means a severe financial hardship to the
Executive resulting from a sudden and unexpected illness or accident of
the Executive or of a dependent of the Executive, loss of the
Executive's property due to casualty, or other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond
the control of the Executive. The circumstances that constitute an
"Unforeseeable Emergency" would depend upon the facts of each case,
but, in any case, payment may not be made in the event that such
hardship is or may be relieved (1) through reimbursement or
compensation by insurance or otherwise, or (2) liquidation of the
Executive's assets, to the extent that liquidation of such assets would
not itself cause severe financial hardship. The need to send a
Participant's child to college or the desire to purchase a home shall
not be construed as an Unforeseeable Emergency.
6. The Installment payments to be made to the Executive under paragraphs 5(a)
and 5(c) shall commence on the first day of the month next following the
date of the termination of his employment. The installment payments to be
made to the designated beneficiary under the provisions of paragraph 5
shall commence on a date to be selected by the Bank but within six months
from the date of death of the Executive.
3
Notwithstanding anything herein contained to the contrary, the Board shall
have the right in its sole discretion to vary or adjust the manner and
timing of installment distributions provided in this paragraph and may make
such distributions in lump sums or over a shorter or longer period of time
than 10 years as it may find appropriate, so long as such variation or
adjustment does not impose a hardship upon the Executive or his designated
beneficiary.
7. Nothing contained in this Agreement and no action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust
of any kind, or a fiduciary relationship between the Bank and the
Executive, his designated beneficiary or any other person. Any funds which
may be invested under the provisions of this Agreement shall continue for
all purposes to be a part of the general funds of the Bank and no person
other than the Bank shall by virtue of the provisions of this Agreement
have any interest in such funds. To the extent that any person acquires a
right to receive payments from the Bank under this agreement, such right
shall be no greater than the right of any unsecured general creditor of the
Bank.
8. Notwithstanding anything herein contained to the contrary, no payment of
any unpaid installments of deferred compensation shall be made and all
rights under the Agreement of the Executive, his designated beneficiary,
executors of administrators, or any other person, to receive payments
thereof shall be forfeited if the Executive shall engage in any activity or
conduct which is illegal or, in the opinion of the Board, is inimical to
the best interests of the Bank.
9. The right of the Executive or any other person to the payment of deferred
compensation or other benefits under this Agreement shall not be assigned,
transferred, pledged or encumbered except by will or by the laws of descent
and distribution.
10. If the Board shall find that any person to whom any payment is payable
under this Agreement is unable to care for his affairs because of illness
or accident, or is a minor, any payment due (unless a prior claim therefor
shall have been made by a duly appointed guardian, committee or other legal
representative) may be paid to the spouse, a child, a parent, or a brother
or sister, or to any person deemed by the Board to have incurred expense
for such person otherwise entitled to payment, in such manner and
proportions as the Board may determine. Any such payment shall be a
complete discharge of the liabilities of the Bank under this agreement.
11. Nothing contained herein shall be construed as conferring upon the
Executive the right to continue in the employ
of the Bank as an executive or in any other capacity.
12. Any deferred compensation payable under this Agreement shall not be deemed
salary or other compensation to the Executive for the purpose of computing
benefits to which he may be entitled under any pension plan or other
arrangement of the Bank for the benefit of its employees.
13. The Board shall have full power and authority to interpret, construe, and
administer this Agreement and the Board's interpretations and construction
thereof, and actions thereunder, including any valuation of the Account, or
the amount or recipient of the payment to be made therefrom, shall be
4
binding and conclusive on all persons for all purposes. No member of the
Board shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of this Agreement
unless attributable to his own willful misconduct or lack of good faith.
14. This agreement shall be binding upon and inure to the benefit of the Bank,
its successors and assigns, and the Executive and his heirs, executors,
administrators, and legal representatives.
15. This Agreement shall be construed in accordance with and governed by the
law of the State of New Jersey.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its
duly authorized officers and Executive has hereunto set his hand and seal as of
the date first above written.
SOMERSET VALLEY BANK
By /s/▇▇▇▇ ▇. Kitchen
------------------
▇▇▇▇ ▇. Kitchen
Chairman
ATTEST:
/s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Assistant Secretary
/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
5
Somerset Valley Bank Deferred Compensation Plan
SOMERSET VALLEY BANK
Deferred Compensation Plan
THIS AGREEMENT made this first day of January 1, 2000 by and between SOMERSET
VALLEY BANK, with its principal offices located at ▇▇-▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (herein referred to as the "Bank"),
and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ residing at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ (herein referred to as the "Executive").
WITNESSETH THAT:
In consideration of the agreements hereinafter contained the parties hereto
agree as follows:
1. The Bank agrees to employ the Executive and the Executive agrees to serve
the Bank in such capacity as the Board of Directors of the Bank (the
"Board") may designate from time to time, beginning from the date of this
agreement and continuing until terminated by either party on at least 90
days prior written notice to the other.
2. During the term of his employment, the Executive shall devote all of his
time, attention skill and efforts to the performance of his duties for the
Bank.
3. The Bank shall pay the Executive, during the term of his employment
hereunder, such salary payable monthly as the Board may from time to time
determine, together with deferred compensation payable as provided in
paragraph 5 below, unless forfeited by the occurrence of any of the events
of forfeiture specified in paragraph 7, below.
4. (a) The Bank shall credit to a book reserve to a Deferred Compensation
Account (the "Account") established for this purpose, $6,700 on the
last day of December, 1999, and on the last day of December each year
thereafter continuing until the Executive's retirement. "Retirement"
shall be defined as age sixty-five (65), of which the Board may adjust
annually as it sees fit. A change in the age of retirement shall not be
effective until the calendar year following such change.
(b) Any such funds so credited to the Account may be kept in cash or
invested and reinvested in mutual funds, stocks, bonds, securities or
any other assets as may be selected by the Board in its discretion. In
the exercise of the foregoing discretionary investment powers, the
Board may engage investment counsel and, if it so desires, may delegate
to such counsel full or limited authority to select the assets in which
the funds are to be invested.
(c) The Bank agrees to credit a fixed rate of interest equal to 7%,
compounded at least monthly, to the Executive's Account. Such interest
rate may be adjusted annually as the Board shall determine.
Regardless of any provision contained herein, the Account shall equal
the greater of the accrued balance including principal deposits and
interest credited thereto or $100,000.
(d) Title to and beneficial ownership of any assets, whether cash or
investments which the Bank may earmark to pay the contingent deferred
compensation hereunder, shall at all times remain in the Bank and the
Executive and his designated beneficiary shall not have any property
interest whatsoever in any specific assets of the Bank.
5. The benefits to be paid as deferred compensation (unless they are forfeited
by the occurrence of any of the events of forfeiture specified in paragraph
7, below) are as follows:
TERMINATION PRIOR TO RETIREMENT
(a) If the Executive's employment hereunder is terminated for any reason
other than death and disability before the Executive shall have reached
retirement, then the Executive shall receive the Account in 10 annual
installments, said installments to be adjusted annually in accordance
with paragraph 5(b). Notwithstanding the foregoing, if before reaching
retirement the Executive should die, or if before reaching retirement
the Executive should become disabled, then payments shall be made in
the same manner and to the same extent as set forth in paragraph 5(e)
and 5(f), respectively.
RETIREMENT
(b) In the calendar year prior to reaching retirement, the Executive shall
have the option either to receive the full value of the Account in one
lump sum or to receive the Account in 10 annual installments in an
amount equal to the fair market value of the assets in the Account as
of such date. If the Executive fails to make a timely election, he will
receive the Account in 10 annual installments in accordance with the
provisions contained herein.
Notwithstanding anything to the contrary, if the Executive chooses to
receive annual payments the total amount payable to the Executive shall
be appropriately increased or decreased as the case may be, but not
more than semi-annually, to reflect the appreciation or depreciation in
value and the net income or loss on the funds which remain invested in
the Account.
DEATH OR DISABILITY
(c) If the Executive's employment is terminated because of disability or
death before any payments from the Account have been made, then the
Bank shall pay in one lump sum an amount equal to the fair market value
of the assets in the Account as of such date, to the Executive (in the
event of his disability) or his designated beneficiary (in the event of
his death).
If the Executive is receiving payments and should die before a total of
10 annual payments are made by the Bank, then the remaining value of
the Account shall be determined as of the date of the death and shall
be paid as promptly as possible in one lump sum to the Executive's then
designated beneficiary.
2
If the Executive is receiving payments and should become disabled
before a total of 10 annual payments are made by the Bank, then said
payments shall continue and be adjusted until all payments have been
made in accordance with paragraph 5(b).
The beneficiary referred to in this paragraph may be designated or
changed by the Executive (without the consent of any prior beneficiary)
on a form provided by the Bank and delivered to the Bank before his
death. If no such beneficiary shall have been designated, or if no
designated beneficiary shall survive the Executive, the lump sum
payable under paragraph 5(c) shall be payable to the Executive's
estate.
The Executive shall be deemed to have become disabled for purposes of
paragraph 5(c) if said Executive is deemed disabled under the Bank's
group long-term disability plan (if any) or if the Board shall find on
the basis of medical evidence satisfactory to the Board that the
Executive is totally disabled, mentally or physically, so as to be
prevented from engaging in further employment by the Bank and that such
disability will be permanent and continuous during the remainder of his
life.
UNFORESEEABLE EMERGENCY
(d) The Executive may request a distribution due to an Unforeseeable
Emergency by submitting a written request to the Bank accompanied by
evidence to demonstrate that the circumstances being experienced
qualify as an Unforeseeable Emergency. The Bank shall have the
authority to require such evidence as it deems necessary to determine
if a distribution is warranted. If an application for a hardship
distribution due to an Unforeseeable Emergency is approved, the
distribution shall be limited to both the amount sufficient to meet the
emergency and the Executive's accrued account balance. The allowable
distribution shall be payable in a method determined by the Bank as
soon as possible after approval of such distribution.
An Executive who has commenced receiving benefits under the Plan may
request acceleration of such payments in the event of an Unforeseeable
Emergency. The Bank may permit accelerated payments to the extent such
accelerated payment does not exceed the amount necessary to meet the
emergency.
An "Unforeseeable Emergency" means a severe financial hardship to the
Executive resulting from a sudden and unexpected illness or accident of
the Executive or of a dependent of the Executive, loss of the
Executive's property due to casualty, or other similar extraordinary
and unforeseeable circumstances arising as a result of events beyond
the control of the Executive. The circumstances that constitute an
"Unforeseeable Emergency" would depend upon the facts of each case,
but, in any case, payment may not be made in the event that such
hardship is or may be relieved (1) through reimbursement or
compensation by insurance or otherwise, or (2) liquidation of the
Executive's assets, to the extent that liquidation of such assets would
not itself cause severe financial hardship. The need to send a
Participant's child to college or the desire to purchase a home shall
not be construed as an Unforeseeable Emergency.
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6. The Installment payments to be made to the Executive under paragraphs 5(a)
and 5(c) shall commence on the first day of the month next following the
date of the termination of his employment. The installment payments to be
made to the designated beneficiary under the provisions of paragraph 5
shall commence on a date to be selected by the Bank but within six months
from the date of death of the Executive.
Notwithstanding anything herein contained to the contrary, the Board shall
have the right in its sole discretion to vary or adjust the manner and
timing of installment distributions provided in this paragraph and may make
such distributions in lump sums or over a shorter or longer period of time
than 10 years as it may find appropriate, so long as such variation or
adjustment does not impose a hardship upon the Executive or his designated
beneficiary.
7. Nothing contained in this Agreement and no action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust
of any kind, or a fiduciary relationship between the Bank and the
Executive, his designated beneficiary or any other person. Any funds which
may be invested under the provisions of this Agreement shall continue for
all purposes to be a part of the general funds of the Bank and no person
other than the Bank shall by virtue of the provisions of this Agreement
have any interest in such funds. To the extent that any person acquires a
right to receive payments from the Bank under this agreement, such right
shall be no greater than the right of any unsecured general creditor of the
Bank.
8. Notwithstanding anything herein contained to the contrary, no payment of
any unpaid installments of deferred compensation shall be made and all
rights under the Agreement of the Executive, his designated beneficiary,
executors of administrators, or any other person, to receive payments
thereof shall be forfeited if the Executive shall engage in any activity or
conduct which is illegal or, in the opinion of the Board, is inimical to
the best interests of the Bank.
9. The right of the Executive or any other person to the payment of deferred
compensation or other benefits under this Agreement shall not be assigned,
transferred, pledged or encumbered except by will or by the laws of descent
and distribution.
10. If the Board shall find that any person to whom any payment is payable
under this Agreement is unable to care for his affairs because of illness
or accident, or is a minor, any payment due (unless a prior claim therefor
shall have been made by a duly appointed guardian, committee or other legal
representative) may be paid to the spouse, a child, a parent, or a brother
or sister, or to any person deemed by the Board to have incurred expense
for such person otherwise entitled to payment, in such manner and
proportions as the Board may determine. Any such payment shall be a
complete discharge of the liabilities of the Bank under this agreement.
11. Nothing contained herein shall be construed as conferring upon the
Executive the right to continue in the employ of the Bank as an executive
or in any other capacity.
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12. Any deferred compensation payable under this Agreement shall not be deemed
salary or other compensation to the Executive for the purpose of computing
benefits to which he may be entitled under any pension plan or other
arrangement of the Bank for the benefit of its employees.
13. The Board shall have full power and authority to interpret, construe, and
administer this Agreement and the Board's interpretations and construction
thereof, and actions thereunder, including any valuation of the Account, or
the amount or recipient of the payment to be made therefrom, shall be
binding and conclusive on all persons for all purposes. No member of the
Board shall be liable to any person for any action taken or omitted in
connection with the interpretation and administration of this Agreement
unless attributable to his own willful misconduct or lack of good faith.
14. This agreement shall be binding upon and inure to the benefit of the Bank,
its successors and assigns, and the Executive and his heirs, executors,
administrators, and legal representatives.
15. This Agreement shall be construed in accordance with and governed by the
law of the State of New Jersey.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its
duly authorized officers and Executive has hereunto set his hand and seal as of
the date first above written.
SOMERSET VALLEY BANK
By /s/▇▇▇▇ ▇. Kitchen
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▇▇▇▇ ▇. Kitchen
Chairman
ATTEST:
/s/▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Assistant Secretary
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇