CITY NATIONAL BANCSHARES CORPORATION
CITY NATIONAL BANK OF NEW JERSEY
DIRECTOR RETIREMENT AGREEMENT
THIS AGREEMENT is made this 1st day of January, 1997 by and
among CITY NATIONAL BANK OF NEW JERSEY, a national banking association (the
"Company"), CITY NATIONAL BANCSHARES CORPORATION, a New Jersey corporation
("CNBC") and XXXXXXX X. XXXXXXXX (the "Director").
INTRODUCTION
To encourage the Director to remain a member of the Company's
Board of Directors, the Company is willing to provide director retirement
benefits to the Director. The Company will pay such retirement benefits from its
general assets and CNBC shall guarantee all of the Company's obligations
hereunder.
AGREEMENT
The Director and the Company agree as follows:
Article 1
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1"Change of Control" means an acquisition, after the date of this Agreement,
(other than directly from CNBC) by an individual, entity or group
(excluding the Company, CNBC or an employee benefit plan of the Company) of
30% or more of CNBC's outstanding voting common stock followed by (x)
termination of the Director's status as a member of the Company's Board of
Directors for any reason prior to such Director's then existing term or (y)
failure for whatever reason of such Director to be elected for an
immediately succeeding term upon the natural expiration of his then current
term.
1.1.2"Code" means the Internal Revenue Code of 1986, as amended. References to
a Code section shall be deemed to be to that section as it now exists and
to any successor provision. 1.1.3 "Early Retirement Date" means the
Director completing 5 Years of Service. 1.1.4 "Normal Retirement Date"
means the Director attaining age 65 and completing 5 Years of Service.
1.1.5"Termination of Service" means the Director's ceasing to be a member of
the Company's Board of Directors for any reason whatsoever.
1.1.6"Years of Service" means the total number of twelve-month periods during
which the Director serves as a member of the Company's Board of Directors.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. If the Director terminates service on or after
the Normal Retirement Date, the Company shall pay to the Director the
benefit described in this Section 2.1.
2.1.1Amount of Annual Benefit. The annual benefit under this Section 2.1 is 50%
of the aggregate amount of Director's fees paid to the Director during the
then last full fiscal year of the Company. The annual benefit is to be paid
each year for 10 years in accordance with Section 2.1.2 below.
2.1.2Payment of Benefit. The Company shall pay the aggregate benefit to the
Director (or his beneficiary pursuant to Section 3.2 hereof) in 120 equal
consecutive monthly installments on the first day of each month commencing
with the month following the Retirement Date and continuing for 119
additional months.
2.2 Early Retirement Benefit. If the Director terminates service after the
Early Retirement Date but before the Normal Retirement Date, the Company
shall pay to the Director the benefit described in this Section 2.2.
2.2.1Amount of Annual Benefit. The annual benefit under this Section 2.2 is the
benefit calculated under Section 2.1.1 as if the date of the Director's
Termination of Service was the Director's Normal Retirement Date, which
amount is then multiplied by the applicable percentage from the following
table based on the Director's Years of Service at Termination of Service:
--------------------------- -------------------------
Years of Applicable
Service Percentage
--------------------------- -------------------------
--------------------------- -------------------------
$5 < 7 20%
$ 7 < 8 40%
$8 < 9 60%
$ 9 < 10 80%
10 or more 100%
--------------------------- -------------------------
2.2.2Payment of Benefit. The Company shall pay the aggregate benefit to the
Director (or his beneficiary pursuant to Section 3.2 hereof) in 120 equal
consecutive monthly installments on the first day of each month commencing
with the month following the Director's Termination of Service and
continuing for 119 additional months.
2.3 Change of Control Benefit. Upon a Change of Control while the Director is
in the active service of the Company, the Company shall pay to the Director
the benefit described in this Section 2.3 in lieu of any other benefit
under this Agreement.
2.3.1Amount of Benefit. The benefit under this Section 2.3 is the present value
(computed with an annual discount rate of 4%) of a theoretical series of
120 equal monthly payments, with each payment equal to 1/12 of the annual
Normal Retirement Benefit described in Section 2.1 (computed as if the
Director's date of Termination of Service was the Director's Normal
Retirement Date), beginning with the month following the month in which the
Director's Normal Retirement Date would have actually occurred (assuming
continuous service as a director) and continuing for an additional 119
consecutive months.
2.4.2Payment of Benefit. The Company shall pay the aggregate benefit to the
Director in a lump sum within 30 days after the Change of Control.
Article 3
Death Benefits
3.1 Death During Active Service. If the Director dies while in the active
service of the Company, the Company shall pay to the Director's beneficiary
the benefit described in this Section 3.1.
3.1.1Amount of Benefit. The benefit under Section 3.1 is the greater of (x) the
normal retirement benefit accrued by the Company for the Director as of the
date of the Director's death or (y) the original projected retirement
benefit as shown on Schedule A hereto.
3.1.2Payment of Benefit. The Company shall pay the aggregate benefit to the
beneficiary in 120 equal consecutive monthly installments on the first day
of each month commencing with the month following the Director's death and
continuing for 119 additional months.
3.2 Death During Benefit Period. If the Director dies after benefit payments
have commenced under this Agreement but before receiving all such payments,
the Company shall pay the remaining benefits to the Director's beneficiary
at the same time and in the same amounts they would have been paid to the
Director had the Director survived.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Director shall designate a
beneficiary by filing a written designation with the Company. The Director may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Director and
accepted by the Company during the Director's lifetime. The Director's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Director, or if the Director names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Director dies without a valid
beneficiary designation, all payments shall be made to the Director's surviving
spouse, if any, and if none, to the Director's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Director's estate.
4.2 Facility of Payment. If a benefit is payable to a minor,
to a person declared incompetent, or to a person incapable of handling the
disposition of his or her property, the Company may pay such benefit to the
guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person. The Company may require proof of
incompetency, minority or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Company from all liability with respect to such benefit.
Article 5
General Limitations
Notwithstanding any provision of this Agreement to the
contrary, the Company shall not pay any benefit under this Agreement if the
Company terminates the Director's service within three months of the
non-appealable conviction of the Director of a felony criminal offense involving
or relating to the Company or CNBC.
Article 6
Claims and Review Procedures
6.1 Claims Procedure. The Company shall notify the Director or
the Director's beneficiary in writing, within ninety (90) days of his or her
written application for benefits, of his or her eligibility or noneligibility
for benefits under the Agreement. If the Company determines that the Director or
the Director's beneficiary is not eligible for benefits or full benefits, the
notice shall set forth (1) the specific reasons for such denial, (2) a specific
reference to the provisions of the Agreement on which the denial is based, (3) a
description of any additional information or material necessary for the claimant
to perfect his or her claim, and a description of why it is needed, and (4) an
explanation of the Agreement's claims review procedure and other appropriate
information as to the steps to be taken if the Director or the Director's
beneficiary wishes to have the claim reviewed. If the Company determines that
there are special circumstances requiring additional time to make a decision,
the Company shall notify the Director or the Director's beneficiary of the
special circumstances and the date by which a decision is expected to be made,
and may extend the time for up to an additional ninety-day period.
6.2 Review Procedure. If the Director or the Director's
beneficiary is determined by the Company not to be eligible for benefits, or if
the Director or the Director's beneficiary believes that he or she is entitled
to greater or different benefits, the Director or the Director's beneficiary
shall have the opportunity to have such claim reviewed by the Company by filing
a petition for review with the Company within sixty (60) days after receipt of
the notice issued by the Company. Said petition shall state the specific reasons
which the Director or the Director's beneficiary believes entitle him or her to
benefits or to greater or different benefits. Within sixty (60) days after
receipt by the Company of the petition, the Company shall afford the Director or
the Director's beneficiary (and counsel, if any) an opportunity to present his
or her position to the Company orally or in writing, and the Director or the
Director's beneficiary (or counsel) shall have the right to review the pertinent
documents. The Company shall notify the Director or the Director's beneficiary
of its decision in writing within the sixty-day period, stating specifically the
basis of its decision, written in a manner calculated to be understood by the
Director or the Director's beneficiary and the specific provisions of the
Agreement on which the decision is based. If, because of the need for a hearing,
the sixty-day period is not sufficient, the decision may be deferred for up to
another sixty-day period at the election of the Company, but notice of this
deferral shall be given to the Director or the Director's beneficiary.
Article 7
Amendments and Termination
Subject to the provisions of the next sentence, the Board of Directors
of the Company may amend or terminate this Agreement at any time prior to the
Director's Termination of Service by written notice to the Director; provided
that all benefits accrued by the Company as of the date of such termination or
amendment for payment of benefits hereunder shall be fully vested and shall be
payable in accordance with the terms hereof unless the Director consents
otherwise in writing. Notwithstanding the foregoing, at any time after the date
of this Agreement, there is an acquisition by an individual, entity or a group
(excluding the Company, CNBC or an employee benefit plan of the Company) of 30%
or more of CNBC's outstanding voting common stock, this Agreement may be amended
or terminated only by written agreement authorized by the Company's Board of
Directors and signed by the Company and the Director.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the
Director and the Company, and their beneficiaries, survivors, executors,
administrators and transferees.
8.2 No Guaranty of Service. This Agreement is not a contract
for services. It does not give the Director the right to remain a director of
the Company, nor does it interfere with the Shareholder's rights to replace the
Director. It also does not require the Director to remain a director nor
interfere with the Director's right to terminate service at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot
be sold, transferred, assigned, pledged, attached or encumbered in any manner.
8.4 Tax Withholding. The Company shall withhold any taxes that
are required to be withheld from the benefits provided under this Agreement.
8.5 Applicable Law. The Agreement and all rights hereunder
shall be governed by the laws of New Jersey, except to the extent preempted by
the laws of the United States of America.
8.6 Unfunded Arrangement. The Director and beneficiary are
general unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's life is
a general asset of the Company to which the Director and beneficiary have no
preferred or secured claim.
8.7 Guaranty. The Company's obligations under this Agreement
are hereby guaranteed, irrevocably and unconditionally by CNBC.
IN WITNESS WHEREOF, the Director and a duly authorized Company
officer have signed this Agreement.
DIRECTOR COMPANY:
CITY NATIONAL BANK OF NEW JERSEY
___________________________ By:_________________________________
XXXXXXX X. XXXXXXXX Name:
Title:
CITY NATIONAL BANCSHARES CORPORATION
By:
Name:
Title:
SCHEDULE A
CITY NATIONAL BANK OF NEW JERSEY
SUMMARY OF PROJECTED BENEFITS
SALARY CONTINUATION PLAN
Projected
15 year
Current Retirement Annual
Executive Age Age Payout
Xxxxxxx Xxxxxxxx 48 65 $ 5,951
Assumption:
Discount Rate: 7.50%
Compensation Inflator: 2.00%
CITY NATIONAL BANCSHARES CORPORATION
CITY NATIONAL BANK OF NEW JERSEY
(collectively, the "Bank")
SALARY CONTINUATION AGREEMENT
BENEFICIARY DESIGNATION
I designate the following as beneficiary of any death benefits under the Salary
Continuation Agreement:
Primary: ______________________________________________________________________
_______________________________________________________________________________
Contingent: ___________________________________________________________________
_______________________________________________________________________________
Note:To name a trust as beneficiary, please provide the name of the trustee and
the exact date of the trust agreement.
I understand that I may change these beneficiary designations by filing a new
written designation with the Bank. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.
Signature: ________________
Date: ____________________
Accepted by the Bank this _______ day of _________________, 199__.
CITY NATIONAL BANCSHARES CORPORATION CITY NATIONAL BANK OF NEW JERSEY
By: By:
Title: Title:
