CITY NATIONAL BANCSHARES CORPORATION
CITY NATIONAL BANK OF NEW JERSEY
SALARY CONTINUATION 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 Xxxxx X. Xxxxxxx (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the
Company, the Company is willing to provide continuation benefits to the
Executive. The Company will pay such continuation the benefits from its general
assets and CNBC shall guarantee the Company's obligations hereunder.
AGREEMENT
The Executive 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
within twelve (12) months by the Executive=s Termination of Employment for
reasons other than death, disability or retirement.
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 Executive attaining age 60.
1.1.4 "Normal Retirement Date" means the Executive attaining age 65.
1.1.5"Termination of Employment" means the Executive's ceasing to be employed
by the Company for any reason whatsoever, voluntary or involuntary, other
than by reason of an approved leave of absence.
1.1.6"Years of Service" means the total number of twelve-month periods during
which the Executive is employed on a full-time basis by the Company as an
officer or in an executive capacity, inclusive of any approved leaves of
absence.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. If the Executive terminates
employment on or after the Normal Retirement Date for reasons other than death,
the Company shall pay to the Executive the benefit described in this Section
2.1.
2.1.1Amount of Annual Benefit. The annual benefit under this Section 2.1 is 40%
of the annual base salary payable to the Executive during the last complete
fiscal year of the Company. The annual benefit is to be paid in accordance
with Section 2.1.2 below.
2.1.2Payment of Benefit. The Company shall pay the aggregate benefit to the
Executive in equal monthly installments with each installment equal to
1/12th of the annual benefit defined in Section 2.1.1 above, on the first
day of each month commencing with the month following Executive's
Termination of Employment on or after the Normal Retirement Date and
continuing until the later of the Executive's death or the expiration of
179 additional months.
2.2 Early Retirement Benefit. If the Executive terminates employment before the
Normal Retirement Date, and for reasons other than death, the Company shall
pay to the Executive the benefit described in this Section 2.2.
2.2.1Amount of Benefit. The annual benefit under this Section 2.2 is the
benefit calculated under Section 2.1.1 as if the date of the Executive's
Termination of Employment was the Executive's Normal Retirement Date, which
amount is then multiplied by a fraction, the numerator of which is the
Executive's actual Years of Service through the date of the Executive's
Termination of Employment and the denominator of which is the Years of
Service the Executive would have had had the date of Executive's
Termination of Employment coincided with his actual Normal Retirement Date.
2.2.2Payment of Benefit. The Company shall pay the aggregate benefit to the
Executive (or his beneficiary pursuant to Section 3.2 hereof) in 180 equal
consecutive monthly installments with each installment equal to 1/12th of
the annual benefit in Section 2.2.1 above, on the first day of each month
commencing with the month following the Executive's Early Retirement Date
and continuing for 179 additional months.
2.3 Change of Control Benefit. Upon a Change of Control while the Executive is
in the active service of the Company, the Company shall pay to the
Executive the benefit described in this Section 2.3 in lieu of any other
benefit under this Agreement.
2.3.1. Amount 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 180 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 Executive's Termination of Employment was the Executive's Normal
Retirement Date), beginning with the month following the month in which the
Executive would attain the age of 65 and continuing for an additional 179
consecutive months.
2.3.2Payment of Benefit. The Company shall pay the aggregate benefit to the
Executive in a lump sum within 30 days after the Change of Control.
Article 3
Death Benefits
3.1 Death During Active Service. If the Executive dies while in the active
service of the Company, the Company shall pay to the Executive'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 Executive as of
the date of the Executive'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 the amounts described under Section 2.1 in equal monthly
installments with each installment equal to 180th of the aggregate benefit
defined in Section 3.1.1 above, on the first day of each month commencing
with the month following the Executive's death and continuing for 179
additional months.
3.2 Death During Benefit Period. If the Executive dies after benefit payments
have commenced under this Agreement but before receiving all such payments,
the Company shall pay the remaining benefits to the Executive's beneficiary
at the same time and in the same amounts they would have been paid to the
Executive had the Executive survived except that for purposes of the normal
retirement benefit, payments shall be made, in accordance with the
provisions of Section 2.1.2, until the later of the Executive=s death or a
total of 180 monthly payments have been made.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a
beneficiary by filing a written designation with the Company. The Executive may
revoke or modify the designation at any time by filing a new designation.
However, designations will only be effective if signed by the Executive and
accepted by the Company during the Executive's lifetime. The Executive's
beneficiary designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as beneficiary and
the marriage is subsequently dissolved. If the Executive dies without a valid
beneficiary designation, all payments shall be made to the Executive's surviving
spouse, if any, and if none, to the Executive's surviving children and the
descendants of any deceased child by right of representation, and if no children
or descendants survive, to the Executive'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 Executive's employment within three months of the
non-appealable conviction of the Executive 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 Executive
or the Executive's beneficiary in writing, within thirty (30) 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 Executive
or the Executive'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 Executive or the
Executive'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 Executive or the Executive'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 Executive or the Executive's
beneficiary is determined by the Company not to be eligible for benefits, or if
the Executive or the Executive's beneficiary believes that he or she is entitled
to greater or different benefits, the Executive or the Executive'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 Executive or the Executive'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 Executive
or the Executive's beneficiary (and counsel, if any) an opportunity to present
his or her position to the Company orally or in writing, and the Executive or
the Executive's beneficiary (or counsel) shall have the right to review the
pertinent documents. The Company shall notify the Executive or the Executive'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 Executive or the Executive'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 Executive or the Executive's
beneficiary.
Article 7
Amendments and Termination
Subject to the provisions of the next sentence, this Agreement
may be amended or terminated only by a written agreement authorized by the Board
of Directors of the Company 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 Executive 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
Executive.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the
Executive and the Company, and their beneficiaries, survivors, executors,
administrators and transferees.
8.2 No Guaranty of Employment. This Agreement is not an
employment policy or contract. It does not give the Executive the right to
remain an employee of the Company, nor does it interfere with the Company's
right to discharge the Executive. It also does not require the Executive to
remain an employee nor interfere with the Executive's right to terminate
employment 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 Executive 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 Executive's life
is a general asset of the Company to which the Executive 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 Executive and a duly authorized
Company officer have signed this Agreement.
EXECUTIVE COMPANY:
CITY NATIONAL BANK OF NEW JERSEY
___________________________ By:_________________________________
Xxxxx X. Xxxxxxx 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
Xxxxx Xxxxxxx 53 65 $ 85,517
Assumption:
Discount Rate: 7.50%
Compensation Inflator: 5.00%
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:
