Exhibit 10.7

 

STANDARD BANK, PaSB

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

FOR

TIMOTHY K. ZIMMERMAN

 

THIS SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT FOR TIMOTHY K. ZIMMERMAN (the
“Agreement”) is effective as of December 31, 2018, and is entered into by
Standard Bank, PaSB (the “Bank”) and Timothy K. Zimmerman (“Executive”).

 

WHEREAS, the Bank wishes to enter into this Agreement with the Executive in
order to provide additional retirement benefits to the Executive, who, as a
member of senior management, has contributed significantly to the success of the
Bank, and whose continued services are vital to the Bank’s continued growth and
success; and

 

WHEREAS, this Agreement is intended to be an unfunded, non-qualified deferred
compensation plan that complies with Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), and the regulations thereunder and is also
intended to be a “top hat” pension plan within the meaning of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”).

 

ARTICLE I

DEFINITIONS

 

When used herein, the following words and phrases shall have the meanings below
unless the context clearly indicates otherwise:

 

1.1“Account” means an account to which the Bank shall credit all contributions.
The Account shall be utilized solely as a device for the determination and
measurement of the amounts to be paid to Executive pursuant to the Agreement.
Executive’s Account shall not constitute or be treated as a trust fund of any
kind.

 

1.2“Account Balance” means the balance of Executive’s Account as of the
applicable distribution date.

 

1.3“Administrator” means the Compensation Committee of the Board of Directors
(“Committee”).

 

1.4“Bank” means Standard Bank, PaSB and any successor to its business and/or
assets which assumes and agrees to perform the duties and obligations under this
Agreement by operation of law or otherwise.

 

1.5“Beneficiary” means the person or persons designated by Executive as the
beneficiary to whom the deceased Executive’s benefits are payable. The
beneficiary designation shall be made on the form attached hereto as Exhibit A
and filed with the Administrator. If no Beneficiary is so designated, then the
Executive’s estate will be deemed the Beneficiary.

 

 

 

 

1.6“Benefit Eligibility Date” shall be the date on which Executive is entitled
to commencement of benefits under the Agreement.

 

(a)In the event benefits become payable under Section 2.4 on account of
Executive’s Separation from Service, the Benefit Eligibility Date shall be the
date of the Executive’s Separation from Service, subject to Section 1.6(d).

 

(b)In the event the Survivor’s Benefit becomes payable under Section 2.5 on
account of Executive’s death, the Benefit Eligibility Date shall be the first
business day of the first month following Executive’s death.

 

(c)In the event the Account Balance becomes payable pursuant to Section 2.7 on
account of Executive’s Separation from Service in connection with or within two
(2) years following a Change in Control, the Benefit Eligibility Date shall be
the date of the Executive’s Separation from Service, subject to Section 1.6(d).

 

(d)Notwithstanding anything in this Section 1.6 to the contrary, if Executive is
a Specified Employee of a publicly-traded company and the payment(s) are due to
Executive’s Separation from Service (other than due to death), then the Benefit
Eligibility Date shall be the first day of the seventh month following
Executive’s Separation from Service (if later than the date otherwise specified
as the Benefit Eligibility Date). For purposes of Code Section 409A, the
payments due hereunder shall be deemed a single payment.

 

1.7“Board of Directors” shall mean the Board of Directors of the Bank.

 

1.8“Cause” shall mean termination because of: (i) Executive’s personal
dishonesty, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, regulation (other than traffic violations or similar offenses), final
cease and desist order or material breach of any provision of this Agreement
which results in a material loss to the Bank, or (ii) Executive’s conviction of
a crime or act involving moral turpitude or a final judgment rendered against
Executive based upon actions of Executive which involve moral turpitude. For the
purposes of this definition, no act, or the failure to act, on Executive’s part
shall be “willful” unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interests
of the Bank or its affiliates.

 

1.9“Change in Control” shall mean any of the following events: (i) a change in
the ownership of Standard AVB Financial Corp. (the “Company”) or the Bank; (ii)
a change in the effective control of the Company or the Bank; or (iii) a change
in the ownership of a substantial portion of the assets of the Company or the
Bank, as described below:

 

(a)A change in ownership occurs on the date that any one person, or more than
one person acting as a group (as defined in Treasury Regulations section
1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Bank or the Company
that, together with stock held by such person or group, constitutes more than
50% of the total fair market value or total voting power of the stock of the
Bank or the Company.

 

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(b)A change in the effective control of the Company or Bank occurs on the date
that either (A) any one person, or more than one person acting as a group (as
defined in Treasury Regulations section 1.409A-3(i)(5)(vi)(B)) acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Company or the
Bank possessing 30% or more of the total voting power of the stock of the
Company or the Bank, or (B) a majority of the members of the Bank’s or the
Company’s Board of Directors is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of
the Bank’s or the Company’s Board of Directors prior to the date of the
appointment or election, provided that this subsection is inapplicable where a
majority shareholder of the corporation is another corporation.

 

(c)A change in the ownership of a substantial portion of the Bank’s or the
Company’s assets occurs on the date that any one person or more than one person
acting as a group (as defined in Treasury Regulations section
1.409A-3(i)(5)(vii)(C)) acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
assets from the Company or the Bank that have a total gross fair market value
equal to or more than 40% of the total gross fair market value of all of the
assets of the Company or the Bank. For purposes of this Agreement, “gross fair
market value” means the value of the assets of the Company or the Bank, or the
value of the assets being disposed of, without regard to any liabilities
associated with such assets.

 

(d)For all purposes hereunder, the definition of Change in Control shall be
construed to be consistent with the requirements of Treasury Regulations section
1.409A-3(i)(5), except to the extent that such regulations are superseded by
subsequent guidance.

 

1.10“Disability” means, with respect to Executive, that, in the good faith
determination of the Bank:

 

(a)Executive is unable to fulfill his employment responsibilities hereunder by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or last for a continuous period of not less than 12
months;

 

(b)Executive is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan covering
employees of the Bank.

 

1.11“Effective Date” of this Agreement shall be December 31, 2018.

 

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1.12“Executive” means Timothy K. Zimmerman, who has been selected and approved
by the Board of Directors to enter into the Agreement.

 

1.13“Payout Period” means the time frame during which benefits payable under the
Agreement shall be distributed, and all payments under this Agreement shall be
paid by lump sum within five (5) business days following the Executive’s Benefit
Eligibility Date specified in Section 1.6.

 

1.14“Separation from Service” (or “Separated from Service”) means Executive’s
death, retirement or other termination of employment with the Bank within the
meaning of Code Section 409A. No Separation from Service shall be deemed to
occur due to military leave, sick leave or other bona fide leave of absence if
the period of the leave does not exceed six months or, if longer, so long as
Executive’s right to reemployment is provided by law or contract. If the leave
exceeds six months and Executive’s right to reemployment is not provided by law
or by contract, then Executive shall have a Separation from Service on the first
date immediately following such six-month period.

 

Whether a Separation from Service has occurred is determined based on whether
the facts and circumstances indicate that the Bank and Executive reasonably
anticipated that no further services would be performed after a certain date or
that the level of bona fide services Executive would perform after that date
(whether as an employee or as an independent contractor) would permanently
decrease to less than 50% of the average level of bona fide services performed
over the immediately preceding 36 months (or the lesser period of time in which
Executive performed services for the Bank). The determination of whether
Executive has had a Separation from Service shall be made by applying the
presumptions set forth in the Treasury Regulations under Code Section 409A.

 

1.15“Specified Employee” means an individual who also satisfies the definition
of “key employee” as that term is defined in Code Section 416(i) (without regard
to paragraph (5) thereof).

 

1.16“Survivor’s Benefit” means the benefit payable to Executive’s Beneficiary
following his death in accordance with Section 2.5.

 

1.17“Vested Account Balance” means the portion of Executive’s Account Balance
that is vested in accordance with the Vesting Schedule.

 

1.18“Vesting Schedule” means the rate at which the Executive’s Account Balance
becomes vested and non-forfeitable. The Executive’s Account Balance shall become
vested as follows:

 

50% on January 1, 2020

100% on June 30, 2020

 

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Notwithstanding the foregoing, the Account Balance shall immediately become 100%
vested upon Executive’s death or Disability and upon a Separation from Service
in connection with or within two years following a Change in Control.

 

ARTICLE II

BENEFITS

 

2.1Account. The Bank shall maintain an Account for Executive to which it shall
credit all amounts allocated thereto in accordance with Section 2.2. Executive’s
Account shall be adjusted no less often than annually to reflect the credits
made to the Account. The adjustments shall be made as long any amount remains
credited to the Account. The amounts allocated and adjustments made shall
comprise the Account at any time.

 

2.2Annual Credits to Account. The Bank shall credit Executive’s Account as of
the last day of each calendar year, commencing as of December 31, 2018 (the
“Contribution Date”), in an amount equal to five percent (5.0%) of the
Executive’s base salary (as of the Contribution Date) and, in addition, the Bank
may make a discretionary contribution up to ten percent (10.0%) of the
Executive’s Base Salary, as determined by the Board of Directors in its sole
discretion, for a total maximum contribution of 15%. These annual contributions
shall only be made if Executive is employed with the Bank as of the Contribution
Date. If a Separation from Service occurs prior to a Contribution Date, the Bank
shall credit Executive's Account a pro-rated amount determined by dividing the
number of days during such year, measured from January 1 to December 31, prior
to termination of Executive's employment by 365. The Executive may not make any
contributions under this Agreement and the Bank may, but is not obligated to,
make additional discretionary contributions to Executive’s Account from time to
time.

 

2.3Interest Credits to Account. The Bank shall credit Executive’s Account with
interest on each Contribution Date at a rate equal to the average of the Moody’s
Aaa Corporate Bond Index over the prior one-year period (e.g., January 1 through
December 31).

 

2.4Benefit on Separation from Service. Upon Executive’s Separation from Service,
Executive shall be entitled to the Vested Account Balance. The benefit under
this Section 2.4 shall be payable in a single lump sum on the Benefit
Eligibility Date specified in Section 1.6(a).

 

2.5Survivor’s Benefit.

 

(a)If Executive dies prior to a Separation from Service, Executive’s Beneficiary
shall be entitled to the Account Balance, which became 100% vested upon the
Executive's death, payable in a single lump sum on the Benefit Eligibility Date
specified in Section 1.6(b).

 

(b)If Executive dies following a Separation from Service but prior to the
payment of the Account Balance, Executive’s Beneficiary shall be entitled to the
Account Balance payable in a single lump sum on the Benefit Eligibility Date
specified in Section 1.6(b).

 

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2.6Termination for Cause. Notwithstanding any other provision of this Agreement
to the contrary, if Executive is terminated for Cause, all benefits under this
Agreement shall be forfeited by Executive and Executive’s participation in the
Agreement shall become null and void.

 

2.7Benefit Payable on Separation from Service in Connection With or Two Years
Following a Change in Control. In the event of the Executive’s Separation from
Service (other than for Cause) in connection with or within two (2) years
following a Change in Control, the Executive's Account Balance shall be 100%
vested. The Executive shall be paid the Account Balance, plus a pro-rata
interest credit, as determined under Section 2.3, through the date of such
Separation from Service, commencing on the Benefit Eligibility Date specified in
Section 1.6(c) in a lump sum.

 

ARTICLE III

BENEFICIARY DESIGNATION

 

Executive shall make an initial designation of primary and secondary
Beneficiaries upon initial participation in the Agreement by completion of a
Beneficiary form substantially in the form attached as Exhibit A, and shall have
the right to change the designation, at any subsequent time. Any Beneficiary
designation shall become effective only when receipt thereof is acknowledged in
writing by the Administrator.

 

ARTICLE IV

EXECUTIVE’S RIGHT TO ASSETS,

ALIENABILITY AND ASSIGNMENT PROHIBITION

 

At no time shall Executive be deemed to have any lien, right, title or interest
in or to any specific investment or asset of the Bank. The rights of Executive,
any Beneficiary, or any other person claiming through Executive under this
Agreement, shall be solely those of an unsecured general creditor of the Bank.
Executive, the Beneficiary, or any other person claiming through Executive,
shall only have the right to receive from the Bank those payments so specified
under this Agreement. Neither Executive nor any Beneficiary under this Agreement
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
Executive or his Beneficiary, nor be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise.

 

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ARTICLE V

ERISA PROVISIONS

 

5.1Named Fiduciary and Administrator. The Bank shall be the “Named Fiduciary”
and the Committee shall be the Administrator of this Agreement. As
Administrator, the Committee shall be responsible for the management, control
and administration of the Agreement as established herein. The Committee may
delegate to others certain aspects of the management and operational
responsibilities of the Agreement, including the employment of advisors and the
delegation of ministerial duties to qualified individuals.

 

5.2Claims Procedure and Arbitration. In the event that benefits under this
Agreement is not paid to Executive (or to his Beneficiary in the case of
Executive’s death) and the claimant(s) feel he or they are entitled to receive
the benefits, then a written claim must be made to the Administrator within
sixty (60) days from the date payments are refused. The Administrator shall
review the written claim and, if the claim is denied, in whole or in part, it
shall provide in writing, within thirty (30) days of receipt of such claim, its
specific reasons for such denial, reference to the provisions of this Agreement
upon which the denial is based, and any additional material or information
necessary for such claimants to perfect the claim. The written notice by the
Administrator shall further indicate the additional steps which must be
undertaken by claimants if an additional review of the claim denial is desired.

 

If claimants desire a second review, they shall notify the Administrator in
writing within thirty (30) days of the first claim denial. Claimants may review
this Agreement or any documents relating thereto and submit any issues and
comments, in writing, they may feel appropriate. In its sole discretion, the
Administrator shall then review the second claim and provide a written decision
within thirty (30) days of receipt of such claim. This decision shall state the
specific reasons for the decision and shall include reference to specific
provisions of this Agreement upon which the decision is based.

 

No claimant shall institute any action or proceeding in any state or federal
court of law or equity or before any administrative tribunal or arbitrator for a
claim for benefits under the Agreement until the claimant has first exhausted
the provisions set forth in this Section 5.2.

 

ARTICLE VI

MISCELLANEOUS

 

6.1No Effect on Employment Rights. Nothing contained herein will confer upon
Executive the right to be retained in the service of the Bank nor limit the
right of the Bank to discharge or otherwise deal with Executive without regard
to the existence of this Agreement.

 

6.2State Law. This Agreement is established under, and will be construed
according to, the laws of the Commonwealth of Pennsylvania, to the extent such
laws are not preempted by ERISA and valid regulations published thereunder or
any other federal law.

 

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6.3Severability and Interpretation of Provisions. The Bank shall have full power
and authority to interpret, construe and administer this Agreement and the
Bank’s interpretation and construction thereof and actions thereunder shall be
binding and conclusive on all persons for all purposes. No employee or
representative of the Bank shall be liable to any person for any actions 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. In the event that any of the provisions of this Agreement or portion
hereof are held to be inoperative or invalid by any court of competent
jurisdiction, or in the event that any provision is found to violate Code
Section 409A and would subject Executive to additional taxes and interest on the
amounts deferred hereunder, or in the event that any legislation adopted by any
governmental body having jurisdiction over the Bank would be retroactively
applied to invalidate this Agreement or any provision hereof or cause the
benefits under this Agreement to be taxable, then: (1) insofar as is reasonable,
effect will be given to the intent manifested in the provisions held invalid or
inoperative, and (2) the validity and enforceability of the remaining provisions
will not be affected thereby. In the event that the intent of any provision
shall need to be construed in a manner to avoid taxability, this construction
shall be made by the Administrator in a manner that would manifest to the
maximum extent possible the original meaning of such provisions.

 

6.4Incapacity of Recipient. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his property, the Bank 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 Bank may require proof of incompetence, minority
or guardianship as it may deem appropriate prior to distribution of the benefit.
The distribution shall completely discharge the Bank for all liability with
respect to the benefit.

 

6.5Unclaimed Benefit. Executive shall keep the Bank informed of his or her
current address and the current address of his Beneficiaries. If the location of
Executive is not made known to the Bank, the Bank shall delay payment of
Executive’s benefit payment(s) until the location of Executive is made known to
the Bank; however, the Bank shall only be obligated to hold the benefit
payment(s) for Executive until the expiration of three (3) years. Upon
expiration of the three (3) year period, the Bank may discharge its obligation
by payment to Executive’s Beneficiary. If the location of Executive’s
Beneficiary is not known to the Bank, Executive and his Beneficiary(ies) shall
thereupon forfeit any rights to the balance, if any, of any benefits provided
for such Executive and/or Beneficiary under this Agreement.

 

6.6Limitations on Liability. Notwithstanding any of the preceding provisions of
the Agreement, no individual acting as an employee or agent of the Bank, or as a
member of the Board of Directors shall be personally liable to Executive or any
other person for any claim, loss, liability or expense incurred in connection
with the Agreement.

 

6.7Gender. Whenever in this Agreement 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.

 

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6.8Effect on Other Corporate Benefit Agreements. Nothing contained in this
Agreement shall affect the right of Executive to participate in or be covered by
any qualified or nonqualified pension, profit sharing, group, bonus or other
supplemental compensation or fringe benefit agreement constituting a part of the
Bank’s existing or future compensation structure.

 

6.9Inurement. This Agreement shall be binding upon and shall inure to the
benefit of the Bank, its successors and assigns, and Executive, his successors,
heirs, executors, administrators, and Beneficiaries.

 

6.10Headings. Headings and sub-headings in this Agreement are inserted for
reference and convenience only and shall not be deemed a part of this Agreement.

 

6.1112 U.S.C. §1828(k). Any payments made to Executive pursuant to this
Agreement or otherwise are subject to and conditioned upon compliance with 12
U.S.C. § 1828(k) or any regulations promulgated thereunder.

 

6.12Payment of Employment Taxes. Any distribution under this Agreement shall be
reduced by the amount of any taxes required to be withheld from the
distribution.

 

6.13Successors to the Bank. The Bank, as applicable, will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Bank to assume
expressly and agree to perform the duties and obligations under this Agreement
in the same manner and to the same extent as the Bank would be required to
perform it if no such succession had taken place.

 

6.14Legal Fees. In the event Executive retains legal counsel to enforce any of
the terms of the Agreement, the Bank will pay his legal fees and related
expenses reasonably incurred by him, but only if Executive prevails in an action
seeking legal and/or equitable relief against the Bank.

 

ARTICLE VII

AMENDMENT

 

7.1This Agreement may not be amended or modified, in whole or part, without the
mutual written consent of Executive and the Bank. Notwithstanding anything to
the contrary herein, the Agreement may be amended without Executive’s consent to
the extent necessary to comply with existing tax laws or changes to existing tax
laws.

 

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ARTICLE VIII

EXECUTION

 

8.1This Agreement sets forth the entire understanding of the Bank and Executive
with respect to the transactions contemplated hereby, and any previous
agreements or understandings between them regarding the subject matter hereof
are merged into and superseded by this Agreement.

 

8.2This Agreement shall be executed in duplicate, each copy of which, when so
executed and delivered, shall be an original, but both copies shall together
constitute one and the same instrument.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed, effective
as of the day and date first above written.

 

    STANDARD BANK, PaSB         /s/ Timothy K. Zimmerman   By: /s/ Terence L.
Graft TIMOTHY K. ZIMMERMAN                   Title: Chairman of the Board      
  March 12, 2019       Date   Date: March 12, 2019

 

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