CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") entered into
this 26 th day of March 2002 ("Effective Date"), by and between Synergy Federal
Savings Bank (the "Savings Bank") and Xxxxx Xxxxxxxxx (the "Employee").
WHEREAS, the Employee is currently employed by the Savings Bank as
Senior Vice President and is experienced in certain phases of the business of
the Savings Bank; and
WHEREAS, the parties desire by this writing to set forth the rights and
responsibilities of the Savings Bank and Employee if the Savings Bank should
undergo a change in control (as defined hereinafter in the Agreement) after the
Effective Date.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed in the capacity as the Senior
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Vice President of the Savings Bank. The Employee's employment shall be for no
definite period of time and the Employee or the Bank may terminate such
employment relationship at any time for any reason or no reason. The employment
at-will relationship remains in full force and effect regardless of any
statements to the contrary made by company personnel or set forth in any
documents other than those explicitly made to the contrary and signed by the
President or the Chairman of the Bank. The Employee shall render such
administrative and management services to the Savings Bank and any parent
savings and loan holding company ("Parent") as are currently rendered and as are
customarily performed by persons situated in a similar executive capacity. The
Employee's other duties shall be such as the Board of Directors for the Savings
Bank (the "Board of Directors" or "Board") may from time to time reasonably
direct, including normal duties as an officer of the Savings Bank and the
Parent.
2. Term of Agreement. The term of this Agreement shall be for the
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period commencing on the Effective Date and ending thirty-six (36) months
thereafter ("Term"). Additionally, on, or before, each annual anniversary date
from the Effective Date, the Term of this Agreement may be extended for an
additional period beyond the then effective expiration date upon a determination
and resolution of the Board of Directors that the performance of the Employee
has met the requirements and standards of the Board, and that the Term of such
Agreement shall be extended. This Agreement shall be deemed terminated upon the
Employee's termination of employment with the Bank, absent a Change in Control
coincident or prior to such termination of employment.
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3. Termination of Employment in Connection with or Subsequent to
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a Change in Control.
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(a) Notwithstanding any provision herein to the contrary, in the event
of the involuntary termination of Employee's employment under this Agreement,
absent Just Cause, in connection with, or within twelve (12) months after, any
Change in Control of the Savings Bank or Parent, Employee shall be paid an
amount equal to the product of 2.999 times the Employee's "base amount" as
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended
(the "Code") and regulations promulgated thereunder. Additionally, the Employee
and his or her dependents shall remain eligible to participate in the medical
and dental insurance programs offered by the Bank to its employees for a period
of not less than eighteen months from the date of termination of employment.
Said sum shall be paid in one (1) lump sum not later than the date of such
termination of employment and such payments shall be in lieu of any other future
payments which the Employee would be otherwise entitled to receive.
Notwithstanding the forgoing, all sums payable hereunder shall be reduced in
such manner and to such extent so that no such payments made hereunder when
aggregated with all other payments to be made to the Employee by the Savings
Bank or the Parent shall be deemed an "excess parachute payment" in accordance
with Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")
and be subject to the excise tax provided at Section 4999(a) of the Code. The
term "Change in Control" shall refer to: (i) the sale of all, or substantially
all, of the assets of the Savings Bank or the Parent; (ii) the merger or
recapitalization of the Savings Bank or the Parent whereby the Savings Bank or
the Parent is not the surviving entity; (iii) a change in control of the Savings
Bank or the Parent, as otherwise defined or determined by the Office of Thrift
Supervision or regulations promulgated by it; or (iv) the acquisition, directly
or indirectly, of the beneficial ownership (within the meaning of that term as
it is used in Section 13(d) of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder) of twenty-five percent (25%) or more of
the outstanding voting securities of the Savings Bank or the Parent by any
person, trust, entity or group. The term "person" means an individual other than
the Employee, or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein. A Change in Control shall not
include a transaction whereby Synergy, MHC shall merge into the Parent or the
Bank and a new parent holding company of the Parent or the Bank is formed as
part of a capital raising transaction by the Parent or the Bank. The provisions
of this Section 3(a) shall survive the expiration of this Agreement occurring
after a Change in Control.
(b) Notwithstanding any other provision of this Agreement to the
contrary except as provided at Sections 4 and 5, Employee may voluntarily
terminate his employment under this Agreement within twelve (12) months
following a Change in Control of the Savings Bank or Parent, and upon the
occurrence, or within 180 days thereafter, of any of the following events, which
have not been consented to in advance by the Employee in writing: (i) if
Employee would be required to move his personal residence or perform his
principal executive functions more than thirty-five (35) miles from the
Employee's primary office as of the signing of this Agreement; (ii) if in the
organizational structure of the Savings Bank or Parent, Employee would be
required to report to a person or persons other than the Board of the Savings
Bank or its President; (iii) if the Savings Bank or Parent should fail to
maintain the Employee's base compensation in effect as of the date of the Change
in Control and existing
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employee benefits plans, including material fringe benefit, stock option and
retirement plans, except to the extent that such reduction in benefit programs
is part of an overall adjustment in benefits for all employees of the Savings
Bank or Parent and does not disproportionately adversely impact the Employee;
(iv) if Employee would be assigned duties and responsibilities other than those
normally associated with his position as referenced at Section 1, herein; or (v)
if Employee's responsibilities or authority have in any way been materially
diminished or reduced. Upon such voluntary termination of employment by the
Executive in accordance with this subsection, Executive shall thereupon be
entitled to receive the payments described in Section 3(a) of this Agreement.
The provisions of this Section 3(b) shall survive the expiration of this
Agreement occurring after a Change in Control.
4. Other Changes in Employment Status.
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Except as provided for at Section 3, herein, the Board of Directors may
terminate the Employee's employment at any time with or without Just Cause
within its sole discretion. This Agreement shall not be deemed to give Employee
any right to be retained in the employment or service of the Bank, or to
interfere with the right of the Bank to terminate the employment of the Employee
at any time. The Employee shall have no right to receive compensation or other
benefits for any period after termination with or without Just Cause.
Termination for "Just Cause" shall include termination because of the Employee's
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of the Agreement.
5. Regulatory Exclusions.
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(a) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Savings Bank's affairs by an order issued
under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Savings Bank under
this Agreement shall terminate, as of the effective date of the order, but the
vested rights of the contracting parties shall not be affected.
(b) If the Savings Bank is in default (as defined in Section 3(x)(1) of
FDIA) all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the
contracting parties.
(c) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary for the
continued operation of the Savings Bank: (i) by the Director of the Office of
Thrift Supervision ("Director of OTS"), or his or her designee, at the time that
the Federal Deposit Insurance Corporation ("FDIC") enters into an agreement to
provide assistance to or on behalf of the Savings Bank under the authority
contained in Section 13(c) of FDIA; or (ii) by the Director of the OTS, or his
or her designee, at the time that the Director of the OTS, or his or her
designee approves a supervisory merger to resolve problems related to operation
of the Savings Bank or when the Savings Bank is determined by the Director of
the OTS to be in an unsafe or
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unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(d) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Savings Bank's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)),
the Savings Bank's obligations under the Agreement shall be suspended as of the
date of service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Savings Bank may within its discretion (i) pay the
Employee all or part of the compensation withheld while its contract obligations
were suspended and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.
(e) Notwithstanding anything herein to the contrary, any payments made
to the Employee pursuant to the Agreement, or otherwise, shall be subject to and
conditioned upon compliance with 12 USC ss.1828(k) and any regulations
promulgated thereunder.
6. Successors and Assigns.
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(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Savings Bank which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Savings Bank or Parent.
(b) The Employee shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of the
Savings Bank.
7. Amendments. No amendments or additions to this Agreement shall be
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binding upon the parties hereto unless made in writing and signed by both
parties, except as herein otherwise specifically provided.
8. Applicable Law. This agreement shall be governed by all respects
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whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of New Jersey, except to the extent that Federal law shall be
deemed to apply.
9. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
10. Arbitration. Any controversy or claim arising out of or relating to
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this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in accordance with the rules then in effect of the district office
of the American Arbitration Association ("AAA") nearest to the home office of
the Bank, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof, except to the extent that the parties may otherwise
reach a mutual settlement of such issue. Further, the settlement of the dispute
to be approved by the Board of the Bank may
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include a provision for the reimbursement by the Bank to the Employee for all
reasonable costs and expenses, including reasonable attorneys' fees, arising
from such dispute, proceedings or actions, or the Board of the Bank or the
Parent may authorize such reimbursement of such reasonable costs and expenses by
separate action upon a written action and determination of the Board following
settlement of the dispute. Such reimbursement shall be paid within ten (10) days
of Employee furnishing to the Bank or Parent evidence, which may be in the form,
among other things, of a canceled check or receipt, of any costs or expenses
incurred by Employee. The provisions of this Section 10 shall survive the
expiration of this Agreement.
11. Confidential Information. The Employee acknowledges that during his
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or her employment he or she will learn and have access to confidential
information regarding the Savings Bank and the Parent and its customers and
businesses ("Confidential Information"). The Employee agrees and covenants not
to disclose or use for his or her own benefit, or the benefit of any other
person or entity, any such Confidential Information, unless or until the Savings
Bank or the Parent consents to such disclosure or use or such information
becomes common knowledge in the industry or is otherwise legally in the public
domain. The Employee shall not knowingly disclose or reveal to any unauthorized
person any Confidential Information relating to the Savings Bank, the Parent, or
any subsidiaries or affiliates, or to any of the businesses operated by them,
and the Employee confirms that such information constitutes the exclusive
property of the Savings Bank and the Parent. The Employee shall not otherwise
knowingly act or conduct himself (a) to the material detriment of the Savings
Bank or the Parent, or its subsidiaries, or affiliates, or (b) in a manner which
is inimical or contrary to the interests of the Savings Bank or the Parent.
Employee acknowledges and agrees that the existence of this Agreement and its
terms and conditions constitutes Confidential Information of the Savings Bank,
and the Employee agrees not to disclose the Agreement or its contents without
the prior written consent of the Savings Bank. Notwithstanding the foregoing,
the Savings Bank reserves the right in its sole discretion to make disclosure of
this Agreement as it deems necessary or appropriate in compliance with its
regulatory reporting requirements. Notwithstanding anything herein to the
contrary, failure by the Employee to comply with the provisions of this Section
may result in the immediate termination of the Agreement within the sole
discretion of the Savings Bank, disciplinary action against the Employee taken
by the Savings Bank, including but not limited to the termination of employment
of the Employee for breach of the Agreement and the provisions of this Section,
and other remedies that may be available in law or in equity.
12. Entire Agreement. This Agreement together with any understanding or
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and first hereinabove written.
Synergy Federal Saving Bank
ATTEST: /s/Xxxxx X. Xxxxxxx By: /s/Xxxx X. Xxxxx
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Xxxxx X. Xxxxxxx Xxxx X. Xxxxx
Assistant Secretary President and Chief Executive Officer
Secretary
WITNESS: /s/Xxxxx X. Xxxxxxx By: /s/Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxx Xxxxx X. Xxxxxxxxx (Employee)
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