EXHIBIT 10.7
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") entered into this
1st day of January, 2000 ("Effective Date"), by and between Third Federal
Savings Bank (the "Savings Bank") and Xxxx X. Xxxxxx (the "Employee").
WHEREAS, the Employee is currently employed by the Savings Bank as Senior
Vice President and Retail Banking Officer and is experienced in all 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 Vice
President and Retail Banking Officer of the Savings Bank. The Employee shall
render such administrative and management services to the Savings Bank and TF
Financial Corporation ("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 President or 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.
2. Term of Agreement. The term of this Agreement shall be for the period
commencing on the Effective Date and ending twenty-four (24) months thereafter.
Additionally, on, or before, each annual anniversary date from the Effective
Date, the term of this Agreement may be extended for an additional one year
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.
3. Termination of Employment in Connection with or Subsequent to a Change
in Control.
(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 twenty-four (24) months after,
any Change in Control of the Bank or Parent, Employee shall be paid an amount
equal to two (2) times the prior (3) calendar year (or lesser period if not
employed for such 3 year period) average annual compensation paid to the
Employee by the Bank (whether said amounts were received or deferred by the
Employee). In addition, Employee shall be reimbursed for the costs associated
with maintaining coverage under the Bank's medical and dental insurance
reimbursement plans similar to that in effect on the date of termination of
employment, or similar plans provided for by the Bank or its successor entity,
for a period of one year thereafter. Said sum shall be paid, at the option of
Employee,
either in one (1) lump sum as of such date of termination of employment, or in
periodic payments over the next 24 months, 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 Bank or the Parent shall be deemed an "excess parachute payment" in
accordance with Section 280G of the Internal Revenue Codes 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 mean: (i) the sale of all, or a
material portion, of the assets of the Bank or the Parent; (ii) the merger or
recapitalization of the Bank or the Parent whereby the Bank or the Parent is not
the surviving entity; (iii) a change in control of the 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 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.
(b) Notwithstanding any other provision of this Agreement to the contrary
except as provided at Sections 4(b), 4(c), 4(d), 4(e) and 5, Employee may
voluntarily terminate his employment under this Agreement within twenty-four
(24) months following a Change in Control of the Bank or Parent, and Employee
shall thereupon be entitled to receive the payment and benefits described in
Section 3(a) of this Agreement, upon the occurrence, or within ninety (90) 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
fifty (50) miles from the Employee's primary office as of the signing of this
Agreement; (ii) if in the organizational structure of the Bank or Parent,
Employee would be required to report to a person or persons deemed to be at a
management level below the management level to which Employee was reporting to
prior to the Change in Control; (iii) if the 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 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 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, for a period of more than six months; or (v) if
Employee's responsibilities or authority have in any way been materially
diminished or reduced for a period of more than six months.
4. Other Changes in Employment Status.
(a) Except as provided for at Section 3, herein, the Board of Directors may
terminate the Employee's employment at any time, but any termination by the
Board of Directors other than termination for Just Cause, shall not prejudice
the Employee's right to compensation or other benefits under the Agreement. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for 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.
(b) 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 parties shall not be affected.
(c) 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.
(d) 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 unsound condition. Any rights of the parties that
have already vested, however, shall not be affected by such action.
(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.
5. Suspension of Employment. 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 shall, (i) pay the Employee all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate any of its obligations which were suspended.
6. Successors and Assigns.
(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.
(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
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 whether
as to validity, construction, capacity, performance or otherwise, by the laws of
the Commonwealth of Pennsylvania, except to the extent that Federal law shall be
deemed to apply.
9. Severability. The provisions of this Agreement shall be deemed 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
this Agreement, or the breach thereof, shall be settled 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 Savings 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. The Savings Bank shall incur the cost of all
fees and expenses associated with filing a request for arbitration with the AAA,
whether such filing is made on behalf of the Savings Bank or the Employee, and
the costs and administrative fees associated with employing the arbitrator and
related administrative expenses assessed by the AAA. Each party shall be
responsible for any fees incurred on its own behalf with respect to other
expenses, including attorneys' fees, arising from such dispute, proceedings or
actions.
11. Confidentiality.
(a) Employee agrees that, at all times hereafter, he will keep all
confidential and proprietary business and marketing strategies of Savings Bank
and any and all other information which he learned regarding the Savings Bank
during the course of his employment by Savings
Bank, in strictest confidence and will not disclose any part or aspect thereof
to anyone for any reason unless required by law to do so.
(b) All marketing and business materials, existing or prospective customer
lists or statements, seminar materials, drawings, designs, books, cards,
records, accounts, audio visual reports, slides, files, notes, memoranda, and
other papers, and any software, computer programs, or data base information or
any other information obtained from Savings Bank or connected with or arising
from any affairs of Savings Bank or his employment hereunder (the "Records"), in
the charge or possession or knowledge of Employee shall be and remain the
exclusive property of Savings Bank and shall not be used, transferred or
disclosed in any way by Employee except in the ordinary performance of
Employee's duties for Savings Bank while an employee of Savings Bank. Upon the
termination of Employee's employment, any and all Records of whatever kind and
in whatever form maintained, as well as all copies and reproductions thereof in
the possession or control of Employee shall be turned over and delivered by
Employee to Savings Bank without any hesitancy or delay.
12. Entire Agreement. This Agreement together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
