CHANGE IN CONTROL SEVERANCE AGREEMENT
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As Amended on December 31, 1998
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") entered into
this 1 st day of January, 1998 ("Effective Date"), by and between Third Federal
Savings Bank (the "Savings Bank") and Xxxx X. Xxxx, Xx. (the "Employee").
WHEREAS, the Employee is currently employed by the Savings Bank as a
Senior Vice President and Information Technology Systems Manager 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 a Senior
Vice President and Information Technology Systems Manager 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 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. Notwithstanding anything herein to the contrary,
the expiration date of this Agreement shall be as of December 31, 2000, except
as may be extended beyond that date by future action of the Board within its
sole discretion in accordance with this Agreement.
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
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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 three
(3) calendar year (or lesser period if not employed for such 3 year period)
average compensation paid to the Employee by the Bank (whether said amounts were
received or deferred by the Employee) and 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 for a period
of one year thereafter. Said sum shall be paid, at the option of Employee,
either in one (1) lump sum within thirty (30) days of such termination
discounted to the present value of such payment using as the discount rate the
"prime rate" as published in the Wall Street Journal Eastern Edition as of the
date of such payment minus 100 basis points, 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 execution of an agreement for the sale of all, or a material
portion, of the assets of the Bank or the Parent; (ii) the execution of an
agreement for a merger or recapitalization of the Bank or the Parent or any
merger or recapitalization 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 voluntary 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
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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.
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(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") or the Resolution Trust
Corporation 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
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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.
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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.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and date first hereinabove written.
THIRD FEDERAL SAVINGS BANK
ATTEST: By: /s/Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
President and CEO
WITNESS:
/s/Xxxxxxxxx Xxxxxxxx Xxxxx
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Xxxxxxxxx Xxxxxxxx Xxxxx
Secretary
WITNESS:
/s/Xxxx Xxxxx Xxxxxxxxxx /s/Xxxx X. Xxxx, Xx.
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Xxxx Xxxxx Xxxxxxxxxx Xxxx X. Xxxx, Xx.
Employee
