[LETTERHEAD OF XXXXXX UNITED BANCORP]
March __, 2000
Xx. Xxxxx Xxxxxxxxx
c/x Xxxxxx United Bank
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxxxxxxx:
Xxxxxx United Bancorp, Xxxxxx United Bank and you are party to the attached
Change In Control, Severance and Employment Agreement dated August 16, 1999 (the
"Agreement"). As indicated in the Background section of the Agreement, one of
the reasons for entering into the Agreement was to cause you not to be
distracted by the personal uncertainties and risks created by any proposed
business combination with another entity. To further that goal, we wish to
clarify certain provisions of the Agreement to make certain that they reflect
unambiguously the original intent of the parties to the Agreement. While we view
these matters as clarifications of our existing understanding, we intend this
letter to have the force and effect of an amendment to the Agreement. Thus, if
and to the extent that the Agreement is inconsistent with this letter, we hereby
agree that the terms set forth in this letter shall be controlling.
We hereby clarify the Agreement (and if and to the extent that the Agreement is
inconsistent with the following, we hereby amend the Agreement) as follows:
A. Time of Change in Control: Section 1(b)(ii)(B) of the Agreement provides that
a Change in Control of Bancorp shall be deemed to occur:
forty-five (45) days prior to the date Bancorp enters
into a definitive agreement to merge, consolidate,
combine or sell the assets of Bancorp; provided however,
that for purposes of any resignation by the Executive,
the Change in Control shall not be deemed to occur until
the consummation of the merger, consolidation,
combination or sale, as the case may be, except if this
Agreement is not expressly assumed in writing by the
acquiring company, then the Change in Control shall be
deemed to occur the day before the consummation; and
further provided that if any definitive agreement to
merge, consolidate, combine or sell assets is terminated
without consummation of the acquisition, then no Change
in Control shall have been deemed to have occurred . . .
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
The concept of looking back 45 days prior to entry into a definitive
agreement was intended solely to assure the Executive that the Executive's
change in control protection would be available if the parties negotiating a
merger terminated the Executive's employment before executing the definitive
merger agreement. Thus, the 45 day "look-back" is to be used solely in
determining when the "Contract Period" begins under the Agreement. In the
context of the pending Xxxxxx-Dime merger (assuming it is consummated), the
"Contract Period" began 45 days prior to execution of the merger agreement, or
August 1, 1999. However, we also included language in this subparagraph to
assure that the Executive could not trigger Change in Control payments by
resigning before the merger was completed. Thus, in the context of the pending
Xxxxxx-Dime merger, if the Executive resigns before the merger is consummated,
the "Contract Period" would be deemed never to have begun, and the Executive
would not be entitled to payment under the Agreement.
B. Definition of Good Reason: "Good Reason" is defined in Section 1(e) of the
Agreement to include the following, if taken without Executive's express written
consent:
"(i) The assignment to Executive of any
duties inconsistent with, or the reduction of authority,
powers or responsibilities associated with, Executive's
position, title, duties, responsibilities and status
with the Company immediately prior to a Change in
Control; any removal of Executive from, or any failure
to re-elect Executive to, any position(s) or office(s)
Executive held immediately prior to such Change in
Control. A change in position, title, duties,
responsibilities and status or position(s) or office(s)
resulting from a Change in Control or from a merger or
consolidation of the Company into or with another bank
or company shall not meet the requirements of this
paragraph if, and only if, the Executive's new title,
duties and responsibilities are accepted in writing by
the Executive, in the sole discretion of the Executive."
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
The language, "A change . . . shall not meet the requirements of
this paragraph if, and only if the Executive's new title, duties and
responsibilities are accepted in writing by the Executive, in the sole
discretion of the Executive" was intended to assure that the Executive will have
complete and absolute discretion to waive (or not to waive) the Executive's
rights to claim "Good Reason" based upon a particular change, or set of changes,
in position, title, duties and/or responsibilities. Subject to paragraph C
below, no waiver is to occur, or be inferred, from any act of the Executive
other than delivery of a document, signed by the Executive, which specifically
states that the Executive accepts the Executive's new title, duties and
responsibilities for purposes of section 1(e) of the Agreement. Without delivery
of such a document, no continuation in the employ of the surviving corporation
or its subsidiaries following the merger, and no other document(s) signed by the
Executive of any sort (including without limitation any documents relating to,
or in the capacity of, the Executive's new position, title, duties and/or
responsibilities), will waive the right to claim Good Reason under paragraph
1(e) of the Agreement.
C. Resignation for Good Reason; Resignation After First 90 Days: Section 9(b) of
the Agreement provides that "For the first 90 days after a Change in Control,
the Executive may resign for Good Reason during the Contract Period upon prior
written notice to the Company." Section 9(c) of the Agreement provides that
"Commencing 90 calendar days after a Change in Control and continuing thereafter
during the Contract Period, the Executive may resign for any reason whatsoever
and need not specify the reason, upon four weeks written notice to the Company
and, for these purposes, the effective date of the resignation and not the date
of the notice must be 90 calendar days after the Change in Control."
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
The language, "For the first 90 days after a Change in Control,"
means, in the context of a merger, the first 90 days after consummation of the
merger. In the context of a merger, it is intended by Section 9(b) that the
Executive will have the absolute right to resign for Good Reason at any time
during the first 90 days following consummation of the merger and be paid in
full under Section 9(d) of the Agreement, so long as an event which constitutes
Good Reason has occurred and the Executive gives written notice prior to the
resignation. In the context of a merger, it is intended by Section 9(c) that the
Executive will have the absolute right to resign for any reason or for no reason
at all at any time during the Contract Period and be paid in full under Section
9(d) of the Agreement so long as the resignation is not to take effect during
the first 90 days following consummation of the merger and the Executive gives
written notice at least four weeks prior to the effective date of the
resignation. The language stating that the Executive may resign "for any reason
whatsoever and need not specify the reason" was intended to ensure the Executive
that her right to resign during the Contract Period and be paid out in full will
not be diminished or forfeited for any reason prior to the end of the Contract
Period, including without limitation the passage of time, or any action or
inaction by the Executive.
D. Cash Compensation: Section 4 of the Agreement provides, in part, as follows:
The Company shall pay to the Executive compensation for
her services during the Contract Period as follows:
a. Annual Salary. An annual salary equal to the annual
salary in effect as of the Change in Control. The annual
salary shall be payable in installments in accordance
with the Company's usual payroll method. The annual
salary shall not be reduced during the Contract Period.
b. Annual Bonus. An annual cash bonus equal to the
highest of the bonuses paid to the Executive for the
three fiscal years prior to the Change in Control. The
bonus shall be payable at the time and in the manner
which the Company paid such bonuses prior to the Change
in Control.
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
It is intended that the references to "Change in Control" in the
above-quoted language shall mean the consummation of the merger. The statement
that "annual salary shall not be reduced during the Contract Period" is intended
to mean that the Executive will be entitled to receive either the Executive's
salary as in effect at the time of the merger, or such greater salary as may
become effective during the Contract Period due to an increase in salary. Thus,
assuming that the Xxxxxx-Dime merger closes during calendar 2000:
o The Executive's post-merger Contract Period annual salary shall be
not less than the greater of (x) the Executive's salary in effect
just prior to the closing of the merger or (y) the highest annual
salary level received by the Executive during the post-merger
Contract Period.
o The Executive's post-merger annual cash bonus shall be not less than
the aggregate amount of cash bonuses paid to the Executive with
respect to either 1997, 1998, or 1999, whichever amount is highest.
E. Payments and Benefits: Section 9(d) of the Agreement provides as follows:
If the Company terminates the Executive's employment
during the Contract Period without Cause or if the
Executive resigns for Good Reason under paragraph 9(b)
or for any reason under paragraph 9(c), the Company
shall, . . . pay the Executive a lump sum (the "Lump
Sum") equal to 3.0 times the sum of (i) the annual
salary paid to the Executive immediately prior to the
Change in Control plus (ii) the highest annual incentive
bonus paid to the Executive for any fiscal year during
each of the three fiscal years immediately prior to the
Change in Control. . .
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
It is intended that the language, "immediately prior to the Change
in Control," as used in Section 9(d) and in the context of a merger such as the
Xxxxxx-Dime merger, means "immediately prior to the consummation of the merger."
F. Interpretation of Specific Events as "Good Reason": "Good Reason" is defined
in Section 1(e) of the Agreement to include the following, if taken without
Executive's express written consent:
"(i) The assignment to Executive of any
duties inconsistent with, or the reduction of authority,
powers or responsibilities associated with, Executive's
position, title, duties, responsibilities and status
with the Company immediately prior to a Change in
Control; any removal of Executive from, or any failure
to re-elect Executive to, any position(s) or office(s)
Executive held immediately prior to such Change in
Control. A change in position, title, duties,
responsibilities and status or position(s) or office(s)
resulting from a Change in Control or from a merger or
consolidation of the Company into or with another bank
or company shall not meet the requirements of this
paragraph if, and only if, the Executive's new title,
duties and responsibilities are accepted in writing by
the Executive, in the sole discretion of the Executive"
. . .
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
Exhibit A sets forth certain facts which we acknowledge and agree
have occurred prior to the date hereof. We further acknowledge and agree that
these facts constitute Good Reason under the language quoted above.
* * * * *
We trust that this letter satisfactorily clarifies issues of concern to you in
connection with the Agreement. Please countersign and deliver to us a copy of
this letter. Upon our mutual execution and delivery of this letter, this letter
shall be binding upon each of us, our successors and assigns as fully as if set
forth in the Agreement.
Very truly yours,
XXXXXX UNITED BANCORP
By: __________________________
Accepted and agreed to by the Executive
XXXXXX UNITED BANK as of the date set forth above:
By: _________________________ ________________________________
XXXXX XXXXXXXXX, individually
