THE DIME BANK CHANGE IN CONTROL SEVERANCE AGREEMENT As Amended and Restated
THE DIME BANK
CHANGE IN CONTROL SEVERANCE AGREEMENT
As Amended and Restated
This Agreement is effective January 1, 2012 (“Effective Date”), and is entered into among The Dime Bank (the “Bank”), a Pennsylvania Banking Corporation, the principal offices for which are located at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (the “Bank”), Dimeco, Inc., a Bank Holding Company (the “Holding Company”) located at the same address, and Xxxxx Xxxxxxxxxx (“Executive”).
Now, therefore, the parties agree as follows:
This Agreement shall continue in effect for the thirty-six-month period beginning as of the Effective Date hereof, and may be extended by the Board of Directors of the Bank (the “Board”) for additional one-year terms as set forth below.
Commencing on second anniversary hereof, and continuing annually thereafter, the Board may extend the term of this Agreement for additional one-year periods. The Board will review the Agreement and the Executive’s performance annually beginning in advance of the second anniversary hereof for purposes of determining whether to extend the term, and will include the review and extension or non-extension in the minutes of the next-to-occur meeting of the Board.
3. Change in Control Followed by Termination of Employment.
Upon occurrence of a Change in Control of the Bank and/or Holding Company followed by termination of Executive’s employment within two years following the Change in Control, the provisions of Section 5 shall apply unless such termination is because of death, disability, retirement, Termination for Cause or the Executive’s voluntary resignation not covered by Good Reason (as defined below). The Executive must provide written notice to the Bank or the Holding Company of the existence of the event or condition constituting such Good Reason within ninety (90) days of the initial occurrence of the event or the condition alleged to constitute “Good Reason.” Upon delivery of such notice by the Executive, the Bank and the Holding Company shall have a period of thirty (30) days thereafter during which it or they may remedy in good faith the condition constituting such Good Reason, and the Executive’s employment shall continue in effect during such time so long as the Bank makes diligent efforts during such time to cure such Good Reason. In the event that the Bank or the Holding Company shall remedy in good faith the event or condition constituting Good Reason, then such notice of termination shall be null and void, and the Bank or the Holding Company shall not be required to pay the amount due to the Executive under this Section 5. The Bank’s or Holding Company’s remedy of any Good Reason event or condition with or without notice from the Executive shall not relieve the Bank or the Holding Company from any obligations to the Executive under this Agreement or otherwise and shall not affect the Executive's rights upon the reoccurrence of the same, or the occurrence of any other, Good Reason event or condition. The provisions of this Section shall survive the expiration of this Agreement occurring after a Change in Control.
“Good Reason” shall exist if, without Executive’s express written consent, the Bank or the Holding Company materially breaches any of their respective obligations under this Agreement. Without limitation, such a material breach shall be deemed to occur upon the occurrence any of the following:
(1) a material diminution in the Executive's base compensation;
(2) a material diminution in the Executive’s authority, duties, or responsibilities;
(3) a material diminution in the budget over which the Executive retains authority;
(4) a material change in the geographic location of the Executive’s office location; or
(5) any other action or inaction that constitutes a material breach by the Bank or the Holding Company of this Agreement.
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It is intended by the parties hereto that all payments provided in this Agreement shall be paid in cash or check from the general funds of the Bank. Further, the Holding Company guarantees such payment and provision of all amounts and benefits due hereunder to Executive.
8. Effect on Prior Agreements and Existing Benefit Plans.
This agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. Nothing in this Agreement shall confer upon Executive the right to continue in the employ of Bank or shall impose on the Bank any obligation to employ or retain Executive in its employ for any period.
(A) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.
(B) This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank, and their respective successors and assigns.
(A) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. (B) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
11. Required Regulatory Provisions.
(A) The Board of Directors may terminate Executive’s employment at any time, but any termination by the Board of Directors, other than Termination for Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause as defined in Section 4 above.
(B) 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) and any rules and regulations promulgated thereunder.
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12. Effect of Code Section 409A.
(a) This Agreement shall be amended to the extent necessary to comply with Section 409A of the Code and regulations promulgated thereunder. Prior to such amendment, and notwithstanding anything contained herein to the contrary, this Agreement shall be construed in a manner consistent with Section 409A of the Code and the parties shall take such actions as are required to comply in good faith with the provisions of Section 409A of the Code such that payments shall not be made to the Executive at such time if such payments shall subject the Executive to the penalty tax under Code Section 409A, but rather such payments shall be made by the Bank and the Holding Company to the Executive at the earliest time permissible thereafter without the Executive having liability for such penalty tax under Section Code 409A.
(b) Notwithstanding anything in this Agreement to the contrary, if the Bank or the Holding Company in good faith determines, as of the effective date of Executive’s Termination of Employment that the Executive is a “specified employee” within the meaning of Section 409A of the Code and if the payment under Section 5 does not qualify as a short-term deferral under Code Section 409A and Treas. Reg. §1.409A-1(b)(4) (or any similar or successor provisions), and that an amount (or any portion of an amount) payable to Executive hereunder, is required to be suspended or delayed for six months in order to satisfy the requirements of Section 409A of the Code, then the Bank and the Holding Company will so advise Executive, and any such payment (or the minimum amount thereof) shall be suspended and accrued for six months (“Six-Month Delay”), whereupon such amount or portion thereof shall be paid to Executive in a lump sum on the first day of the seventh month following the effective date of Executive’s Termination of Employment. The limitations of this Six-Month Delay shall only be effective if the stock of the Holding Company or a parent corporation is publicly traded as set forth at Section 409A(a)(2)(B)(i) of the Code.
"Specified Employee" means, for an applicable twelve (12) month period beginning on April 1, a key employee (as described in Code Section 416(i), determined without regard to paragraph (5) thereof) during the calendar year ending on the December 31 immediately preceding such April 1.
"Termination of Employment" shall have the same meaning as "separation from service", as that phrase is defined in Section 409A of the Code (taking into account all rules and presumptions provided for in the Section 409A regulations). No separation from service is deemed to occur due to military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Executive’s right to reemployment is provided by law or contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Executive will return to perform services for the Bank and the Holding Company. If the period of leave exceeds six months and the Executive does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Executive to be unable to perform the duties of his position of employment or any substantially similar position of employment, a 29-month period of absence may be substituted for such six-month period.
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Whether a “Termination of Employment” takes place is determined based on whether the facts and circumstances indicate that the Bank and the Holding Company and Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Bank and the Holding Company if the Executive has been providing services to the Bank and the Holding Company less than 36 months). Facts and circumstances to be considered in making this determination include, but are not limited to, whether the Executive continues to be treated as an employee for other purposes (such as continuation of salary and participation in employee benefit programs), whether similarly situated service providers have been treated consistently, and whether the Executive is permitted, and realistically available, to perform services for other service recipients in the same line of business. The Executive is presumed to have separated from service where the level of bona fide services performed decreases to a level equal to 20 percent or less of the average level of services performed by the Executive during the immediately preceding 36-month period. The Executive will be presumed not to have separated from service where the level of bona fide services performed continues at a level that is a 50 percent or more of the average level of service performed by the Executive during the immediately preceding 36-month period. No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20 percent and less than 50 percent of the average level of bona fide services performed during the immediately preceding 36-month period. The presumption is rebuttable by demonstrating that the Bank and the Holding Company and the Executive reasonably anticipated that as of a certain date the level of bona fide services would be reduced permanently to a level less than or equal to 20 percent of the average level of bona fide services provided during the immediately preceding 36-month period or full period of services provided to the Bank and the Holding Company if the Executive has been providing services to the Bank and the Holding Company for a period of less than 36 months (or that the level of bona fide services would not be so reduced).
For periods during which the Executive is on a paid bona fide leave of absence and has not otherwise terminated employment, the Executive is treated as providing bona fide services at a level equal to the level of services that the Executive would have been required to perform to receive the compensation paid with respect to such leave of absence. Periods during which the Executive is on an unpaid bona fide leave of absence and has not otherwise terminated employment are disregarded for purposes of determining the applicable 36-month (or shorter) period).
(c) Notwithstanding the Six-Month Delay rule set forth in Section 12(b) above:
(i) To the maximum extent permitted under Code Section 409A and Treas. Reg. §1.409A-1(b)(9)(iii) (or any similar or successor provisions), the Bank and the Holding Company will pay the Executive an amount equal to the lesser of two times (1) the maximum amount that may be taken into account under a qualified plan pursuant to Code Section 401(a)(17) for the year in which the Executive’s Termination of Employment occurs, and (2) the sum of the Executive’s annualized compensation based upon the annual rate of pay for services provided to the Bank and the Holding Company for the taxable year of the Executive preceding the taxable year of the Executive in which his Termination of Employment occurs (adjusted for any increase during that year that was expected to continue indefinitely if the Executive had not had a Termination of Employment); provided that amounts paid under this Section 12(c) must be paid no later than the last day of the second taxable year of the Executive following the taxable year of the Executive in which occurs the Termination of Employment and such amounts paid will count toward, and will not be in addition to, the total payment amount required to be made to the Executive by the Bank and the Holding Company under Section 5; and
(ii) To the maximum extent permitted under Code Section 409A and Treas. Reg. §1.409A-1(b)(9)(v)(D) (or any similar or successor provisions), within ten (10) days of the Termination of Employment, the Bank will pay the Executive an amount equal to the applicable dollar amount under Code Section 402(g)(1)(B) for the year of the Executive’s Termination of Employment; provided that the amount paid under this Section 12(c) will count toward, and will not be in addition to, the total payment amount required to be made to the Executive by the Bank and the Holding Company under Section 5.
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(d) To the extent that any reimbursements or in-kind payments are subject to Code Section 409A, then such expenses (other than medical expenses) must be incurred before the last day of the second taxable year following the taxable year in which the termination occurred, provided that any reimbursement for such expenses be paid before the Executive’s third taxable year following the taxable year in which the termination occurred. For medical expenses, to the extent the Agreement entitles the Executive to reimbursement by the Bank and the Holding Company of payments of medical expenses incurred and paid by the Executive but not reimbursed by a person other than the Bank and the Holding Company and allowable as a deduction under Code Section 213 (disregarding the requirement of Code Section 213(a) that the deduction is available only to the extent that such expenses exceed 7.5 percent of adjusted gross income), then the reimbursement applies during the period of time during which the Executive would be entitled (or would, but for the Agreement, be entitled) to continuation coverage under a group health plan of the Bank and the Holding Company under Code Section 4980B (COBRA) if the Executive elected such coverage and paid the applicable premiums.
If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.
14. Headings for Reference Only.
The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.
The validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, but only to the extent not preempted by Federal law.
Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by Executive within fifty (50) miles from the location of the Bank’s main office, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.
17. Payment of Costs and Legal Fees.
All reasonable costs and legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank (which payments are guaranteed by the Holding Company pursuant to Section 7 hereof) if Executive is successful pursuant to a legal judgment, arbitration or settlement.
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(A) The Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense and shall indemnify Executive (and his heirs, executors and administrators) to the fullest extent permitted under the Bank’s Articles of Incorporation and Bylaws and applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of him having been a director or officer of the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees and the cost of reasonable settlements. The provisions of this Section shall survive any termination or expiration of this Agreement.
The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank’s obligations under this Agreement. Accordingly, any reference herein to the Bank or the Holding Company whereby a performance obligation toward the Executive is created, such obligation shall apply to any such successor entity.
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20. Date Signed: January12, 2012
| ATTEST: | THE DIME BANK | |
| /s/ L. Xxxx Xxxxxx | /s/ Xxxxxxx X. Xxxxxxx | |
| L. Xxxx Xxxxxx, Vice President | Xxxxxxx X. Xxxxxxx | |
| Chairman of the Board | ||
| ATTEST: | DIMECO, INC. | |
| (Guarantor) | ||
| /s/ Xxxx X. Xxxxx | /s/ Xxxxxxx X. Xxxxxxx | |
| Xxxx X. Xxxxx, Secretary | Xxxxxxx X. Xxxxxxx | |
| Chairman of the Board | ||
| ATTEST: | FOR THE BOARD OF DIRECTORS | |
| /s/ L. Xxxx Xxxxxx | /s/ Xxxx X. Xxxxxxxxxx | |
| L. Xxxx Xxxxxx, Vice President | Xxxx X. Xxxxxxxxxx | |
| Chairman, Compensation Committee | ||
| WITNESS: | EXECUTIVE | |
| /s/ Xxxxxxx X. Xxxxxxx | /s/ Xxxxx Xxxxxxxxxx | |
| Xxxxxxx X. Xxxxxxx | Xxxxx Xxxxxxxxxx |
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