CHANGE OF CONTROL AGREEMENT
This is an Agreement (the "Agreement") made by and between
Xxxxx Bancorp, Inc. ("Company") and Xxxxx X. Xxxxx ("Executive").
RECITALS
Company is a bank holding company whose principal subsidiary is
engaged in the business of banking and businesses incidental
thereto.
Executive possesses unique skills, knowledge and experience
relating to the business of the Company.
Company desires to recognize the past and future services of
Executive, and, in that connection, Executive desires to be
assured that, in the event of a change in the control of Company,
Executive will be provided with an adequate severance payment
for termination without cause or as compensation for Executive's
Severance because of a material change in his duties and
functions.
Company desires to be assured of the objectivity of Executive in
evaluating a potential change of control and advising whether or
not a potential change of control is in the best interest of Company
and its shareholders.
Company desires to induce Executive to remain in the employee
of the Company following a change of control to provide for
continuity of management.
NOW, THEREFORE, in consideration of the premises and of their
mutual covenants expressed in this Agreement, the parties hereto
make the following agreement, intending to be legally bound thereby:
Section 1 - Definitions.
Exchange Act - "Exchange Act" means The Securities Exchange
Act of 1934.
Change in Control - "Change in Control" shall result if:
Any person or group (as such terms are used in connection with
Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13(d)(3) and 13(d)(5)
under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power
of the Company's then outstanding securities; or
Company is a party to a merger, consolidation, sale of assets or
other reorganization, or a proxy contest, as a consequence of
which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority
of the Board of Directors thereafter; or
During any period of 24 consecutive months, individuals who at
the beginning of such period constitute the Board of Directors
(including for this purpose any new director whose election or
nomination for election by the company's stockholders was
approved by a vote of a least two-thirds of the directors then still
in office who were directors at the beginning of such period)
cease for any reason to constitute at least a majority of the
Board of Directors.
Notwithstanding the foregoing, no Trust Department or designated
fiduciary or other trustee of such Trust Department of the Company
or a subsidiary of the Company, or other similar fiduciary capacity
of the Company with direct voting control of the stock shall be
included or considered. Further, no profit-sharing, employee stock
ownership, employee stock purchase and savings, employee
pension, or other employee benefit plan of the corporation or any
of its subsidiaries, and no Trustee of any such plan in its capacity
as such Trustee, shall be included or considered.
Code - "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
Company - "Company" shall include The Xxxxx County National
Bank of Wooster and any members of its Affiliated Group, over
which Executive has managerial control, as that term is defined
in Section 1504 of the Code, and shall include any predecessor
corporations of the Company and its Affiliated Group.
Board - "Board" shall mean the Board of Directors of Company.
Section 2 - Term of Agreement.
This Agreement shall be effective from the date of this Agreement
to until the Agreement Termination Date, which is the earliest of:
The tenth anniversary of the date of this Agreement;
The date this Agreement is mutually rescinded;
The date prior to a Change in Control on which the Executive's
employment with the Company is terminated by death, retirement,
disability, resignation, or dismissal for any reason;
The date Executive is terminated for Good Cause (as hereinafter
defined in Section 2C) after a Change in Control;
The date which is five (5) years after a Change in Control.
The date which Company, The Xxxxx County National Bank of
Wooster, or any other member of its Affiliated Group, and over
which Executive has managerial control, which is a depository
institution which is insured by an agency for any state or the
United States Federal Government:
becomes insolvent: or has appointed any conservator or receiver;
or is determined by an appropriate federal banking agency to be in
a troubled condition, as defined in the applicable law and
regulations governing the appropriate federal banking agency; or
is assigned a composite rating of 4 or 5 by the appropriate federal
banking agency or is informed in writing by the Federal Deposit
Insurance Corporation that it is rated a 4 or 5 under the Uniform
Financial Institution's Rating System of the Federal Financial
Institutions Examination Council; or has initiated against it by the
Federal Deposit Insurance Corporation a proceeding to terminate
or suspend deposit insurance; or
reasonably determines in good faith and with due care that the
payments called for under this Agreement, or the obligations and
promises assumed and made under this Agreement have become
proscribed under applicable law or regulations. Provided, however,
if such law or regulations apply prospectively only, or for some other
reason do not apply to this Agreement, then this Agreement shall
not be deemed by Company to be proscribed under this
Subsection (f).
This Agreement shall not change, alter or amend any rights which
either Company or Executive may have in respect of the termination
of the employment of Executive by Company prior to a Change in
Control. Nothing contained in this Agreement shall be construed
to create any additional right or obligation of Executive to be
employed by Company. If the employment of Executive by
Company is terminated by Company or by Executive, for any
reason whatsoever, prior to a Change in Control, Executive and
Company shall have only such rights and obligations in
respect of such termination as either of them would have had
if this Agreement had not been effected.
For purposes of this Agreement, the employment of Executive by
Company shall be deemed to have been terminated for good
cause only if such employment is terminated by Company by
reason of Executive's; (i) dishonest conduct materially detrimental
to Company; (ii) fraud with respect to the business or affairs of the
Company; (iii) conviction of a felony; (iv) alcohol or illegal drug
abuse; or (v) willful or material violation of any of the obligations
imposed upon Executive under this Agreement, any employment
contract between the Executive and the Company and any material
Company policy.
Section 3 - Reduction in Compensation Proscribed After a
Change in Control.
During the term of this Agreement as defined by Section 2 and after
the date of a Change in Control, Executive shall receive as
compensation, while still employed by Company, a salary at a rate
no less than that in effect as of the change in Control, and
shall in addition, be entitled to receive a bonus equal to at least
the average of the last three years bonuses paid. In addition,
during such period, the Company shall pay and provide for Executive
at no cost to Executive, all of his then-current fringe benefits,
including but not limited to health, disability, dental, life insurance
club memberships, etc., all of which shall be at levels and amounts
no less favorable than levels and amounts I n effect as of the Change
of Control.
Section 4 - Payment Upon Termination of Employment After a
Change in Control.
If during the term of this Agreement as defined by Section 2 and
after the date of a Change of Control, Executive is discharged
without good cause or Executive resigns because he has made
a reasonable, objective determination, in good faith and with due
care, that
Executive has been demoted;
The Company has materially reduced the compensation of
Executive;
The Company has altered Executive's principal place of
employment away from a location which would be greater than
thirty (30) miles from where Executive's place of employment
existed at the time of alteration, or
Company has materially reduced Executive's job title, status or
responsibility;
only then Company shall pay to Executive the benefits as provided
for in Subsection C below.
If Executive is discharged by Company other than for good cause
and there is a Change of Control within two years of the discharge
and during the term of this Agreement, then Company shall pay
to Executive the benefits as provided for in Subsection C below.
If Executive is entitled to benefits under Subsection A or
Subsection B above, then during the benefit period, Company
shall continue at no cost to Executive, Executive's coverage in
Company's health, disability, dental, life insurance and club
memberships at the same levels that had been provided
immediately prior to his termination of employment, and shall
also pay Executive a monthly payment in cash in the amount
defined in Subsection D below, without interest. The first monthly
cash payment shall be paid at the end of the first month
commencing after the Executive's termination of employment in
the case of a benefit entitlement under Subsection A above, and
at the end of the first month commencing after the Change of
Control in the case of a benefit entitlement under Subsection
B above, and payments shall continue each consecutive month
thereafter until 36 payments have been made, or until the
benefit period has ended, if earlier. The benefit period shall
commence on the date of termination of the Executive's
employment or the date of the Change of Control, as the case
may be and shall end on the earlier of:
The last day of the 36th consecutive whole month thereafter, or
The termination date of this Agreement as defined in Section 2(A).
In the event Executive dies after benefits have commenced but before
the end of the benefit period, then the remaining payments shall be
paid to the person or persons as stated in the last designation of
beneficiary concerning this Agreement signed by Executive and filed
with Company, and if not, then to the personal representative of
Executive.
The amount of the monthly cash benefit shall be 8% of the sum of
employee compensation (including bonuses) paid by Company to
Executive in the last whole calendar year preceding Executive's
termination of employment, as determined by the Company for
federal income tax purposes and reported to Executive and
Internal Revenue Service ("IRS"). Provided however, if the
monthly payments required under this Agreement in such amount
together with the other benefits provided for hereunder would be
deemed by the IRS to result in an "Excess Parachute Payment,"
as that term is defined in Section 280G of the Code, then the
amount of such monthly cash payments shall be reduced to the
highest amount which will not result in the total of all benefits
provided for hereunder being deemed by the IRS to result
in an "Excess Parachute Payment," as that term is defined in
Section 280G of the Code, rounded down to the nearest even
+$10 MULTIPLE.
Section 5 - Pension Payments.
Nothing in this Agreement shall change any pension benefits or
benefits from other qualified plans maintained by Company to
which Executive is otherwise entitled. However, payments made
under this Agreement pursuant to Section 4 shall not be considered
compensation for purposes of the Company's pension plan or any
other qualified retirement plan maintained by the Company.
Section 6 - Right to Other Benefits.
Nothing in this Agreement shall abridge, eliminate, or cause
Executive to lose Executive's right or entitlement to any other
Company benefit to which Executive may be entitled due to his
status as an employee under any plan or policy of Company on
such terms and conditions as are required of any employee under
any plan or policy of Company. Further, nothing in this Agreement
shall create in Executive any greater rights or entitlements, except
as specified in this Agreement. The plans and policies referred to
in this Section 6 include, but are not limited to, life insurance plan
dental, disability or health insurance benefits, severance policies,
club memberships, and accrued vacation pay.
Section 7 - Protection of Business.
Notwithstanding anything to the contrary contained elsewhere in
this Agreement:
Executive will not at any time (during or after employment with
Company) divulge, disclose, reveal or communicate to any person,
firm corporation, partnership, joint venture or other entity, directly
or indirectly, any trade secrets or other information which
Executive may have obtained during the course of his
employment by Company in respect of any matters affecting or
relating to the banking business of Company including, without
limitation, any of its plan, policies, business practices, finances,
methods of operation or other information known to Executive
to be historically considered by Company to be confidential
information.
In addition to any action for damages, the restrictions on
competition and other restrictions imposed upon Executive under
this Section 7 of this Agreement may be enforced by Company by
an action for an injunction, it being agreed that (in view of the
general practical difficulty of determining by computation or legal
proof the exact amount of damages, if any, resulting to Company
from a violation by Executive of the provisions of this Section 7)
that there would be no adequate remedy at law for any breach by
Executive of any such restriction.]
The obligations imposed upon Executive by the Section 7 shall
survive the termination of this Agreement pursuant to Section 2
hereof.
Section 8 - Arbitration.
The parties hereto agree to arbitrate any issue, misunderstanding,
disagreement or dispute in connection with the terms in effect in this
Agreement in accordance with the Rules of the American Arbitration
Association, before one arbitrator mutually agreeable to the parties
hereto. If after two weeks Executive determines that Company and
Executive have been unable to agree upon one arbitrator, then
Executive may appoint one arbitrator and require Company to
appoint a second arbitrator. Whereupon, the two appointed
arbitrators shall appoint a third arbitrator mutually agreeable to
them. Company and Executive shall be mutually and equally
responsible for the costs and expenses associated with
arbitration. The arbitration shall occur in Wooster, Ohio,
or such other place as mutually agreed upon.
Section 9 - Notices and Payments
All payments required or permitted to be made under the
provisions of this Agreement, and all notices and other
communications required or permitted to be given or delivered
under this Agreement to Company or to Executive, which
notices or communications must be in writing, shall be
deemed to have been given if delivered by hand, or mailed
by first-class mail, addressed as follows:
If to Company:
Xxxxx Bancorp, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxx 00000
Attention: Chairman of the Board of Directors
If to Executive:
Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxx 00000
Company or Executive may, by notice given to the other from
time to time and at any time, designate a different address for
making payments required to be made, and for the giving of
notices or other communications required or permitted to be
given, to the party designating such new address.
Section 10 - Payroll Taxes.
Any payment required or permitted to be made or given to Executive
under this Agreement shall be subject to the withholding and other
requirements of applicable laws, and to the deduction requirements
of any benefit plan maintained by Company in which Executive is
a participant, and to all reporting, filing and other requirements in
respect of such payments, and Company shall use it best efforts
promptly to satisfy all such requirements.
Section 11 - Governing Law.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio and the parties hereto consent
to the jurisdiction of the Courts of the State of Ohio and Xxxxx
County and the Federal District Courts in and for Xxxxx County
in connection with this Agreement.
Section 12 - Duplicate Originals.
This Agreement may be executed in one or more counter parts,
each of which shall be deemed to be a duplicate original, but all
of which, taken together, shall constitute a single instrument.
Section 13 - Captions.
The captions contained in this Agreement are included only for
Convenience of reference and do not define, limit, explain or modify
this Agreement or its interpretations, construction or meaning and
are in no way to be construed as a part of this Agreement.
Section 14 - Severability.
If any provision of this Agreement or the application of any provision
to any person or any circumstances shall be determined to be
invalid or unenforceable, such provision or portion thereof shall
nevertheless be effective and enforceable to the extent determined
reasonable. Such determination shall not affect any other provision
of this Agreement or the application of said provision to any other
person or circumstance, all of which other provisions shall remain
in full force and effect, and it I s the intention of company and
Executive that if any provision of this Agreement is susceptible
of two or more constructions, one of which would render the
provision unenforceable, then the provisions shall have the
meaning which renders it enforceable.
Section 15 - Number and Gender.
When used in this Agreement, the number and gender of each
pronoun shall be construed to be such number and gender as
the context, circumstances or its antecedent may require.
Section 16 - Successor and Assigns.
This Agreement shall inure to the benefit of and be binding upon
the successors and assigns (including successive, as well as
immediate, successors and assigns) of Company; provided,
however, that Company may not assign this Agreement or any of
its rights or obligations hereunder to any party other than a
corporation which succeeds to substantially all of the business
and assets of Company by merger, consolidation, sale of assets
or otherwise. This Agreement shall inure to the benefit of and be
binding upon the successor and assigns (including successive,
as well as immediate, successors and assigns) of Executive;
provided, however, that the right of Executive under this
Agreement may be assigned only to his personal
representative or trustee or by will or pursuant to
applicable laws of descent and distribution.
In WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on and to be effective on
October 7, 1998.
In the Presence of:
/s/ Xxxxx X. Xxxxx
Executive
In the Presence of:
/s/ Xxxxx. L. Xxxxxxxxxxx
Xxxxx Bancorp, Inc.
