EXHIBIT 10 - AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
Exhibit 10
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT (the
"Agreement"), is made this 30th day of April, 2003, between FIRST WASHINGTON
FINANCIAL CORP. ("FWFC"), a corporation organized under the laws of the State of
New Jersey, with its principal office at U.S. Xxxxx 000 & Xxxx Xxxxxx, Xxxxxxx,
Xxx Xxxxxx 00000 and C. XXXXXXX XXXXXXXXX (the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by FWFC as its President and Chief
Executive Officer;
WHEREAS, the Executive has worked diligently in his position in the
business of FWFC;
WHEREAS, the Board of Directors of FWFC believes that the future
services of the Executive are of great value to FWFC and that it is important
for the growth and development of FWFC that the Executive continue in his
position;
WHEREAS, if FWFC receives any proposal from a third person concerning a
possible business combination involving FWFC, or the acquisition of voting
securities of FWFC, the Board of Directors of FWFC (the "Board") believes it is
imperative that FWFC and the Board be able to rely upon the Executive to
continue in his position, and that they be able to receive and rely upon his
advice, if they request it, as to the best interests of FWFC and its
shareholders, without concern that the Executive might be distracted by the
personal uncertainties and risks created by such a proposal;
WHEREAS, to achieve that goal, and to retain the Executive's services
prior to any such activity, the Board and the Executive have agreed to enter
into this Agreement to govern the Executive's status in the event of a Change in
Control, as hereinafter defined.
NOW, THEREFORE, to assure FWFC that it will have the continued
dedication of the Executive and the availability of his advice and counsel
notwithstanding the possibility, threat or occurrence of a bid to take over
control of FWFC, and to induce the Executive to remain in the employ of FWFC,
and for other good and valuable consideration, FWFC and the Executive, each
intending to be legally bound hereby agree as follows:
1. Definitions.
A. Cause. For purposes of this Agreement "Cause" with respect
to the termination by Company (as defined below) of Executive's employment shall
mean (i) willful and continued failure by the Executive to perform his duties
for Company under this Agreement after at least one warning in writing from the
Company's Board of Directors identifying specifically any such failure, (ii) the
willful engaging by the Executive in misconduct which causes material injury to
Company as specified in written notice to the Executive from the Company's Board
of Directors; or (iii) conviction of a crime (other than a traffic violation)
which is either a felony or an indictable offense or in the reasonable opinion
of the Board of Directors is of such a nature that it should be cause for
termination, habitual drunkenness, drug abuse, or excessive absenteeism other
than for illness, after a warning (with respect to drunkenness or absenteeism
only) in writing from the Company's Board of Directors to refrain from such
behavior. No act or failure to act on the part of the Executive shall be
considered willful unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the action or omission was in the
best interest of Company. Notwithstanding the foregoing, "Cause" shall not be
deemed to exist unless and until the Board of Directors of the Company, at a
duly convened meeting of such Board of Directors held on reasonable notice to
Executive and at which Executive and his counsel are afforded the opportunity to
appear and address such Board of Directors, adopts a resolution by the
affirmative vote of at least two-thirds of the members of such Board of
Directors finding that Cause exists and specifying the reasons for the finding
of Cause.
B. Company. "Company" shall mean FWFC and any successor in
interest to FWFC, whether by means of merger, consolidation or the continuation
of all or substantially all of the business of FWFC.
C. Change in Control. "Change in Control" shall mean the
occurrence of any of the following events:
(1) The acquisition of beneficial ownership of at
least 25% of FWFC's voting securities or all or substantially all of the assets
of FWFC by a single person or entity, or a group of affiliated persons or
entities acting in concert. The determination of whether a group of persons or
entities is "affiliated" or is "acting in concert", shall be made by the Board
of FWFC in its good faith discretion.
(2) The merger, consolidation or combination of FWFC
with an unaffiliated entity in which either (i)
the directors of FWFC immediately prior to such merger, consolidation or
combination constitute less than a majority of the Board of Directors of the
surviving, new, combined or resulting entity or (ii) the shareholders of FWFC
prior to such transaction fail to hold a majority of the voting interests of the
surviving, new, combined or resulting entity in the transaction.
(3) The transfer of all or substantially all of
FWFC's assets.
(4) Individuals who constitute the Incumbent Board
(as defined below) of FWFC cease for any reason to constitute a majority of the
Board.
D. Time of Change in Control.For purposes of this
Agreement, a Change in Control shall be deemed to occur on the earlier of:
(1) The first date of which a single person or
entity, or a group of affiliated persons or entities acting in concert, acquire
the beneficial ownership of 25% or more of Company's voting securities; or
(2) The date on which the members of the Incumbent
Board fail to represent a majority of the Board; or
(3) The business day prior to effective date of any
merger, consolidation, combination or sale of assets as defined in paragraph 1C
above.
E. Incumbent Board. "Incumbent Board" means the Board of
Directors of FWFC on the date hereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three quarters of the directors comprising the Incumbent Board, or
whose nomination for election by stockholders was approved by the same
nominating committee serving under an Incumbent Board, shall be considered as
though such individual were a member of the Incumbent Board.
F. Contract Period. "Contract Period" shall mean the period
commencing the day immediately preceding a Change in Control and ending on the
earlier of (i) the third anniversary of the Change in Control, or (ii) the date
the Executive retires from service with the Company or (iii) the death of the
Executive.
G. Good Reason. When used with reference to a voluntary
termination by Executive of his employment with Company, "Good Reason" shall
mean any of the following actions, if taken without Executive's express written
consent:
(1) The assignment to Executive of any duties
inconsistent with, or the reduction of powers or functions associated with,
Executive's position, title, duties, responsibilities and status with FWFC
immediately prior to a Change in Control or any removal of Executive from, or
any failure to re-elect Executive to, any position(s) or office(s) Executive
held with FWFC and/or its subsidiaries immediately prior to such Change in
Control. A change in position, title, duties, responsibilities and status or
position(s) or office(s) resulting merely from a merger of FWFC into or with
another bank or company shall not meet the requirements of this paragraph if,
and only if, the Executive's new title and responsibilities are accepted in
writing by the Executive, in the sole discretion of the Executive.
(2) A reduction by Company in Executive's annual base
compensation as in effect immediately prior to a Change in Control or the
failure to award Executive annual increases in accordance herewith;
(3) A failure by Company to continue any bonus plan
in which Executive participated immediately prior to the Change in Control or
failure by Company to continue Executive as a participant in such plan on at
least the same basis as Executive participated in such plan prior to the Change
in Control;
(4) The Company's transfer of Executive to another
geographic location outside of New Jersey or within New Jersey but more than 25
miles from his present office location, except for required travel on Company's
business to an extent substantially consistent with Executive's business travel
obligations immediately prior to such Change in Control;
(5) The failure by Company to continue in effect any
employee benefit plan, program or arrangement (including, without limitation the
Company's 401(k) plan, the Company's Employee Stock Ownership Plan, life
insurance plan, health and accident plan, disability plan, any other insurance
policies or plans covering Executive or Executive's family members or stock
option plan) in which Executive is participating on the same terms and
conditions (including, but not limited to, Executive's contribution and
co-payment requirements) as such plan, program or arrangement was in effect for
Executive immediately prior to a Change in Control (except that Company may
institute, continue or provide plans, programs or arrangements providing
Executive with substantially similar benefits on the same terms and conditions
as they were provided to Executive prior to the Change in Control and not have
such substitution qualify as "Good Reason"); the taking of any action by Company
which would adversely affect Executive's participation in or materially reduce
Executive's benefits under, any of such plans, programs or arrangements; the
failure to continue, or the taking of any action which would deprive Executive,
of any material fringe benefit enjoyed by Executive immediately prior to such
Change in Control; or the failure by Company to provide Executive with the
number of paid vacation days to which Executive was entitled immediately prior
to such Change in Control;
(6) The failure of FWFC to obtain an assumption in
writing of the obligations of Company to perform this Agreement by an successor
to FWFC and to provide such assumption to the Executive prior to any Change in
Control; or
(7) Any purported termination of Executive's
employment by Company during the term of this Agreement, which is not effected
pursuant to all of the requirements of this Agreement; and, of purposes of this
Agreement, no such purported termination shall be effective.
2. Employment. Company hereby agrees to employ the Executive, and the
Executive hereby accepts employment, during the Contract Period upon the terms
and conditions set forth herein.
3. Position. During the Contract Period, the Executive shall be
employed as a senior executive officer of Company and as the senior executive
officer of the subsidiary, division or profit center of the Company, which is
the principal successor to the business, assets and properties of FWFC. The
Executive shall devote his full time and attention to the business of Company,
and shall not during the Contract Period be engaged in any other business
activity. This paragraph shall not be construed as preventing the Executive from
managing any investments of his which do not require any service on his part in
the operation of such investments.
4. Cash Compensation. Company shall pay to the Executive compensation
for his services during the Contract Period as follows:
A. Base Compensation. The base compensation shall be equal to
the annual compensation, including both salary and bonus, as were paid to or
accrued for the Executive by FWFC, its subsidiaries and affiliates in the 12
months immediately prior to the Change in Control. The annual salary portion of
base compensation shall be payable in installments in accordance with Company's
usual payroll method. The bonus shall be payable at the time and in the manner
which the Company paid such bonuses prior to the Change in Control. Any increase
in the Executive's annual compensation pursuant to paragraph 4B below, or
otherwise, shall automatically and permanently increase the base compensation.
B. Annual Increase. The Board of Directors of Company during
the Contract Period shall review annually, or at more frequent intervals which
the Board determines is appropriate, the Executive's compensation and shall
award him additional compensation to reflect the impact of inflation, the
Executive's performance, the performance of the Company and competitive
compensation levels, all as determined in the discretion of the Board of
Directors. Additional compensation may take any form including but not limited
to increases in the annual salary, incentive bonuses and/or bonuses not geared
to performance. However, in no event shall the percentage increase in
compensation be less than the annual percentage increase in the Consumer Price
Index for Urban Wage Earners and Clerical Workers (New York and Northern New
Jersey-ALL Items) during the preceding twelve months.
5. Expenses and Fringe Benefits. During the Contract Period, the
Executive shall be entitled to reimbursement for all business expenses incurred
by him with respect to the business of Company in the same manner and to the
same extent as such expenses were previously reimbursed to him immediately prior
to the Change in Control. If prior to the Change in Control, the Executive was
entitled to the use of an automobile, he shall be entitled to the same use of an
automobile at lease comparable to the automobile provided to him prior to the
Change in Control, and shall be entitled to vacations and sick days, in
accordance with the practices and procedures of Company, as such existed during
Executive's employment with FWFC immediately prior to the Change in Control.
During the Contract Period, the Executive also shall be entitled to hospital,
health, medical and life insurance, and any other benefit enjoyed, from time to
time, by other executive officers of Company, all upon terms as favorable as
those enjoyed by Executive prior to the Change in Control. Notwithstanding
anything in this section to the contrary, if Company adopts any change in the
expenses allowed to, or fringe benefits provided for, executive officers of
Company, and such policy is uniformly applied to all Executive officers of
Company, including the Chief Executive Officer of such Company, then no such
change shall be deemed to be contrary to this section.
6. Termination for Cause. Company shall have the right to terminate the
Executive for Cause, upon written notice to him of the termination which notice
shall specify the reasons for the termination. In the event of Termination for
Cause the Executive shall not be entitled to any further benefits under this
Agreement.
7. Disability. During the Contract Period, if the Executive becomes
permanently disabled, or is unable to perform his duties hereunder for 6
consecutive months in any 18-month period, Company may terminate the employment
of the Executive. In such event, the Executive shall not be entitled to any
further benefits under this Agreement other than payments under the disability
policy which Company may obtain for the benefit of senior officers generally.
8. Death Benefits. Upon the Executive's death during the Contract
Period, the Executive shall be entitled to the benefits of any life insurance
policy paid for by Company and naming the Estate of the Executive as the
beneficiary or having allowed the Executive to name the beneficiary, but his
Estate shall not be entitled to any further benefits under this Agreement.
9. Termination Without Cause of Resignation for Good Reason. Company
may terminate the Executive without Cause during the Contract Period by 20
business days prior written notice to the Executive, and Executive may resign
for Good Reason during the Contract Period upon four weeks' prior written notice
to Company specifying the Good Reason. If Company terminates the Executive's
employment during the Contract Period without Cause or if the Executive Resigns
for Good Reason, Company shall within 20 business days of the termination of
employment pay the Executive a lump sum equal to 2.99 times the highest annual
compensation, including only salary and cash bonus, paid the Executive by FWFC,
its subsidiaries and affiliates during any of the three calendar years
immediately prior to the Change in Control (the "Lump Sun Payment"). During the
remainder of the Contract Period Company also shall continue to provide the
Executive with and pay for medial and hospital insurance, disability insurance
and life insurance, as were provided and paid for at the time of the termination
of his employment with Company. Company shall also sell to the Executive for a
purchase price of $1.00 the automobile, if any, used by the Executive while
employed by Company.
The Executive shall not have a duty to mitigate the damages suffered by
him in connection with the termination by Company of his employment without
Cause or a resignation for Good Reason during the Contract Period.
10. Resignation Without Good Reason. The Executive shall be entitled to
resign from the employment of Company at any time during the Contract Period
without Good Reason, but upon such resignation the Executive shall not be
entitled to any additional compensation for the time after which he ceases to be
employed by Company, and shall not be entitled to any of the other benefits
provided hereunder. No such resignation shall be effective unless in writing
with four weeks' notice thereof.
11. Non-Disclosure of Confidential Information.
A. Non-Disclosure of Confidential Information. Except in the
course of his employment with Company and in the pursuit of the business of
Company or any of its subsidiaries or affiliates, the Executive shall not, at
any time during or following the Contract Period, disclose or use, any
confidential information or proprietary data of Company or any of its
subsidiaries or affiliates.
B. Specific Performance. Executive agrees that Company does
not have an adequate remedy at law for the breach of this section and agrees
that he shall be subject to injunctive relief and equitable remedies as a result
of the breach of this section. The invalidity or unenforceability of any
provisions of this Agreement shall not effect the force and effect of the
remaining valid portions.
C. Survival. This section shall survive the termination of the
Executive's employment hereunder and the expiration of this Agreement.
12. Term and Effect Prior to Change in Control.
A. Term. Except as otherwise provided for hereunder, this
Agreement shall commence on the date hereof and shall remain in effect for a
period of 3 years from the date hereof (the "Initial Term") or until the end of
the Contract Period, whichever is later. The Initial Term shall be automatically
extended for an additional one-year period on the anniversary date hereof (so
that the Initial Term is always 3 years) unless the Board of Directors of FWFC,
by a majority vote of the Directors then in office votes not to extend the
Initial Term. The Executive shall be promptly notified of the passage of such
resolution.
B. No Effect Prior to Change in Control. This Agreement shall
not affect any rights of FWFC or the Executive prior to a Change in Control or
any rights of the Executive granted in any other agreement, plan or
arrangements. The rights, duties and benefits provided hereunder shall only
become effective upon a Change in Control. If the employment of the Executive by
FWFC is terminated for any reason prior to a Change in Control, this Agreement
shall thereafter be of no further force and effect.
13. Waiver of Rights Under Existing Change in Control Agreement.
Executive and First Washington State Bank (the "Bank") have been parties to that
certain Change in Control Agreement dated as of December 6, 1995 (the "C-IN-C
Agreement"). Pursuant to this Agreement, the C-IN-C Agreement is terminated.
Under the terms of the C-IN-C Agreement, the Company's acquisition of the Bank
constituted a "change in control" of the Bank. Executive and FWFC acknowledge
that such was not an intended consequence of the FWFC's acquisition of the Bank,
and, in connection with the execution of this Agreement and termination of the
C-IN-C Agreement, Executive hereby agrees to waive any and all rights he may
have under the C-IN-C Agreement due to the occurrence of the change in control
under the C-IN-C Agreement.
14. Certain Additional Tax Payments by Company. In the event payments
made to Executive hereunder would constitute "excess parachute payments" under
Section 280G of the Code and therefore be subject to the excise tax imposed
pursuant to Section 4999 of the Code, the amount payable to Executive hereunder
shall be increased to account for the application of such excise tax (the
"Additional Tax Payments"), as well as for the impact of the imposition of such
excise tax on the Additional Tax Payment. The purpose of this provision is to
hold Executive harmless from the effect of the excise tax imposed under Section
4999 of the Code, and to ensure Executive will receive, as a net payment, the
amount Executive was entitled to under Section 9 hereof, excluding the effect of
ordinary income tax, FICA, Medicaid and other standard payroll taxes and
deductions.
15. Severance Compensation and Benefits Not in Derogation of Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of Company, except that the Executive shall not be
entitled to the benefits of any other plan or program of Company expressly
providing for severance or termination pay if the Executive is terminated
without Cause or resigns for Good reason after the Change in Control.
16. Miscellaneous. The terms of this Agreement shall be governed by,
and interpreted and construed in accordance with the provisions of, the laws of
New Jersey and, to the extent applicable, federal law. This Agreement supersedes
all prior agreements and understandings with respect to the matters covered
hereby including the Agreement referred to in Paragraph 13 above. The amendment
or termination of this Agreement may be made only in a writing executed by
Company and the Executive, and no amendment or termination of this Agreement
shall be effective unless and until made in such a writing. This agreement shall
be binding upon any successor (whether direct or indirect, by purchase, merge,
consolidation, liquidation or otherwise) to all or substantially all of the
assets of Company. This Agreement is personal to the Executive and the Executive
may not assign any of his rights or duties hereunder but this Agreement shall be
enforceable by the Executive's legal representatives, executors or
administrators. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart.
IN WITNESS WHEREOF, Company caused this Agreement to be signed by
its duly authorized representatives pursuant to the authority of its Board of
Directors, and the Executive has personally executed this Agreement, all as of
the day and year first written above.
FIRST WASHINGTON FINANCIALCORP
/s/ Xxxxxx X Xxxxxxx BY: /s/ Xxxxxxx X. Xxxxxx
--------------------------------- -------------------------------------
XXXXXX X. XXXXXXX, SECRETARY XXXXXXX X. XXXXXX, CHAIRMAN
/s/ Xxxx Xxxxxxxx /s/ C. Xxxxxxx Xxxxxxxxx
--------------------------------- -------------------------------------
XXXX XXXXXXXX C. XXXXXXX XXXXXXXXX
ASSISTANT CORP. SECRETARY (EXECUTIVE)
