CHANGE IN CONTROL AGREEMENT
EXHIBIT 10.1
This Agreement is entered into this 28th day of March, 2012 by and between Fairport Savings Bank (the “Bank”), a federally chartered savings association with its principal executive office at 00 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, and Xxxxx Xxxxxxx (“Executive”).
WHEREAS, the parties wish to protect both the interests of the Bank and the Executive in the event of a change in control of the Bank; and
WHEREAS, the parties intend that this Agreement shall accomplish both the interests of the Bank and the Executive in such instance;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:
(a) Executive shall receive as severance pay or liquidated damages, or both, an amount equal to two times the sum of: (i) the highest annual rate of Base Salary paid to Executive at any time under this Agreement, and (ii) the greater of (x) the average annual cash bonus paid to Executive with respect to the three completed fiscal years prior to the termination, or (y) the cash bonus paid to Executive with respect to the fiscal year ended prior to the termination; provided however, that in no event shall total severance compensation from all sources equal or exceed three times Executive’s average annual compensation over the five fiscal years preceding the fiscal year in which the Separation from Service occurs (for purposes of this provision and only for purposes of this provision, compensation shall mean any payment of money or provision of any other thing of value in consideration of employment, including, without limitation, Base Salary, commissions, bonuses, pension and profit sharing plans, severance payments, retirement, director or committee fees, fringe benefits, and the payment of expense items without accountability or business purpose or that do not meet the IRS requirement for deductibility by the Bank). Such payments, less applicable withholdings, shall be made in accordance with the Bank’s regular bi-weekly payroll practices, starting on the first payroll period following the Executive’s “Separation from Service,” as defined in Code Section 409A(a)(2)(A)(i) and Treasury Regulations § 1.409A-1(h), and ending on the last payroll period that provides the Executive with one year of severance payments; provided however, if Executive is a “Specified Employee,” as defined in Code Section 409A (a)(2)(B)(i) and Treasury Regulations § 1.409A-1(i), and if the amount exceeds the “permitted amount” under such Code Sections (i.e., $500,000, as of January 1, 2012), then payment of amounts in excess of the “permitted amount” shall be delayed until the first day of the seventh full month following Executive’s Separation from Service.
In the event of Executive’s death, the foregoing severance/liquidated damages payment(s) payable upon a qualifying Change in Control, shall be made to Executive’s surviving spouse, or if no surviving spouse, to his estate. In the event that the Company or the Bank enters into an agreement that would cause a Change in Control of
2
the Bank, and Executive dies after such agreement is executed but prior to consummation of the Change in Control, which payments shall commence upon, and shall be contingent upon, the actual consummation of the Change in Control. The present value of the payment required hereunder, less applicable withholdings, shall be made in accordance with the Bank’s regular bi-weekly payroll practices, starting on the first payroll period following the Executive’s “Separation from Service,” as defined in Code Section 409A(a)(2)(A)(i) and Treasury Regulations § 1.409A-1(h), and ending on the last payroll period that provides the Executive with one year of severance payments; provided however, if Executive is a “Specified Employee,” as defined in Code Section 409A (a)(2)(B)(i) and Treasury Regulations § 1.409A-1(i), and if the amount exceeds the “permitted amount” under such Code Sections (i.e., $500,000, as of January 1, 2012), then payment of amounts in excess of the “permitted amount” shall be delayed until the first day of the seventh full month following Executive’s Separation from Service. For these purposes, present value shall be determined using the applicable federal rate under Code Section 1274(d).
(b) Upon the occurrence of a Change in Control followed by the Executive’s Separation from Service within twenty-four (24) months following such Change in Control, unless such Separation from Service is “for cause”, or Executive’s resignation is not for “good reason”, as such terms are defined herein, the Bank will continue, at the Bank’s expense, life, health and disability insurance coverage substantially identical to the coverage maintained by the Bank for Executive prior to the Change in Control, except to the extent such coverage is changed in its application to all employees of the Bank. Such coverage shall cease twelve (12) months from the date of Executive’s Separation from Service.
(c) The term “for cause” shall mean, for purposes of this Agreement only, the following: involuntary termination of the Executive’s employment by a vote of at least a majority of the entire membership of the Board because of Executive’s personal dishonesty, incompetence, willful misconduct, any 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, the willful commission of any act that in the judgment of the Board would likely cause substantial economic damage to the Bank or the Company or substantial injury to the business reputation of the Bank or the Company, or material breach of any provision of this Agreement.
The Bank may not terminate Executive’s employment “for cause” under this Agreement unless (1) the Bank shall have first provided Executive with written notice of the intended termination and the reason for such termination (“breach”) and (2) if such breach is susceptible to cure or remedy, a period of thirty (30) days shall have elapsed between the delivery of such notice and the termination of Executive’s employment without the Executive having, in the reasonable opinion of the Bank, effectively cured or remedied such breach.
3
(d) The term “good reason” shall mean, for purposes of this Agreement only, the following: (i) a significant reduction in Executive’s duties, position or responsibilities, or Executive’s removal from his/her position and responsibilities (unless offered a comparable position (i.e., a position of equal or greater organizational level, duties, authority compensation and status) within twenty-four (24) months after a Change in Control; (ii) within twenty-four (24) months following a Change in Control, there is a material reduction in Executive’s compensation, compared to the compensation provided to Executive immediately prior to the Change in Control; or (iii) within twenty-four (24) months following a Change in Control Executive is permanently relocated to a workplace more than thirty-five (35) miles from Executive’s primary workplace immediately preceding a Change in Control.
Executive may not resign for “good reason” unless Executive has provided the Bank with a written notice informing the Bank of the existence of the “good reason” condition, which notice must be delivered to the Bank not later than 90 days after the initial occurrence of the “good reason” condition that forms the basis for the Executive’s resignation for “good reason.” The Bank shall have 30 days to cure such “good reason” condition; provided however, that the Bank may waive its right to cure. Thereafter, Executive must actually resign no later than 60 days after the expiration of the 30 day-cure period (or 60 days after the Bank has informed the Executive in writing that the Bank has waived the 30-day cure period).
4
(b) Executive will not, during or after the term of his/her employment, disclose any knowledge of the past, present, planned or considered business activities of the Bank or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever (except for such disclosure as may be required to be provided to the appropriate Federal and/or State regulatory body, including by not limited to, the Federal Deposit Insurance Corporation (“FDIC”), or other federal banking agency with jurisdiction over the Bank or Executive). Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank, and Executive may disclose any information regarding the Bank which is otherwise publicly available.
(c) In the event of a breach or threatened breach by Executive of the provisions of this Section 7, in addition to the immediate termination of any obligation on the part of the Bank to continue to pay Executive the Termination Benefits, the Bank will also be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of the Bank or affiliates thereof, or from rendering any services to any person, firm, corporation, other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to the Bank for such breach or threatened breach, including the recovery of damages from Executive.
5
other incentive-based or equity-based compensation received by the Executive from the Bank during the twelve (12) month period following the first public issuance or filing with the Commission (whichever first occurs) of the financial document embodying such financial reporting requirement and; (ii) any profits realized from the sale of securities of the issuer during that twelve (12) month period.
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 as to any act other than that specifically waived.
14. GOVERNING LAW. This Agreement shall be governed in all respects, including validity, construction, capacity and performance, by the laws of the State of New York, but only to the extent not superseded by federal law.
6
(i) the Claimant’s requested determination has been made, and that the claim for benefits has been allowed in full; or
(ii) the Bank has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:
(A) specific reason or reasons the claim was denied;
(B) specific reference(s) to the pertinent provisions of the Agreement upon which the decision was based;
(C) a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary;
(D) an explanation of the claim review procedure set forth below; and
(E) a statement of the Claimant’s right to bring a civil action under ERISA in the event of an adverse determination upon review.
(i) may submit any written comments, documents, records and other information relating to the claim;
7
(ii) may, upon reasonable request and free of charge, have reasonable access to, and copies of, all documents, records and other information relevant to the Claimant’s claim;
(iii) will be entitled to a review that takes into account all comments, documents, records and other information submitted by the Claimant related to the claim, without regard to whether such information was submitted or considered in the initial benefit determination; and
(iv) will be informed of such other matters as the Board or its designee deems relevant.
(d) Elective Arbitration. If a Claimant’s claim described in Section 16(a) is denied pursuant to Sections 15(b) (an “Arbitrable Dispute”), the Claimant may, in lieu of the Claimant’s right to bring a civil action under Section 502(a) of ERISA, and as the Claimant’s only further recourse, submit the claim to final and binding arbitration conducted before a panel of three arbitrators sitting in a location selected by the Bank within fifty (50) miles of Fairport, New York, in accordance with the rules of the American Arbitration Association then in effect. In the event the need for arbitration arises the Bank shall select one arbitrator and the Executive shall select one arbitrator. The arbitrators selected by the parties shall select a third arbitrator. The arbitrators shall not have any authority to add to or modify the provisions of this Agreement in any way. Judgment may be entered on the arbitrators’ award in any court having jurisdiction.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
8
ATTEST:
|
FAIRPORT SAVINGS BANK
|
|
/s/ Xxxxxx X. Xxxxxx
|
By:
|
/s/ Xxxxxx X. Xxxxxxxxx
|
Secretary
|
Chairman of the Board
|
|
By:
|
/s/ Xxxxxx X. Xxxxx
|
|
Chairman of Compensation Committee
|
||
WITNESS:
|
EXECUTIVE
|
|
/s/ Xxxxx X. Xxxxxx
|
By: |
/s/ Xxxxx X. Xxxxxxx
|
Assistant Treasurer
|
9