ADDENDUM TO
EMPLOYMENT AGREEMENT
BY AND BETWEEN
ATLANTIC LIBERTY SAVINGS, F.A.
AND
XXXXX X. XXXXXXX
This Addendum (the "Addendum") to that certain employment agreement (the
"Association Employment Agreement") by and between Atlantic Liberty Savings,
F.A., a federally chartered savings association (the "Association"), with its
principal administrative office at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx
00000-0000, and Xxxxx X. Xxxxxxx ("Executive") is made effective as of this 20th
day of December, 2005.
WHEREAS, Executive is currently employed as President and Chief Executive
Officer of the Association, a wholly-owned subsidiary of Atlantic Liberty
Financial Corp., a Delaware corporation (the "Company"); and
WHEREAS, new Section 409A of the Internal Revenue Code of 1986, as amended
("Code"), which is initially effective in 2005, has deemed certain employment
agreements to be deferred compensation, subject to its provisions; and
WHEREAS, the Association and Executive desire to update the Association
Employment Agreement to conform to the provisions and requirements of Code
Section 409A.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter set forth, the Association and Executive hereby agree
to the following amendments to the Association Employment Agreement, it being
understood and agreed that except to the amendments specifically provided for
herein, the remaining terms of the Association Employment Agreement shall remain
in full force and effect:
1. Section 6 of the Association Employment Agreement is hereby renamed:
"PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION OR CHANGE IN CONTROL."
2. Section 6(a)(iii) of the Association Employment Agreement is hereby
replaced in its entirety with the following:
"(iii) Upon the occurrence of an Event of Termination, as defined in
Section 6(a)(i) or (ii), on the Date of Termination, as
defined in Section 9(b), the Association shall pay Executive,
or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance
pay or liquidated damages, or both, a sum equal to three (3)
times the sum of (x) the average annual rate of Base Salary
paid in the last three (3) years ending in the year of
termination and (y) the average rate of bonus awarded to
Executive during the prior three
years. Payment of the amount required hereunder shall be made
on the first day of the seventh month following Executive's
Separation from Service if Executive is a Specified Employee
and such delay is required by Code Section 409A. For these
purposes, the terms `Specified Employee' and `Separation from
Service' shall have the meaning required by Code Section 409A.
Such payments shall not be reduced in the event Executive
obtains other employment following termination of employment."
3. Section 6(b) of the Association Employment Agreement is hereby replaced
in its entirety with the following:
"(b) The provisions of Section 6(b) shall apply upon the occurrence of a
Change in Control during the term of this Agreement. In the event of a Change in
Control of the Association or Company, Executive shall be entitled to a sum
equal to three (3) times the sum of (x) the highest annual rate of Base Salary
and (y) the highest annual bonus awarded to Executive during the prior three
years. Payment of the amount required hereunder shall be made on the effective
date of the Change in Control. Notwithstanding anything to the contrary herein,
only if required by Code Section 409A, if the Executive is a "Specified
Employee" within the meaning of Code Section 409A, the payment required
hereunder shall be made no earlier than the first day of the seventh month
following Executive's Separation from Service, as defined in Code Section 409A.
For the purposes of this Agreement, a Change in Control of the Company or the
Association shall mean a change in ownership of the Company or the Association
under paragraph (i) below, a change in effective control of the Company or the
Association under paragraph (ii) below, or a change in the ownership of a
substantial portion of the assets of the Company or the Association under
paragraph (iii) below:
(i) Change in the ownership of the Company or the Association. A
change in the ownership of the Company or the Association
shall occur on the date that any one person, or more than one
person acting as a group (as defined in Proposed Treasury
Regulation Section 1.409A-3(g)(5)(v)(B) or subsequent
guidance), acquires ownership of stock of the corporation
that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market
value or total voting power of the stock of such corporation.
(ii) Change in the effective control of the Company or the
Association. A change in the effective control of the Company
or the Association shall occur on the date that either (i) any
one person, or more than one person acting as a group (as
defined in Proposed Treasury Regulation Section
1.409A-3(g)(5)(v)(B) or subsequent guidance), acquires (or has
acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) ownership
of stock of the corporation possessing 35 percent or more of
the total voting power of the stock of such corporation; or
(ii) a majority of members of the corporation's Board of
Directors is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of
the members of the corporation's Board of Directors prior to
the date of the appointment or election, provided that this
sub-section (ii) is inapplicable where a majority shareholder
of the Company or the Association is another corporation.
2
(iii) Change in the ownership of a substantial portion of the
Company's or the Association's assets. A change in the
ownership of a substantial portion of the Company's or the
Association's assets shall occur on the date that any one
person, or more than one person acting as a group (as defined
in Proposed Treasury Regulation Section 1.409A-3(g)(5)(v)(B)
or subsequent guidance), acquires (or has acquired during the
12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the
corporation that have a total gross fair market value equal to
or more than 40 percent of the total gross fair market value
of (i) all of the assets of the Company or the Association, or
(ii) the value of the assets being disposed of, either of
which is determined without regard to any liabilities
associated with such assets.
(iv) For all purposes hereunder, the definition of Change in
Control shall be construed to be consistent with the
requirements of Proposed Treasury Regulation Section
1.409A-3(g) or subsequent guidance."
4. Section 6(c) of the Association Employment Agreement shall be replaced
in its entirety with the following:
"(c) Upon the occurrence of an Event of Termination under Section 6(a) or a
Change in Control under Section 6(b), the Association will cause to be continued
life, medical, dental and disability coverage substantially identical to the
coverage maintained by the Association for Executive prior to such event or
Change in Control. Such coverage, or in lieu thereof, a payment of not less than
$12,000 per annum, shall continue until thirty-six (36) months following
Executive's termination of employment."
5. Section 6(d) of the Association Employment Agreement shall be amended by
replacing the introductory clause "Upon the occurrence of an
Event of Termination," with the following clause:
"Upon the occurrence of an Event of Termination or a Change in Control,"
6. Sections 6(e) and 6(f) of the Association Employment Agreement shall be
amended by replacing the introductory clause "Upon the occurrence of an
Event of Termination, within sixty (60) days (or within such shorter
period to the extent that information can reasonably be obtained)
following Executive's termination of employment with the Association,"
with the following clause:
"Upon the occurrence of an Event of Termination or a Change in Control,
within sixty (60) days (or within such shorter period to the extent that
information can reasonably be obtained) of the event which triggers a
distribution hereunder,"
3
7. A new Section 6(i) shall be added to the Association Employment
Agreement which shall read as follows:
"(i) Payments made under Section 6(b) above shall be made irrespective of
whether termination of employment has occurred. Notwithstanding anything
herein to the contrary, Executive shall only be entitled to a payment under
the first to occur of an Event of Termination under Section 6(a), or a
Change in Control under Section 6(b). Payments under one of these
alternatives shall preclude payments under the other."
8. Section 10 of the Association Employment Agreement is hereby renamed:
"POST-PAYMENT OBLIGATIONS."
IN WITNESS WHEREOF, the Association and the Company have caused this
Addendum to be executed on their behalf by their duly authorized officers, and
Executive has set his hand as of the date first written above.
ATLANTIC LIBERTY SAVINGS, F.A.
Dated: December 20, 2005 By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------- ------------------------------
ATLANTIC LIBERTY FINANCIAL CORP.
Dated: December 20, 2005 By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------- ------------------------------
EXECUTIVE
Dated: December 20, 2005 By: /s/ Xxxxx X. Xxxxxxx
--------------------------- ------------------------------
Xxxxx X. Xxxxxxx
4
