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EXHIBIT 10.6
ONE-YEAR CHANGE OF CONTROL AGREEMENT
This CHANGE OF CONTROL AGREEMENT (the "Agreement") is made and
entered into as of [______________], 1999 by and among XXXXXX CITY SAVINGS BANK,
a savings bank organized and operating under the laws of the State of New Jersey
and having an office at West 00 Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000-0000
(the "Bank"), XXXXXX CITY BANCORP, INC., a business corporation organized and
existing under the laws of the State of Delaware and having an xxxxxx xx Xxxx 00
Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000-0000 (the "Company") and
[________________], an individual residing at [______________________] (the
"Officer").
INTRODUCTORY STATEMENT
The Bank is undertaking a reorganization through which it will
convert from a mutual savings bank to a stock savings bank and become a wholly
owned subsidiary of the Company, and the Company will become a majority-owned
subsidiary of Xxxxxx City, MHC, a New Jersey mutual holding company (the
"Reorganization"). At the same time, the Company will sell less than fifty
percent (50%) of its outstanding common stock to the public in an initial public
offering. The Officer has served the Bank as an officer and is familiar with the
Bank's operations.
The Board of Managers of the Bank and the Board of Directors
of the Company have concluded that it is in the best interests of the Bank, the
Company and their prospective shareholders to establish a working environment
for the Officer which minimizes the personal distractions that might result from
possible business combinations in which the Company or the Bank might be
involved following the Reorganization. To this end, the Bank and the Company
have decided to provide the Officer with assurance that his compensation will be
continued for a minimum period of one (1) year following termination of
employment (the "Assurance Period") if his employment terminates under specified
circumstances related to a business combination. The Board of Managers of the
Bank and the Board of Directors of the Company have decided to formalize this
assurance by entering into this Change of Control Agreement with the Officer.
The terms and conditions which the Bank, the Company and the
Officer have agreed to are as follows.
AGREEMENT
SECTION 1. EFFECTIVE DATE; TERM; CHANGE OF CONTROL AND PENDING
CHANGE OF CONTROL DEFINED.
(a) This Agreement shall take effect on the effective date of
the Reorganization (the "Effective Date") and shall be in effect during the
period (the "Term") beginning on the Effective Date of the Reorganization and
ending on the first anniversary of the date on which the Bank notifies the
Executive of its intent to discontinue the Agreement (the "Initial Expiration
Date") or, if later, the first anniversary of the latest Change of Control or
Pending Change of Control, as defined below, that occurs after the Effective
Date and before the Initial Expiration Date.
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(b) For all purposes of this Agreement, a "Change of Control"
shall be deemed to have occurred upon the happening of any of the following
events:
(i) the consummation of a reorganization, merger or
consolidation of the Company with one or more other persons, other than
a transaction following which:
(A) at least 51% of the equity ownership interests of the
entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"))
in substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the outstanding equity ownership
interests in the Company; and
(B) at least 51% of the securities entitled to vote
generally in the election of directors of the entity resulting
from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of the Company;
(ii) the acquisition of all or substantially all of the assets
of the Company or beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 25% or more of the
outstanding securities of the Company entitled to vote generally in the
election of directors by any person or by any persons acting in
concert;
(iii) a complete liquidation or dissolution of the Company;
(iv) the occurrence of any event if, immediately following
such event, at least 50% of the members of the Board of Directors of
the Company do not belong to any of the following groups:
(A) individuals who were members of the Board of
Directors of the Company on the date of this Agreement; or
(B) individuals who first became members of the Board
of Directors of the Company after the date of this Agreement
either:
(1) upon election to serve as a member of
the Board of Directors of the Company by affirmative
vote of three- quarters of the members of such board,
or of a nominating committee thereof, in office at
the time of such first election; or
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(2) upon election by the shareholders of the
Board of Directors of the Company to serve as a
member of such board, but only if nominated for
election by affirmative vote of three-quarters of the
members of the Board of Directors of the Company, or
of a nominating committee thereof, in office at the
time of such first nomination;
provided, however, that such individual's election or
nomination did not result from an actual or threatened
election contest (within the meaning of Rule 14a- 11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents
(within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf
of the Board of Directors of the Company; or
(v) any event which would be described in section 1(b)(i),
(ii), (iii) or (iv) if the term "Bank" were substituted for the term
"Company" therein.
In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary of
either of them, or by any employee benefit plan maintained by any of them. For
purposes of this section 1(b), the term "person" shall have the meaning assigned
to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(c) For purposes of this Agreement, a "Pending Change of
Control" shall mean: (i) the signing of a definitive agreement for a transaction
which, if consummated, would result in a Change of Control; (ii) the
commencement of a tender offer which, if successful, would result in a Change of
Control; or (iii) the circulation of a proxy statement seeking proxies in
opposition to management in an election contest which, if successful, would
result in a Change of Control.
SECTION 2. DISCHARGE PRIOR TO A PENDING CHANGE OF CONTROL.
The Bank may discharge the Officer at any time prior to the
occurrence of a Pending Change of Control for any reason or for no reason. In
such event:
(a) The Bank shall pay to the Officer's estate his earned but
unpaid compensation (including, without limitation, salary and all
other items which constitute wages under applicable law) as of the date
of his termination of employment. This payment shall be made at the
time and in the manner prescribed by law applicable to the payment of
wages but in no event later than 30 days after the date of the
Officer's termination of employment.
(b) The Bank shall provide the benefits, if any, due to the
Officer's estate, surviving dependents or his designated beneficiaries
under the employee benefit plans and programs and compensation plans
and programs maintained for the benefit of the officers and employees
of the Bank. The time and manner of payment or
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other delivery of these benefits and the recipients of such benefits
shall be determined according to the terms and conditions of the
applicable plans and programs.
The payments and benefits described in sections 2(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
SECTION 3. TERMINATION OF EMPLOYMENT DUE TO DEATH.
The Officer's employment with the Bank shall terminate,
automatically and without any further action on the part of any party to this
Agreement, on the date of the Officer's death. In such event, the Bank shall pay
and deliver to the Officer (and, in the event of his death before payment, to
his estate and surviving dependents and beneficiaries, as applicable) the
Standard Termination Entitlements.
SECTION 4. TERMINATION DUE TO DISABILITY AFTER CHANGE OF
CONTROL OR PENDING CHANGE OF CONTROL.
The Bank may terminate the Officer's employment during the
Term and after the occurrence of a Change of Control or a Pending Change of
Control upon a determination, by a majority vote of the members of the Board of
Directors of the Bank, acting in reliance on the written advice of a medical
professional acceptable to it, that the Officer is suffering from a physical or
mental impairment which, at the date of the determination, has prevented the
Officer from performing his assigned duties on a substantially full-time basis
for a period of at least one hundred and eighty (180) days during the period of
one (1) year ending with the date of the determination or is likely to result in
death or prevent the Officer from performing his assigned duties on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year beginning with the date of the
determination. In such event:
(a) The Bank shall pay and deliver to the Officer (or in the
event of his death before payment, to his estate and surviving
dependents and beneficiaries, as applicable) the Standard Termination
Entitlements.
(b) In addition to the Standard Termination Entitlements, the
Bank shall continue to pay the Officer his base salary, at the annual
rate in effect for him immediately prior to the termination of his
employment, during a period ending on the earliest of: (i) the
expiration of one hundred and eighty (180) days after the date of
termination of his employment; (ii) the date on which long-term
disability insurance benefits are first payable to him under any
long-term disability insurance plan covering employees of the Bank (the
"LTD Eligibility Date"); (iii) the date of his death; and (iv) the
expiration of the Assurance Period (the "Initial Continuation Period").
If the end of the Initial Continuation Period is neither the LTD
Eligibility Date nor the date of his death, the Bank shall continue to
pay the Officer his base salary, at an annual rate equal to sixty
percent (60%) of the annual rate in effect for him immediately prior to
the termination of his employment, during an additional
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period ending on the earliest of the LTD Eligibility Date, the date of
his death and the expiration of the Assurance Period.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by the Bank and shall
take effect on the later of the effective date of termination specified in such
notice or the date on which the notice of termination is deemed given to the
Officer.
SECTION 5. DISCHARGE WITH CAUSE AFTER CHANGE OF CONTROL OR
PENDING CHANGE OF CONTROL.
(a) The Bank may terminate the Officer's employment with
"Cause" during the Term and after the occurrence of a Change of Control or
Pending Change of Control, but a termination shall be deemed to have occurred
with "Cause" only if:
(i) the Board of Directors of the Bank, by majority vote of
its entire membership, determine that the Officer (A) has willfully and
intentionally failed to perform his assigned duties under this
Agreement in any material respect (including, for these purposes, the
Officer's inability to perform such duties as a result of drug or
alcohol dependency); (B) has willfully and intentionally engaged in
dishonest or illegal conduct in connection with his performance of
services for the Bank or has been convicted of a felony; (C) has
willfully violated, in any material respect, any law, rule, regulation,
written agreement or final cease-and-desist order with respect to his
performance of services for the Bank; or (D) has willfully and
intentionally breached the material terms of this Agreement in any
material respect; and
(ii) at least forty-five (45) days prior to the vote
contemplated by section 1(b)(i), the Bank has provided the Officer with
notice of its intent to discharge the Officer for Cause, detailing with
particularity the facts and circumstances which are alleged to
constitute Cause (the "Notice of Intent to Discharge"); and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the vote contemplated by section 5(a)(i), the
Officer (together with his legal counsel, if he so desires) is afforded
a reasonable opportunity to make both written and oral presentations
before the Board of Directors of the Bank for the purpose of refuting
the alleged grounds for Cause for his discharge; and
(iv) after the vote contemplated by section 5(a)(i), the Bank
has furnished to the Officer a notice of termination which shall
specify the effective date of his termination of employment (which
shall in no event be earlier than the date on which such notice is
deemed given) and include a copy of a resolution or resolutions adopted
by the Board of Directors of the Bank, certified by its corporate
secretary and signed by each member of the Board of Directors voting in
favor of adoption of the resolution(s), authorizing the termination of
the Officer's employment with Cause and stating with particularity the
facts and circumstances found to constitute Cause for his discharge
(the "Final Discharge Notice").
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For purposes of this section 5, no act or failure to act, on the part of the
Officer, shall be considered "willful" unless it is done, or omitted to be done,
by the Officer in bad faith or without reasonable belief that the Officer's
action or omission was in the best interests of the Bank. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board of Directors of the Bank or based upon the written advice of counsel for
the Bank shall be conclusively presumed to be done, or omitted to be done, by
the Officer in good faith and in the best interests of the Bank.
(b) If the Officer is discharged with Cause during the Term
and after a Change of Control or Pending Change of Control, the Bank shall pay
and provide to him (or, in the event of his death, to his estate, his surviving
beneficiaries and his dependents) the Standard Termination Entitlements only.
Following the giving of a Notice of Intent to Discharge, the Bank may
temporarily suspend the Officer's duties and authority and, in such event, may
also suspend the payment of salary and other cash compensation, but not the
Officer's participation in retirement, insurance and other employee benefit
plans. If the Officer is not discharged, or is discharged without Cause, within
forty-five (45) days after the giving of a Notice of Intent to Discharge,
payments of salary and cash compensation shall resume, and all payments withheld
during the period of suspension shall be promptly restored. If the Officer is
discharged with Cause not later than forty-five (45) days after the giving of
the Notice of Intent to Discharge, all payments withheld during the period of
suspension shall be deemed forfeited and shall not be included in the Standard
Termination Entitlements. If a Final Discharge Notice is given later than
forty-five (45) days, but sooner than ninety (90) days, after the giving of the
Notice of Intent to Discharge, all payments made to the Officer during the
period beginning with the giving of the Notice of Intent to Discharge and ending
with the Officer's discharge with Cause shall be retained by the Officer and
shall not be applied to offset the Standard Termination Entitlements. If the
Bank does not give a Final Discharge Notice to the Officer within ninety (90)
days after giving a Notice of Intent to Discharge, the Notice of Intent to
Discharge shall be deemed withdrawn and any future action to discharge the
Officer with Cause shall require the giving of a new Notice of Intent to
Discharge.
SECTION 6. DISCHARGE WITHOUT CAUSE.
The Bank may discharge the Officer without Cause at any time
after the occurrence of a Change of Control or Pending Change of Control, and in
such event:
(a) The Bank shall pay and deliver to the Officer (or in the
event of his death before payment, to his estate and surviving
dependents and beneficiaries, as applicable) the Standard Termination
Entitlements.
(b) In addition to the Standard Termination Entitlements:
(i) During the Assurance Period, the Bank shall
provide for the Officer and his dependents continued group
life, health (including hospitalization, medical and major
medical), dental, accident and long-term disability insurance
benefits on substantially the same terms and conditions
(including any required premium-sharing arrangements,
co-payments and deductibles) in effect for them immediately
prior to the Officer's resignation. The coverage provided
under this section 6(b)(i) may, at the election of the Bank,
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be secondary to the coverage provided as part of the Standard
Termination Entitlements and to any employer-paid coverage
provided by a subsequent employer or through Medicare, with
the result that benefits under the other coverages will offset
the coverage required by this section 6(b)(i).
(ii) The Bank shall make a lump sum payment to the
Officer (or, in the event of his death before payment, to his
estate), in an amount equal to the estimated present value of
the salary that the Officer would have earned if he had
continued working for the Bank during the Assurance Period at
the highest annual rate of salary achieved during the period
of three (3) years ending immediately prior to the date of
termination (the "Salary Severance Payment"). The Salary
Severance Payment shall be computed using the following
formula:
(n) (BS/PR)
SSP= (Sigma) [---------------------------]
(1) [1 + (I / PR)](n)
where "SSP" is the amount of the Salary Severance Payment
(before the deduction of applicable federal, state and local
withholding taxes); "BS" is the highest annual rate of salary
achieved by the Officer during the period of three (3) years
ending immediately prior to the date of termination; "PR" is
the number of payroll periods that occur during a year under
the Bank's normal payroll practices; "I" equals the applicable
federal short term rate established under section 1274 of the
Internal Revenue Code of 1986 (the "Code") for the month in
which the Officer's termination of employment occurs (the
"Short Term AFR") and "n" equals the product of the Assurance
Period at the Officer's termination of employment (expressed
in years and fractions of years) multiplied by the number of
payroll periods that occur during a year under the Bank's
normal payroll practices. The Salary Severance Payment shall
be made within five (5) business days after the Officer's
termination of employment and shall be in lieu of any claim to
a continuation of base salary which the Officer might
otherwise have and in lieu of cash severance benefits under
any severance benefits program which may be in effect for
officers or employees of the Bank.
(iii) The Bank shall make a lump sum payment to the
Officer (or, in the event of his death before payment, to his
estate), in an amount equal to the estimated present value of
the annual bonuses that the Officer would have earned if he
had continued working for the Bank during the Assurance Period
at the highest annual rate of salary achieved during the
period of three (3) years ending immediately prior to the date
of termination (the "Bonus Severance Payment"). The Bonus
Severance Payment shall be computed using the following
formula:
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BSP = SSP x (ABP / ASP)
where "BSP" is the amount of the Bonus Severance Payment
(before the deduction of applicable federal, state and local
withholding taxes); "SSP" is the amount of the Salary
Severance Payment (before the deduction of applicable federal,
state and local withholding taxes); "ABP" is the aggregate of
the annual bonuses paid or declared (whether or not paid) for
the most recent period of three (3) calendar years to end on
or before the Officer's termination of employment; and "ASP"
is the aggregate base salary actually paid to the Officer
during such period of three (3) calendar years (excluding any
year for which no bonus was declared or paid). The Bonus
Severance Payment shall be made within five (5) business days
after the Officer's termination of employment and shall be in
lieu of any claim to a continuation of participation in annual
bonus plans of the Bank which the Officer might otherwise
have.
(iv) The Bank shall make a lump sum payment to the
Officer (or, in the event of his death before payment, to his
estate), in an amount equal to the estimated present value of
the long-term incentive bonuses that the Officer would have
earned if he had continued working for the Bank during the
Assurance Period (the "Incentive Severance Payment"). The
Incentive Severance Payment shall be computed using the
following formula:
ISP = (SSP / RAP) x (ALTIP / ALTSP) x Y
where "ISP" is the amount of the Incentive Severance Payment
(before the deduction of applicable federal, state and local
withholding taxes); "SSP" is the amount of the Salary
Severance Payment (before the deduction of applicable federal,
state and local withholding taxes); "ALTIP" is the aggregate
of the most recently paid or declared (whether or not paid)
long-term incentive compensation payments (but not more than
three (3) such payments) for performance periods that end on
or before the Officer's termination of employment; and "ALTSP"
is the aggregate base salary actually paid to the Officer
during the performance periods covered by the payments
included in "ALTIP" and excluding base salary paid for any
period for which no long-term incentive compensation payment
was declared or paid; "RAP" is the Assurance Period, expressed
in years and fractions of years; and "Y" is the aggregate
(expressed in years and fractions of years) of the Assurance
Period plus the number of years and fraction of years that
have elapsed since the end of the last performance period for
which a long-term incentive payment has been declared and
paid. The Incentive Severance Payment shall be made within
five (5) business days after the Officer's termination of
employment and shall be in lieu of any claim to a continuation
of participation in long-term incentive compensation plans of
the Bank which
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the Officer might otherwise have. Notwithstanding the
foregoing, the Incentive Severance Payment shall be zero if
the Officer's termination of employment occurs at a time when
he is not covered by any long-term incentive compensation
plan.
(v) The Bank shall pay to the Officer (or in the
event of his death, to his estate), a lump sum payment in an
amount equal to the excess (if any) of : (A) the present value
of the aggregate benefits to which he would be entitled under
any and all tax-qualified and non-tax-qualified defined
benefit plans maintained by, or covering employees of, the
Bank (the "Pension Plans") if he had continued working for the
Bank during the Assurance Period; over (B) the present value
of the benefits to which the Officer and his spouse and/or
designated beneficiaries are actually entitled under such
plans (the "Pension Severance Payment"). The Pension Severance
Payment shall be computed according to the following formula:
PSP = PPB - APB
where "PSP" is the amount of the Pension Severance Payment
(before deductions for applicable federal, state and local
withholding taxes); "APB" is the aggregate lump sum present
value of the actual vested pension benefits payable under the
Pension Plans in the form of a straight life annuity beginning
at the earliest date permitted under the Pension Plans,
computed on the basis of the Officer's life expectancy at the
earliest date on which payments under the Pension Plans could
begin, determined by reference to Table VI of section 1.72-9
of the Income Tax Regulations (the "Assumed Life Expectancy"),
and on the basis of an interest rate assumption equal to the
average bond-equivalent yield on United States Treasury
Securities with a Constant Maturity of 30 Years for the month
prior to the month in which the Officer's termination of
employment occurs (the "30-Year Treasury Rate"); and "PPB" is
the lump sum present value of the pension benefits (whether or
not vested) that would be payable under the Pension Plans in
the form of a straight life annuity beginning at the earliest
date permitted under the Pension Plans, computed on the basis
that the Officer's actual age at termination of employment is
his attained age as of his last birthday that would occur
during the Assurance Period, that his service for benefit
accrual purposes under the Pension Plans is equal to the
aggregate of his actual service plus the Assurance Period,
that his average compensation figure used in determining
his accrued benefit is equal to the highest annual rate of
salary achieved by the Officer during the period of three (3)
years ending immediately prior to the date of termination,
that the Officer's life expectancy at the earliest date on
which payments under the Pension Plans could begin is the
Assumed Life Expectancy and that the interest rate assumption
used is equal to the 30-Year Treasury Rate. The Pension
Severance Payment shall be made within five (5) business days
after the Officer's termination of employment and shall be in
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lieu of any claim to any actual increase in his accrued
benefit in the Pension Plans in respect of the Assurance
Period.
(vi) The Bank shall pay to the Officer (or in the
event of his death, to his estate) a lump sum payment in an
amount equal to the present value of the additional employer
contributions that would have been credited directly to his
account(s) under any and all tax-qualified and non-tax
qualified defined contribution plans maintained by, or
covering employees of, the Bank (the "Non-ESOP DC Plans"),
plus the fair market value of the additional shares of
employer securities or other property that would have been
allocated to his account as a result of employer contributions
under any tax-qualified leveraged employee stock ownership
plan and any related non-tax-qualified supplemental plan
maintained by, or covering employees of, the Bank (the "ESOP
Plans") if he had continued in employment during the Assurance
Period (the "Defined Contribution Severance Payment"). The
Defined Contribution Severance Payment shall be computed
according to the following formula:
DCSP = [SSP x (EC / BS)] + [(STK + PROP) x Y]
where: "DCSP" is the amount of the Defined Contribution
Severance Payment (before deductions for applicable federal,
state and local withholding taxes); "SSP" is the amount of the
Salary Severance Payment (before deductions for applicable
federal, state and local withholding taxes); "EC" is the
amount of employer contributions actually credited to the
Officer's accounts under the Non-ESOP Plans for the last plan
year to end before his termination of employment; "BS" is the
Officer's compensation taken into account in computing EC; "Y"
is the aggregate (expressed in years and fractions of years)
of the Assurance Period and the number of years and fractions
of years that have elapsed between the end of plan year for
which EC was computed and the date of the Officer's
termination of employment; "STK" is the fair market value
(determined by the final reported sales price for stock of the
same class on the last trading day before the Officer's
termination of employment) of the employer securities actually
allocated to the Officer's accounts under the ESOP Plans in
respect of employer contributions and dividends applied to
loan amortization payments for the last plan year to end
before his termination of employment; and "PROP" is the fair
market value (determined as of the day before the Officer's
termination of employment using the same valuation methodology
used to value the assets of the ESOP Plans) of the property
other than employer securities actually allocated to the
Officer's accounts under the ESOP Plans in respect of employer
contributions and dividends applied to loan amortization
payments for the last plan year to end before his termination
of employment.
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(vii) At the election of the Bank made within 30 days
following the Officer's termination of employment, upon the
surrender of options or appreciation rights issued to the
Officer under any stock option and appreciation rights plan or
program maintained by, or covering employees of, the Bank, a
lump sum payment in an amount equal to the product of:
(A) the excess of (I) the fair market value
of a share of stock of the same class as the stock
subject to the option or appreciation right,
determined as of the date of termination of
employment, over (II) the exercise price per share
for such option or appreciation right, as specified
in or under the relevant plan or program; multiplied
by
(B) the number of shares with respect to
which options or appreciation rights are being
surrendered.
For the purpose of computing this payment, the Officer shall
be deemed fully vested in all options and appreciation rights
under any stock option or appreciation rights plan or program
maintained by, or covering employees of, the Bank, even if he
is not vested under such plan or program.
(viii) At the election of the Bank made within 30
days following the Officer's termination of employment, upon
the surrender of any shares awarded to the Officer under any
restricted stock plan maintained by, or covering employees of,
the Bank, the Bank shall make a lump sum payment in an amount
equal to the product of:
(A) the fair market value of a share of
stock of the same class of stock granted under such
plan, determined as of the date of the Officer's
termination of employment; multiplied by
(B) the number of shares which are being
surrendered.
For purposes of computing this payment, the Officer shall be
deemed fully vested in all shares awarded under any restricted
stock plan maintained by, or covering employees of, the Bank,
even if he is not vested under such plan.
The payments and benefits described in section 6(b) are referred to in this
Agreement as the "Additional Change of Control Entitlements".
SECTION 7. RESIGNATION.
(a) The Officer may resign from his employment with the Bank
at any time. A resignation under this section 7 shall be effected by notice of
resignation given by the Officer to the Bank and shall take effect on the later
of the effective date of termination specified in such notice or the date on
which the notice of termination is deemed given to the Officer. The Officer's
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resignation of any of the positions within the Bank or the Company to which he
has been assigned shall be deemed a resignation from all such positions.
(b) The Officer's resignation shall be deemed to be for "Good
Reason" if the effective date of resignation occurs during the Term, but on or
after the effective date of a Change of Control, and is on account of:
(i) the failure of the Bank (whether by act or omission of the
Board of Directors, or otherwise) to appoint or re-appoint or elect or
re-elect the Officer to the position with Bank that he held immediately
prior to the Change of Control (the "Assigned Office") or to a more
senior office;
(ii) if the Officer is or becomes a member of the Board of
Directors of the Bank, the failure of the shareholders of the Bank
(whether in an election in which the Officer stands as a nominee or in
an election where the Officer is not a nominee) to elect or re-elect
the Officer to membership at the expiration of his term of membership,
unless such failure is a result of the Officer's refusal to stand for
election;
(iii) a material failure by the Bank, whether by amendment of
the certificate of incorporation or organization, by-laws, action of
the Board of Directors of the Bank or otherwise, to vest in the Officer
the functions, duties, or responsibilities customarily associated with
the Assigned Office; provided that the Officer shall have given notice
of such failure to the Bank, and the Bank has not fully cured such
failure within thirty (30) days after such notice is deemed given;
(iv) any reduction of the Officer's rate of base salary in
effect from time to time, whether or not material, or any failure
(other than due to reasonable administrative error that is cured
promptly upon notice) to pay any portion of the Officer's compensation
as and when due;
(v) any change in the terms and conditions of any compensation
or benefit program in which the Officer participates which, either
individually or together with other changes, has a material adverse
effect on the aggregate value of his total compensation package;
provided that the Officer shall have given notice of such material
adverse effect to the Bank, and the Bank has not fully cured such
failure within thirty (30) days after such notice is deemed given;
(vi) any material breach by the Company or the Bank of any
material term, condition or covenant contained in this Agreement;
provided that the Officer shall have given notice of such material
adverse effect to the Company and the Bank, and
the Company or the Bank have not fully cured such failure within thirty
(30) days after such notice is deemed given; or
(vii) a change in the Officer's principal place of employment
to a place that is not the principal executive office of the Bank, or a
relocation of the Bank's
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principal executive office to a location that is both more than
twenty-five (25) miles away from the Officer's principal residence and
more than twenty-five (25) miles away from the location of the Bank's
principal executive office on the day before the occurrence of the
Change of Control.
In all other cases, a resignation by the Officer shall be deemed to be without
Good Reason. In the event of resignation, the Officer shall state in his notice
of resignation whether he considers his resignation to be a resignation with
Good Reason, and if he does, he shall state in such notice the grounds which
constitute Good Reason. The Officer's determination of the existence of Good
Reason shall be conclusive in the absence of fraud, bad faith or manifest error.
(c) In the event of the Officer's resignation for any reason,
the Bank shall pay and deliver the Standard Termination Entitlements. In the
event of the Officer's resignation with Good Reason, the Bank shall also pay and
deliver the Additional Termination Entitlements.
SECTION 8. TERMS AND CONDITIONS OF THE ADDITIONAL TERMINATION
ENTITLEMENTS.
The Bank and the Officer hereby stipulate that the damages
which may be incurred by the Officer following any termination of employment are
not capable of accurate measurement as of the date first above written and that
the Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Officer's efforts, if any, to mitigate damages.
The Bank and the Officer further agree that the Bank may condition the payment
and delivery of the Additional Termination Entitlements on the receipt of: (a)
the Officer's resignation from any and all positions which he holds as an
officer, director or committee member with respect to the Bank or any subsidiary
or affiliate of either of them; and (b) a release of the Bank and its officers,
directors, shareholders, subsidiaries and affiliates, in form and substance
satisfactory to the Bank, of any liability to the Officer, whether for
compensation or damages, in connection with his employment with the Bank and the
termination of such employment except for the Standard Termination Entitlements
and the Additional Termination Entitlements.
SECTION 9. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of the Officer's employment during the
Assurance Period or thereafter, whether by the Bank or by the Officer, shall
have no effect on the rights and obligations of the parties hereto under the
Bank's qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of,
the Bank from time to time; provided, however, that nothing in this Agreement
shall be deemed to duplicate any compensation or benefits provided under any
agreement, plan or program covering the Officer to which the Bank or Company is
a party and any duplicative amount payable under any such agreement, plan or
program shall be applied as an offset to reduce the amounts otherwise payable
hereunder.
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SECTION 10. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Officer, his legal representatives and testate or intestate
distributees, and the Company and the Bank and their respective successors and
assigns, including any successor by merger or consolidation or a statutory
receiver or any other person or firm or corporation to which all or
substantially all of the assets and business of the Company or the Bank may be
sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's or Bank's obligations
hereunder at least 60 days in advance of the scheduled effective date of any
such succession shall, if such succession constitutes a Change of Control,
constitute Good Reason for the Officer's resignation on or at any time during
the Term following the occurrence of such succession.
SECTION 11. NOTICES.
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to the Officer:
[Officer name]
[Officer address]
[Officer address]
If to the Company or the Bank:
Xxxxxx City Bancorp, Inc.
West 00 Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Chairman, Human Resources Committee
with a copy to:
Xxxxxxx Xxxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxx Xxxxxx, Esq.
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SECTION 12. INDEMNIFICATION FOR ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Officer against reasonable costs, including legal fees and expenses, incurred
by him in connection with or arising out of any action, suit or proceeding
(including any tax controversy) in which he may be involved, as a result of his
efforts, in good faith, to defend or enforce the terms of this Agreement. For
purposes of this Agreement, any settlement agreement which provides for payment
of any amounts in settlement of the Bank's obligations hereunder shall be
conclusive evidence of the Officer's entitlement to indemnification hereunder,
and any such indemnification payments shall be in addition to amounts payable
pursuant to such settlement agreement, unless such settlement agreement
expressly provides otherwise.
(b) The Bank's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Officer or others. In no event
shall the Officer be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Officer under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Officer obtains other employment. Unless it is determined that the
Officer has acted frivolously or in bad faith, the Bank shall pay as incurred,
to the full extent permitted by law, all legal fees and expenses which the
Officer may reasonably incur as a result of or in connection with his
consultation with legal counsel or arising out of any action, suit, proceeding,
tax controversy or contest (regardless of the outcome thereof) by the Bank, the
Officer or others regarding the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance thereof
(including as a result of any contest by the Officer about the amount of any
payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in section 7872(f)(2)(A) of
the Code.
SECTION 13. SEVERABILITY.
A determination that any provision of this Agreement is
invalid or unenforceable shall not affect the validity or enforceability of any
other provision hereof.
SECTION 14. WAIVER.
Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
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SECTION 15. COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, and all of which shall constitute one
and the same Agreement.
SECTION 16. GOVERNING LAW.
Except to the extent preempted by federal law, this Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of New Jersey applicable to contracts entered into and to be performed
entirely within the State of New Jersey.
SECTION 17. HEADINGS AND CONSTRUCTION.
The headings of sections in this Agreement are for convenience
of reference only and are not intended to qualify the meaning of any section.
Any reference to a section number shall refer to a section of this Agreement,
unless otherwise stated.
SECTION 18. ENTIRE AGREEMENT; MODIFICATIONS.
This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.
SECTION 19. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Officer by the Company or the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their compliance
with section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C.
Section 1828(k), and any regulations promulgated thereunder.
SECTION 20. GUARANTY.
The Company hereby irrevocably and unconditionally guarantees
to the Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement as
and when due without any requirement of presentment, demand of payment, protest
or notice of dishonor or nonpayment.
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IN WITNESS WHEREOF, the Bank and the Company have caused this
Agreement to be executed and the Officer has hereunto set his hand, all as of
the day and year first above written.
----------------------------------
[OFFICER NAME]
XXXXXX CITY SAVINGS BANK
Attest:
By By
----------------------------------- -------------------------------
Name: Name:
Title: Title:
[Seal]
XXXXXX CITY BANCORP, INC.
Attest:
By By
----------------------------------- -------------------------------
Name: Name:
Title: Title:
[Seal]
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