AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.49
AMENDMENT
TO EMPLOYMENT AGREEMENT
TO EMPLOYMENT AGREEMENT
AGREEMENT made the 18th of September 2007, by and between SOVEREIGN BANCORP,
INC., a Pennsylvania corporation (“SBI”), and XXXXXXXXX X. XXXXXXX, an individual (the
“Officer”).
WITNESSETH:
WHEREAS, the parties entered into an agreement dated August 7, 2007, relating, among other
things, to the Officer’s employment by SBI (the “Employment Agreement”); and
WHEREAS, the parties desire, to amend the Employment Agreement to comply with Section 409A of
the Internal Revenue Code of 1986, as amended, by executing this document (the “Amendment”),
effective August 7, 2007.
NOW, THEREFORE, the parties, intending to be legally bound hereby, further agree as follows,
effective August 7, 2007:
1. Section 3(b) of the Employment Agreement is amended and restated to read as
follows—
(b) The Officer’s employment under this Agreement may be terminated at
any time during the Employment Period without Cause, by action of the Chief
Executive Officer of the Bank, upon giving written notice of such termination to the
Officer at least thirty (30) days prior to the date upon which such termination
shall take effect. If the Officer’s employment is terminated under the provisions of
this Section 3(b), then the Officer shall be entitled to receive the compensation
and benefits set forth in Section 5. For purposes of this Section 3(b), (i) a
material adverse change in the Officer’s duties or responsibilities following a
Change in Control of Sovereign, or (ii) a violation by the Bank of the last sentence
of Section 1 hereof shall be deemed to be a termination of the Officer’s employment
without Cause. Upon the occurrence of any of the events listed in this Section 3(b),
the Officer shall be permitted, within ninety (90) days of the occurrence of such
event, to resign from employment by a notice in writing delivered to the Bank,
whereupon he will become entitled to receive the compensation and benefits set forth
in Section 5, provided, however, that the Bank shall be given thirty (30) days from
the day it receives the notice of termination to remedy any such event.
Notwithstanding the foregoing, any amounts payable upon a termination under this
Section 3(b) shall be paid only if the Officer actually terminates employment within
two (2) years following the initial existence of the events listed in this Section.
2. Section 5(b) of the Amended Employment Agreement is amended and restated to read
as follows—
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(b) All payments required by Section 5(a) shall be paid in a lump sum
cash payment not later than the thirtieth (30th) day following the date
of termination of employment.
3. Section 5A(a)(ii) of the Amended Employment Agreement is amended to read as
immediately set forth below—
a reduction in the Officer’s base and/or annual target incentive
compensation below a level that was in effect immediately prior to the public
announcement;
4. Section 5A(a)(v) of the Amended Employment Agreement is amended to read as
immediately set forth below—
(v) any material breach of this Agreement by the Officer’s employer at any
relevant time, coupled with the failure to cure the same within thirty (30) days
after receipt of written notice of such breach from the Officer; and
5. Section 5A(a) of the Amended Employment Agreement is amended by adding a new
subsection (vi) at the end thereof reading as immediately set forth below —
(vi) any reduction in title or any material reduction in Officer’s
responsibilities or authority as they exist immediately prior to the
public announcement.
6. Section 5A(b) of the Employment Agreement is amended and restated to read as
follows—
(b) Notice of Termination. Upon the occurrence of an event of
Good Reason subject to Section 5A(a), the Officer may, within ninety (90) days of
the occurrence of any such event, resign from employment by a notice in writing
(“Notice of Termination”) delivered to Sovereign, whereupon he will become entitled
to the payments and benefits described in Sections 5A(e) and 5A(f), provided,
however, that Sovereign shall be given thirty (30) days from the date it receives
the Notice of Termination to remedy such event. Notwithstanding the foregoing, any
amounts payable upon a termination for Good Reason shall be paid only if the Officer
actually terminates employment within two (2) years following the initial existence
of the event constituting Good Reason. In the case of a termination described in
Section 5A(a)(i), the Officer shall confirm his involuntary termination, in writing,
within ninety (90) days of the date of such termination, and such confirmation will
be deemed a Notice of Termination.
7. Section 5A(e)(i) of the Employment Agreement is amended and restated to read as
follows—
(i) Basic Payments. The Officer will be paid an amount equal to three
(3) times the sum of (A) the highest annualized base salary paid to him during the
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year of termination or the immediately preceding two (2) calendar years, and (B) the
greater of (i) the target bonus in the year of termination or (ii) the highest bonus
paid to him with respect to one of the three (3) calendar years immediately
preceding the year of termination. Such amount will be paid to the Officer in a lump
sum cash payment not later than the thirtieth (30th) day following the
date of termination of employment. For purposes of this Paragraph (i), to the extent
necessary, base salary and bonuses with any predecessor of Sovereign or an affiliate
thereof shall be taken into account.
8. Section 5A(e)(ii) of the Employment Agreement is amended and restated to read as
follows—
(ii) Health and Medical Benefits. For a period of three (3) years from
the day of termination of employment, the Officer shall be provided, at no charge,
with a continuation of health and medical benefits substantially similar to the most
favorable of such benefits provided to him at his employer’s cost during the two
year period immediately preceding such termination. To the extent such benefits
cannot be provided under a plan because the Officer is no longer an employee of the
employer, a lump sum payment in cash equal to the present value (determined based
upon 120% of the then prevailing monthly short-term applicable federal rate), after
tax cost (estimated in good faith by the Bank) of obtaining such benefits, or
substantially similar benefits, shall be made to the Officer within fifteen (15)
days of his termination of employment.
9. Section 10 of the Employment Agreement is amended and restated to read as
follows—
10. All payments made to the Officer pursuant to this Employment Agreement or
otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §
1828(k) and any regulations promulgated thereunder. Notwithstanding the preceding
sentence, but only to the extent permitted under 12 U.S.C. §1828(k), in the event
that the amounts and benefit payable under this Agreement, when added to other
amounts and benefits which may become payable to the Officer by the Bank and
relevant affiliates of the Bank, are such that the Officer becomes subject to the
excise tax provisions of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), the Bank shall pay him such additional amount or amounts as
will result in his retention (after the payment of all federal, state and local
excise, employment and income taxes on the amount of such payments and the value of
such benefits) of a net amount equal to the net amount he would have retained had
the initially calculated payments and benefits been subject only to potential income
and employment taxation. For purposes of the preceding sentence, the Officer shall
be deemed to be subject to the highest marginal federal, relevant state and relevant
local tax rates. All calculations required to be made under this section shall be
made by independent accountants of the Bank’s choice, subject to the right of the
Officer’s representative to review the same. All such amounts required to be paid
shall be
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paid at the time any withholding may be required, but in no event later than the
end of the Officer’s taxable year next following the Officer’s taxable year in
which the Officer remits the related taxes. In the event any amount paid
hereunder is subsequently determined to be in error because estimates were
required or otherwise, the parties agree to reimburse each other to correct such
error, as appropriate, and to pay interest thereon at the applicable federal
rate (as determined under Code Section 1274 for the period of time such
erroneous amount remained outstanding and unreimbursed). The parties recognize
that the actual implementation of the provisions of this section are complex and
agree to deal with each other in good faith to resolve any questions or
disagreements arising hereunder.
In the event the Bank’s regulator declines to permit the payment of the tax
gross-up amounts described above, the payments and benefits provided to the
Officer under this Agreement shall be limited to the amount permitted by Code
Section 280G (or, if less, 12 U.S.C. §1828(k)).
10. Section 20 of the Employment Agreement is deleted in its entirety.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment, or caused it to be
executed, as of the date first above written.
| SOVEREIGN | BANCORP, INC. | |||||
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| By | ||||||
| Xxxxxx X. XxXxxxxxx, Director of Human | ||||||
| Resources | ||||||
| Date: | September 18, 2007 | |||||
| /s/ Xxxxxxxxx X. Xxxxxxx
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Date: | , 2007 |
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