CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (this "Agreement") is made effective as of
October 1, 2007 (the "Effective Date"), by and between Beacon Federal, a
federally chartered savings association with its principal office in East
Syracuse, New York (the "Bank") and Xxxx Xxxx-Xxxxxxx ("Executive").
WHEREAS, Executive currently serves in the position of Vice President
Compliance/Internal Audit of the Bank, a position of substantial responsibility;
and
WHEREAS, the Bank wishes to provide economic assurances to Executive in
certain circumstances, as specified herein;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereto
agree as follows:
1. TERM OF AGREEMENT
This Agreement shall commence as of the Effective Date and shall continue
thereafter for a period of one (1) year. Commencing on the first anniversary
date of this Agreement (the "Anniversary Date"), and continuing on each
Anniversary Date thereafter, the term of this Agreement shall renew for an
additional year such that the remaining term of this Agreement is always one (1)
year, unless written notice of non-renewal (a "Non-Renewal Notice") is provided
to Executive at least thirty (30) days and not more than sixty (60) days prior
to any such Anniversary Date, in which case the term of this Agreement shall
become fixed and shall end one (1) year following such Anniversary Date.
2. TERMINATION OF EMPLOYMENT
This Agreement provides for certain payments and benefits to Executive
only in the event of a Change in Control (as defined below) followed by the
termination of Executive's employment with the Bank, as set described in this
Section 2.
(a) Upon the occurrence of a Change in Control during the term of this
Agreement followed by Executive's (i) involuntary termination of employment,
other than for Cause (as defined below) within one year after the Change in
Control or (ii) voluntary termination of employment for Good Reason (as defined
below), the provisions of Section 3 shall apply. Upon the occurrence of a Change
in Control during the term of this Agreement, Executive shall have the right to
elect to terminate employment with the Bank by resignation within one year after
any of the following events, each of which shall constitute "Good Reason": (A) a
demotion, loss of title, office or significant authority (in each case, other
than as a result of the fact that the Bank is merged into another entity in
connection with the Change in Control and will not operate as a stand-alone,
independent entity); (B) a reduction in his annual compensation or benefits; or
(C) relocation of his principal place of employment by more than 50 miles from
its location immediately prior to the Change in Control; provided, however, that
the Executive must provide at least 30 days prior written notice to the Bank
given within a reasonable period of time (not to exceed, except in case of a
continuing breach, 90 days) after the event giving rise to the right to elect;
provided, however, that the Bank shall have at least 30 days to remedy the
situation.
(b) The term "Change in Control" shall mean any of the following events,
but shall not include a conversion of the Bank from mutual to stock form:
(i) a change in control of the Bank or any holding company of the Bank
of a nature that would be required to be reported in response to Item 5.01(a) of
the current report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); or
(ii) a change in control of the Bank or any holding company of the Bank
within the meaning of the Home Owners' Loan Act, as amended, and applicable
rules and regulations promulgated thereunder, as in effect at the time of the
Change in Control; or
(iii) any of the following events, upon which a Change in Control shall
be deemed to have occurred:
(A) any "person" (as the term is used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the Bank
or the Bank's holding company representing 25% or more of the combined voting
power of such outstanding securities, except for any securities purchased by an
employee stock ownership plan or trust established by the Bank; or
(B) individuals who constitute the Board on the Effective Date
(the "Incumbent Board") cease for any reason to constitute a majority thereof,
provided that any person becoming a director subsequent to the Effective Date
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 of the Bank or the Bank's holding company was approved by the same
Nominating Committee serving under an Incumbent Board, shall be, for purposes of
this subsection (B), considered as though they were members of the Incumbent
Board; or
(C) a sale of all or substantially all the assets of the Bank or
the Bank's holding company, or a plan of reorganization, merger, consolidation,
or similar transaction occurs in which the security holders of the Bank or the
Bank's holding company immediately prior to the consummation of the transaction
do not own at least 50.1% of the securities of the surviving entity to be
outstanding upon consummation of the transaction; or
(D) a proxy statement is issued soliciting proxies from
stockholders of the Bank or the Bank's holding company by someone other than the
current management of the Bank or the Bank's holding company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Bank or the Bank's holding company, or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the plan are to be exchanged for or converted into
cash or property or securities not issued by the Bank or the Bank's holding
company; or
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(E) a tender offer is made for 25% or more of the voting
securities of the Bank or the Bank's holding company and stockholders owning
beneficially or of record 25% or more of the outstanding securities of the Bank
or the Bank's holding company have tendered or offered to sell their shares
pursuant to such tender offer and such tendered shares have been accepted by the
tender offeror.
(c) Even if a Change in Control shall occur during the term of this
Agreement, Executive shall not have the right to receive termination benefits
pursuant to Section 3 upon termination of employment for Cause. Termination for
"Cause" shall mean termination because of Executive's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, material breach of the Bank's Code of Ethics, material violation of the
Xxxxxxxx-Xxxxx requirements for officers of public companies, if applicable,
that in the reasonable opinion of the Chief Executive Officer will likely cause
substantial financial harm or substantial injury to the reputation of the Bank
of any holding company of the Bank, willfully engaging in actions that in the
reasonable opinion of the Chief Executive Officer will likely cause substantial
financial harm or substantial injury to the business reputation of the Bank,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than routine traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement.
3. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL
(a) If Executive's employment is terminated in accordance with Section
2(a), the Company (i) shall be obligated to pay Executive, or in the event of
Executive's subsequent death, his or her beneficiary or beneficiaries, or his or
her estate, as the case may be, as severance pay, an amount equal to the sum of
(A) Executive's highest annual rate of base salary paid to Executive at any time
under this Agreement, plus (B) the highest bonus paid to Executive with respect
to the completed fiscal year prior to the Change in Control; and (ii) shall
provide at the Bank's expense for twelve (12) months after the date of such
termination of employment, life insurance coverage and non-taxable medical and
dental coverage substantially comparable to the coverage maintained by the Bank
for Executive prior to the termination of employment, except to the extent such
coverage may be changed in its application to all Bank employees. The period for
group health care continuation coverage under COBRA shall not begin until the
expiration of such twelve (12) month period.
(b) Upon the occurrence of a Change in Control, Executive shall have such
rights as specified in any other employee benefit plan with respect to options
and such other rights as may have been granted to the Executive under such
plans.
(c) All cash severance payments shall be made in a lump sum within thirty
(30) days after Executive's termination of employment. Such payments shall not
be reduced in the event Executive obtains other employment following termination
of employment with the Bank.
(d) Notwithstanding the preceding paragraphs of this Section 3, in the
event that the aggregate payments or benefits to be made or afforded to
Executive in the event of a Change in Control would be deemed to include an
"excess parachute payment" under Section 280G of the Internal Revenue Code or
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any successor thereto, then at the election of Executive, (i) such payments or
benefits shall be payable or provided to Executive over the minimum period
necessary to reduce the present value of such payments or benefits to an amount
that is one dollar ($1.00) less than three times Executive's "base amount" under
such Section 280G, or (ii) the payments or benefits to be provided under this
Section 3 shall be reduced to the extent necessary to avoid treatment as an
excess parachute payment, with the allocation of the reduction among such
payments and benefits to be determined by Executive.
4. NOTICE OF TERMINATION
Any purported termination of Executive's employment by the Bank or by
Executive shall be communicated by Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice that shall indicate the Date of Termination and, in the event of
termination by Executive, the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated. "Date of Termination" shall mean the date specified in
the Notice of Termination (which, in the case of termination for Cause, shall be
immediate). In no event shall the Date of Termination exceed 30 days from the
date Notice of Termination is given.
5. SOURCE OF PAYMENTS
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. Any holding company established by the
Bank may accede to this Agreement but only for the purposed of guaranteeing
payment and provision of all amounts and benefits due hereunder to Executive.
6. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Bank or any
predecessor of the Bank and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to Executive of
a kind elsewhere provided. No provision of this Agreement shall be interpreted
to mean that Executive is subject to receiving fewer benefits than those
available to him without reference to this Agreement.
7. NO ATTACHMENT
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Bank and their respective successors and assigns.
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8. MODIFICATION AND WAIVER
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) 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 or as to any act other than that
specifically waived.
9. REQUIRED PROVISIONS
(a) The Bank may terminate Executive's employment at any time, but any
termination by the Board other than termination for Cause shall not prejudice
Executive's right to compensation or other benefits under this Agreement.
Executive shall have no right to receive compensation or other benefits for any
period after termination for Cause.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) [12 USC ss.1818(e)(3)] or 8(g)(1) [12 USC ss.1818(g)(1)] of the
Federal Deposit Insurance Act, the Bank's obligations under this contract shall
be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay Executive all or part of the compensation withheld while its
contract obligations were suspended and (ii) reinstate (in whole or in part) any
of its obligations which were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) [12 USC ss.1818(e)(4)] or 8(g)(1) [12 USC ss.1818(g)(1)] of the
Federal Deposit Insurance Act, all obligations of the Bank under this Agreement
shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x)(1) [12 USC
ss.1813(x)(1)] of the Federal Deposit Insurance Act, all obligations of the Bank
under this Agreement shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations under this Agreement shall be terminated, except to the
extent determined that continuation of the contract is necessary for the
continued operation of the Bank, (i) by the Director of the OTS or his or her
designee, at the time the FDIC enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) [12 USC
ss.1823(c)] of the Federal Deposit Insurance Act; or (ii) by the Director or his
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or her designee at the time the Director or his or her designee approves a
supervisory merger to resolve problems related to operation of the Bank or when
the Bank is determined by the Director to be in an unsafe or unsound condition.
Any rights of the parties that have already vested, however, shall not be
affected by such action.
(f) Notwithstanding anything herein contained to the contrary, any payments
to Executive by the Bank or any holding company of 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 the regulations promulgated thereunder in 12 C.F.R. Part
359.
10. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
11. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
12. GOVERNING LAW
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of New York.
13. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a single
arbitrator sitting in a location selected by Executive within twenty-five miles
of East Syracuse, New York in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
14. SUCCESSOR TO THE BANK
Any successor to or assignee of the Bank, whether direct or indirect, by
purchase, merger, consolidation or otherwise, to all or substantially all the
business or assets of the Bank, expressly and unconditionally assumes and agrees
to perform the Bank's obligations under this Agreement, in the same manner and
to the same extent that the Bank would be required to perform if no such
succession or assignment had taken place.
15. OBLIGATIONS OF BANK
The termination of Executive's employment, other than following a Change in
Control, shall not result in any obligation of the Bank under this Agreement.
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16. SIGNATURES
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officers, and Executive has signed this Agreement, effective
as of the date first above written.
BEACON FEDERAL
October 3, 2007 By:/s/ Xxxx X. Xxxxxxxx
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Date President and Chief Executive Officer
EXECUTIVE:
October 1, 2007 /s/ Xxxx Xxxx-Xxxxxxx
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Date Xxxx Xxxx-Xxxxxxx
