CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT ("Agreement") made as of the 1st day of May,
1998, between MAIN STREET BANCORP, INC., a Pennsylvania business
corporation ("Main"), BERKS COUNTY BANK, a Pennsylvania banking
corporation (the "Bank"), and XXXXXX X. XXXXXXXXX, an individual
(the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive will initially be serving as a Senior
Vice President of Main and the Bank following the consolidation
of BCB Financial Services Corporation and Heritage Bancorp, Inc.
to form Main; and
WHEREAS, Main and the Bank consider the continued services
of the Executive to be in the best interest of Main, the Bank and
the shareholders of Main; and
WHEREAS, Main and the Bank desire to induce the Executive to
remain in the employ of his then employer (whether it be Main or
any other company affiliated with Main (the "Employer")) on an
impartial and objective basis in the event of a transaction
pursuant to which a Change in Control (as defined in
Section 2(c)) of Main occurs.
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Term of Agreement.
(a) In General. Except as otherwise provided herein,
the term of this Agreement will be for a period commencing
on the date of this Agreement and ending on December 31,
2000; provided, however, that this Agreement will
automatically be renewed on January 1, 2000 for the two-year
period commencing on such date and ending on December 31,
2001, unless either the Executive or his Employer gives
written notice of nonrenewal to the other on or before
November 1, 1999 (in which case this Agreement will continue
in effect through December 31, 2000); and provided further,
that if this Agreement is renewed on January 1, 2000, it
will automatically be renewed on January 1 of each
subsequent year (the "Annual Renewal Date") for a period
ending two years from each Annual Renewal Date unless either
the Executive or his Employer gives written notice to the
other at least 60 days prior to an Annual Renewal Date (in
which case this Agreement will continue in effect for a term
ending one year from the Annual Renewal Date immediately
following such notice).
(b) Termination for Cause. Notwithstanding the
provisions of Section 1(a), this Agreement will terminate
automatically upon termination of the Executive's employment
by his Employer for Cause. As used in this
Agreement, the term "Cause" means:
(i) prior to a Change in Control, termination for
any reason; and
(ii) concurrent with or following a Change in
Control, termination following (A) the Executive's
conviction or plea of guilty or nolo contendere to a
felony, a crime of falsehood, or a crime involving
fraud or moral turpitude, or the actual incarceration
of the Executive for a period of 45 consecutive days,
(B) the Executive's willful and repeated failure to
follow the lawful instructions of his Employer after
receipt of written notice of such instructions from an
appropriate corporate official, other than a failure
resulting from the Executive's incapacity because of
physical or mental illness, or (C) a government
regulatory agency recommends or orders in writing that
the employment of the Executive be so terminated.
If the Executive's employment is terminated for Cause, his
rights under this Agreement will cease as of the effective
date of such termination.
(c) Voluntary Termination, Retirement, or Death.
Notwithstanding the provisions of Section 1(a), this
Agreement will terminate automatically upon the voluntary
termination of the Executive's employment (other than in
accordance with Section 2), his retirement or his death. In
any such event, the Executive's rights under this Agreement
will cease as of the effective date of such termination;
provided, however, that if the Executive dies after a Notice
of Termination (as defined in Section 2(b)) is delivered by
him in accordance with such section, the payments described
in Section 3 will nonetheless be made to the person or
persons determined pursuant to Section 9(b).
(d) Disability. Notwithstanding the provisions of
Section 1(a), this Agreement will terminate automatically
upon the termination of the Executive's employment by reason
of his Disability. In such event, the Executive's rights
under this Agreement will cease as of the effective date of
such termination; provided, however, that if the Executive
becomes disabled after a Notice of Termination is delivered
by him in accordance with Section 2(b), he will nonetheless
be entitled to receive the payments described in Section 3.
As used in this Agreement, the term "Disability" means
incapacitation, by accident, sickness or otherwise, such
that the Executive is rendered unable to perform the
essential duties required of him by his then position with
the Employer, notwithstanding reasonable accommodation, for
a period of six consecutive months.
2. Termination Following a Change in Control.
(a) Events Giving Right To Terminate For Good Reason.
If a Change in Control occurs and, concurrently therewith or
thereafter during the term of this Agreement, an event
constituting Good Reason also occurs with respect to the
Executive, he may terminate his employment in accordance
with the provisions of Section 2(b) and, thereupon, will
become entitled to the payments described in Section 3. As
used in this Agreement, the term "Good Reason" means any of
the following events:
(i) the involuntary termination of the Executive,
other than an involuntary termination permitted in
Sections 1(b) and (d);
(ii) a reduction in the Executive's title,
responsibility (including reporting responsibility) or
authority as in effect immediately prior to the Change
in Control; provided, however, that the assignment of
the Executive to a position with a reasonably similar
title, responsibility and authority will not constitute
an event of Good Reason if the Executive's actual or
targeted compensation in such new position is not less
than the Executive's actual and targeted compensation
immediately prior to the Change in Control;
(iii) the assignment to the Executive of duties
inconsistent with his position immediately prior to the
Change in Control, except for an assignment of duties
consistent with a position permitted in Clause (ii);
(iv) reassignment of the Executive to a principal
office which is more than 50 miles from 000 Xxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx;
(v) a reduction in the Executive's annual base
salary in effect immediately prior to the Change in
Control;
(vi) the failure to provide the Executive with
welfare, pension, incentive compensation, fringe and
other benefits to which he was entitled immediately
prior to the Change in Control, unless such failure
occurs by reason of a reduction or change in such
benefits for employees generally or similarly situated
executive employees of the corporation which is the
acquiring, resulting or successor corporation in the
Change in Control (or an affiliate thereof); or
(vii) any material breach of this Agreement by
the corporation that may be the Executive's Employer at
the relevant time, coupled with the failure to cure the
same within 30 days after receipt of written notice of
such breach from the Executive.
(b) Notice of Termination. Upon the occurrence of a
Change in Control and an event of Good Reason, the Executive
may, within 90 days of the occurrence of any such event,
resign from employment by a notice in writing ("Notice of
Termination") delivered to Main, whereupon he will become
entitled to the payments described in Section 3. In the
case of a termination described in Clause (i) of
Section 2(a), the Executive will confirm his involuntary
termination, in writing, within 90 days of the date of such
termination, and such confirmation will be deemed a Notice
of Termination.
(c) Change in Control Defined. As used in this
Agreement, the term "Change in Control" means any of the
following:
(i) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities and
Exchange Act of 1934 (the "Exchange Act")), other than
Main, a subsidiary of Main, an employee benefit plan of
Main or a subsidiary of Main (including a related
trust), becomes the beneficial owner (as determined
pursuant to Rule 13d-3 under the Exchange Act),
directly or indirectly of securities of Main
representing more than 20% of the combined voting power
of Main's then outstanding securities;
(ii) the occurrence of, or execution of an
agreement providing for, a sale of all or substantially
all of the assets of Main or the Bank to an entity
which is not a direct or indirect subsidiary of Main;
(iii) the occurrence of, or execution of an
agreement providing for, a reorganization, merger,
consolidation or similar transaction involving Main,
unless (A) the shareholders of Main immediately prior
to the consummation of any such transaction will
initially own securities representing a majority of the
voting power of the surviving or resulting corporation,
and (B) the directors of Main immediately prior to the
consummation of such transaction will initially
represent a majority of the directors of the surviving
or resulting corporation; and
(iv) any other event which is at any time
irrevocably designated as a "Change in Control" for
purposes of this Agreement by resolution adopted by a
majority of the then non-employee directors of Main.
3. Rights in the Event of Certain Terminations Following
Change in Control. In the event the Executive validly and timely
delivers a Notice of Termination to Main, he will be entitled to
receive the following payments and benefits:
(a) Basic Payments. The Executive will be paid an
amount equal to two times the sum of (i) the highest
annualized base salary paid to him during the year of
termination or the immediately preceding two calendar years,
and (ii) the highest bonus paid to him with respect to one
of the two calendar years immediately preceding the year of
termination. Such amount will be paid to the Executive in
24 equal monthly installments (without interest), beginning
30 days following the date of termination of employment.
For purposes of this subsection, to the extent necessary,
base salary and bonuses with any predecessor of Main or an
affiliate thereof shall be taken into account.
(b) Supplemental Payment in Lieu of Certain Benefits.
In lieu of continued pension, welfare and other benefits, a
lump sum cash payment of $24,023 will be paid to the
Executive within 30 days following the date of termination
of employment.
(c) Excise Tax Matters in General. In the event that
the amounts and benefits payable under this section, when
added to other amounts and benefits which may become payable
to the Executive by Main and/or any affiliated company, are
such that he becomes subject to the excise tax provisions of
Section 4999 of the Internal Revenue Code of 1996, as
amended (the "Code"), Main will pay him (or cause him to be
paid) 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 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 income
and employment taxation. For purposes of the preceding
sentence, the Executive will be deemed to be subject to the
highest marginal federal, state and local tax rates. All
calculations required to be made under this subsection will
be made by Main's independent certified public accountants,
subject to the right of Executive's representative to review
the same. All such amounts required to be paid will be paid
at the time any withholding may be required under applicable
law, and any additional amounts to which the Executive may
be entitled will be paid or reimbursed no later than 15 days
following confirmation of such amount by Main's accountants.
In the event any amounts paid hereunder are 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 1274A for the period of time such erroneous
amount remained outstanding and unreimbursed). The parties
recognize that the actual implementation of the provisions
of this subsection are complex and agree to deal with each
other in good faith to resolve any questions or
disagreements arising hereunder.
(d) Limited Restriction on Payments and Benefits to
Avoid Excise Tax. Notwithstanding the provisions of
Subsection (c), if (i) it is determined that the payments to
be provided to the Executive hereunder would subject him to
the excise tax provisions of Code Section 4999, but (ii) a
5% reduction in the present value (as determined pursuant to
the provisions of Code Section 280G) of such payments would
result in no such excise tax being owed, then such payments
will be reduced or eliminated by the smallest amount
necessary to avoid the imposition of such excise tax. The
Executive will be entitled, within a reasonable period of
time, to specify which payments will be reduced or
eliminated.
4. Legal Expenses. Main will pay (or cause to be paid) to
the Executive all reasonable legal fees and expenses when
incurred by the Executive in seeking to obtain or enforce any
right or benefit provided by this Agreement, provided he brings
the action in good faith.
5. Notices. Any notice required or permitted to be given
under this Agreement will, to be effective hereunder, be given to
Main, in the case of notices given by the Executive, and will, to
be effective hereunder, be given by Main, in the case of notices
given to the Executive. Any such notice will be deemed properly
given if in writing and if mailed by registered or certified
mail, postage prepaid with return receipt requested, to the
residence of the Executive, in the case of notices to the
Executive, and to the principal office of Main, in the case of
notices to Main.
6. Waiver. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or
discharge is agreed to in writing and signed by the Executive and
an executive officer of Main specifically designated by the Board
of Directors of Main. No waiver by any party hereto at any time
of any breach by another party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party will be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time.
7. Assignment. This Agreement is not assignable by any
party hereto, except by Main and the Bank to any successor in
interest to the respective businesses of Main and the Bank.
8. Entire Agreement. This Agreement contains the entire
agreement of the parties relating to the subject matter of this
Agreement and, in accordance with the provisions of Section 18,
supersedes any prior agreement of the parties.
9. Successors; Binding Agreement.
(a) Main will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business and/or
assets of Main and/or the Bank to expressly assume and agree
to perform this Agreement (or cause it to be performed) in
the same manner and to the same extent that Main, the Bank
or any affiliated company of either would be required to
perform it if no such succession had taken place. Failure
by Main to obtain such assumption and agreement prior to the
effectiveness of any such succession will constitute a
material breach of this Agreement. As used in this
Agreement, "Main" and the "Bank" means Main and the Bank as
hereinbefore defined and any successor to the business
and/or assets of Main and/or the Bank as aforesaid which
assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs,
distributees, devisees, and legatees. If the Executive
should die while any amount is payable to the Executive
under this Agreement if the Executive had continued to live,
all such amounts, unless otherwise provided herein, will be
paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee, or, if
there is no such designee, to the Executive's estate.
10. Continuation of Certain Provisions. Any termination of
the Executive's employment under this Agreement or of this
Agreement will not affect the benefit provisions of Section 3 or
4, which will, if relevant, survive any such termination and
remain in full force and effect in accordance with their
respective terms.
11. Other Rights. Except as provided in Section 18,
nothing herein will be construed as limiting, restricting or
eliminating any rights the Executive may have under any plan,
contract or arrangement to which he is a party or in which he is
a vested participant; provided, however, that any termination
payments required hereunder will be in lieu of any severance
benefits to which he may be entitled under a severance plan or
arrangement of Main, the Bank or any affiliated company of
either; and provided further, that if the benefits under any such
plan or arrangement may not legally be eliminated, then the
payments hereunder will be correspondingly reduced in such
equitable manner as the Board of Directors of Main may determine.
12. No Mitigation or Offset. The Executive will not be
required to mitigate the amount of any payment provided for in
this Agreement by seeking employment or otherwise; nor will any
amounts or benefits payable or provided hereunder be reduced in
the event he does secure employment.
13. Validity. The invalidity or unenforceability of any
provisions of this Agreement will not affect the validity or
enforceability of any other provision of this Agreement,
which will remain in full force and effect. In addition, to the
extent relevant, if a government regulatory agency recommends or
orders that the Bank terminate the employment of the Executive
with the Bank or relieve him of his duties as such relate to the
Bank, the Agreement or such provision will nevertheless be and
remain an obligation of Main enforceable against it in accordance
with its terms, notwithstanding any such termination of the
Executive's employment with the Bank.
14. Applicable Law. Except to the extent preempted by
federal law, this Agreement will be governed by and construed in
accordance with the domestic internal law of the Commonwealth of
Pennsylvania.
15. Number. Words used herein in the singular will be
construed as being used in the plural, as the context requires,
and vice versa.
16. Headings. The headings of the sections and subsections
of this Agreement are for convenience only and will not control
or affect the meaning or construction or limit the scope or
intent of any of the provisions of this Agreement.
17. References to Entities. All references to Main will be
deemed to include references to the Bank, as appropriate in the
relevant context, and vice versa.
18. Effective Date; Termination of Prior Agreement. This
Agreement will become effective immediately upon the execution
and delivery of this Agreement by the parties hereto. Upon the
execution and delivery of this Agreement, any prior agreement
relating to the subject matter hereof will be deemed
automatically terminated and be of no further force or effect.
19. Withholding For Taxes. All amounts and benefits paid
or provided hereunder will be subject to withholding for taxes as
required by law.
20. Individual Agreement. This Agreement is an agreement
solely between and among the parties hereto. It is intended to
constitute a nonqualified unfunded arrangement for the benefit of
a key management employee and will be construed and
interpreted in a manner consistent with such intention.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
MAIN STREET BANCORP, INC.
By/s/ Xxxxxx X. Xxxxxx
(SEAL)
BERKS COUNTY BANK
By/s/ Xxxxxx X. Xxxxxx
(SEAL)
/s/ Xxxxxx X. Xxxxxxxxx (SEAL)
Xxxxxx X. Xxxxxxxxx
