1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT 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
"Executive").
INTRODUCTORY STATEMENT
The Bank is undertaking a reorganization through which it will
convert from a mutual savings 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 Executive has served the Bank in an executive capacity for many
years 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 secure a continuity in management
following the Reorganization. They also consider it desirable to establish a
working environment for the Executive which minimizes the personal distractions
that might result from possible business combinations in which the Company or
the Bank might be involved. For these reasons, the Board of Managers of the Bank
and the Board of Directors of the Company have decided to offer to enter into a
contract with the Executive for his future services. The Executive has accepted
this offer.
The terms and conditions which the Bank, the Company and the
Executive have agreed to are as follows.
AGREEMENT
SECTION 1. EMPLOYMENT.
The Company and the Bank hereby continue to employ the
Executive, and the Executive hereby accepts such continued employment, during
the period and upon the terms and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT
PERIOD.
(a) The Company and the Bank shall employ the Executive during
an initial period of three (3) years beginning on the effective date of the
Reorganization (the "Employment Commencement Date") and ending on the day before
the third (3rd) anniversary of the
2
Employment Commencement Date, and during the period of any additional extensions
described in section 2(b) (the "Employment Period").
(b) On the day after the Employment Commencement Date and on
each day thereafter, the Employment Period shall be extended by one day, such
that on any date the Employment Period will expire on the day before the third
(3rd) anniversary of such date. These extensions shall continue in perpetuity
until discontinued by: (i) joint notice to the Executive given by the Bank and
the Company that they have elected to discontinue the extensions; (ii) notice by
the Executive to the Bank and the Company that he has elected to discontinue the
extensions; or (iii) termination of the Executive's employment with the Bank and
the Company, whether by resignation, discharge or otherwise. On the date on
which such a notice is deemed given, or on the effective date of a termination
of the Executive's employment with the Bank and the Company, the Employment
Period shall be converted to a fixed period of three (3) years ending on the day
before the third (3rd) anniversary of such date. Except as otherwise expressly
provided in this Agreement, any reference in this Agreement to the term
"Remaining Unexpired Employment Period" as of any date shall mean the period
beginning on such date and ending on the day before the third (3rd) anniversary
of the earliest of the date in question, any earlier date on which the Executive
or the Bank and the Company is deemed to have given a notice to discontinue
extensions of the Employment Period, and any earlier date on which the
Executive's employment with the Bank and the Company was terminated.
(c) Nothing in this Agreement shall be deemed to prohibit the
Company or the Bank from terminating the Executive's employment before the end
of the Employment Period with or without notice for any reason. This Agreement
shall determine the relative rights and obligations of the Bank, the Company and
the Executive in the event of any such termination. In addition, nothing in this
Agreement shall require the termination of the Executive's employment at the
expiration of the Employment Period. Any such continuation shall be on an
"at-will" basis unless the Bank, the Company and the Executive agree otherwise.
SECTION 3. DUTIES.
The Executive shall serve as [___________________] of the
Company and as [__________________] of the Bank, having such power, authority
and responsibility and performing such duties as are prescribed by or under
their respective By-Laws and as are customarily associated with such positions.
The Executive shall devote his full business time and attention (other than
during weekends, holidays, approved vacation periods, and periods of illness or
approved leaves of absence) to the business and affairs of the Bank and the
Company and shall use his best efforts to advance their respective best
interests.
SECTION 4. CASH COMPENSATION.
In consideration for the services to be rendered by the
Executive hereunder, the Bank and the Company shall pay to him a salary at an
initial annual rate of [____________] ([__________]), payable in approximately
equal installments in accordance with their respective customary payroll
practices for senior officers. The Bank's and the Company's respective Boards
-2-
3
of Directors shall review the Executive's annual rate of salary at such times
during the Employment Period as they deem appropriate, but not less frequently
than once every twelve (12) months, and may, in their discretion, approve a
salary increase. In addition to salary, the Executive may receive other cash
compensation from the Company or the Bank for services hereunder at such times,
in such amounts and on such terms and conditions as the Boards of Directors of
the Bank and the Company may determine. If the Executive is discharged or
suspended, or is subject to any regulatory prohibition or restriction with
respect to participation in the affairs of the Bank, he shall continue to
perform services for the Company in accordance with this Agreement but shall not
directly or indirectly provide services to or participate in the affairs of the
Bank in a manner inconsistent with the terms of such discharge or suspension or
any applicable regulatory order.
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated
as an employee of the Company and the Bank and shall be entitled to participate
in and receive benefits under any and all qualified or non-qualified retirement,
pension, savings, profit-sharing or stock bonus plans, any and all group life,
health (including hospitalization, medical and major medical), dental, accident
and long-term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Company and the Bank, in accordance with the terms and conditions of such
employee benefit plans and programs and compensation plans and programs and
consistent with the Company's and the Bank's customary practices.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six years
thereafter, the Company and the Bank shall cause the Executive to be covered by
and named as an insured under any policy or contract of insurance obtained by
them to insure their directors and officers against personal liability for acts
or omissions in connection with service as an officer or director of the Company
or the Bank or service in other capacities at their request. The coverage
provided to the Executive pursuant to this section 6 shall be of the same scope
and on the same terms and conditions as the coverage (if any) provided to other
officers or directors of the Company and the Bank.
(b) To the maximum extent permitted under applicable law,
during the Employment Period and for a period of six years thereafter, the
Company and the Bank shall indemnify the Executive against and hold him harmless
from any costs, liabilities, losses and exposures to the fullest extent and on
the most favorable terms and conditions that similar indemnification is offered
to any director or officer of the Company and the Bank or any subsidiary or
affiliate thereof.
-3-
4
SECTION 7. OUTSIDE ACTIVITIES.
The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he may disclose to
and as may be approved by the Boards of Directors of the Company and the Bank
(which approval shall not be unreasonably withheld); provided, however, that
such service shall not materially interfere with the performance of his duties
under this Agreement. The Executive may also engage in personal business and
investment activities which do not materially interfere with the performance of
his duties hereunder; provided, however, that such activities are not prohibited
under any code of conduct or investment or securities trading policy established
by the Company or the Bank and generally applicable to all similarly situated
executives.
SECTION 8. WORKING FACILITIES AND EXPENSES.
The Executive's principal place of employment shall be at the
Bank's executive offices at the address first above written, or at such other
location as the Bank, the Company and the Executive may mutually agree upon. The
Bank and the Company shall provide the Executive at his principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to his positions with the Company and the Bank
and necessary or appropriate in connection with the performance of his assigned
duties under this Agreement. The Company shall provide to the Executive for his
exclusive use an automobile owned or leased by the Company and appropriate to
his position, to be used in the performance of his duties hereunder, including
commuting to and from his personal residence. The Bank or the Company shall
reimburse the Executive for his ordinary and necessary business expenses,
including, without limitation, all expenses associated with his business use of
the aforementioned automobile, fees for memberships in such clubs and
organizations as the Executive and the Company shall mutually agree are
necessary and appropriate for business purposes, and his travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the payer of an itemized
account of such expenses in such form as the payer may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT DUE TO DEATH.
The Executive's employment with the Bank and the Company shall
terminate, automatically and without any further action on the part of any party
to this Agreement, on the date of the Executive's death. In such event:
(a) The Bank and the Company shall pay to the Executive'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 Executive's termination of employment.
-4-
5
(b) The Company and the Bank shall provide the benefits, if
any, due to the Executive's estate, surviving dependents or his
designated beneficiaries under the employee benefit plans and programs
and compensation plans and pro grams maintained for the benefit of the
officers and employees of the Company and the Bank. The time and manner
of payment or 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 9(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
SECTION 10. TERMINATION DUE TO DISABILITY.
The Bank and the Company may terminate the Executive's
employment upon a determination, by separate votes of a majority of the members
of the Boards of Directors of the Company and the Bank, acting in reliance on
the written advice of a medical professional acceptable to them, that the
Executive is suffering from a physical or mental impairment which, at the date
of the determination, has prevented the Executive 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 Executive 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 and the Company shall pay and deliver to the
Executive (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 and the Company shall continue to pay the Executive 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 or
the Company (the "LTD Eligibility Date"); (iii) the date of his death;
and (iv) the expiration of the Remaining Unexpired Employment 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 Company and the Bank shall continue to pay the Executive
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 period ending on the earliest of
the LTD Eligibility Date, the date of his death and the expiration of
the Remaining Unexpired Employment Period.
-5-
6
A termination of employment due to disability under this section 10 shall be
effected by joint notice of termination given to the Executive by the Company
and 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 Executive.
SECTION 11. DISCHARGE WITH CAUSE.
(a) The Bank and the Company may terminate the Executive's
employment during the Employment Period, and such termination shall be deemed to
have occurred with "Cause" only if:
(i) the Board of Directors of the Bank and the Board of
Directors of the Company, by separate majority votes of their entire
membership, determine that the Executive (A) has willfully and
intentionally failed to perform his assigned duties under this
Agreement in any material respect (including, for these purposes, the
Executive'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 Company or 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 Company or 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 votes
contemplated by section 11(a)(i), the Bank and the Company have
provided the Executive with notice of their intent to discharge the
Executive 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 votes contemplated by section 11(a)(i),
the Executive (together with his legal counsel, if he so desires) is
afforded a reasonable opportunity to make both written and oral
presentations before the Boards of Directors of the Company and the
Bank for the purpose of refuting the alleged grounds for Cause for his
discharge; and
(iv) after the votes contemplated by section 11(a)(i), the
Company and the Bank have furnished to the Executive 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 and the
Board of Directors of the Company, certified by their corporate
secretaries and signed by each member of their respective Board of
Directors voting in favor of adoption of the resolution(s), authorizing
the termination of the Executive's
-6-
7
employment with Cause and stating with particularity the facts and
circumstances found to constitute Cause for his discharge (the "Final
Discharge Notice").
For purposes of this section 11, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company and the
Bank. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board and the Bank Board or based upon the
written advice of counsel for the Company or the Bank shall be conclusively
presumed to be done, or omitted to be done, by the Executive in good faith and
in the best interests of the Company and the Bank.
(b) If the Executive is discharged during the Employment
Period with Cause, the Company and 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 and the Company may temporarily
suspend the Executive's duties and authority and, in such event, may also
suspend the payment of salary and other cash compensation, but not the
Executive's participation in retirement, insurance and other employee benefit
plans. If the Executive 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 Executive 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 Executive during the
period beginning with the giving of the Notice of Intent to Discharge and ending
with the Executive's discharge with Cause shall be retained by the Executive and
shall not be applied to offset the Standard Termination Entitlements. If the
Bank and the Company do not give a Final Discharge Notice to the Executive
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 Executive with Cause shall require the giving of a new Notice of
Intent to Discharge.
SECTION 12. DISCHARGE WITHOUT CAUSE.
The Bank and the Company may discharge the Executive at any
time during the Employment Period and, unless such discharge constitutes a
discharge with Cause:
(a) The Bank and the Company shall pay and deliver to the
Executive (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:
-7-
8
(i) During the Remaining Unexpired Employment Period,
the Bank and the Company shall provide for the Executive 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 Executive's
termination. The coverage provided under this section 12(b)(i)
may, at the election of the Bank and the Company, 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 12(b)(i).
(ii) The Bank and the Company shall make a lump sum
payment to the Executive (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 Executive would have
earned if he had continued working for the Company and the
Bank during the Remaining Unexpired Employment 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 Executive 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 Company's and 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 Executive's termination of
employment occurs (the "Short Term AFR") and "n" equals the
product of the Remaining Unexpired Employment Period at the
Executive'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 Company's and the
Bank's normal payroll practices. The Salary Severance Payment
shall be made within five (5) business days after the
Executive's termination of employment and shall be in lieu of
any claim to a continuation of base salary which the Executive
might otherwise have and in lieu of cash severance benefits
under any
-8-
9
severance benefits program which may be in effect for officers
or employees of the Bank or the Company.
(iii) The Bank and the Company shall make a lump sum
payment to the Executive (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 Executive would
have earned if he had continued working for the Company and
the Bank during the Remaining Unexpired Employment 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:
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 Executive's termination of employment; and "ASP"
is the aggregate base salary actually paid to the Executive
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 Executive's termination of employment and shall be
in lieu of any claim to a continuation of participation in
annual bonus plans of the Bank or the Company which the
Executive might otherwise have.
(iv) The Bank and the Company shall make a lump sum
payment to the Executive (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
Executive would have earned if he had continued working for
the Company and the Bank during the Remaining Unexpired
Employment Period (the "Incentive Severance Payment"). The
Incentive Severance Payment shall be computed using the
following formula:
ISP = (SSP / RUP) 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
-9-
10
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 Executive's termination of
employment; and "ALTSP" is the aggregate base salary actually
paid to the Executive 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; "RUP" is the
Remaining Unexpired Employment Period, expressed in years and
fractions of years; and "Y" is the aggregate (expressed in
years and fractions of years) of the Remaining Unexpired
Employment 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 Executive'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 or the Company which the
Executive might otherwise have. Notwithstanding the foregoing,
the Incentive Severance Payment shall be zero if the
Executive's termination of employment occurs at a time when he
is not covered by any long-term incentive compensation plan.
(v) The Company and the Bank shall pay to the
Executive (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 Company or the Bank (the "Pension
Plans") if he had continued working for the Company and the
Bank during the Remaining Unexpired Employment Period; over
(B) the present value of the benefits to which the Executive
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 Executive'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
-10-
11
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
Executive'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 Executive's
actual age at termination of employment is his attained age as
of his last birthday that would occur during the Remaining
Unexpired Employment Period, that his service for benefit
accrual purposes under the Pension Plans is equal to the
aggregate of his actual service plus the Remaining Unexpired
Employment Period, that his average compensation figure used
in determining his accrued benefit is equal to the highest
annual rate of salary achieved by the Executive during the
period of three (3) years ending immediately prior to the date
of termination, that the Executive'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 Executive's termination of employment
and shall be in lieu of any claim to any actual increase in
his accrued in the Pension Plans in respect of the Remaining
Unexpired Employment Period.
(vi) The Company and the Bank shall pay to the
Executive (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 and the
Company (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 or dividends 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 and the Company (the "ESOP
Plans") if he had continued in employment during the Remaining
Unexpired Employment 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);
-11-
12
"EC" is the amount of employer contributions actually credited
to the Executive's accounts under the Non-ESOP Plans for the
last plan year to end before his termination of employment;
"BS" is the Executive's compensation taken into account in
computing EC; "Y" is the aggregate (expressed in years and
fractions of years) of the Remaining Unexpired Employment
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 Executive'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 Executive's termination of
employment) of the employer securities actually allocated to
the Executive'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 Executive'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 Executive'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.
(vii) At the election of the Company made within 30
days following the Executive's termination of employment,
upon the surrender of options or appreciation rights issued to
the Executive under any stock option and appreciation rights
plan or program maintained by, or covering employees of, the
Company or 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 Executive 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 Company or the
Bank, even if he is not vested under such plan or program.
-12-
13
(viii) At the election of the Company made within 30
days following the Executive's termination of employment,
upon the surrender of any shares awarded to the Executive
under any restricted stock plan maintained by, or covering
employees of, the Company or the Bank, the Company and 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 Executive's
termination of employment; multiplied by
(B) the number of shares which are being
surrendered.
For purposes of computing this payment, the Executive shall be
deemed fully vested in all shares awarded under any restricted
stock plan maintained by, or covering employees of, the
Company or the Bank, even if he is not vested under such plan.
The payments and benefits described in section 12(b) are referred to in this
Agreement as the "Additional Termination Entitlements".
SECTION 13. RESIGNATION.
(a) The Executive may resign from his employment with the Bank
and the Company at any time. A resignation under this section 13 shall be
effected by notice of resignation given by the Executive to the Company and 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 Executive. The Executive's 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 Executive's resignation shall be deemed to be for
"Good Reason" if the effective date of resignation occurs within ninety (90)
days after any of the following:
(i) the failure of the Company or the Bank (whether by act or
omission of their respective Boards of Directors, or otherwise) to
appoint or re-appoint or elect or re-elect the Executive to the
position(s) with the Company and the Bank, specified in section 3 of
this Agreement or to a more senior office;
(ii) if the Executive is or becomes a member of the Board of
Directors of the Company or the Bank, the failure of their respective
shareholders (whether in an election in which the Executive stands as a
nominee or in an election where the Executive is not a nominee) to
elect or re-elect the Executive to membership at the expiration of his
term of membership, unless such failure is a result of the Executive's
refusal to stand for election;
-13-
14
(iii) a material failure by the Company or the Bank, whether
by amendment of their respective certificates of incorporation or
organization, by-laws, action of their respective Boards of Directors
or otherwise, to vest in the Executive the functions, duties, or
responsibilities prescribed in section 3 of this Agreement; provided
that the Executive shall have given notice of such failure 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;
(iv) any reduction of the Executive'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 Executive's
compensation as and when due;
(v) any change in the terms and conditions of any compensation
or benefit program in which the Executive 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 Executive 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;
(vi) any material breach by the Company or the Bank of any
material term, condition or covenant contained in this Agreement;
provided that the Executive 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 Executive'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 principal executive office to a
location that is both more than twenty-five (25) miles away from the
Executive's principal residence and more than twenty-five (25) miles
away from the location of the Bank's principal executive office on the
date of this Agreement.
In all other cases, a resignation by the Executive shall be deemed to be without
Good Reason.
(c) In the event of the Executive's resignation before the
expiration of the Employment Period, the Company and the Bank shall pay and
deliver the Standard Termination Entitlements. In addition, if the Executive's
resignation is deemed to be a resignation with Good Reason, the Company and the
Bank shall also pay and deliver the Additional Termination Entitlements.
-14-
15
SECTION 14. TERMS AND CONDITIONS OF THE ADDITIONAL TERMINATION
ENTITLEMENTS.
The Company, the Bank and the Executive hereby stipulate that
the damages which may be incurred by the Executive 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 Executive's efforts, if any, to
mitigate damages. The Company, the Bank and the Executive further agree that the
Company and the Bank may condition the payment and delivery of the Additional
Termination Entitlements on the receipt of the Executive's resignation from any
and all positions which he holds as an officer, director or committee member
with respect to the Company, the Bank or any subsidiary or affiliate of either
of them.
SECTION 15. TERMINATION UPON OR FOLLOWING A CHANGE OF CONTROL.
(a) 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
-15-
16
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
(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 15(a)(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 15(a), the term "person" shall have the meaning
assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
-16-
17
(b) 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.
(c) Notwithstanding anything in this Agreement to the
contrary, if the Executive's employment with the Bank and the Company terminates
due to death or disability within one (1) year after the occurrence of a Pending
Change of Control and if a Change of Control occurs within two (2) years after
such termination of employment, he (or in the event of his death, his estate)
shall be entitled to receive the Standard Termination Entitlements and the
Additional Termination Entitlements that would have been payable if a Change of
Control had occurred on the date of his termination of employment and he had
resigned with Good Reason immediately thereafter; provided, that payment shall
be deferred without interest until, and shall be payable immediately upon, the
actual occurrence of a Change of Control.
(d) Notwithstanding anything in this Agreement to the
contrary: (i) in the event of the Executive's resignation within sixty (60) days
after the occurrence of a Change of Control, he shall be entitled to receive the
Standard Termination Entitlements and Additional Termination Entitlements that
would be payable if his resignation were a resignation for Good Reason, without
regard to the actual circumstances of his resignation; and (ii) for a period of
one (1) year after the occurrence of a Change of Control, no discharge of the
Executive shall be deemed a discharge with Cause unless the votes contemplated
by section 11(a) of this Agreement are supported by at least two-thirds of the
members of the Board of Directors of the Company and the Bank at the time the
vote is taken who were also members of the Board of Directors of the Company and
the Bank immediately prior to the Change of Control.
(e) Notwithstanding anything in this Agreement to the
contrary, for purposes of computing the Additional Termination Entitlements due
upon a termination of employment that occurs, or is deemed to have occurred,
after a Change of Control, the Remaining Unexpired Employment Period shall be
deemed to be three (3) full years.
SECTION 16. TAX INDEMNIFICATION.
(a) If the Executive's employment terminates under
circumstances entitling him (or in the event of his death, his estate) to the
Additional Termination Entitlements, the Company shall pay to the Executive (or
in the event of his death, his estate) an additional amount intended to
indemnify him against the financial effects of the excise tax imposed on excess
parachute payments under section 280G of the Code (the "Tax Indemnity Payment").
The Tax Indemnity Payment shall be determined under the following formula:
E x P
X = ------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
-17-
18
where
E = the percentage rate at which an excise tax is
assessed under section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this section
16;
FI = the highest marginal rate of income tax applicable to
the Executive under the Code for the taxable year in
question;
SLI = the sum of the highest marginal rates of income tax
applicable to the Executive under all applicable
state and local laws for the taxable year in
question; and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Such computation shall be made at the expense of the Company by an attorney or a
firm of independent certified public accountants selected by the Executive and
reasonably satisfactory to the Company (the "Tax Advisor") and shall be based on
the following assumptions: (i) that a change in ownership, a change in effective
ownership or control, or a change in the ownership of a substantial portion of
the assets, of the Bank or the Company has occurred within the meaning of
section 280G of the Code (a "280G Change of Control"); (ii) that all direct or
indirect payments made to or benefits conferred upon the Executive on account of
his termination of employment are "parachute payments" within the meaning of
section 280G of the Code; and (iii) that no portion of such payments is
reasonable compensation for services rendered prior to the Executive's
termination of employment.
(b) With respect to any payment that is presumed to be a
parachute payment for purposes of section 280G of the Code, the Tax Indemnity
Payment shall be made to the Executive on the earlier of the date the Company,
the Bank or any direct or indirect subsidiary or affiliate of the Company or the
Bank is required to withhold such tax or the date the tax is required to be paid
by the Executive, unless, prior to such date, the Company delivers to the
Executive the written opinion, in form and substance reasonably satisfactory to
the Executive, of the Tax Advisor or of an attorney or firm of independent
certified public accountants selected by the Company and reasonably satisfactory
to the Executive, to the effect that the Executive has a reasonable basis on
which to conclude that (i) no 280G Change in Control has occurred, or (ii) all
or part of the payment or benefit in question is not a parachute payment for
purposes of section 280G of the Code, or (iii) all or a part of such payment or
benefit constitutes reasonable compensation for services rendered prior to the
280G Change of Control, or (iv) for some other reason which shall be set forth
in detail in such letter, no excise tax is due under section 4999 of the Code
with respect to such payment or benefit (the "Opinion Letter"). If the Company
delivers an Opinion Letter, the Tax Advisor shall recompute, and the Company
shall make, the Tax Indemnity Payment in reliance on the information contained
in the Opinion Letter.
-18-
19
(c) In the event that the Executive's liability for the excise
tax under section 4999 of the Code for a taxable year is subsequently determined
to be different than the amount with respect to which the Tax Indemnity Payment
is made, the Executive or the Company, as the case may be, shall pay to the
other party at the time that the amount of such excise tax is finally
determined, an appropriate amount, plus interest, such that the payment made
under section 16(b), when increased by the amount of the payment made to the
Executive under this section 16(c), or when reduced by the amount of the payment
made to the Company under this section 16(c), equals the amount that should have
properly been paid to the Executive under section 16(a). The interest paid to
the Company under this section 16(c) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. The payment made to the Executive shall
include such amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an additional amount equal
to any monetary penalties assessed by the Internal Revenue Service on account of
an underpayment of the excise tax. To confirm that the proper amount, if any,
was paid to the Executive under this section 16, the Executive shall furnish to
the Company a copy of each tax return which reflects a liability for an excise
tax, at least 20 days before the date on which such return is required to be
filed with the Internal Revenue Service. Nothing in this Agreement shall give
the Company any right to control or otherwise participate in any action, suit or
proceeding to which the Executive is a party as a result of positions taken on
his federal income tax return with respect to his liability for excise taxes
under section 4999 of the Code.
SECTION 17. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that, in the event
of his termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Company or the Bank, he shall not, without
the written consent of the Company, become an officer, employee, consultant,
director or trustee of any savings bank, savings and loan association, savings
and loan holding company, bank or bank holding company, or any direct or
indirect subsidiary or affiliate of any such entity, that entails working within
any city or county in the State of New Jersey or any other county in which the
Company or the Bank maintains an office; provided, however, that this section 17
shall not apply if the Executive is entitled to the Additional Termination
Entitlements.
SECTION 18. CONFIDENTIALITY.
Unless he obtains the prior written consent of the Company,
the Executive shall keep confidential and shall refrain from using for the
benefit of himself, or any person or entity other than the Company or any entity
which is a subsidiary of the Company or of which the Company is a subsidiary,
any material document or information obtained from the Company, or from its
parent or subsidiaries, in the course of his employment with any of them
concerning their properties, operations or business (unless such document or
information is readily ascertainable from public or published information or
trade sources or has otherwise been made available to the public through no
fault of his own) until the same ceases to be material (or becomes so
ascertainable or available); provided, however, that nothing in this section 18
shall prevent the Executive, with or without the Company's consent, from
participating in or disclosing documents
-19-
20
or information in connection with any judicial or administrative investigation,
inquiry or proceeding to the extent that such participation or disclosure is
required under applicable law.
SECTION 19. SOLICITATION.
The Executive hereby covenants and agrees that, for a period
of one year following his termination of employment with the Company or the
Bank, he shall not, without the written consent of the Company and the Bank,
either directly or indirectly:
(a) solicit, offer employment to, or take any other action
intended, or that a reasonable person acting in like circumstances
would expect, to have the effect of causing any officer or employee of
the Company, the Bank or any of their respective subsidiaries or
affiliates to terminate his or her employment and accept employment or
become affiliated with, or provide services for compensation in any
capacity whatsoever to, any savings bank, savings and loan association,
bank, bank holding company, savings and loan holding company, or other
institution engaged in the business of accepting deposits, making loans
or doing business within the counties specified in section 17;
(b) provide any information, advice or recommendation with
respect to any such officer or employee of any savings bank, savings
and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the business of
accepting deposits, making loans or doing business within the counties
specified in section 17; that is intended, or that a reasonable person
acting in like circumstances would expect, to have the effect of
causing any officer or employee of the Company, the Bank, or any of
their respective subsidiaries or affiliates to terminate his employment
and accept employment or become affiliated with, or provide services
for compensation in any capacity whatsoever to, any savings bank,
savings and loan association, bank, bank holding company, savings and
loan holding company, or other institution engaged in the business of
accepting deposits, making loans or doing business within the counties
specified in section 17;
(c) solicit, provide any information, advice or recommendation
or take any other action intended, or that a reasonable person acting
in like circumstances would expect, to have the effect of causing any
customer of the Company to terminate an existing business or commercial
relationship with the Company.
SECTION 20. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of the Executive's employment during the term
of this Agreement or thereafter, whether by the Company, by the Bank or by the
Executive, shall have no effect on the rights and obligations of the parties
hereto under the Company's or 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 dis-
-20-
21
ability 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 Company or 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 Executive to which
the 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.
SECTION 21. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding
upon the Executive, 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 may be sold or
otherwise transferred. Failure of the Company to obtain from any successor its
express written assumption of the Company's obligations hereunder at least 60
days in advance of the scheduled effective date of any such succession shall be
deemed a material breach of this Agreement.
SECTION 22. 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 Executive:
[Executive name and 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
-21-
22
with a copy to:
Xxxxxxx Xxxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxx Xxxxxx, Esq.
SECTION 23. INDEMNIFICATION FOR ATTORNEYS' FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive 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 Company's or the Bank's obligations
hereunder shall be conclusive evidence of the Executive'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 Company'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 Company may have against the Executive or others. In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and such amounts shall not be reduced
whether or not the Executive obtains other employment. Unless it is determined
that the Executive has acted frivolously or in bad faith, the Company shall pay
as incurred, to the full extent permitted by law, all legal fees and expenses
which the Executive 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 Company, the Executive 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 Executive 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. This section 23(b) shall apply whether such
consultation, action, suit, proceeding or contest arises before, on, after or as
a result of a Change of Control.
SECTION 24. 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.
-22-
23
SECTION 25. 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.
SECTION 26. 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 27. 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 28. 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 29. 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 30. NON-DUPLICATION.
In the event that the Executive shall perform services for the
Bank or any other direct or indirect subsidiary or affiliate of the Company or
the Bank, any compensation or benefits provided to the Executive by such other
employer shall be applied to offset the obligations of the Company hereunder, it
being intended that this Agreement set forth the aggregate compensation and
benefits payable to the Executive for all services to the Company, the Bank and
all of their respective direct or indirect subsidiaries and affiliates.
-23-
24
SECTION 31. RELATIVE OBLIGATIONS OF THE BANK AND THE COMPANY.
The Company shall, with respect to the Executive's services
hereunder and the compensation therefor and with respect to any termination of
the Executive's employment, have all of the obligations imposed on the Bank
under this Agreement to the same extent as though the name of the Company were
substituted for the name of the Bank herein and the Executive shall, with
respect to the services hereunder and the compensation therefor and with respect
to any termination of the Executive's employment, have all of the rights,
privileges and duties relative to the Company as though the name of the Company
were substituted for the name of the Bank herein. If the Executive performs
services for both the Bank and the Company, any entitlement of the Executive to
severance compensation and other termination benefits under this Agreement shall
be determined on the basis of the aggregate compensation payable to the
Executive by the Bank and the Company, and liability therefor shall be
apportioned between the Bank and the Company in the same manner as compensation
paid to the Executive for services to each of them; provided, however, that the
Company shall be jointly and severally liable with the Bank for all obligations
of the Bank under this Agreement; and provided, further, that in no event shall
the Bank bear any liability for actions of, or obligations undertaken by, the
Company under this Agreement. It is the intent and purpose of this section 31
that the Executive have the same legal and economic rights that he would have if
all of his services were rendered to and all of his compensation were paid by
the Company. This section 31 shall be construed and enforced to give effect to
such intent and purpose.
SECTION 32. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Executive 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.
-24-
25
IN WITNESS WHEREOF, the Bank and the Company have caused this
Agreement to be executed and the Executive has hereunto set his hand, all as of
the day and year first above written.
---------------------------------
[EXECUTIVE 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]
-25-
