CHANGE IN CONTROL AGREEMENT AMONG HARLEYSVILLE SAVINGS FINANCIAL CORPORATION, HARLEYSVILLE SAVINGS BANK AND _____________
Exhibit
10.1
HARLEYSVILLE
SAVINGS BANK AND _____________
This
CHANGE IN CONTROL AGREEMENT (this “Agreement”), dated as of the _____ day of May
2009, is among Harleysville Savings Financial Corporation (the “Corporation”),
Harleysville Savings Bank, a Pennsylvania chartered savings bank and a wholly
owned subsidiary of the Corporation (the “Bank”), and _______________ (the
“Executive”). Any reference to the “Employers” shall mean both the
Corporation and the Bank, and any reference to an “Employer” shall mean either
the Corporation or the Bank, as the context requires.
WITNESSETH:
WHEREAS, the
Executive is presently an officer of the Employers;
WHEREAS, the
Employers desire to be ensured of the Executive’s continued active participation
in the business of the Employers; and
WHEREAS, in
order to induce the Executive to remain in the employ of the Employers and in
consideration of the Executive’s agreeing to remain in the employ of the
Employers, the parties desire to specify the severance benefits which shall be
due the Executive in the event that his employment with the Employers is
terminated under specified circumstances;
NOW
THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as
follows:
1. Definitions.
The following words and terms shall have the meanings set forth below for
the purposes of this Agreement:
(a) Annual
Compensation. The Executive’s “Annual Compensation” for purposes of this
Agreement shall be deemed to mean the highest level of base salary paid to the
Executive by the Employers or any subsidiary thereof during any of the three
calendar years ending prior to the calendar year in which the Date of
Termination occurs, plus the average of the annual bonus paid to the Executive
by the Employers or any subsidiary during the three calendar years ending prior
to the calendar year in which the Date of Termination occurs.
(b) Cause.
Termination by the Employers of the Executive’s employment for “Cause” shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order. For purposes of this paragraph, no act or failure to act
on the Executive’s part shall be considered “willful” unless done, or omitted to
be done, by the Executive not in good faith and without reasonable belief that
the Executive’s action or omission was in the best interest of the
Employers.
(c) Change in
Control. “Change in Control” shall mean a change in the
ownership of the Corporation or the Bank, a change in the effective control of
the Corporation or the Bank or a change in the ownership of a substantial
portion of the assets of the Corporation or the Bank, in each case as provided
under Section 409A of the Code and the regulations thereunder.
(d) Code. Code
shall mean the Internal Revenue Code of 1986, as amended.
(e) Date of
Termination. “Date of Termination” shall mean (i) if the Executive’s
employment is terminated for Cause, the date on which the Notice of Termination
is given, and (ii) if the Executive’s employment is terminated for any other
reason, the date specified in such Notice of Termination.
(f) Disability.
“Disability” shall mean the Executive (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Employers.
(g) Good Reason.
Termination by the Executive of the Executive’s employment for “Good Reason”
shall mean termination by the Executive following a Change in Control based on
the occurrence of any of the following events:
(i) (A) a
material diminution in the Executive’s base compensation as in effect
immediately prior to the date of the Change in Control or as the same may be
increased from time to time thereafter, (B) a material diminution in the
Executive’s authority, duties or responsibilities as in effect immediately prior
to the Change in Control, or (C) a material diminution in the authority, duties
or responsibilities of the officer (as in effect immediately prior to the date
of the Change in Control) to whom the Executive is required to report
immediately prior to the Change in Control,
(ii) any
material breach of this Agreement by the Employers, or
(iii) any
material change in the geographic location at which the Executive must perform
his services under this Agreement immediately prior to the Change in
Control;
provided,
however, that prior to any termination of employment for Good Reason, the
Executive must first provide written notice to the Employers within ninety (90)
days of the initial existence of the condition, describing the existence of such
condition, and the Employers shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Employers received the written
notice from the Executive. If the Employers remedy the condition
within such thirty (30) day cure period, then no Good Reason shall be deemed to
exist with respect to such condition. If the Employers do not remedy
the condition within such thirty (30) day cure period, then the Executive may
deliver a Notice of Termination for Good Reason at any time within sixty (60)
days following the expiration of such cure period.
2
(h) IRS. IRS
shall mean the Internal Revenue Service.
(i) Notice of
Termination. Any purported termination of the Executive’s employment by
the Employers for Cause, Disability or Retirement or by the Executive for Good
Reason shall be communicated by a written “Notice of Termination” to the other
party hereto. For purposes of this Agreement, a “Notice of Termination” shall
mean a notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated, (iii) specifies a Date of
Termination, which shall be not less than thirty (30) nor more than ninety (90)
days after such Notice of Termination is given, except in the case of the
Employers’ termination of the Executive’s employment for Cause, which shall be
effective immediately, and (iv) is given in the manner specified in Section 7
hereof.
(j) Retirement.
“Retirement” shall mean voluntary termination by the Executive in
accordance with the Employers’ retirement policies, including early retirement,
generally applicable to their salaried employees.
2. Benefits Upon
Termination. If the Executive’s employment by the Employers shall be
terminated within eighteen (18) months subsequent to a Change in Control by (i)
the Employers other than for Cause, Disability or Retirement or as a result of
the Executive’s death, or (ii) the Executive for Good Reason, then the Employers
shall, subject to the provisions of Section 3 hereof, if
applicable:
(a) pay
to the Executive, in a lump sum as of the Date of Termination, a cash amount
equal to two (2) times the Executive’s Annual Compensation;
(b) maintain
and provide for a period ending at the earlier of (i) thirty-six (36) months
after the Date of Termination or (ii) the date of the Executive’s full-time
employment by another employer (provided that the Executive is entitled under
the terms of such employment to benefits substantially similar to those
described in this subparagraph (b)), at no cost to the Executive, the
Executive’s continued participation in all group insurance, life insurance,
health and accident insurance, and disability insurance in which the Executive
was participating immediately prior to the Date of Termination; provided that
any insurance premiums payable by the Employers or any successors pursuant to
this Section 2(b) shall be payable at such times and in such amounts (except
that the Employers shall also pay any employee portion of the premiums) as if
the Executive was still an employee of the Employers, subject to any increases
in such amounts imposed by the insurance company or COBRA, and the
amount of insurance premiums required to be paid by the Employers in any taxable
year shall not affect the amount of insurance premiums required to be paid by
the Employers in any other taxable year; and provided further that if the
Executive’s participation in any group insurance plan is barred, the Employers
shall either arrange to provide the Executive with insurance benefits
substantially similar to those which the Executive was entitled to receive under
such group insurance plan or, if such coverage cannot be obtained, pay a lump
sum cash equivalency amount within thirty (30) days following the Date of
Termination based on the annualized rate of premiums being paid by the Employers
as of the Date of Termination; and
3
(c) pay
to the Executive, in a lump sum as of the Date of Termination, a cash amount
equal to the projected cost to the Employers of providing benefits to the
Executive for a period of thirty-six (36) months pursuant to any other employee
benefit plans, programs or arrangements offered by the Employers in which the
Executive was entitled to participate immediately prior to the Date of
Termination (other than retirement plans, stock compensation plans or cash
compensation plans of the Employers), with the projected cost to the Employers
to be based on the costs incurred for the calendar year immediately preceding
the year in which the Date of Termination occurs and with any automobile-related
costs to exclude any depreciation on Bank-owned automobiles.
(d) The
payments to the Executive hereunder shall be paid by the Corporation and the
Bank in the same proportion as the time and services actually expended by the
Executive on behalf of each respective Employer, and no payments shall be
duplicated.
3. Limitation of
Benefits under Certain Circumstances. If the payments
and benefits pursuant to Section 2 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employers, would constitute a “parachute payment” under Section 280G of the
Code, then the payments and benefits pursuant to Section 2 hereof shall be
reduced by the minimum amount necessary to result in no portion of the payments
and benefits under Section 2 being non-deductible to either of the Employers
pursuant to Section 280G of the Code and subject to the excise tax imposed under
Section 4999 of the Code. If the payments and benefits under Section
2 are required to be reduced, the cash severance shall be reduced first,
followed by a reduction in the fringe benefits. The determination of
any reduction in the payments and benefits to be made pursuant to Section 2
shall be based upon the opinion of independent tax counsel selected by the
Employers and paid for by the Employers. Such counsel shall promptly prepare the
foregoing opinion, but in no event later than thirty (30) days from the Date of
Termination, and may use such actuaries as such counsel deems necessary or
advisable for the purpose. Nothing contained in this Section 3 shall
result in a reduction of any payments or benefits to which the Executive may be
entitled upon termination of employment other than pursuant to Section 2 hereof,
or a reduction in the payments and benefits specified in Section 2 below
zero.
4. Mitigation;
Exclusivity of Benefits.
(a) The
Executive shall not be required to mitigate the amount of any benefits hereunder
by seeking other employment or otherwise, nor shall the amount of any such
benefits be reduced by any compensation earned by the Executive as a result of
employment by another employer after the Date of Termination or otherwise,
except as set forth in Section 2(b) above.
(b) The
specific arrangements referred to herein are not intended to exclude any other
benefits which may be available to the Executive upon a termination of
employment with the Employers pursuant to employee benefit plans of the
Employers or otherwise.
4
5. Withholding. All
payments required to be made by the Employers hereunder to the Executive shall
be subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Employers may reasonably determine should be withheld
pursuant to any applicable law or regulation.
6. Assignability.
The Employers may assign this Agreement and their rights hereunder in whole, but
not in part, to any corporation, bank or other entity with or into which the
Employers may hereafter merge or consolidate or to which the Employers may
transfer all or substantially all of their respective assets, if in any such
case said corporation, bank or other entity shall by operation of law or
expressly in writing assume all obligations of the Employers hereunder as fully
as if it had been originally made a party hereto, but may not otherwise assign
this Agreement or their rights hereunder. The Executive may not assign or
transfer this Agreement or any rights or obligations hereunder.
7. Notice. For
the purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
below:
To the
Employers: Corporate
Secretary
and Harleysville Saving
Bank
000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx
00000
To the
Executive:
_____________________
At the
address last appearing on the
personnel
records of the Employers
8. Amendment;
Waiver.
No provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by the
Executive and such officer or officers as may be specifically designated by the
Boards of Directors of the Employers to sign on their behalf. No waiver by any
party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
9. Governing
Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the United States where applicable
and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.
10. Nature of Employment
and Obligations.
(a) Nothing
contained herein shall be deemed to create other than a terminable at will
employment relationship between the Employers and the Executive, and the
Employers may terminate the Executive’s employment at any time, subject to
providing any payments specified herein in accordance with the terms
hereof.
5
(b) Nothing
contained herein shall create or require the Employers to create a trust of any
kind to fund any benefits which may be payable hereunder, and to the extent that
the Executive acquires a right to receive benefits from the Employers hereunder,
such right shall be no greater than the right of any unsecured general creditor
of the Employers.
11. Term of
Agreement. This Agreement shall terminate three (3) years after date
first written above; provided that on or prior to the first anniversary of the
date first written above and each anniversary thereafter, the Boards of
Directors of the Employers shall consider (with appropriate corporate
documentation thereof, and after taking into account all relevant factors,
including the Executive’s performance as an employee) renewal of the term of
this Agreement for an additional one (1) year, and the term of this Agreement
shall be so extended unless the Boards of Directors of the Employers do not
approve such renewal and provide written notice to the Executive, or the
Executive gives written notice to the Employers, at least thirty (30) days prior
to such anniversary date, of such party’s or parties’ election not to extend the
term beyond its then scheduled expiration date; and provided further that,
notwithstanding the foregoing to the contrary, this Agreement shall be
automatically extended for an additional one (1) year upon a Change in
Control.
12. Headings. The
section headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
13. Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
14. Changes in Statutes
or Regulations. If any statutory or regulatory provision referenced
herein is subsequently changed or re-numbered, or is replaced by a separate
provision, then the references in this Agreement to such statutory or regulatory
provision shall be deemed to be a reference to such section as amended,
re-numbered or replaced.
15. Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument.
16. Regulatory
Prohibition. Notwithstanding any other provision of this Agreement to the
contrary, any payments made to the Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with Section
18(k) of the FDIA (12 U.S.C. §1828(k)) and 12 C.F.R. Part 359.
17. Entire
Agreement. This Agreement embodies the entire agreement
between the Employers and the Executive with respect to the matters agreed to
herein. All prior agreements between the Employers and the Executive
with respect to the matters agreed to herein are hereby superseded and shall
have no force or effect.
6
IN WITNESS
WHEREOF, this Agreement has been executed as of the date first written
above.
| Attest: | HARLEYSVILLE SAVINGS FINANCIAL | |
| CORPORATION | ||
| ______________________________ |
By:
_______________________________________________________
|
|
| Xxxxxx X. Xxxx | ||
| President and Chief Executive Officer | ||
| Attest: | HARLEYSVILLE SAVINGS BANK | |
| ______________________________ | By: _______________________________________________________ | |
| Xxxxxx X. Xxxx | ||
| President and Chief Executive Officer | ||
|
|
|
|
| Attest: | ||
| ______________________________ | By: _______________________________________________________ | |
7
