SAVINGS INSTITUTE BANK AND TRUST COMPANY CHANGE IN CONTROL AGREEMENT
Exhibit
10.13
SAVINGS
INSTITUTE BANK AND TRUST COMPANY
This
AGREEMENT (“Agreement”) is hereby entered into as
of September 30, 2004, by and
between Savings Institute Bank and Trust Company (the “Bank”),
a federally-chartered savings bank with its principal offices at 000 Xxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxx 00000, Xxxxxx X. Xxxxxxx
(“Executive”) and SI Financial Group, Inc. (the “Company”), a
federally-chartered corporation and the holding company of the Bank, as
guarantor.
WHEREAS,
the Bank recognizes the importance of Executive to the Bank’s operations and
wishes to protect his position with the Bank in the event of a change in control
of the Bank or the Company for the period provided for in this Agreement;
and
WHEREAS,
Executive and the Board of Directors of the Bank desire to enter into an
agreement setting forth the terms and conditions of payments due to Executive
in
the event of a change in control and the related rights and obligations of
each
of the parties.
NOW,
THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is hereby agreed as follows:
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1.
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Term
of Agreement.
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(a) The
term of this Agreement shall be (i) the initial term, consisting of the period
commencing on the date of this Agreement (the “Effective Date”) and ending on
the second anniversary of the Effective Date, plus (ii) any and all extensions
of the initial term made pursuant to this Section 1.
(b) Commencing
on the first anniversary of the Effective Date and continuing each anniversary
date thereafter, the Board of Directors of the Bank (the “Board of Directors”)
may extend the term of this Agreement for an additional one (1) year period
beyond the then effective expiration date, provided that Executive shall not
have given at least sixty (60) days’ written notice of his desire that the term
not be extended.
(c) Notwithstanding
anything in this Section to the contrary, this Agreement shall terminate if
Executive or the Bank terminates Executive’s employment prior to a Change in
Control.
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2.
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Change
in Control.
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(a) Upon
the occurrence of a Change in Control of the Bank or the Company followed at
any
time during the term of this Agreement by the termination of Executive’s
employment in accordance with the terms of this Agreement, other than for Just
Cause, as defined in Section 2(c) of this Agreement, the provisions of Section
3
of this Agreement shall apply. Upon the occurrence of a Change in
Control, Executive shall have the right to elect to
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voluntarily
terminate his employment at any time during the term of this Agreement following
an event constituting “Good Reason.”
“Good
Reason” means, unless Executive has consented in writing thereto, the occurrence
following a Change in Control, of any of the following:
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(i)
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the
assignment to Executive of any duties materially inconsistent with
Executive’s position, including any material change in status, title,
authority, duties or responsibilities or any other action that results
in
a material diminution in such status, title, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and that is remedied
by the
Bank or Executive’s employer reasonably promptly after receipt of notice
thereof given by the Executive;
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(ii)
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a
reduction by the Bank or Executive’s employer of the Executive’s base
salary in effect immediately prior to the Change in
Control;
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(iii)
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the
relocation of the Executive’s office to a location more than twenty-five
(25) miles from its location as of the date of this
Agreement;
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(iv)
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the
taking of any action by the Bank or any of its affiliates or successors
that would materially adversely affect the Executive’s overall
compensation and benefits package, unless such changes to the compensation
and benefits package are made on a non-discriminatory basis to all
employees; or
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(v)
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the
failure of the Bank or the affiliate of the Bank by which Executive
is
employed, or any affiliate that directly or indirectly owns or controls
any affiliate by which Executive is employed, to obtain the assumption
in
writing of the Bank’s obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Bank or
such
affiliate within thirty (30) days after a reorganization, merger,
consolidation, sale or other disposition of assets of the Bank or
such
affiliate.
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(b) For
purposes of this Agreement, a “Change in Control” shall be deemed to occur on
the earliest of any of the following events:
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(i)
Merger: The Company merges into or consolidates
with another corporation, or merges another corporation into the
Company,
and as a result less than a majority of the combined voting power
of the
resulting corporation immediately after the merger or consolidation
is
held by persons who were stockholders of the Company immediately
before
the merger or consolidation.
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(ii)
Acquisition of Significant Share Ownership: There is
filed or required to be filed a report on Schedule 13D or another
form or
schedule (other than
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Schedule
13G) required under Sections 13(d) or 14(d) of the Securities Exchange
Act
of 1934, if the schedule discloses that the filing person or persons
acting in concert has or have become the beneficial owner of 25%
or more
of a class of the Company’s voting securities, but this clause (b) shall
not apply to beneficial ownership of Company voting shares held in
a
fiduciary capacity by an entity of which the Company directly or
indirectly beneficially owns 50% or more of its outstanding voting
securities.
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(iii)
Change in Board Composition: During any period of
two consecutive years, individuals who constitute the Company’s Board of
Directors at the beginning of the two-year period cease for any
reason to
constitute at least a majority of the Company’s Board of Directors;
provided, however, that for purposes of this clause (iii), each
director
who is first elected by the board (or first nominated by the board
for
election by the stockholders) by a vote of at least two-thirds
(2/3) of
the directors who were directors at the beginning of the two-year
period
shall be deemed to have also been a director at the beginning of
such
period; or
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(iv) Sale
of Assets: The Company sells to a third party all or
substantially all of its assets.
Notwithstanding
anything in this Agreement to the contrary, in no event shall the reorganization
of the Bank from the mutual holding company form of organization to the full
stock holding company form of organization (including the elimination of the
mutual holding company) constitute a “Change in Control” for purposes of this
Agreement.
(c) Executive
shall not have the right to receive termination benefits pursuant to Section
3
hereof upon termination for Just Cause. The term “Just Cause” shall
mean termination because of Executive’s personal dishonesty, incompetence,
willful misconduct, any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, regulation (other than traffic violations or similar offenses), final
cease and desist order, or any material breach of any provision of this
Agreement. Notwithstanding the foregoing, Executive shall not be
deemed to have been terminated for Just Cause unless and until there shall
have
been delivered to him a copy of a resolution duly adopted by the affirmative
vote of a majority of the entire membership of the Board of Directors at a
meeting of the Board of Directors called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board of Directors), finding that in the good
faith opinion of the Board of Directors, Executive was guilty of conduct
justifying termination for Just Cause and specifying the particulars thereof
in
detail. Executive shall not have the right to receive compensation or
other benefits for any period after termination for Just
Cause. During the period beginning on the date of the Notice of
Termination for Just Cause pursuant to Section 4 hereof through the Date of
Termination, stock options granted to Executive under any stock option plan
shall not be exercisable nor shall any unvested stock awards granted to
Executive under any stock benefit plan of the Bank, the Company or any
subsidiary or affiliate thereof, vest. At the Date of Termination,
such stock options and any such unvested stock awards shall become null and
void
and shall not be exercisable by or delivered to
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Executive
at any time subsequent to such termination for Just Cause.
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3.
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Termination
Benefits.
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(a) If
Executive’s employment is voluntarily (in accordance with Section 2(a) of
this Agreement) or involuntarily terminated within two (2) years of a Change
in
Control, Executive shall receive:
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(i)
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a
lump sum cash payment equal to two (2) times the Executive’s “base
amount,” within the meaning of Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the “Code”). Such payment shall be
made not later than five (5) days following Executive’s termination of
employment under this
Section 3.
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(ii)
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Continued
benefit coverage under all Bank health and welfare plans which Executive
participated in as of the date of the Change in Control (collectively,
the
“Employee Benefit Plans”) for a period of twenty-four (24) months
following Executive’s termination of employment. Said coverage
shall be provided under the same terms and conditions in effect on
the
date of Executive’s termination of employment. Solely for
purposes of benefits continuation under the Employee Benefit Plans,
Executive shall be deemed to be an active employee. To the extent
that
benefits required under this Section 3(a) cannot be provided under
the
terms of any Employee Benefit Plan, the Bank shall enter into alternative
arrangements that will provide Executive with comparable
benefits.
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(b) Notwithstanding
the preceding provisions of this Section 3, in no event shall the aggregate
payments or benefits to be made or afforded to Executive under said paragraphs
(the “Termination Benefits”) constitute an “excess parachute payment” under
Section 280G of the Code or any successor thereto, and to avoid such a result,
Termination Benefits will be reduced, if necessary, to an amount (the
“Non-Triggering Amount”), the value of which is one dollar ($1.00) less than an
amount equal to three (3) times Executive’s “base amount,” as determined in
accordance with said Section 280G. The allocation of the reduction
required hereby among the Termination Benefits provided by this Section 3 shall
be determined by Executive.
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4.
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Notice
of Termination.
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(a) Any
purported termination by the Bank or by Executive shall be communicated by
Notice of Termination to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in detail the facts and circumstances claimed to provide a
basis
for termination of Executive’s employment under the provision so
indicated.
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(b) “Date
of Termination” shall mean the date specified in the Notice of Termination
(which, in the case of a termination for Just Cause, shall not be less than
thirty (30) days from the date such Notice of Termination is
given).
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5.
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Source
of Payments.
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All
payments provided in this Agreement
shall be timely paid in cash or check from the general funds of the
Bank. The Company, however, unconditionally guarantees payment and
provision of all amounts and benefits due hereunder to Executive and, if such
amounts and benefits due from the Bank are not timely paid or provided by the
Bank, such amounts and benefits shall be paid or provided by the
Company.
6. Effect
on Prior Agreements and Existing Benefit Plans.
This
Agreement contains the entire
understanding between the parties hereto and supersedes any prior agreement
between the Bank and Executive, except that this Agreement shall not affect
or
operate to reduce any benefit or compensation inuring to Executive of a kind
elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement. Nothing
in this Agreement shall confer upon Executive the right to continue in the
employ of the Bank or shall impose on the Bank any obligation to employ or
retain Executive in its employ for any period.
7. No
Attachment.
(a) Except
as required by law, no right to receive payments under this Agreement shall
be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to execution, attachment, levy or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to affect any such action shall be null, void and of no
effect.
(b) This
Agreement shall be binding upon, and inure to the benefit of, Executive, the
Bank and their respective successors and assigns.
8. Modification
and Waiver.
(a) This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(b) No
term or condition of this Agreement shall be deemed to have been waived, nor
shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or
estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only
as
to the specific term or condition waived and shall not constitute a waiver
of
such term or condition for the future or as to any act other than that
specifically waived.
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9. Severability.
If,
for any reason, any provision of
this Agreement, or any part of any provision, is held invalid, such invalidity
shall not affect any other provision of this Agreement or any part of such
provision not held so invalid, and each such other provision and part thereof
shall to the full extent consistent with law continue in full force and
effect.
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10.
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Headings
for Reference Only.
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The
headings of sections and paragraphs
herein are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions of this
Agreement. In addition, references herein to the masculine shall
apply to both the masculine and the feminine.
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11.
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Governing
Law.
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Except
to the extent preempted by
federal law, the validity, interpretation, performance, and enforcement of
this
Agreement shall be governed by the laws of the State of Connecticut, without
regard to principles of conflicts of law of that State.
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12.
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Arbitration.
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Any
dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators sitting in a location
selected by Executive within fifty (50) miles from the location of the Bank,
in
accordance with the rules of the American Arbitration Bank then in
effect. Judgment may be entered on the arbitrator’s award in any
court having jurisdiction; provided, however, that Executive shall be entitled
to seek specific performance of his right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under
or
in connection with this Agreement.
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13.
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Payment
of Legal Fees.
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All
reasonable legal fees paid or
incurred by Executive pursuant to any dispute or question of interpretation
relating to this Agreement shall be paid or reimbursed by the Bank, only if
Executive is successful pursuant to a legal judgment, arbitration or
settlement.
14. Indemnification.
The
Company or the Bank shall provide
Executive (including his heirs, executors and administrators) with coverage
under a standard directors’ and officers’ liability insurance policy at its
expense and shall indemnify Executive (and his heirs, executors and
administrators) to the fullest extent permitted under applicable law against
all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been a director or officer of the Company or the
Bank
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(whether
or not he continues to be a director or officer at the time of incurring such
expenses or liabilities), such expenses and liabilities to include, but not
be
limited to, judgments, court costs, attorneys’ fees and the cost of reasonable
settlements.
15. Successors
to the Bank and the Company.
The
Bank and the Company shall require
any successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all of the business or
assets of the Bank or the Company, expressly and unconditionally to assume
and
agree to perform the Bank’s and the Company’s obligations under this Agreement,
in the same manner and to the same extent that the Bank and the Company would
be
required to perform if no such succession or assignment had taken
place.
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16.
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Required
Provisions.
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In
the
event any of the foregoing provisions of this Section 16 are in conflict with
the terms of this Agreement, this Section 16 shall prevail.
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a.
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The
Bank’s board of directors may terminate Executive’s employment at any
time, but any termination by the Bank, other than Termination for
Cause,
shall not prejudice Executive’s right to compensation or other benefits
under this Agreement. Executive shall not have the right to
receive compensation or other benefits for any period after Termination
for Cause.
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b.
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If
Executive is suspended from office and/or temporarily prohibited
from
participating in the conduct of the Bank’s affairs by a notice served
under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance
Act, 12
U.S.C. §1818(e)(3) or (g)(1); the Bank’s obligations under this contract
shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the
Bank may in its discretion: (i) pay Executive all or part of
the compensation withheld while their contract obligations were suspended;
and (ii) reinstate (in whole or in part) any of the obligations which
were
suspended.
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c.
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If
Executive is removed and/or permanently prohibited from participating
in
the conduct of the Bank’s affairs by an order issued under Section 8(e)(4)
or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or
(g)(1), all obligations of the Bank under this contract shall terminate
as
of the effective date of the order, but vested rights of the contracting
parties shall not be affected.
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d.
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If
the Bank is in default as defined in Section 3(x)(1) of the Federal
Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank
under this contract shall terminate as of the date of default, but
this
paragraph shall not affect any vested rights of the contracting
parties.
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e.
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All
obligations under this contract shall be terminated, except to the
extent
determined that continuation of the contract is necessary for the
continued
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operation
of the Bank: (i) by the Director of the OTS (or his designee),
at the time the FDIC or the Resolution Trust Corporation, at the
time the
FDIC enters into an agreement to provide assistance to or on behalf
of the
Bank under the authority contained in Section 13(c) of the Federal
Deposit
Insurance Act, 12 U.S.C. §1823(c); or (ii) by the Director of the OTS (or
his designee) at the time the Director (or his designee) approves
a
supervisory merger to resolve problems related to the operations
of the
Bank or when the Bank is determined by the Director to be in an unsafe
or
unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by such
action.
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f.
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Any
payments made to employees Executive pursuant to this Agreement,
or
otherwise, are subject to and conditioned upon their compliance with
12
U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute
and Indemnification Payments.
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SIGNATURES
IN
WITNESS WHEREOF, Savings Institute
Bank and Trust Company and SI Financial Group, Inc. have caused this Agreement
to be executed and their seals to be affixed hereunto by their duly authorized
officers, and Executive has signed this Agreement, on the 30th day of
September,
2004.
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ATTEST:
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SAVINGS
INSTITUTE BANK AND TRUST COMPANY
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/s/
Xxxxxx X. Xxxxxxxx
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By:
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/s/
Xxxx X. Xxxxxxxxxx
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Corporate
Secretary
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For
the Entire Board of Directors
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ATTEST:
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(Guarantor)
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/s/
Xxxxxx X. Xxxxxxxx
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By:
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/s/
Xxxx X. Xxxxxxxxxx
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Corporate
Secretary
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For
the Entire Board of Directors
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[SEAL]
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WITNESS:
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EXECUTIVE
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/s/
Xxxxxx X. Xxxxxxxx
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/s/
Xxxxxx X. Xxxxxxx
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Corporate
Secretary
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Xxxxxx
X. Xxxxxxx
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