WALDEN FEDERAL SAVINGS AND LOAN ASSOCIATION AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT
Exhibit
10.4
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FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED
AND RESTATED
This
AMENDED AND RESTATED
AGREEMENT (“Agreement”) is hereby entered into as of June 28, 2007, by and between XXXXXX FEDERAL SAVINGS AND LOAN
ASSOCIATION (the “Bank”), XXXXXX X. XXXXXX
(“Executive”), and HOMETOWN BANCORP, INC. (the
“Company”), the holding company of the Bank, as guarantor.
WHEREAS, the Company, the Bank
and the Executive entered into a Change in Control Agreement effective June 28,
2007; and
WHEREAS, Section 409A of the
Internal Revenue Code (the “Code”), effective January 1, 2005, requires deferred
compensation arrangements, including those set forth in change in control
agreements, to comply with its provisions and restrictions and limitations on
payments of deferred compensation; and
WHEREAS, the Final Treasury
Regulations issued under Code Section 409A in April of 2007 necessitate changes
to the original agreement; and
WHEREAS, the parties hereto
desire to set forth the terms of the revised Agreement.
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 date that is three (3) years after the Effective Date, plus (ii) any and all
extensions of the initial term made pursuant to this Section
1. Notwithstanding anything in this Section 1 to the contrary,
the term of the Agreement shall be fixed at one year as of the effective date of
a Change in Control.
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 Executive’s desire that
the term not be extended.
c. Notwithstanding
anything in this Section 1 to the contrary, this Agreement shall terminate
(i) if Executive or the Bank terminates Executive’s employment prior to a
Change in Control and (ii) on the first anniversary of the effective date
of 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 (as defined in Section 2c.) followed at
any time during the remaining term of the Agreement by the Executive’s
“Separation from Service,” as defined in Code Section 409A and the Treasury
Regulations thereunder, in accordance with the terms of the Agreement, other
than for Cause (as defined in Section 2d.), the provisions of Section 3 of the
Agreement shall apply.
b. Upon
the occurrence of a Change in Control, Executive shall have the right to elect
to voluntarily terminate her employment following the occurrence of 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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A
material reduction in Executive’s responsibilities or authority in
connection with her employment with the Company or the
Bank;
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ii.
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Assignment
to Executive of duties of a non-executive nature or duties for which she
is not reasonably equipped by her skills and
experience;
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iii.
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A
reduction in salary or benefits contrary to the terms of this Agreement,
or, following a Change in Control as defined in Section 2c. of this
Agreement, any reduction in salary or material reduction in benefits below
the amounts to which Executive was entitled prior to the Change in
Control;
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iv.
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Termination
of incentive and benefit plans (other than the Bank’s tax-qualified
plans), programs or arrangements, or reduction of Executive’s
participation to such an extent as to materially reduce their aggregate
value below their aggregate value as of the Effective
Date;
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v.
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A
relocation of Executive’s principal business office by more than
thirty-five (35) miles from its current location;
or
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vi.
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Liquidation
or dissolution of the Company or the
Bank.
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Notwithstanding the foregoing, if the
Company or the Bank reduces or eliminates the Executive’s benefits under one or
more plans as part of a good faith, overall reduction or elimination of such
benefits or plans, in a manner that does not discriminate against Executive
(except as such discrimination may be necessary to comply with law), the
Company’s or the Bank’s action shall not constitute Good Reason for termination
or a material breach of this Agreement, provided that benefits of the same type
or to the same general extent are not subsequently made available to other
officers of the Company and the Bank, or any company that controls either of
them, under a plan or program in which Executive is not entitled to
participate. Furthermore, the Executive must give written notice to
the Bank within 90 days after the initial occurrence of an event giving rise to
“Good Reason” (as defined above) and the Bank shall have 30 days to cure such
condition. If the condition is not cured during such period, the
Executive must terminate employment no later than two years following the Good
Reason condition.
c. 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.
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Merger: The
Company or the Bank merges into or consolidates with another corporation,
or merges another corporation into the Company or the Bank, 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 or the Bank immediately
before the merger or consolidation.
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ii.
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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
Schedule
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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.
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Change in Board
Composition: During any period of two consecutive years,
individuals who constitute the Company’s or the Bank’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 or the Bank’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.
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Sale of
Assets: The Company or the Bank sells to a third party
all or substantially all of its
assets.
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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.
d. Executive
shall not have the right to receive termination benefits pursuant to Section 3
of this Agreement upon termination for Cause. Termination for Cause shall mean
termination of Executive’s employment 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 Cause unless and until there shall have
been delivered to her 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 the purpose of finding
(after reasonable notice to Executive and an opportunity for her, together with
counsel, to be heard before the Board of Directors), that Executive engaged in
conduct justifying termination for Cause and specifying the particulars of such
conduct in detail. Executive shall not have the right to receive
compensation or other benefits for any period after termination for
Cause. During the period beginning on the date of the Notice of
Termination for Cause pursuant to Section 4 of this Agreement 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 unvested stock awards shall become null and void and
shall not be exercisable by or delivered to Executive at any time following her
termination for Cause.
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3.
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Termination
Benefits.
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a. If,
on or after the effective date of a Change in Control, Executive’s employment is
voluntarily (in accordance with Section 2b.) or involuntarily terminated (other
than for Cause) during the remaining term of the Agreement, and provided that
such termination of employment is a “Separation from Service” as defined in Code
Section 409A and the regulations thereunder, Executive shall
receive:
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i.
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a
lump sum cash payment equal to three (3) times the Executive’s base salary
as of the termination date. Such payment shall be made not
later than ten (10) calendar days following Executive’s termination of
employment under this Section 3, unless Executive is a “Specified
Employee” as defined in Code Section 409A and the regulations thereunder,
in which case, solely to the extent necessary to avoid penalties under
Code Section 409A, such payment shall be delayed until the first day of
the seventh month following the Executive’s Separation from
Service.
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ii.
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Continued
benefit coverage under all group life insurance and non-taxable medical
and dental insurance plans in which Executive participated as of the date
of the Change in Control (collectively, the “Employee Benefit Plans”) for
a period of thirty-six 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 benefit continuation under
the Employee Benefit Plans, Executive shall be deemed to be an active
employee. To the extent that the Bank cannot provide any benefits required
under this Section 3a. under the terms of the Employee Benefit Plans, the
Bank shall enter into alternative arrangements that will provide Executive
with coverage that is substantially similar to the coverage provided to
Executive by the Bank prior to her termination of employment, subject to
any applicable limitations of Code Section
409A.
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b. Notwithstanding
any contrary provisions of this Section 3, in no event shall the aggregate
payments or benefits to be made or afforded to Executive (the “Termination
Benefits”) constitute an “excess parachute payment” under Section 280G of
the Code, and to avoid such a result, the Termination Benefits will
be reduced, if necessary, to an amount that is one dollar ($1.00) less than
three (3) times Executive’s “base amount,” as determined in accordance with said
Section 280G of the Code. The reduction shall be taken from the Executive’s cash
severance payment.
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4.
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Notice of
Termination.
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a. The
Bank or Executive shall communicate any purported termination by means of a
Notice of Termination to the other party(ies). 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.
b. “Date
of Termination” shall mean the date specified in the Notice of Termination
(which, in the case of a termination for 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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The Bank shall make in a timely manner
all payments provided for under this Agreement in cash or check from its general
funds. The Company, however, unconditionally guarantees payment and
the provision of all amounts and benefits due to Executive under this
Agreement. If the Bank does not timely pay or provide such amounts
and benefits, the Company shall pay or provide such amounts and
benefits.
6.
Effect on Prior Agreements
and Existing Benefit Plans.
This Agreement contains the entire
understanding between the parties and supersedes any prior agreement between the
Bank or the Company and Executive, except that this Agreement shall not
effectively reduce any benefit or compensation otherwise inuring to
Executive. No provision of this Agreement shall be interpreted to
mean that Executive is subject to receiving fewer benefits than those available
to her without reference to this Agreement. Nothing in this Agreement
shall confer upon Executive the right to continue in the employ of the Bank or
the Company or shall impose on the Bank or the Company any obligation to retain
Executive as an employee 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 do so shall be null, void and of no effect.
b. This
Agreement shall be binding upon, and inure to the benefit of, Executive, the
Bank, the Company and their respective successors and assigns.
8.
Modification and
Waiver.
a. This
Agreement may be modified or amended only by means of a written instrument
signed by the parties.
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 written waiver shall be deemed a continuing waiver
unless specifically stated as such, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
9.
Severability.
If all or part of any provision of this
Agreement is held invalid for any reason, such invalidity shall not affect the
validity of any other provision or part of this Agreement, and all other
provisions and parts of this Agreement shall 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
in this Agreement 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, any references 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 New York, without regard to conflicts
of law principles.
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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’s
home office in Walden, New York, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on
the arbitrator’s award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of her 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 and expenses
paid or incurred by Executive pursuant to any dispute or question of
interpretation handled pursuant to Section 12 of this Agreement shall be paid or
reimbursed by the Bank or the Company, but only if Executive is successful
pursuant to the arbitration proceeding or a legal judgment or
settlement. Such payments or reimbursements shall be made in a cash
lump sum no later than 2 ½ months after the end of the calendar year in which
such expenses were incurred.
14. Indemnification.
The Company or the Bank shall provide
Executive (and Executive’s heirs, executors and administrators) with coverage
under a standard directors’ and officers’ liability insurance policy and shall
indemnify Executive (and Executive’s heirs, executors and administrators) to the
fullest extent permitted under applicable law against all expenses and
liabilities reasonably incurred in connection with or arising out of any action,
suit or proceeding in which Executive may be involved by reason of acting
outside the scope of her authority as a director or officer of the Company or
the Bank (whether or not Executive continues to serve as 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 costs of reasonable settlements. Such payments or
reimbursements shall be made in a cash lump sum no later than 2 ½ months after
the end of the calendar year in which such expenses were incurred.
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.
16. Required
Provisions. 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.
a. 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
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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.
b. If
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs by a notice served under
Section 8(e)(3) 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 Agreement shall be
suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may
in its discretion: (i) pay Executive all or part of the compensation
withheld while its contract obligations were suspended; and (ii) reinstate (in
whole or in part) any of the obligations which were suspended.
c. If
Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank’s affairs by an order issued under Section 8(e)(4) 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 Agreement shall terminate as of the
effective date of the order, but vested rights of the contracting parties shall
not be affected.
d. If
the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under this
Agreement shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the contracting parties.
e. All
obligations under this Agreement shall be terminated, except to the extent
determined that continuation of the contract is necessary for the continued
operation of the Bank: (i) by the Director of the OTS (or his or her
designee), at the time the Federal Deposit Insurance Corporation (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 or her 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.
f. Any
payments made to 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.
17. Effect of
Code Section 409A. Notwithstanding anything in this agreement
to the contrary, if the Bank in good faith determines, as of the effective date
of Executive’s termination of employment, that an amount (or any portion of an
amount) payable to Executive hereunder, is required to be suspended or delayed
for six months in order to satisfy the requirements of Section 409A of the Code,
then the Bank will so advise Executive, and any such payment (or the minimum
amount thereof) shall be suspended and accrued for six months, whereupon such
amount or portion thereof shall be paid to Executive in a lump sum (together
with interest thereon at the then-prevailing prime rate) on the first day of the
seventh month following the effective date of Executive’s termination of
employment.
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SIGNATURES
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement effective as of the date first set
forth above.
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XXXXXX
FEDERAL SAVINGS AND LOAN
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ASSOCIATION
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| December 18, 2008 |
By:
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/s/ Xxxxxx X. Xxxxxxx | |
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Date
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For
the Entire Board of Directors
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HOMETOWN
BANCORP, INC.
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(Guarantor)
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| December 18, 2008 |
By:
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/s/ Xxxxxx X. Xxxxxxx | |
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Date
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For
the Entire Board of Directors
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EXECUTIVE
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| December 18, 2008 | /s/ Xxxxxx X. Xxxxxx | ||
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Date
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Xxxxxx
X. Xxxxxx
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