[LETTERHEAD OF XXXXXX UNITED BANCORP]
March __, 2000
Xx. Xxxxxx X. Xxxxxx
c/x Xxxxxx United Bank
0000 XxxXxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxxxx:
Xxxxxx United Bancorp, Xxxxxx United Bank and you are party to the attached
Change In Control, Severance and Employment Agreement dated January ___, 1998
(the "Agreement"). As indicated in the Background section of the Agreement, one
of the reasons for entering into the Agreement was to cause you not to be
distracted by the personal uncertainties and risks created by any proposed
business combination with another entity. To further that goal, we wish to
clarify certain provisions of the Agreement to make certain that they reflect
unambiguously the original intent of the parties to the Agreement. While we view
these matters as clarifications of our existing understanding, we intend this
letter to have the force and effect of an amendment to the Agreement. Thus, if
and to the extent that the Agreement is inconsistent with this letter, we hereby
agree that the terms set forth in this letter shall be controlling.
We hereby clarify the Agreement (and if and to the extent that the Agreement is
inconsistent with the following, we hereby amend the Agreement) as follows:
A. Time of Change in Control: Section 1(b)(ii)(B) of the Agreement provides that
a Change in Control of HUBCO shall be deemed to occur:
forty-five (45) days prior to the date HUBCO enters into
a definitive agreement to merge, consolidate, combine or
sell the assets of HUBCO; provided however, that for
purposes of any resignation by the Executive, the Change
in Control shall not be deemed to occur until the
consummation of the merger, consolidation, combination
or sale, as the case may be, except if this Agreement is
not expressly assumed in writing by the acquiring
company, then the Change in Control shall be deemed to
occur the day before the consummation; and further
provided that if any definitive agreement to merge,
consolidate, combine or sell assets is terminated
without consummation of the acquisition, then no Change
in Control shall have been deemed to have occurred . . .
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
The concept of looking back 45 days prior to entry into a definitive
agreement was intended solely to assure the Executive that the Executive's
change in control protection would be available if the parties negotiating a
merger terminated the Executive's employment before executing the definitive
merger agreement. Thus, the 45 day "look-back" is to be used solely in
determining when the "Contract Period" begins under the Agreement. In the
context of the pending Xxxxxx-Dime merger (assuming it is consummated), the
"Contract Period" began 45 days prior to execution of the merger agreement, or
August 1, 1999. However, we also included language in this subparagraph to
assure that the Executive could not trigger Change in Control payments by
resigning before the merger was completed. Thus, in the context of the pending
Xxxxxx-Dime merger, if the Executive resigns before the merger is consummated,
the "Contract Period" would be deemed never to have begun, and the Executive
would not be entitled to payment under the Agreement.
B. Definition of Good Reason: "Good Reason" is defined in Section 1(e) of the
Agreement to include the following, if taken without Executive's express written
consent:
"(i) The assignment to Executive of any
duties inconsistent with, or the reduction of authority,
powers or responsibilities associated with, Executive's
position, title, duties, responsibilities and status
with the Company immediately prior to a Change in
Control; any removal of Executive from, or any failure
to re-elect Executive to, any position(s) or office(s)
Executive held immediately prior to such Change in
Control. A change in position, title, duties,
responsibilities and status or position(s) or office(s)
resulting from a Change in Control or from a merger or
consolidation of the Company into or with another bank
or company shall not meet the requirements of this
paragraph if, and only if, the Executive's new title,
duties and responsibilities are accepted in writing by
the Executive, in the sole discretion of the Executive."
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
The language, "A change . . . shall not meet the requirements of
this paragraph if, and only if the Executive's new title, duties and
responsibilities are accepted in writing by the Executive, in the sole
discretion of the Executive" was intended to assure that the Executive will have
complete and absolute discretion to waive (or not to waive) the Executive's
rights to claim "Good Reason" based upon a particular change, or set of changes,
in position, title, duties and/or responsibilities. Subject to paragraph C
below, no waiver is to occur, or be inferred, from any act of the Executive
other than delivery of a document, signed by the Executive, which specifically
states that the Executive accepts the Executive's new title, duties and
responsibilities for purposes of section 1(e) of the Agreement. Without delivery
of such a document, no continuation in the employ of the surviving corporation
or its subsidiaries following the merger, and no other document(s) signed by the
Executive of any sort (including without limitation any documents relating to,
or in the capacity of, the Executive's new position, title, duties and/or
responsibilities), will waive the right to claim Good Reason under paragraph
1(e) of the Agreement.
C. Resignation for Good Reason: Section 9(b) of the Agreement provides that "The
Executive may resign for Good Reason during the Contract Period upon prior
written notice to the Company."
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
It is intended that the language, "the Executive may resign for Good
Reason during the Contract Period" will give the Executive a reasonable period
of time to resign for Good Reason following an event which constitutes Good
Reason. We acknowledge and agree that nine months constitutes a reasonable
period of time for this purpose. Thus, the Executive shall have the absolute
right to resign for Good Reason so long as the Executive gives notice of such
resignation at any time within the nine month period following the event which
constitutes Good Reason. In no event shall the Executive have less than nine
months from the date of consummation of the merger in which to validly give such
notice. If the Executive does not give notice of resignation prior to expiration
of nine months following an event constituting Good Reason (or if Good Reason
occurs prior to consummation of the merger, nine months following consummation
of the merger), the Executive will be deemed to have waived the right to resign
for that particular Good Reason.
D. Cash Compensation: Section 4 of the Agreement provides, in part, as follows:
The Company shall pay to the Executive compensation for
his services during the Contract Period as follows:
a. Annual Salary. An annual salary equal to the annual
salary in effect as of the Change in Control. The annual
salary shall be payable in installments in accordance
with the Company's usual payroll method. The annual
salary shall not be reduced during the Contract Period.
b. Annual Bonus. An annual cash bonus equal to higher of
a) the highest bonus paid to the Executive during the
three fiscal years prior to the Change in Control or b)
the highest full year bonus to which the Executive would
have been entitled during the three fiscal years prior
to the Change in Control. The bonus shall be payable at
the time and in the manner which the Company paid such
bonuses prior to the Change in Control.
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
It is intended that the references to "Change in Control" in the
above-quoted language shall mean the consummation of the merger. The statement
that "annual salary shall not be reduced during the Contract Period" is intended
to mean that the Executive will be entitled to receive either the Executive's
salary as in effect at the time of the merger, or such greater salary as may
become effective during the Contract Period due to an increase in salary. Thus,
assuming that the Xxxxxx-Dime merger closes during calendar 2000:
o The Executive's post-merger Contract Period annual salary shall be
not less than the greater of (x) the Executive's salary in effect
just prior to the closing of the merger or (y) the highest annual
salary level received by the Executive during the post-merger
Contract Period.
o The Executive's post-merger annual cash bonus shall be not less than
the aggregate amount of cash bonuses paid to the Executive with
respect to either 1997, 1998, or 1999, whichever amount is highest.
E. Payments and Benefits: Section 9(c) of the Agreement provides as follows:
If the Company terminates the Executive's employment
during the Contract Period without Cause or if the
Executive resigns for Good Reason under paragraph 9(b),
the Company shall, . . . pay the Executive a lump sum
(the "Lump Sum") equal to 2.0 times the sum of (i) the
annual salary of the Executive immediately prior to the
Change in Control and the higher of, (ii) the highest
bonus paid to the Executive during the three fiscal
years prior to the Change in Control or, (iii) the
highest full year bonus to which the Executive would
have been entitled during the three fiscal years prior
to the Change in Control. . .
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
It is intended that the language, "immediately prior to the Change
in Control," as used in Section 9(c) and in the context of a merger such as the
Xxxxxx-Dime merger, means "immediately prior to the consummation of the merger."
F. Interpretation of Specific Events as "Good Reason": "Good Reason" is defined
in Section 1(e) of the Agreement to include the following, if taken without
Executive's express written consent:
"(i) The assignment to Executive of any
duties inconsistent with, or the reduction of authority,
powers or responsibilities associated with, Executive's
position, title, duties, responsibilities and status
with the Company immediately prior to a Change in
Control; any removal of Executive from, or any failure
to re-elect Executive to, any position(s) or office(s)
Executive held immediately prior to such Change in
Control. A change in position, title, duties,
responsibilities and status or position(s) or office(s)
resulting from a Change in Control or from a merger or
consolidation of the Company into or with another bank
or company shall not meet the requirements of this
paragraph if, and only if, the Executive's new title,
duties and responsibilities are accepted in writing by
the Executive, in the sole discretion of the Executive"
. . .
It is our mutual intention with respect to the foregoing language, and the
foregoing language shall be so construed, as follows (or such language is hereby
amended if and to the extent necessary to make it consistent with the
following):
Exhibit A sets forth certain facts which we acknowledge and agree
have occurred prior to the date hereof. We further acknowledge and agree that
these facts constitute Good Reason under the language quoted above.
* * * * *
We trust that this letter satisfactorily clarifies issues of concern to you in
connection with the Agreement. Please countersign and deliver to us a copy of
this letter. Upon our mutual execution and delivery of this letter, this letter
shall be binding upon each of us, our successors and assigns as fully as if set
forth in the Agreement.
Very truly yours,
XXXXXX UNITED BANCORP
By: __________________________
Accepted and agreed to by the Executive
XXXXXX UNITED BANK as of the date set forth above:
By: _________________________ ________________________________
XXXXXX X. XXXXXX, individually
