1
EXHIBIT 10.7
TWO-YEAR CHANGE OF CONTROL AGREEMENT
This CHANGE OF CONTROL 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
"Officer").
INTRODUCTORY STATEMENT
The Bank is undertaking a reorganization through which it will
convert from a mutual savings bank 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 Officer has served the Bank as an officer 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 establish a working environment
for the Officer which minimizes the personal distractions that might result from
possible business combinations in which the Company or the Bank might be
involved following the Reorganization. To this end, the Bank and the Company
have decided to provide the Officer with assurance that his compensation will be
continued for a minimum period of two (2) years following termination of
employment (the "Assurance Period") if his employment terminates under specified
circumstances related to a business combination. The Board of Managers of the
Bank and the Board of Directors of the Company have decided to formalize this
assurance by entering into this Change of Control Agreement with the Officer.
The terms and conditions which the Bank, the Company and the
Officer have agreed to are as follows.
AGREEMENT
SECTION 1. EFFECTIVE DATE; TERM; CHANGE OF CONTROL AND
PENDING CHANGE OF CONTROL DEFINED.
(a) This Agreement shall take effect on the effective date of the
Reorganization (the "Effective Date") and shall be in effect during the period
(the "Term") beginning on the Effective Date of the Reorganization and ending on
the first anniversary of the date on which the Bank notifies the Executive of
its intent to discontinue the Agreement (the "Initial Expiration Date") or, if
later, the second anniversary of the latest Change of Control or Pending Change
of Control, as defined below, that occurs after the Effective Date and before
the Initial Expiration Date.
2
(b) For all purposes of this Agreement, 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 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-
3
(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 1(b)(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 1(b), the term "person" shall have the meaning assigned
to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(c) 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.
SECTION 2. DISCHARGE PRIOR TO A PENDING CHANGE OF CONTROL.
The Bank may discharge the Officer at any time prior to the
occurrence of a Pending Change of Control for any reason or for no reason. In
such event:
(a) The Bank shall pay to the Officer'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 Officer's termination
of employment.
(b) The Bank shall provide the benefits, if any, due to the
Officer's estate, surviving dependents or his designated beneficiaries
under the employee benefit plans and programs and compensation plans and
programs maintained for the benefit of the officers and employees of the
Bank. The time and manner of payment or other
-3-
4
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 2(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
SECTION 3. TERMINATION OF EMPLOYMENT DUE TO DEATH.
The Officer's employment with the Bank shall terminate,
automatically and without any further action on the part of any party to this
Agreement, on the date of the Officer's death. In such event, the Bank shall pay
and deliver to the Officer (and, in the event of his death before payment, to
his estate and surviving dependents and beneficiaries, as applicable) the
Standard Termination Entitlements.
SECTION 4. TERMINATION DUE TO DISABILITY AFTER CHANGE OF
CONTROL OR PENDING CHANGE OF CONTROL.
The Bank may terminate the Officer's employment during the Term
and after the occurrence of a Change of Control or a Pending Change of Control
upon a determination, by a majority vote of the members of the Board of
Directors of the Bank, acting in reliance on the written advice of a medical
professional acceptable to it, that the Officer is suffering from a physical or
mental impairment which, at the date of the determination, has prevented the
Officer 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 Officer 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 shall pay and deliver to the Officer (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 shall continue to pay the Officer 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 (the
"LTD Eligibility Date"); (iii) the date of his death; and (iv) the
expiration of the Assurance 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 Bank shall continue to
pay the Officer 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
-4-
5
period ending on the earliest of the LTD Eligibility Date, the date of
his death and the expiration of the Assurance Period.
A termination of employment due to disability under this section 4 shall be
effected by a notice of termination given to the Officer by 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
Officer.
SECTION 5. DISCHARGE WITH CAUSE AFTER CHANGE OF CONTROL OR
PENDING CHANGE OF CONTROL.
(a) The Bank may terminate the Officer's employment with "Cause"
during the Term and after the occurrence of a Change of Control or Pending
Change of Control, but a termination shall be deemed to have occurred with
"Cause" only if:
(i) the Board of Directors of the Bank, by majority vote of its
entire membership, determine that the Officer (A) has willfully and
intentionally failed to perform his assigned duties under this Agreement
in any material respect (including, for these purposes, the Officer'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
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 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 vote contemplated
by section 1(b)(i), the Bank has provided the Officer with notice of its
intent to discharge the Officer 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 vote contemplated by section 5(a)(i), the
Officer (together with his legal counsel, if he so desires) is afforded
a reasonable opportunity to make both written and oral presentations
before the Board of Directors of the Bank for the purpose of refuting
the alleged grounds for Cause for his discharge; and
(iv) after the vote contemplated by section 5(a)(i), the Bank has
furnished to the Officer 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, certified by its corporate secretary and signed
by each member of the Board of Directors voting in favor of adoption of
the resolution(s), authorizing the termination of the Officer's
employment with Cause and stating with particularity the facts and
circumstances found to constitute Cause for his discharge (the "Final
Discharge Notice").
-5-
6
For purposes of this section 5, no act or failure to act, on the part of the
Officer, shall be considered "willful" unless it is done, or omitted to be done,
by the Officer in bad faith or without reasonable belief that the Officer's
action or omission was in the best interests of the Bank. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board of Directors of the Bank or based upon the written advice of counsel for
the Bank shall be conclusively presumed to be done, or omitted to be done, by
the Officer in good faith and in the best interests of the Bank.
(b) If the Officer is discharged with Cause during the Term and
after a Change of Control or Pending Change of Control, 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 may
temporarily suspend the Officer's duties and authority and, in such event, may
also suspend the payment of salary and other cash compensation, but not the
Officer's participation in retirement, insurance and other employee benefit
plans. If the Officer 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 Officer 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 Officer during the
period beginning with the giving of the Notice of Intent to Discharge and ending
with the Officer's discharge with Cause shall be retained by the Officer and
shall not be applied to offset the Standard Termination Entitlements. If the
Bank does not give a Final Discharge Notice to the Officer 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
Officer with Cause shall require the giving of a new Notice of Intent to
Discharge.
SECTION 6. DISCHARGE WITHOUT CAUSE.
The Bank may discharge the Officer without Cause at any time
after the occurrence of a Change of Control or Pending Change of Control, and in
such event:
(a) The Bank shall pay and deliver to the Officer (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:
(i) During the Assurance Period, the Bank shall provide
for the Officer 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
Officer's resignation. The coverage provided under this section
6(b)(i) may, at the election of the Bank,
-6-
7
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 6(b)(i).
(ii) The Bank shall make a lump sum payment to the
Officer (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 Officer would have earned if he had continued
working for the Bank during the Assurance 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
SSP=(SIGMA) [ (BS/PR) ]
1 + (I / PR)]n
1
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
Officer 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 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 Officer's
termination of employment occurs (the "Short Term AFR") and "n"
equals the product of the Assurance Period at the Officer'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 Bank's normal payroll practices. The
Salary Severance Payment shall be made within five (5) business
days after the Officer's termination of employment and shall be
in lieu of any claim to a continuation of base salary which the
Officer might otherwise have and in lieu of cash severance
benefits under any severance benefits program which may be in
effect for officers or employees of the Bank.
(iii) The Bank shall make a lump sum payment to the
Officer (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 Officer would have earned if he had
continued working for the Bank during the Assurance 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:
-7-
8
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 Officer's
termination of employment; and "ASP" is the aggregate base salary
actually paid to the Officer 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 Officer's termination of
employment and shall be in lieu of any claim to a continuation of
participation in annual bonus plans of the Bank which the Officer
might otherwise have.
(iv) The Bank shall make a lump sum payment to the
Officer (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 Officer would have earned if
he had continued working for the Bank during the Assurance Period
(the "Incentive Severance Payment"). The Incentive Severance
Payment shall be computed using the following formula:
ISP = (SSP / RAP) 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 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
Officer's termination of employment; and "ALTSP" is the aggregate
base salary actually paid to the Officer 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; "RAP" is the Assurance
Period, expressed in years and fractions of years; and "Y" is the
aggregate (expressed in years and fractions of years) of the
Assurance 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 Officer'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 which the Officer might otherwise have. Notwithstanding the
foregoing, the
-8-
9
Incentive Severance Payment shall be zero if the Officer's
termination of employment occurs at a time when he is not covered
by any long-term incentive compensation plan.
(v) The Bank shall pay to the Officer (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 Bank (the "Pension
Plans") if he had continued working for the Bank during the
Assurance Period; over (B) the present value of the benefits to
which the Officer 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 Officer'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 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 Officer'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 Officer's actual age at
termination of employment is his attained age as of his last
birthday that would occur during the Assurance Period, that his
service for benefit accrual purposes under the Pension Plans is
equal to the aggregate of his actual service plus the Assurance
Period, that his average compensation figure used in determining
his accrued benefit is equal to the highest annual rate of salary
achieved by the Officer during the period of three (3) years
ending immediately prior to the date of termination, that the
Officer'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 Officer's
termination of employment and shall be in
-9-
10
lieu of any claim to any actual increase in his accrued benefit
in the Pension Plans in respect of the Assurance Period.
(vi) The Bank shall pay to the Officer (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 (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 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 (the "ESOP Plans") if he had continued in
employment during the Assurance 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); "EC" is the amount of
employer contributions actually credited to the Officer's
accounts under the Non-ESOP Plans for the last plan year to end
before his termination of employment; "BS" is the Officer's
compensation taken into account in computing EC; "Y" is the
aggregate (expressed in years and fractions of years) of the
Assurance 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 Officer'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 Officer's termination of employment) of the employer
securities actually allocated to the Officer'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 Officer'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 Officer'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.
-10-
11
(vii) At the election of the Bank made within 30 days
following the Officer's termination of employment, upon the
surrender of options or appreciation rights issued to the
Officer under any stock option and appreciation rights plan or
program maintained by, or covering employees of, 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 Officer 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 Bank, even if he is
not vested under such plan or program.
(viii) At the election of the Bank made within 30 days
following the Officer's termination of employment, upon the
surrender of any shares awarded to the Officer under any
restricted stock plan maintained by, or covering employees of,
the Bank, 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 Officer's termination of
employment; multiplied by
(B) the number of shares which are being
surrendered.
For purposes of computing this payment, the Officer shall be
deemed fully vested in all shares awarded under any restricted
stock plan maintained by, or covering employees of, the Bank,
even if he is not vested under such plan.
The payments and benefits described in section 6(b) are referred to in this
Agreement as the "Additional Change of Control Entitlements".
SECTION 7. RESIGNATION.
(a) The Officer may resign from his employment with the Bank at
any time. A resignation under this section 7 shall be effected by notice of
resignation given by the Officer to 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 Officer. The Officer's
-11-
12
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 Officer's resignation shall be deemed to be for "Good
Reason" if the effective date of resignation occurs during the Term, but on or
after the effective date of a Change of Control, and is on account of:
(i) the failure of the Bank (whether by act or omission of the
Board of Directors, or otherwise) to appoint or re-appoint or elect or
re-elect the Officer to the position with Bank that he held immediately
prior to the Change of Control (the "Assigned Office") or to a more
senior office;
(ii) if the Officer is or becomes a member of the Board of
Directors of the Bank, the failure of the shareholders of the Bank
(whether in an election in which the Officer stands as a nominee or in
an election where the Officer is not a nominee) to elect or re-elect the
Officer to membership at the expiration of his term of membership,
unless such failure is a result of the Officer's refusal to stand for
election;
(iii) a material failure by the Bank, whether by amendment of the
certificate of incorporation or organization, by-laws, action of the
Board of Directors of the Bank or otherwise, to vest in the Officer the
functions, duties, or responsibilities customarily associated with the
Assigned Office; provided that the Officer shall have given notice of
such failure to the Bank, and the Bank has not fully cured such failure
within thirty (30) days after such notice is deemed given;
(iv) any reduction of the Officer'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 Officer's compensation as and when
due;
(v) any change in the terms and conditions of any compensation or
benefit program in which the Officer 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 Officer shall have given notice of such material
adverse effect to the Bank, and the Bank has 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 Officer 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 Officer'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
-12-
13
principal executive office to a location that is both more than
twenty-five (25) miles away from the Officer's principal residence and
more than twenty-five (25) miles away from the location of the Bank's
principal executive office on the day before the occurrence of the
Change of Control.
In all other cases, a resignation by the Officer shall be deemed to be without
Good Reason. In the event of resignation, the Officer shall state in his notice
of resignation whether he considers his resignation to be a resignation with
Good Reason, and if he does, he shall state in such notice the grounds which
constitute Good Reason. The Officer's determination of the existence of Good
Reason shall be conclusive in the absence of fraud, bad faith or manifest error.
(c) In the event of the Officer's resignation for any reason, the
Bank shall pay and deliver the Standard Termination Entitlements. In the event
of the Officer's resignation with Good Reason, the Bank shall also pay and
deliver the Additional Termination Entitlements.
SECTION 8. TERMS AND CONDITIONS OF THE ADDITIONAL TERMINATION
ENTITLEMENTS.
The Bank and the Officer hereby stipulate that the damages which
may be incurred by the Officer 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 Officer's efforts, if any, to mitigate damages.
The Bank and the Officer further agree that the Bank may condition the payment
and delivery of the Additional Termination Entitlements on the receipt of: (a)
the Officer's resignation from any and all positions which he holds as an
officer, director or committee member with respect to the Bank or any subsidiary
or affiliate of either of them; and (b) a release of the Bank and its officers,
directors, shareholders, subsidiaries and affiliates, in form and substance
satisfactory to the Bank, of any liability to the Officer, whether for
compensation or damages, in connection with his employment with the Bank and the
termination of such employment except for the Standard Termination Entitlements
and the Additional Termination Entitlements.
SECTION 9. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS.
The termination of the Officer's employment during the Assurance
Period or thereafter, whether by the Bank or by the Officer, shall have no
effect on the rights and obligations of the parties hereto under 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 disability 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 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 Officer to which the Bank or 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.
-13-
14
SECTION 10. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding upon
the Officer, 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 or the Bank may be sold or otherwise
transferred. Failure of the Company to obtain from any successor its express
written assumption of the Company's or Bank's obligations hereunder at least 60
days in advance of the scheduled effective date of any such succession shall, if
such succession constitutes a Change of Control, constitute Good Reason for the
Officer's resignation on or at any time during the Term following the occurrence
of such succession.
SECTION 11. 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 Officer:
[Officer name]
[Officer address]
[Officer 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
with a copy to:
Xxxxxxx Xxxxxxxx & Wood
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: W. Xxxxxx Xxxxxx, Esq.
-14-
15
SECTION 12. INDEMNIFICATION FOR ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the
Officer 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 Bank's obligations hereunder shall be
conclusive evidence of the Officer'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 Bank'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 Bank may have against the Officer or others. In no event
shall the Officer be obligated to seek other employment or take any other action
by way of mitigation of the amounts payable to the Officer under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Officer obtains other employment. Unless it is determined that the
Officer has acted frivolously or in bad faith, the Bank shall pay as incurred,
to the full extent permitted by law, all legal fees and expenses which the
Officer 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 Bank, the
Officer 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 Officer 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.
SECTION 13. 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.
SECTION 14. 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.
-15-
16
SECTION 15. 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 16. 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 17. 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 18. 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 19. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any
payments to the Officer 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.
SECTION 20. GUARANTY.
The Company hereby irrevocably and unconditionally guarantees to
the Officer the payment of all amounts, and the performance of all other
obligations, due from the Bank in accordance with the terms of this Agreement as
and when due without any requirement of presentment, demand of payment, protest
or notice of dishonor or nonpayment.
-16-
17
IN WITNESS WHEREOF, the Bank and the Company have caused this
Agreement to be executed and the Officer has hereunto set his hand, all as of
the day and year first above written.
[OFFICER 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]
-17-
