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EXHIBIT 10.2
EMPLOYMENT PROTECTION AGREEMENT
This EMPLOYMENT PROTECTION AGREEMENT (the "Agreement") by and among THE
XXXX SAVINGS BANK, a New York-chartered capital stock savings bank having its
principal place of business in Troy, New York (the "Bank"), XXXX FINANCIAL
CORPORATION, a Delaware corporation owning all of the issued and outstanding
shares of capital stock of the Bank ("Xxxx Financial") (the Bank and Xxxx
Financial, collectively, the "Employers"), and ___________________________, an
individual residing in __________, New York (the "Employee").
WHEREAS, the Employee is currently serving as the
______________________ of the Bank; and
WHEREAS, the Boards of Directors of the Employers (the "Boards")
believe that it is in the best interests of the Employers to encourage the
Employee's continued employment with and dedication to the Bank in the face of
potentially distracting circumstances arising from the possibility of a change
of control of the Employers, although no such change is now contemplated; and
WHEREAS, the Boards have approved and authorized the entry into this
Agreement with the Employee; and
WHEREAS, the parties desire to enter into this Agreement setting forth
the terms and conditions for the payment of special compensation to the Employee
in the event of a termination of the Employee's employment in connection with or
as the result of a change of control of the Employers;
NOW, THEREFORE, it is AGREED as follows:
1. TERM. The initial term of this Agreement shall be for a three-year
period commencing on the date hereof. Subject to annual review and approval by
the Boards, this Agreement may be renewed by written notice to the Employee for
one additional year on the first and each subsequent anniversary date of this
Agreement. References herein to the term of this Agreement shall include the
initial term and any additional years for which this Agreement is renewed.
2. TERMINATION OF EMPLOYMENT IN CONNECTION WITH A CHANGE OF CONTROL.
(a) If during the term of this Agreement there is a "Change of
Control" (as defined below) and the Employee's employment is terminated,
voluntarily by the Employee with "Good Reason" (as defined below) or
involuntarily
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without "Cause" (as defined below), in either case (i) within two years after
such Change of Control, (ii) concurrently therewith or (iii) before and in
connection with such Change of Control (including, without limitation, after
Xxxx Financial has entered into an agreement or engaged in substantive
negotiations with respect to such Change of Control) then, subject to Sections
2(e) and (f) below, the following shall apply:
(i) Concurrently with such termination of employment, the
Employers shall pay to the Employee a lump sum cash payment equal to two times
the greater of (A) the Employee's base cash compensation from the Bank in effect
immediately before the Change of Control or (B) the annual base cash
compensation paid to the Employee by the Bank during the calendar year preceding
the year in which the Change of Control occurs;
(ii) For two years after such termination, the Employers
shall continue in effect all medical, prescription, dental, disability, employee
life, group life and accidental death insurance and other employee welfare plans
for the benefit of the Employee and, if applicable, the Employee's family, which
would have been provided to them if the Employee's employment had not been
terminated; provided, however, that if the Employee becomes reemployed with
another employer and is eligible to receive medical, prescription or dental
benefits under another employer provided plan, the medical, prescription and
dental benefits described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility; and
(iii) Except as otherwise required by applicable federal or
state banking regulations with respect to accelerated vesting of options and
restricted stock following the conversion of the Bank from mutual to stock form
of organization and the formation of Xxxx Financial, as of the time of such
termination of employment, the Employee shall be fully vested in all stock
options, restricted stock, deferred compensation and other employee benefits
that would otherwise be forfeited as a result of such termination of employment
(except that vesting under any qualified pension or retirement plan shall be
only in accordance with the terms of such plan).
Payments under this Section 2(a) shall be in lieu of any amount that may be
otherwise owed to the Employee as damages for the loss of employment. Payments
under this Section 2(a) shall not be reduced by any compensation which the
Employee may receive from other employment with another employer after
termination of the Employee's employment with the Bank. No payment hereunder
shall affect the Employee's entitlement to any vested retirement benefits or
other compensation payments.
(b) For purposes of this Agreement, "Good Reason" shall mean a
material reduction in the Employee's position, authority, duties,
responsibilities,
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compensation or perquisites, or a material adverse change in the conditions of
his or her employment or location of employment (in either case) from those that
existed before the Change of Control. To establish that a voluntary termination
was with Good Reason, the Employee shall provide the Employers with a written
notice of resignation setting out the reasons why the Employee believes that
Good Reason exists. Unless the Bank, within 30 days of the date of such notice
of resignation, shall reject the Employee's statement that Good Reason exists,
the Employee shall be conclusively deemed to have voluntarily resigned with Good
Reason. If the Bank rejects the Employee's statement that Good Reason exists,
the Bank shall have the burden of proving that such rejection of the Employee's
statement was proper.
(c) For purposes of this Agreement, "Cause" shall mean the Employee's
personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform material stated
duties, willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order. In determining
incompetence, the acts or omissions shall be measured against standards
generally prevailing in the financial institutions industry; provided, it shall
be the burden of the Employers to prove the alleged acts and omissions and the
prevailing nature of the standards the Employers shall have alleged are violated
by such acts and/or omissions.
(d) For purposes of this Agreement, a "Change of Control" shall mean:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock of Xxxx Financial
(the "Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of Xxxx Financial entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (1), the
following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from Xxxx Financial, (ii) any acquisition by Xxxx
Financial, (iii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Xxxx Financial, the Bank or any other corporation
controlled by Xxxx Financial or (iv) any acquisition by any corporation pursuant
to a transaction that complies with clauses (i), (ii) and (iii) of subsection
(3) of this Section 2(d); or
(2) Individuals who, as of the date hereof, constitute the Board
of Directors of Xxxx Financial (the "Incumbent Board") cease for any reason to
constitute at least a majority of such Board of Directors (the "Xxxx Financial
Board"); provided, however, that any individual becoming a director subsequent
to
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the date hereof whose election, or nomination for election by Xxxx Financial's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Xxxx Financial Board; or
(3) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of Xxxx Financial (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction owns
Xxxx Financial or all or substantially all of Xxxx Financial's assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of Xxxx Financial, the Bank, such corporation resulting from such
Business Combination or a corporation controlled by any of them) beneficially
owns, directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(4) Approval by the shareholders of Xxxx Financial of a
complete liquidation or dissolution of Xxxx Financial without the establishment
of a successor corporation.
(e) (1) Notwithstanding any other provision of this Agreement or
of any other agreement, contract, or understanding heretofore or hereafter
entered into by the Employee and the Employers, except an agreement, contract,
or
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understanding hereafter entered into that expressly modifies or excludes
application of this Section 2(e) (the "Other Agreements"), and notwithstanding
any formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Employee (including groups or classes of
participants or beneficiaries of which the Employee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Employee (a "Benefit Plan"), the Employee shall not have any right to
receive any payment or other benefit under this Agreement, any Other Agreement,
or any Benefit Plan if such payment or benefit, taking into account all other
payments or benefits to or for the Employee under this Agreement, all Other
Agreements, and all Benefit Plans, would cause any payment to the Employee under
this Agreement to be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (a
"Parachute Payment"). In the event that the receipt of any such payment or
benefit under this Agreement, any Other Agreement, or any Benefit Plan would
cause the Employee to be considered to have received a Parachute Payment under
this Agreement, then the Employee shall have the right, in the Employee's sole
discretion, to designate those payments or benefits under this Agreement, any
Other Agreements, and/or any Benefit Plans, which should be reduced or
eliminated so as to avoid having the payment to the Employee under this
Agreement be deemed to be a Parachute Payment.
(2) All determinations required to be made under this
Section 2(e), including whether and when the payments and benefits referred to
in Section 2(e)(1) shall be reduced, shall be made by KPMG LLP or such other
certified public accounting firm as may be designated by the Employee and shall
be reasonably acceptable to the Employers (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Employers and the Employee
within 15 business days of the receipt of notice from the Employee that such a
determination is required, or such earlier time as is requested by the
Employers. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting a change in the ownership
or effective control (as defined for purposes of Section 280G of the Code) of
the Employers, the Employee shall appoint another nationally recognized
accounting firm which is reasonably acceptable to the Employers to make the
determinations required hereunder (which accounting firm shall then be referred
to as the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Employers. Any determination by the Accounting
Firm shall be binding upon the Employers and the Employee. As a result of the
uncertainty in the application of Section 280G of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
additional adjustments may be required. The Employee shall promptly repay to the
Employers any amount that is later determined to constitute a Parachute Payment,
with interest at 120% of the applicable federal rate, as defined for purposes of
Section 280G of the Code and all such amounts shall be treated as loans from the
Employers to the Employee.
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(f) Notwithstanding any other provision in this Agreement, (i)
the Employers may terminate or suspend this Agreement and the employment of the
Employee, as if such termination were for Cause, to the extent required by the
applicable laws of the State of New York related to banking, by applicable
federal law relating to deposit insurance or bank holding companies or by
regulations or orders issued by the New York State Banking Department, the Board
of Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation or other state or federal banking regulatory agency having
jurisdiction over Xxxx Financial or the Bank and (ii) no payment shall be
required to be made to or for the benefit of the Employee under this Agreement
to the extent such payment is prohibited by applicable law, regulation or order
issued by a banking agency or a court of competent jurisdiction; provided, that
it shall be the Employers' burden to prove that any such action was so required.
3. NO ASSIGNMENTS. This Agreement is personal to each of the parties
hereto. No party may assign or delegate any rights or obligations hereunder
without first obtaining the written consent of the other party hereto. However,
in the event of the death of the Employee, all rights to receive payments
hereunder shall become rights of the Employee's estate.
4. AMENDMENTS OR ADDITIONS; ACTION BY BOARD OF DIRECTORS. No amendments
or additions to this Agreement shall be binding unless in writing and signed by
both parties hereto. The prior approval by a majority affirmative vote of the
full Boards shall be required in order for the Employers to authorize any
amendments or additions to this Agreement.
5. SECTION HEADINGS. The section headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.
6. GOVERNING LAW. This Agreement shall be governed by the laws of the
United States to the extent applicable, and otherwise by the laws of the State
of New York (excluding the choice of law rules thereof).
XXXX FINANCIAL CORPORATION
Attest: By:
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(Secretary) (President)
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THE XXXX SAVINGS BANK
Attest: By:
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(Secretary) (President)
EMPLOYEE:
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