Exhibit 10.9
Change of Control Agreement
This Change of Control Agreement (the "Agreement") is made and
entered into as of _____________ by and among Slade's Ferry Bancorp, a
Massachusetts corporation (the "Company"), Slade's Ferry Bank, a wholly-
owned subsidiary of the Company (the "Bank") and _____________ (the
"Officer").
Introductory Statement
The Board of Directors of the Bank has concluded that it is in the
best interests of the Bank, the Company and their 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. To this end, the Bank has
decided to provide the Officer with assurance that her salary will be
continued for a minimum period of one (1) year following termination of
employment (the "Assurance Period") if her employment terminates under
specified circumstances related to a business combination. The Board of
Directors of the Bank has decided to formalize this assurance by entering
into this Change of Control Agreement with the Officer. The Board of
Directors of the Company has authorized the Company to guarantee the Bank's
obligations under this Agreement.
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 day and year first
written above (the "Effective Date") and shall be in effect during the
period (the "Term") beginning on the Effective Date and ending on the first
anniversary of the date on which the Bank notifies the Officer of its
intent to discontinue the Agreement (the "Initial Expiration Date") or, if
later, the first 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.
(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 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"), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock");
provided, however, that any acquisition by the Company or its
subsidiaries of 20% or more of Outstanding Company Common Stock shall
not constitute a Change of Control; and provided, further, that any
acquisition by a corporation with respect to which, following such
acquisition, more than 50% of the then outstanding shares of common
stock of such corporation, is then
beneficially owned, directly or indirectly, by all or substantially
all of the individuals and entities who were the beneficial owners of
the Outstanding Company Common Stock immediately prior to such
acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding Company
Common Stock, shall not constitute a Change of Control; or
(ii) individuals who, as of the date of this Agreement,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any
individual becoming a director subsequent to the date of this
Agreement whose election, or nomination or election by the Company'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 is in connection with either an actual or
threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a
person other than the Board;
(iii) consummation by the Company of
(A) a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all the
individuals and entities who were the beneficial owners
of the Outstanding Company Common Stock immediately prior
to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation,
beneficially own, directly or indirectly, more than 40%
of the then outstanding shares of common stock of the
corporation resulting from such a reorganization, merger
or consolidation;
(B) a reorganization, merger or consolidation, in each
case,
(a) with respect to which all or substantially
all of the individuals and entities who were
the beneficial owners of the Outstanding
Company Common Stock immediately prior to
such reorganization, merger or consolidation,
following such reorganization, merger or
consolidation, beneficially own, directly or
indirectly, more than 40% but less than 50%
of the then outstanding shares of common
stock of the corporation resulting from such
a reorganization, merger or consolidation,
(b) at least a majority of the directors then
constituting the Incumbent Board do not
approve the transaction and do not designate
the transaction as not constituting a Change
of Control, and
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(c) following the transaction, members of the
then Incumbent Board do not continue to
comprise at least a majority of the Board; or
(C) the sale or other disposition of all or
substantially all of the assets of the Company, excluding
a sale or other disposition of assets to a subsidiary of
the Company; or
(iv) consummation by the Bank of (A) a reorganization, merger
or consolidation, in each case, with respect to which, following such
reorganization, merger or consolidation, the Company does not
beneficially own, directly or indirectly, more than 50% of the then
outstanding shares of common stock of the corporation or bank
resulting from such a reorganization, merger or consolidation or (B)
the stockholders of the Company approve a plan the sale or other
disposition of all or substantially all of the assets of the Bank,
excluding a sale or other disposition of assets to the Company or a
subsidiary of the Company.
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 a
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; (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; (iv) the Company or any
person publicly announces an intention to take or to consider taking
action, which, if consummated, would constitute a Change of Control; (v)
any person (other than the Company, the Bank or an employee benefit plan of
either) is or becomes the beneficial owner, directly or indirectly, (or
discloses directly or indirectly to the Company or the public a plan to
become the beneficial owner) of securities of the Company representing 20%
or more of the combined voting power of the Company's then outstanding
securities; or (vi) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Pending Change of Control has occurred;
provided, however, that the Change of Control contemplated does, in fact,
occur.
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 (or, in the event of her
death, her estate) her earned but unpaid compensation (including, without
limitation, salary and all other items which constitute wages under
applicable law) as of the date of her termination of employment. This
payment shall be made at the time and in the manner prescribed by law
applicable to the
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payment of wages but in no event later than 30 days after the date of the
Officer's termination of employment; and
(b) the Bank shall provide the benefits, if any, due to the Officer
(or, in the event of her death, her estate, surviving dependents or her
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
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 her estate and surviving dependents and beneficiaries, as
applicable, the Standard Termination Entitlements.
Section 4. Termination Due to Disability.
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 her assigned duties on a
substantially full-time basis for a period of at least ninety (90) 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 her
assigned duties on a substantially full-time basis for a period of at least
ninety (90) days during the period of one (1) year beginning with the date
of the determination. In such event the Bank shall pay and deliver to the
Officer (or in the event of her death before payment, to her estate and
surviving dependents and beneficiaries, as applicable) the Standard
Termination Entitlements.
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 such termination is due to personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any banking law,
rule or
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regulation, conviction of a felony or final cease and desist order issued
in response to conduct of the Officer determined to be substantially
deleterious to the Bank or Company, or any material breach of this
Agreement, in each case as measured against standards generally prevailing
at the relevant time in the savings and community banking industry. For
purposes of section 5(a), 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 and its
affiliates. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board 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. The cessation of employment of the Officer shall
not be deemed to be for Cause within the meaning of this section 5(a)
unless and until there shall have been delivered to the Officer a copy of a
resolution duly adopted by the affirmative vote of three-fourths of the
non-employee members of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Officer and
the Officer is given an opportunity, together with counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board,
the Officer is guilty of the conduct described in this section 5(a), and
specifying the particulars thereof in detail.
(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 her death, to her estate, her
surviving beneficiaries and her dependents) the Standard Termination
Entitlements only.
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 her death before payment, to her 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 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 in
effect immediately prior to the Officer's resignation. The coverage
provided under this section 6(b)(i) will cease upon the earlier of
(i) the date the Officer first becomes eligible for such benefit
coverage under similar plans or programs maintained by a subsequent
employer and (ii) the date the Assurance Period terminates; and
(ii) The Bank shall make a lump sum payment to the Officer
(or, in the event of her death before payment, to her estate), in an
amount equal to the estimated present value of the salary that
Officer would have
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earned if she had continued working for the Bank during the Assurance
Period at the highest annual rate of salary achieved during that
portion of the employment period which is prior to the Officer's
termination of employment with the Bank, where such present value is
to be determined using a discount rate equal to the applicable short-
term federal rate prescribed under section 1274(d) of the Internal
Revenue Code of 1986 ("Code"), compounded using the compounding
period corresponding to the Bank's regular payroll periods for its
officers. Such lump sum shall be paid in lieu of all other payments
of salary provided for under this Agreement in respect of the period
following any such termination.
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 her 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 resignation of any of the positions within the Bank or the
Company to which she 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. 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 her notice of
resignation whether she considers her resignation to be a resignation with
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 she holds as an officer, director or
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committee member with respect to the Bank or the Company 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 her employment with
the Bank and the termination of such employment except for the Standard
Termination Entitlements and the Additional Termination Entitlements. The
Officer hereby agrees that if the payment of the Additional Termination
Entitlements, either alone or together with other payments and benefits
which the Officer has the right to receive from the Bank or the Company,
whether pursuant to this Agreement or otherwise, would constitute a
"parachute payment" under Section 280G of the Code, then the amount payable
under this Agreement shall be reduced to result in no portion of the
payment payable under this Agreement being non-deductible to the Bank or
Company (or any successor thereto) by reason of Section 280G of the Code
and subject to excise tax under Section 4999 of the Code. There parties
hereto agree that the payments and benefits payable pursuant to this
Agreement shall be reduced so as not to equal or exceed three times the
Officer's "base amount," as that term is defined in Section 280G(b)(3) of
the Code, and shall be reduced to 2.99 times the Officer's base amount.
The determination of any reduction in the payment to be made to the Officer
shall be based upon an analysis of an accounting or law firm selected and
paid for by the Bank.
Section 9. No Effect on Employee Benefit Plans or Programs.
The termination of the Officer's employment during the Term of this
Agreement or thereafter, whether by the Bank or 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.
Section 10. Successors and Assigns.
This Agreement will inure to the benefit of and be binding upon the
Officer, her 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.
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
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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:
To the most recent address listed for the Officer in the Bank's
records.
If to the Company or the Bank:
Slade's Ferry Bancorp
100 Slade's Ferry Avenue
Somerset, Massachusetts 02726
Attention: Chairman, Personnel Committee
of the Board of Directors
Section 12. Indemnification for Attorneys' Fees.
The Bank shall indemnify, hold harmless and defend the Officer
against reasonable costs, including legal fees, incurred by her in
connection with or arising out of any action, suit or proceeding in which
she may be involved, as a result of her efforts, in good faith, to defend
or enforce the terms of this Agreement; provided, however, that the Officer
shall have substantially prevailed on the merits pursuant to a judgment,
decree or order of a court of competent jurisdiction or of an arbitrator in
an arbitration proceeding. The determination whether the Officer shall
have substantially prevailed on the merits and is therefore entitled to
such indemnification, shall be made by the court or arbitrator, as
applicable. In the event of a settlement pursuant to a settlement
agreement, any indemnification payment under this section 12 shall be made
only after a determination by the members of the Board (other than the
Officer and any other member of the Board to which the Officer is related
by blood or marriage) that the Officer has acted in good faith and that
such indemnification payment is in the best interests of the Bank.
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.
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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.
This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent
that federal law is inapplicable, in accordance with the laws of the
Commonwealth of Massachusetts applicable to contracts entered into and to
be performed entirely within the Commonwealth of Massachusetts.
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.
The following provisions are included for the purposes of complying
with various laws, rules and regulations applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, any
payments to the Officer by 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 ("FDI Act"), 12 U.S.C.
[SECTION]1828(k), and any regulations promulgated thereunder.
(b) Notwithstanding anything herein contained to the contrary, if
the Officer is suspended from office and/or temporarily prohibited from
participating in the conduct of the affairs of the Bank pursuant to a
notice serviced under section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C.
[SECTION]1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice
are dismissed, the Bank, in its discretions, may:
(i) pay to the Officer all or part of the compensation
withheld while the Bank's obligations hereunder were suspended, and
(ii) reinstate, in whole or in part, any of the obligations
which were suspended.
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(c) Notwithstanding anything herein contained to the contrary, if
the Officer 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 FDI Act, 12 U.S.C. [SECTION]1818(e)(4) or (g)(1), all
prospective obligations of the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights and obligations of
the Bank and the Officer shall not be affected.
(d) Notwithstanding anything herein contained to the contrary, if
the Bank is in default (within the meaning of section 3(x)(1) of the FDI
Act, 12 U.S.C. [SECTION]1813(x)(1)), all prospective obligations of the
Bank under this Agreement shall terminate as of the date of default, but
vested rights and obligations of the Bank and the Officer shall not be
affected.
(e) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Bank hereunder shall be terminated, except
to the extent that a continuation of this Agreement is necessary for the
continued operation of the Bank:
(i) By the Commissioner of the Massachusetts Division of
Banks or his designee or the FDIC, at the time the FDIC enters into
an agreement to provide assistance to or on behalf of the Bank under
the authority contained in section 13(c) of the FDI Act, 12 U.S.C.
[SECTION]1823(c); or
(ii) By the Commissioner or his designee at the time such
Commissioner or his designee approves a supervisory merger to resolve
problems related to the operation of the Bank or when the Bank is
determined by the Commissioner to be in an unsafe or unsound
condition. The vested rights and obligations of the parties shall
not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required or by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
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.
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In Witness Whereof, the Bank and the Company have caused this
Agreement to be executed and the Officer has hereunto set her hand, all as
of the day and year first above written.
------------------------------------
[Officer Name]
Slade's Ferry Bank
Attest:
By By
--------------------------- ----------------------------
Name: Name:
Title: Title:
[Seal]
Slade's Ferry Bancorp
Attest:
By By
--------------------------- ----------------------------
Name: Name:
Title: Title:
[Seal]
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