MERGER SEVERANCE BENEFIT PROGRAM
Exhibit 10.9
A. Covered Employees:
Subject to paragraph B below, the Merger Severance Benefit (as
hereinafter defined) will be provided to any employee whose employment
is terminated within six months after a Change of Control (as herein
defined).
B. Limitations on Change of Control Benefits
1. General. No employee will be eligible for a Merger Severance
Benefit if (a) his employment is terminated for "Cause", (b) he
is a temporary employee, (c) his compensation with the Bank is
more than 50% commission-based, or (d) he is offered a Comparable
Position within the Bank and refuses to accept such position.
2. Cause. The term "Cause" shall mean and include (a) neglect of
or refusal to perform, other than as a result of sickness,
accident or similar cause beyond an employee's reasonable
control, any duty or responsibility as an employee of the Bank
after written notice by the Bank to the employee; (b) any
material breach by the employee of any agreement to which the
employee and the Bank are both parties; (c) dishonesty with
respect to the Bank or the commission of any crime (other than
minor traffic violations); or (d) any material misconduct or
material neglect of duties by the employee in connection with the
business or affairs of the Bank. The foregoing definition of
Cause is in no way intended to limit or qualify the right of the
Bank to terminate any person's employment for any reason.
3. Comparable Position. A comparable position shall mean a
position which is offered to an employee where there is no
reduction in base salary or scheduled hours, and where the
employee is not required to commute more than 35 miles further
than the employee's present commute.
C. Definition of "Change of Control":
A "Change of Control" will be deemed to have occurred
1. If there is a merger or consolidation of the Bank with any other
bank or corporation and the voting securities of the Bank
outstanding immediately prior to such merger or consolidation do
not continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
more than fifty percent (50%) of the combined voting power of the
voting securities of the Bank or such surviving entity
immediately after such merger or consolidation, or
2. When any person or entity or group of persons or entities either
related or acting in concert becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended) of securities of the Bank representing more than
fifty percent (50%) of the total number of votes that may be cast
for the election of directors of the Bank, or
3. If the Bank sells all or substantially all of its assets to
another bank or corporation, other than in a transaction in which
the voting securities of the Bank outstanding immediately prior
to such transaction continue to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined
voting power of the voting securities of the Bank or such
surviving entity immediately after such transaction, or
4. If during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who
are Continuing Directors (as herein defined) cease for any reason
to constitute at least a majority of the Board of Directors of
the Bank. For this purpose, a "Continuing Director" shall mean
(a) an individual who was a director of the Bank at the beginning
of such period or (b) any new director (other than a director
designated by a person who has entered into any agreement with
the Company to effect a transaction described in clause (1), (2)
or (3) of this Paragraph C) whose election by the Board or
nomination for election by the Bank's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of
such period or whose election or nomination for election was
previously so approved.
D. "Merger Severance Benefit" Defined.
The Merger Severance Benefit hereunder shall include each of the
following three items:
1. Payment in one lump sum as of date of termination of
employment of a severance benefit equal to the greater of
(i) two weeks Base Salary for each year of service (with
partial years of service included in the calculation on a
pro-rated basis), up to a maximum benefit of 26 weeks Base
Salary; or (ii) the applicable Minimum Benefit set forth in
paragraph E below; and
2. Continuation of health benefits and life insurance benefits
for a period of time after termination equal to the number
of weeks (and partial weeks) of Base Salary to which the
employee is entitled under the preceding paragraph, on the
same terms and conditions as though the employee had
remained an active employee; and
3. After the end of the period during which benefits are
continued under the preceding paragraph, COBRA benefits
determined as though employment had terminated at the end of
such period.
For purposes of this paragraph D and paragraph E below, "Base
Salary" shall not include bonus payments, 401(k) matching
payments, pension payments, or other payments not specifically
provided for under this program. However, the lump sum payment
made under section D(1) above will be "W-2 income" from which a
401(k) employee contribution will be automatically deducted (and
in connection with which a 401(k) employer matching contribution
will be made) to the extent that the employee is a participant in
the 401(k) plan as of the date of termination of employment (it
being understood that employees may withdraw from the 401(k) plan
at any time prior to such date of termination of employment).
E. Minimum Benefit. Subject to the limitations set forth in
paragraph B(1) above:
1. All officers of the level of Vice President and above shall
receive the maximum benefit of 26 weeks Base Salary; and
2. All other elected and appointed officers shall receive at
least 13 weeks Base Salary; and
3. All other full-time employees shall receive at least 2 weeks
Base Salary; and
4. All part-time employees shall receive at least 2 weeks Base
Salary.
F. Continuation of Benefits for Commissioned Employees. Although
employees whose compensation is more than 50% commission-based
are not generally eligible for Merger Severance Benefits, as set
forth in paragraph B above, such employees shall be entitled to:
1. Continuation of health insurance benefits for a period of six
months (in the case of vice presidents and assistant vice
presidents) or three months (in the case of all other such
employees) after termination, on the same terms and conditions as
though such employee had remained an active employee during such
period; and
2. After the end of the period during which health benefits are
continued under clause (1) above, COBRA benefits determined as
though employment had terminated at the end of such period.
G. Offset for Amounts Received Under Other Agreements or Laws.
Merger Severance Benefits payable pursuant to this program shall
be reduced by the amount of any equivalent severance pay benefits
payable to an officer under any employment or change of control
contract or to any employee under any "tin parachute", WARN or
similar law.
H. Withholding. All payments will be subject to usual and customary
withholding and co-payments by employees for health, life
insurance and dental benefits. The Bank shall have the right to
withhold from lump sum amounts otherwise payable the aggregate
amount of any co-payments required to be made by employees with
respect to employee benefit programs which are continued under
the Merger Severance Program.
I Parachute Payment. In the event that any severance payment
otherwise payable under this Plan exceeds in the aggregate the
amount that may be deducted by the Bank by reason of the
operation of Section 280G of the Internal Revenue Code of 1986,
as amended, the amount of such payments shall be reduced to the
maximum which can be deducted by the Bank. This provision shall
not be deemed to modify or otherwise have any impact on any
individual retirement plan or employment or severance agreement
between the Bank and any employee of the Bank.