EXHIBIT 10.11
SAVINGS INSTITUTE BANK AND TRUST COMPANY
CHANGE IN CONTROL AGREEMENT
This AGREEMENT ("Agreement") is hereby entered into as of September 30,
2004, by and between Savings Institute Bank and Trust Company (the "Bank"), a
federally-chartered savings bank with its principal offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Executive") and SI Financial
Group, Inc. (the "Company"), a federally-chartered corporation and the holding
company of the Bank, as guarantor.
WHEREAS, the Bank recognizes the importance of Executive to the Bank's
operations and wishes to protect his position with the Bank in the event of a
change in control of the Bank or the Company for the period provided for in this
Agreement; and
WHEREAS, Executive and the Board of Directors of the Bank desire to enter
into an agreement setting forth the terms and conditions of payments due to
Executive in the event of a change in control and the related rights and
obligations of each of the parties.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is hereby agreed as follows:
1. Term of Agreement.
(a) The term of this Agreement shall be (i) the initial term, consisting
of the period commencing on the date of this Agreement (the "Effective Date")
and ending on the second anniversary of the Effective Date, plus (ii) any and
all extensions of the initial term made pursuant to this Section 1.
(b) Commencing on the first anniversary of the Effective Date and
continuing each anniversary date thereafter, the Board of Directors of the Bank
(the "Board of Directors") may extend the term of this Agreement for an
additional one (1) year period beyond the then effective expiration date,
provided that Executive shall not have given at least sixty (60) days' written
notice of his desire that the term not be extended.
(c) Notwithstanding anything in this Section to the contrary, this
Agreement shall terminate if Executive or the Bank terminates Executive's
employment prior to a Change in Control.
2. Change in Control.
(a) Upon the occurrence of a Change in Control of the Bank or the
Company followed at any time during the term of this Agreement by the
termination of Executive's employment in accordance with the terms of this
Agreement, other than for Just Cause, as defined in Section 2(c) of this
Agreement, the provisions of Section 3 of this Agreement shall apply. Upon the
occurrence of a Change in Control, Executive shall have the right to elect to
1
voluntarily terminate his employment at any time during the term of this
Agreement following an event constituting "Good Reason."
"Good Reason" means, unless Executive has consented in writing thereto,
the occurrence following a Change in Control, of any of the following:
(i) the assignment to Executive of any duties materially
inconsistent with Executive's position, including any material
change in status, title, authority, duties or responsibilities
or any other action that results in a material diminution in
such status, title, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and that is remedied
by the Bank or Executive's employer reasonably promptly after
receipt of notice thereof given by the Executive;
(ii) a reduction by the Bank or Executive's employer of the
Executive's base salary in effect immediately prior to the
Change in Control;
(iii) the relocation of the Executive's office to a location more
than twenty-five (25) miles from its location as of the date
of this Agreement;
(iv) the taking of any action by the Bank or any of its affiliates
or successors that would materially adversely affect the
Executive's overall compensation and benefits package, unless
such changes to the compensation and benefits package are made
on a non-discriminatory basis to all employees; or
(v) the failure of the Bank or the affiliate of the Bank by which
Executive is employed, or any affiliate that directly or
indirectly owns or controls any affiliate by which Executive
is employed, to obtain the assumption in writing of the Bank's
obligation to perform this Agreement by any successor to all
or substantially all of the assets of the Bank or such
affiliate within thirty (30) days after a reorganization,
merger, consolidation, sale or other disposition of assets of
the Bank or such affiliate.
(b) For purposes of this Agreement, a "Change in Control" shall be
deemed to occur on the earliest of any of the following events:
(i) Merger: The Company merges into or consolidates with another
corporation, or merges another corporation into the Company, and as
a result less than a majority of the combined voting power of the
resulting corporation immediately after the merger or consolidation
is held by persons who were stockholders of the Company immediately
before the merger or consolidation.
(ii) Acquisition of Significant Share Ownership: There is filed or
required to be filed a report on Schedule 13D or another form or
schedule (other than
2
Schedule 13G) required under Sections 13(d) or 14(d) of the
Securities Exchange Act of 1934, if the schedule discloses that the
filing person or persons acting in concert has or have become the
beneficial owner of 25% or more of a class of the Company's voting
securities, but this clause (b) shall not apply to beneficial
ownership of Company voting shares held in a fiduciary capacity by
an entity of which the Company directly or indirectly beneficially
owns 50% or more of its outstanding voting securities.
(iii) Change in Board Composition: During any period of two
consecutive years, individuals who constitute the Company's Board of
Directors at the beginning of the two-year period cease for any
reason to constitute at least a majority of the Company's Board of
Directors; provided, however, that for purposes of this clause
(iii), each director who is first elected by the board (or first
nominated by the board for election by the stockholders) by a vote
of at least two-thirds (2/3) of the directors who were directors at
the beginning of the two-year period shall be deemed to have also
been a director at the beginning of such period; or
(iv) Sale of Assets: The Company sells to a third party all or
substantially all of its assets.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the reorganization of the Bank from the mutual holding company form of
organization to the full stock holding company form of organization (including
the elimination of the mutual holding company) constitute a "Change in Control"
for purposes of this Agreement.
(c) Executive shall not have the right to receive termination benefits
pursuant to Section 3 hereof upon termination for Just Cause. The term "Just
Cause" shall mean termination because of Executive's personal dishonesty,
incompetence, willful misconduct, any breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order, or any material breach of any provision
of this Agreement. Notwithstanding the foregoing, Executive shall not be deemed
to have been terminated for Just Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the affirmative vote of
a majority of the entire membership of the Board of Directors at a meeting of
the Board of Directors called and held for that purpose (after reasonable notice
to Executive and an opportunity for him, together with counsel, to be heard
before the Board of Directors), finding that in the good faith opinion of the
Board of Directors, Executive was guilty of conduct justifying termination for
Just Cause and specifying the particulars thereof in detail. Executive shall not
have the right to receive compensation or other benefits for any period after
termination for Just Cause. During the period beginning on the date of the
Notice of Termination for Just Cause pursuant to Section 4 hereof through the
Date of Termination, stock options granted to Executive under any stock option
plan shall not be exercisable nor shall any unvested stock awards granted to
Executive under any stock benefit plan of the Bank, the Company or any
subsidiary or affiliate thereof, vest. At the Date of Termination, such stock
options and any such
3
unvested stock awards shall become null and void and shall not be exercisable by
or delivered to Executive at any time subsequent to such termination for Just
Cause.
3. Termination Benefits.
(a) If Executive's employment is voluntarily (in accordance with Section
2(a) of this Agreement) or involuntarily terminated within two (2) years of a
Change in Control, Executive shall receive:
(i) a lump sum cash payment equal to two (2) times the Executive's
"base amount," within the meaning of Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"). Such
payment shall be made not later than five (5) days following
Executive's termination of employment under this Section 3.
(ii) Continued benefit coverage under all Bank health and welfare
plans which Executive participated in as of the date of the
Change in Control (collectively, the "Employee Benefit Plans")
for a period of twenty-four (24) months following Executive's
termination of employment. Said coverage shall be provided
under the same terms and conditions in effect on the date of
Executive's termination of employment. Solely for purposes of
benefits continuation under the Employee Benefit Plans,
Executive shall be deemed to be an active employee. To the
extent that benefits required under this Section 3(a) cannot
be provided under the terms of any Employee Benefit Plan, the
Bank shall enter into alternative arrangements that will
provide Executive with comparable benefits.
(b) Notwithstanding the preceding provisions of this Section 3, in no
event shall the aggregate payments or benefits to be made or afforded to
Executive under said paragraphs (the "Termination Benefits") constitute an
"excess parachute payment" under Section 280G of the Code or any successor
thereto, and to avoid such a result, Termination Benefits will be reduced, if
necessary, to an amount (the "Non-Triggering Amount"), the value of which is one
dollar ($1.00) less than an amount equal to three (3) times Executive's "base
amount," as determined in accordance with said Section 280G. The allocation of
the reduction required hereby among the Termination Benefits provided by this
Section 3 shall be determined by Executive.
4. Notice of Termination.
(a) Any purported termination by the Bank or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated.
4
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a termination for Just Cause, shall not be
less than thirty (30) days from the date such Notice of Termination is given).
5. Source of Payments.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. The Company, however, unconditionally
guarantees payment and provision of all amounts and benefits due hereunder to
Executive and, if such amounts and benefits due from the Bank are not timely
paid or provided by the Bank, such amounts and benefits shall be paid or
provided by the Company.
6. Effect on Prior Agreements and Existing Benefit Plans.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Bank and Executive, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to Executive of a kind elsewhere provided. No provision of
this Agreement shall be interpreted to mean that Executive is subject to
receiving fewer benefits than those available to him without reference to this
Agreement. Nothing in this Agreement shall confer upon Executive the right to
continue in the employ of the Bank or shall impose on the Bank any obligation to
employ or retain Executive in its employ for any period.
7. No Attachment.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null, void
and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Bank and their respective successors and assigns.
8. Modification and Waiver.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
5
9. Severability.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
10. Headings for Reference Only.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement. In addition, references herein to the
masculine shall apply to both the masculine and the feminine.
11. Governing Law.
Except to the extent preempted by federal law, the validity,
interpretation, performance, and enforcement of this Agreement shall be governed
by the laws of the State of Connecticut, without regard to principles of
conflicts of law of that State.
12. Arbitration.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Bank, in accordance with the rules of the
American Arbitration Bank then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
13. Payment of Legal Fees.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank, only if Executive is successful pursuant to a legal
judgment, arbitration or settlement.
14. Indemnification.
The Company or the Bank shall provide Executive (including his heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense and shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under applicable law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Company or the Bank
6
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs, attorneys' fees and the
cost of reasonable settlements.
15. Successors to the Bank and the Company.
The Bank and the Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business or assets of the Bank or the Company,
expressly and unconditionally to assume and agree to perform the Bank's and the
Company's obligations under this Agreement, in the same manner and to the same
extent that the Bank and the Company would be required to perform if no such
succession or assignment had taken place.
16. Required Provisions.
In the event any of the foregoing provisions of this Section 16 are in
conflict with the terms of this Agreement, this Section 16 shall prevail. 18.
a. The Bank's board of directors may terminate Executive's employment
at any time, but any termination by the Bank, other than Termination
for Cause, shall not prejudice Executive's right to compensation or
other benefits under this Agreement. Executive shall not have the
right to receive compensation or other benefits for any period after
Termination for Cause.
b. If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice
served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1818(e)(3) or (g)(1); the Bank's
obligations under this contract shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Bank may in its discretion: (i) pay
Executive all or part of the compensation withheld while their
contract obligations were suspended; and (ii) reinstate (in whole or
in part) any of the obligations which were suspended.
c. If Executive 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 Federal Deposit
Insurance Act, 12 U.S.C. Section 1818(e)(4) or (g)(1), all
obligations of the Bank under this contract shall terminate as of
the effective date of the order, but vested rights of the
contracting parties shall not be affected.
d. If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1813(x)(1) all
obligations of the Bank under this contract shall terminate as of
the date of default, but this paragraph shall not affect any vested
rights of the contracting parties.
e. All obligations under this contract shall be terminated, except to
the extent determined that continuation of the contract is necessary
for the continued
7
operation of the Bank: (i) by the Director of the OTS (or his
designee), at the time the FDIC or the Resolution Trust Corporation,
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 Federal Deposit Insurance Act, 12 U.S.C. Section
1823(c); or (ii) by the Director of the OTS (or his designee) at the
time the Director (or his designee) approves a supervisory merger to
resolve problems related to the operations of the Bank or when the
Bank is determined by the Director to be in an unsafe or unsound
condition. Any rights of the parties that have already vested,
however, shall not be affected by such action.
f. Any payments made to employees Executive pursuant to this Agreement,
or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. Section 1828(k) and FDIC regulation 12 C.F.R. Part
359, Golden Parachute and Indemnification Payments.
8
SIGNATURES
IN WITNESS WHEREOF, Savings Institute Bank and Trust Company and SI
Financial Group, Inc. have caused this Agreement to be executed and their seals
to be affixed hereunto by their duly authorized officers, and Executive has
signed this Agreement, on the 30th day of September, 2004.
ATTEST: SAVINGS INSTITUTE BANK AND
TRUST COMPANY
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------- ---------------------------------
Corporate Secretary For the Entire Board of Directors
ATTEST: SI FINANCIAL GROUP, INC.
(Guarantor)
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------- ---------------------------------
Corporate Secretary For the Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------- -------------------------------------
Corporate Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇
9
