Exhibit 10.3
CHANGE IN CONTROL AGREEMENT
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THIS CHANGE IN CONTROL AGREEMENT (this "Agreement") is made this ___ day
of __________, 200_, between Two River Community Bank (the "Bank"), a banking
corporation organized under the laws of New Jersey with its principal office at
0000 Xxxxxxx 00 Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 and _________________ (the
"Executive"), residing at _____________________________________________.
BACKGROUND
WHEREAS, the Executive is employed by the Bank;
WHEREAS, the Executive has worked diligently in his position in pursuing
the business objectives of the Bank;
WHEREAS, The Board of Directors of the Bank believes that the future
services of the Executive are of great value to the Bank, and that it is
important for the growth and development of the Bank that the Executive continue
in his position;
WHEREAS, if the Bank receives any proposal from a third person concerning
a possible business combination with, or acquisition of equities securities to
the Bank, the Board of Directors of the Bank (the "Board") believes it is
imperative that the Bank and the Board be able to rely upon the Executive to
continue in his position, and that they be able to receive and rely upon his
advice, if they request it, as to the best interests of the Bank and its
shareholders, without concern that the Executive might be distracted by the
personal uncertainties and any risks created by such a proposal;
WHEREAS, to achieve that goal, and to retain the Executive's services
prior to any such activity, the Board and the Executive have agreed to enter
into this Agreement to govern the Executive's termination benefits in the event
of a Change in Control of the Bank, as hereinafter defined.
NOW THEREFORE, to assure the Bank that it will have the continued
dedication of the Executive and the availability of his advice and counsel
notwithstanding the possibility, threat or occurrence of a bid to take over
control of the Bank, and to induce the Executive to remain in the employ of the
Bank, and for other good and valuable consideration, the Bank and the Executive,
each intending to be legally bound hereby agree as follows:
1. Definitions.
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a. Cause. For purposes of this Agreement, "Cause", with respect
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to the termination by the Bank of the Executive's employment
shall mean (i) the willful and continued failure by the
Executive to perform his duties for the Bank under this
Agreement after at least one warning in writing from the Board
identifying specifically any such failure; (ii) willful
misconduct of any type by the Executive, including, but not
limited to, the disclosure or improper use of confidential
information under Section 11 of this
Agreement, which causes material injury to the Bank, as
specified in a written notice to the Executive from the Board;
or (iii) the Executive's conviction of a crime (other than a
traffic violation), habitual drunkenness, drug abuse, or
excessive absenteeism (other than for illness), after a
warning (with respect to drunkenness or absenteeism only) in
writing from the Board to refrain from such behavior. No act
or failure to act on the part of the Executive shall be
considered willful unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that
the action or omission was in the best interest of the Bank.
b. Change in Control. "Change in Control" shall mean the
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occurrence of any of the following events:
i. The Bank acquires actual knowledge that any person, as
such term is used in Sections 13 (d) and 14 (d) (2) of
the Securities and Exchange Act of 1934 (the "Exchange
Act"), other than an affiliate of the Bank or an
employee benefit plan established or maintained by the
Bank or any of its affiliates, is or becomes the
beneficial owner (as defined in Rule 13d-3 of the
Exchange Act) directly or indirectly, of securities of
the Bank representing more than twenty-five percent
(25%) of the combined voting power of the Bank's then
outstanding securities (a "Control Person"); provided
that no person shall be considered a Control Person for
purposes of this paragraph (1) if such person acquires
in excess of twenty-five percent (25%) of the combined
voting power of the Bank's then outstanding voting
securities in violation of law and, by order of a court
of competent jurisdiction, settlement or otherwise,
subsequently disposes or is required to dispose of all
Bank securities acquired in violation of law.
ii. Upon the first purchase of the Bank's common stock
pursuant to a tender or exchange offer (other than a
tender or exchange offer made by the Bank or an employee
benefit plan established or maintained by the Bank or
any of its affiliates).
iii. Upon the approval by the Bank's shareholders of (A) a
merger, combination, or consolidation of the Bank with
or into another entity (other than a merger or
consolidation the definitive agreement for which
provides that at least two-thirds of the directors of
the surviving or resulting entity immediately after the
transaction arc Continuing Directors (as hereinafter
defined) (a "Non-Control Transaction"), (B) a sale or
disposition of all or substantially all of the Bank's
assets or (C) a plan of liquidation or dissolution of
the Bank.
iv. If during any period of two (2) consecutive years,
individuals who at the beginning of such period
constitute the board of directors of
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the Bank (the "Continuing Directors") cease for any
reason to constitute at least two-thirds thereof or,
following a Non-Control Transaction, two-thirds of the
board of directors of the surviving or resulting entity;
provided that any individual whose election or
nomination for election as a member of the board of
directors of the Bank (or, following a Non-Control
Transaction, the board of directors of the surviving or
resulting entity) was approved by a vote of at least
two-thirds of the Continuing Directors then in office
shall be considered a Continuing Director.
v. Upon a sale of (A) common stock of the Bank if after
such sale any person (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) other than an
employee benefit plan established or maintained by the
Bank or an affiliate of the Bank, owns a majority of the
Bank's common stock or (B) all or substantially all of
the Bank's assets (other than in the ordinary course of
business).
c. Contract Period. "Contract Period" shall mean the period
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commencing the day immediately preceding a Change in Control
and ending on the earlier of (i) the third anniversary of the
Change in Control or (ii) the date the Executive would attain
age 65 or (iii) the death of the Executive.
d. Good Reason. When used with reference to a voluntary
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termination by the Executive of his employment with the Bank,
"Good Reason" shall mean any of the following, if taken
without the Executive's express written consent:
i. The assignment to the Executive of any duties
inconsistent with, or the reduction of powers or
functions associated with, the Executive's position,
title, duties, responsibilities and status with the Bank
immediately prior to a Change in Control; or any removal
of the Executive from, or any failure to re-elect the
Executive to, any position(s) or office(s) the Executive
held immediately prior to such Change in Control. A
change in position, title, duties, responsibilities and
status or position(s) or office(s) resulting merely from
a merger of the Batik into or with another bank or
company shall not meet the requirements of this
paragraph if, and only if, the Executive's new title and
responsibilities are accepted in writing by the
Executive, in the sole discretion of the Executive.
ii. A reduction by the Bank in the Executive's annual base
compensation as in effect immediately prior to a Change
in Control or the failure to award the Executive annual
increases in accordance herewith.
iii. A failure by the Bank to continue any bonus plan in
which the Executive participated immediately prior to
the Change in Control
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or a failure by the Bank to continue the Executive as a
participant in such plan on at least the same basis as
the Executive participate in such plan prior to the
Change in Control.
iv. The Bank's transfer of the Executive to another
geographic location outside of New Jersey or more than
25 miles from his present office location, except for
required travel on the Bank's business to an extent
substantially consistent with the Executive's business
travel obligations immediately prior to such Change in
Control.
v. The failure by the Bank to continue in effect any
employee benefit plan, program or arrangement
(including, without limitation any 401(k) plan, stock
option plan, life insurance plan, health and accident
plan, or disability plan) in which the Executive is
participating immediately prior to a Change in Control
(except that the Bank may institute or continue plans,
programs or arrangements providing the Executive with
substantially similar benefits); the taking of any
action by the Bank which would adversely affect the
Executive's participation in or materially reduce the
Executive's benefits under any of such plans, programs
or arrangements; the failure to continue, or the taking
of any action which would deprive the Executive of any
material fringe benefit enjoyed by the Executive
immediately prior to such Change in Control; or the
failure by the Bank to provide the Executive with the
number of paid vacation days to which the Executive was
entitled immediately prior to such Change in Control.
vi. The failure by the Bank to obtain an enforceable
assumption in writing by (i) any entity which is the
acquiring entity or successor to the Bank in a Change in
Control or, (ii) if the acquiring entity or successor to
the Bank is a bank, the holding company parent of the
acquiring entity or successor, of this Agreement and the
obligations of the Bank to perform this Agreement, and
to provide such assumption to the Executive prior to any
Change in Control.
vii. Any purported termination of the Executive's employment
by the Bank during the term of this Agreement which is
not effected pursuant to all of the requirements of this
Agreement; and, for purposes of this Agreement, no such
purported termination shall be effective.
2. Employment. The Bank hereby agrees to employ the Executive, and the
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Executive hereby accepts employment, during the Contract Period upon
the terms and conditions set forth herein.
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3. Position. During the Contract Period the Executive shall be employed
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as the ___________________________ of the Bank, or such other
corporate or divisional profit center as shall then be the principal
successor to the business, assets and properties of the Bank, with
the same title and the same duties and responsibilities as before
the Change in Control. The Executive shall devote his full time and
attention to the business of the Bank, and shall not during the
Contract period be engaged in any other business activity.
This paragraph shall not be construed as preventing the Executive
from managing any investments of his which do not require any
service on his part in the operation of such investments.
4. Cash Compensation. The Bank shall pay to the Executive compensation
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for his services during the Contract Period as follows:
a. Base Compensation. The base compensation shall be equal to
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such annual compensation, including both salary and bonus, as
was paid to or accrued for the Executive in the 12 months
immediately prior to the Change in Control. The annual salary
portion of base compensation shall be payable in installments
in accordance with the Bank's usual payroll method. The bonus
shall be payable at the time and in the manner which the Bank
paid such bonuses prior to the Change in Control. Any increase
in the Executive's annual compensation pursuant to paragraph
4(b) below, or otherwise, shall automatically and permanently
increase the base compensation.
b. Annual Increase. During the Contract Period the Board shall
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review annually, or at more frequent intervals which the Board
determines to be appropriate, the Executive's compensation and
shall award him additional compensation to reflect the impact
of inflation, the Executive's performance, the performance of
the Bank and competitive compensation levels, all as
determined in the discretion of the Board. Additional
compensation may take any form including but not limited to
increases in annual salary, incentive bonuses and/or bonuses
not tied to performance. However, in no event shall the
percentage increase in annual compensation be less than the
annual percentage increase in the Consumer Price Index for
Urban Wage Earners and Clerical Workers (New York and Northern
New Jersey - All Items) during the preceding twelve months.
5. Expenses and Fringe Benefits. During the Contract Period, the
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Executive shall be entitled to reimbursement for all business
expenses incurred by him with respect to the business of the Bank in
the same manner and to the same extent as such expenses were
previously reimbursed to him immediately prior to the Change in
Control. If prior to the Change in Control, the Executive was
entitled to the use of an automobile, he shall be entitled to the
same use of an automobile at least comparable to the automobile
provided to him prior to the Change in Control, and he shall be
entitled to vacations and sick days, in accordance with the
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practices and procedures of the Bank, as such existed immediately
prior to the Change in Control. During the Contract Period the
Executive also shall be entitled to hospital, health, medical and
life insurance, and any other benefits enjoyed, from time to time,
by executive officers of the Bank, all upon terms as favorable as
those enjoyed by other executive officers of the Bank.
Notwithstanding anything in this section to the contrary, if the
Bank adopts any change in the expenses allowed to, or fringe
benefits provided for, executive officers of the Bank, and such
policy is uniformly applied to all executive officers of the Bank,
and any successor or acquirer of the Bank, if any, including the
chief executive officer of such entities, then no such change in
policy shall be deemed to be a violation of this provision.
6. Termination for Cause. The Bank shall have the right to terminate
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the Executive for Cause, upon written notice to him of the
termination, which notice shall specify the reasons for the
termination. In the event of termination for Cause, the Executive
shall not be entitled to any further benefits under this Agreement.
7. Disability. During the Contract Period, if the Executive becomes
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permanently disabled, or is unable to perform his duties hereunder
for six consecutive months in any 18-month period, the Bank may
terminate the employment of the Executive. In such event, the
Executive shall not be entitled to any further benefits under this
Agreement other than payments under any disability policy which the
Bank may obtain for the benefit of senior officers generally.
8. Death Benefits. Upon the Executive's death during the Contract
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Period, the Executive shall be entitled to the benefits of any life
insurance policy paid for the Bank, but his estate shall not be
entitled to any further benefits under this Agreement.
9. Termination without Cause or Resignation for Good Reason. The Bank
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may terminate the Executive without Cause during the Contract Period
by four weeks' prior written notice to the Executive, and the
Executive may resign for Good Reason during the Contract Period upon
four weeks' prior written notice to the Bank specifying the Good
Reason. If the Bank terminates the Executive's employment during the
Contract Period without Cause or if the Executive resigns for Good
Reason, the Bank shall, within twenty (20) business days of the
termination of employment, pay the Executive a lump sum equal to two
(2) times the highest annual compensation, including only salary and
cash bonus, paid to the Executive during any of the three calendar
years immediately prior to the Change in Control (the "Lump Sum
Payment"). During the remainder of the Contract Period, the Bank
shall continue to provide the Executive with and pay for medical and
hospital insurance, disability insurance and life insurance, as were
provided and paid for in the time of the termination of his
employment with the Bank; provided that, if at any time during the
remainder of the Contract Period, the Executive becomes employed by
another employer which provides one or more such insurance benefits,
the Bank shall thereafter be relieved of its
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obligation to provide such insurance benefits to the extent such
benefits are duplicative of what is provided to the Executive by the
Executive's new employer. The Bank shall also sell to the Executive
for a purchase price of $1.00 the automobile, if any, used by the
Executive while employed by the Bank.
The Executive shall not have a duty to mitigate the damages suffered
by him in connection with the termination by the Bank of his
employment without Cause or a resignation for Good Reason during the
Contract Period. If the Bank fails to pay the Executive the Lump Sum
Payment or to provide him with the benefits due under this section,
the Executive, after giving ten (10) days' written notice to the
Bank identifying the Bank's failure, shall be entitled to recover
from the Bank all of his reasonable legal fees and expenses incurred
in connection with his enforcement against the Bank of the terms of
this Agreement. The Bank agrees to pay such legal fees and expenses
to the Executive on demand. The Executive shall be denied payment of
his legal fees and expenses only if a court finds that the Executive
sought payment of such fees without reasonable cause and in bad
faith.
10. Resignation without Good Reason. The Executive shall be entitled to
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resign from the employment of the Bank at any time during the
Contract Period without Good Reason, but upon such resignation, the
Executive shall not be entitled to any additional compensation for
the time after which he ceases to be employed by the Bank, and shall
not be entitled to any of the other benefits provided hereunder. No
such resignation shall be effective unless in writing with four
weeks' notice thereof.
11. Non-Disclosure of Confidential Information.
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a. Non-Disclosure of Confidential Information. Except in the
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course of his employment with the Bank and in pursuit of the
business of the Bank or any of its subsidiaries or affiliates,
the Executive shall not, at any time during or following the
Contract Period, disclose or use for any purpose any
confidential information or proprietary data of the Bank or
any of its subsidiaries or affiliates. The Executive agrees
that, among other things, all information concerning the
identity of and the Bank's relations with its customers is
confidential information.
b. Specific Performance. The Executive agrees that the Bank does
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not have an adequate remedy at law for the breach of this
section and agrees that he shall be subject to injunctive
relief and equitable remedies as a result of the breach of
this section. The invalidity or unenforceability of any
provision of this Agreement shall not affect the force and
effect of the remaining valid portions.
c. Survival. This section shall survive the termination of the
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Executive's employment hereunder and the expiration of this
Agreement.
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12. Term and Effect Prior to Change in Control.
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a. Term. Except as otherwise provided for hereunder, this
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Agreement shall commence on the date hereof and shall remain
in effect for a period of two (2) years from the date hereof
(the "Initial Term") or until the end of the Contract Period,
whichever is later. The Initial Term shall be automatically
extended for an additional one (1) year period on the
anniversary date hereof (so that the Initial Term is always
three years) unless the Board of Directors of the Bank, by a
majority vote of the directors then in office, votes not to
extend the Initial Term. The Executive shall be promptly
notified of the passage of such a resolution.
b. No Effect Prior to Change in Control. This Agreement shall
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not, in any respect, affect any rights of the Bank or the
Executive prior to a Change in Control or any rights of the
Executive granted in any other agreement, plan or
arrangements. The rights, duties and benefits provided
hereunder shall only become effective upon a Change in
Control. If the employment of the Executive by the Bank is
terminated for any reason prior to a Change in Control, this
Agreement shall thereafter be of no further force and effect.
13. Certain Reduction of Payments by the Bank.
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a. Anything in this Agreement to the contrary notwithstanding,
prior to the payment of any compensation or benefits payable
under Section 9 hereof, the certified public accountants of
the Bank immediately prior to a Change in Control (the
"Certified Public Accountants") shall determine as promptly as
practicable and in any event within 20 business days following
the termination of employment of the Executive, whether any
payment or distribution by the Bank to or for the benefit of
the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise) (a "Payment") would more likely than not be
nondeductible by the Bank for Federal income purposes because
of Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), and if it is then the aggregate present
value of amounts payable or distributable to or for the
benefit of the Executive pursuant to this Agreement (such
payments or distributions pursuant to this Agreement are
hereinafter referred to as "Agreement Payments") shall be
reduced (but not below zero) to the reduced Amount. For
purposes of this paragraph, the "Reduced Amount" shall be an
amount expressed in present value which maximizes the
aggregate present value of Agreement Payments without causing
any Payment to be nondeductible by the Bank because of said
Section 280G of the Code.
b. If under paragraph (a) of this section the Certified Public
Accountants determine that any Payment would more likely than
not be nondeductible by the Bank because of Section 280G of
the Code, the Bank shall promptly
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give the Executive notice to that effect and a copy of the
detailed calculation thereof and of the Reduced Amount, and
the Executive may then elect, in his sole discretion, which
and how much of the Agreement Payments shall be eliminate or
reduced (as long as after such election the aggregate present
value of the Agreement Payments equals the Reduced Amount),
and shall advise the Bank in writing of his election within 20
business days of his receipt of notice. If no such election is
made by the Executive within such 20-day period, the Bank may
elect which and how much of the Agreement Payments shall be
eliminated or reduced (as long as after such election the
Aggregate present Value of the Agreement Payments equals the
Reduced Amount) and shall notify the Executive promptly of
such election. For purposes of this paragraph, the present
Value shall be determined in accordance with Section
280G(d)(4) of the Code. All determinations made by the
Certified Public Accountants shall be binding upon the Bank
and the Executive shall be made within 20 days of a
termination of employment of the Executive. The Bank may
suspend for a period of up to 30 days after termination of
employment the Lump Sum Payment and any other payments or
benefits due to the Executive under Section 9 hereof until the
Certified Public Accountants finish the determination and the
Executive (or the Bank, as the case may he) elect how to
reduce the Agreement Payments, if necessary. As promptly as
practicable following such determination and the elections
hereunder, the Bank shall pay to or distribute to or for the
benefit of the Executive such amounts as are then due to the
Executive under this Agreement and shall promptly pay to or
distribute for the benefit of the Executive in the future such
amounts as become due to the Executive under this Agreement.
c. As a result of the uncertainty in the application of Section
280G of the Code, it is possible that Agreement Payments may
be made by the Bank which should not have been made
("Overpayment"), or that additional Agreement Payments which
will have not been made by the Bank could have been made
("Underpayment"), in each case, consistent with the
calculation of the Reduced Amount hereunder. In the event that
the Certified Public Accountants, based upon the assertion of
a deficiency by the Internal Revenue Service against the Bank
or the Executive which said Certified Public Accountants
believe has a high probability of success, determine that an
Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Executive which
Executive shall repay to the Bank together with interest at
the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code; provided that no amount shall be
payable by the Executive to the Bank in and to the extent such
payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event that the
Certified Public Accountants, based upon controlling
precedent, determine that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the Bank to or
from the benefit of the Executive together with
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interest at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Code.
14. Severance Compensation and Benefits not in Derogation of Other
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Benefits. Anything to the contrary herein contained notwithstanding,
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the payment or obligation to pay any monies, or granting of any
benefits, rights or privileges to the Executive as provided in this
Agreement shall not be in lieu or derogation of the rights and
privileges that the Executive now has or will have under any plans
or programs of the Bank, except that the Executive shall not be
entitled to the benefits of any other plan or program of the Bank
expressly providing for severance or termination pay if the
Executive is terminated without Cause or resigns for Good Reason
after a Change in Control.
15. Miscellaneous. This Agreement shall be the joint and several
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obligation of the Bank and any acquiring entity which assumes the
Bank's obligations under this Agreement. The terms of this Agreement
shall be governed by, and interpreted and construed in accordance
with the provisions of, the laws of New Jersey and, to the extent
applicable, Federal law. This Agreement supersedes all prior
agreements and understandings with respect to the matters covered
hereby. The amendment or termination of this Agreement may be made
only in a writing executed by the Bank and the Executive, and no
amendment or termination of this Agreement shall be effective unless
and until made in such a writing. This Agreement shall be binding
upon any successor (whether direct or indirect, by purchase, merge,
consolidation, liquidation or otherwise) to all or substantially all
of the assets of the Bank. This Agreement is personal to the
Executive, and the Executive may not assign any of his rights or
duties hereunder, but this Agreement shall be enforceable by the
Executive's legal representatives, executors or administrators. This
Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, and it shall not be necessary in making
proof of this Agreement to produce or account for more than one such
counterpart. The Bank shall, as part of any Change in Control
involving an acquiring entity or successor to the Bank, obtain an
enforceable assumption in writing by (i) the entity which is the
acquiring entity or successor to the Bank in the Change in Control
and, (ii) if the acquiring entity or successor to the Bank is a
bank, the holding company parent of the acquiring entity or
successor, of this Agreement and the obligations of the Bunk under
this Agreement, and shall provide a copy of such assumption to the
Executive prior to any Change in Control.
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IN WITNESS WHEREOF, the Bank has caused this Agreement to be signed by
their duly authorized representative pursuant to the authority of the Board or
Directors, and the Executive has personally executed this Agreement, all as of
the day and year first written above.
WITNESS:
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, individually
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ATTEST: TWO RIVER COMMUNITY BANK
By:
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