CHANGE-IN-CONTROL AND RESTRICTIVE COVENANT AGREEMENT FOR CERTAIN OFFICERS OF ROCKVILLE BANK
Exhibit 10.3
CHANGE-IN-CONTROL
AND
RESTRICTIVE COVENANT AGREEMENT
FOR CERTAIN OFFICERS
OF ROCKVILLE BANK
AND
RESTRICTIVE COVENANT AGREEMENT
FOR CERTAIN OFFICERS
OF ROCKVILLE BANK
January 2, 2009
PERSONAL AND CONFIDENTIAL
▇▇. ▇▇▇▇ ▇. ▇▇▇▇
Rockville Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Rockville Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇:
Rockville Bank (the “Bank”) and Rockville Financial, Inc. (the “Company”) consider it
essential to the best interests of the Company’s stockholders to ▇▇▇▇▇▇ the continued employment of
key management personnel. In this connection, the Boards of Directors of the Bank and the Company
(the “Board”) recognize that the possibility of a change in ownership or control of the Bank or the
Company may result in the departure or distraction of such personnel to the detriment of the Bank
and the Company and its stockholders. As you are a skilled and dedicated Bank executive with
important management responsibilities and talents, the Bank and the Company believe that their best
interests will be served if you are encouraged to remain with the Bank.
The Bank and the Company have determined that your ability to perform your responsibilities
and utilize your talents for the benefit of the Bank and the Company, and the Bank’s ability to
retain you as an employee, will be significantly enhanced if you are provided with fair and
reasonable protection from the risks of a change in ownership or control of the Bank or the
Company. Accordingly, in order to induce you to remain in the employ of the Bank, you, the Bank
and the Company agree as follows:
1. Term of Agreement.
(a) Generally. Except as provided in Section 1(b) hereof, (i) this Agreement shall be
effective as of January 2, 2009 and shall continue in effect through December 31, 2009, and (ii)
commencing on January 1, 2010, and each January 1 thereafter, this Agreement shall be automatically
extended for one additional year unless, not later than November 30th of the preceding year, either
party to this Agreement gives notice to the other that the Agreement shall not be extended under
this Section 1(a); provided, however, that no such notice by the Bank or the Company shall be
effective if a Change in Control or Potential Change in Control (both as defined herein) shall have
occurred prior to the date of such notice.
(b) Upon a Change in Control. If a Change in Control shall have occurred at any time
during the period in which this Agreement is effective, this Agreement shall continue in effect for
(i) the remainder of the month in which the Change in Control occurred and (ii) a term of 24 months
beyond the month in which such Change in Control occurred (such entire period hereinafter referred
to as the “Protected Period”).
2. Change in Control; Potential Change in Control.
(a) A “Change in Control” shall be deemed to have occurred if, during the term of this
Agreement:
(i) the Company, or the mutual holding company parent of the Company, whether it remains a
mutual holding company or converts to the stock form of organization (the “Mutual Holding
Company”), merges into or consolidates with another corporation, or merges another corporation into
the Company or the Mutual Holding Company, and as a result, with respect to the Company, less than
a majority of the combined voting power of the resulting corporation immediately after the merger
or consolidation is held by “Persons” as such term is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) who were stockholders of
the Company immediately before the merger or consolidation or, with respect to the Mutual Holding
Company, less than a majority of the directors of the resulting corporation immediately after the
merger or consolidation were directors of the Mutual Holding Company immediately before the merger
or consolidation;
(ii) following a conversion of the Mutual Holding Company to the stock form of organization,
any Person (other than any trustee or other fiduciary holding securities under an employee benefit
plan of the Bank or the Company), becomes the “Beneficial Owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the resulting corporation representing
25% or more of the combined voting power of the resulting corporation’s then-outstanding
securities;
(iii) during any period of twenty-four months (not including any period prior to the Effective
Date of this Agreement), individuals who at the beginning of such period constitute the board of
directors of the Company, and any new director (other than (A) a director nominated by a Person who
has entered into an agreement with the Company to effect a transaction described in Sections
(2)(a)(i), (ii) or (iv) hereof, (B) a director nominated by any Person (including the Company) who
publicly announces an intention to take or to consider taking actions (including, but not limited
to, an actual or threatened proxy contest) which if consummated would constitute a Change in
Control or (C) a director nominated by any Person who is the Beneficial Owner, directly or
indirectly, of securities of the Company representing 25% or more of the combined voting power of
the Company’s securities) whose election by the board of directors of the Company or nomination for
election by the Company’s stockholders was approved in advance 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 the
period or whose election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(iv) the stockholders of the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially all of the
Company’s assets; or
(v) the board of directors of the Company adopts a resolution to the effect that, for purposes
of this Agreement, a Change in Control has occurred.
(b) A “Potential Change in Control” shall be deemed to have occurred if:
(i) the Company enters into an agreement, the consummation of which would result in the
occurrence of a Change in Control;
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(ii) any Person (including the Company) publicly announces an intention to take or to consider
taking actions which if consummated would constitute a Change in Control; or
(iii) the board of directors of the Bank adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change in Control has occurred.
(c) Employee Covenants. You agree that, subject to the terms and conditions of this
Agreement, in the event of a Potential Change in Control, you will remain in the employ of the Bank
until the earliest of (i) a date which is 180 days from the occurrence of such Potential Change in
Control, (ii) the termination of your employment by reason of Disability (as defined herein) or
(iii) the date on which you first become entitled under this Agreement to receive the benefits
provided in Section 3(b) hereof.
(d) Company Covenant Regarding Potential Change in Control or Change in Control. In
the event of a Potential Change in Control or a Change in Control, the Bank or the Company shall,
not later than 15 days thereafter, have established one or more rabbi trusts and shall deposit
therein cash in an amount sufficient to provide for full payment of all potential obligations of
the Bank and the Company that would arise assuming consummation of a Change in Control, or has
arisen in the case of an actual Change in Control, and a subsequent termination of your employment
under Section 3(b). Such rabbi trust(s) shall be irrevocable and shall provide that neither the
Bank nor the Company may, directly or indirectly, use or recover any assets of the trust(s) until
such time as all obligations which potentially could arise hereunder have been settled and paid in
full or otherwise extinguished, subject only to the claims of creditors of the Bank and the Company
in the event of insolvency or bankruptcy of the Bank or the Company; provided, however, that if no
Change in Control has occurred within two years after such Potential Change in Control, such rabbi
trust(s) shall at the end of such two-year period become revocable and may thereafter be revoked by
the Bank.
3. Termination.
(a) Termination by the Bank for Cause, by You Without Good Reason, or by Reason of Death
or Disability. If during the Protected Period your employment by the Bank is terminated by the
Bank for Cause, by you without Good Reason, or because of your death or Disability, the Bank and
the Company shall be relieved of their obligation to make any payments to you other than (i)
payment of amounts otherwise accrued and owing but not yet paid and (ii) any amounts payable under
then-existing employee benefit programs at the time such amounts are due.
(b) Termination by the Bank Without Cause or by You for Good Reason. If during the
Protected Period your employment by the Bank is terminated by the Bank without Cause or by you for
Good Reason, you shall be entitled to the compensation and benefits described in this Section 3(b).
If your employment by the Bank is terminated prior to a Change in Control at the request of a
Person engaging in a transaction or series of transactions that would result in a Change in
Control, the Protected Period shall commence upon the subsequent occurrence of a Change in Control,
your actual termination shall be deemed a termination occurring during the Protected Period and
covered by this Section 3(b), your Date of Termination shall be deemed to have occurred immediately
following the Change in Control, and Notice of Termination shall be deemed to have been given by
the Bank immediately prior to your actual termination. Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstances constituting Good
Reason hereunder. The compensation and benefits provided under this Section 3(b) are as follows:
(i) The Bank shall pay you your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, on the fifth day following the Date of
Termination, and you shall receive all other amounts to which you are entitled under any
compensation or benefit plan of the Bank, at the time such payments are due in accordance with the
terms of such compensation or benefit plan.
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(ii) In the payroll period next following the payroll period in which your Date of Termination
occurs, the Bank shall pay you, in lieu of any further salary, bonus or severance payments for
periods subsequent to the Date of Termination, a lump sum amount in cash equal two times the sum
of:
(A) the greater of (I) your annual base salary in effect immediately prior to the
Change in Control or (II) your annual base salary in effect at the time Notice of
Termination is given; and
(B) the greater of (I) your annual target bonus for the year in which the Change in
Control occurs or, (II) if no such target bonus has yet been determined for such year,
the annual bonus actually earned by you in the year immediately preceding the year in
which the Change in Control occurs.
(iii) In the payroll period next following the payroll period in which your Date of
Termination occurs, in lieu of any annual incentive compensation payable to you under any bonus or
incentive plan (the “Incentive Plan”) for the year in which your employment is terminated, the Bank
shall pay you an amount equal to the portion of your annual target incentive compensation
potentially payable in cash to you (i.e., excluding the portion payable in stock or in other
non-cash awards) for the year of termination, multiplied by a fraction the numerator of which is
the number of days you were employed in the year of termination and the denominator of which is
365; provided, however, if you have previously deferred any award payable under any such Incentive
Plan, the terms of the applicable Incentive Plan shall determine the time of payment of the cash
amount that is payable under this Section 3(b)(iii) in lieu of such award.
(iv) Stock options held by you at termination, if not then vested and exercisable, will become
fully vested and exercisable at the date of such termination, and, in other respects (including the
period following termination during which such options may be exercised), such options shall be
governed by the plans and programs and the agreements and other documents pursuant to which such
options were granted.
(v) Any performance objectives upon which the earning of performance-based restricted stock
and deferred stock awards, including outstanding stock plan awards, and other long-term incentive
awards is conditioned shall be deemed to have been met at target level at the date of termination,
and restricted stock and deferred stock awards, including outstanding stock plan awards, and other
long-term incentive awards (to the extent then or previously earned, in the case of
performance-based awards) shall become fully vested and non-forfeitable at the date of such
termination, and, in other respects, such awards, including the time of payment of such awards,
shall be governed by the plans and programs and the agreements and other documents pursuant to
which such awards were granted.
(vi) The Bank shall provide you with a cash allowance for outplacement and job search
activities (including, but not limited to, office and secretarial expenses) in the amount of 20% of
your annual base salary and annual target bonus taken into account under Section 3(b)(ii) hereof,
provided that such cash allowance shall apply only to those costs or obligations that are
incurred by you before the last day of the second calendar year following the calendar year in
which your Date of Termination occurs. Payments of such cash allowance shall be made on the
fifteenth day following the submission of each receipt to the Bank evidencing costs or obligations
incurred by you in connection with outplacement and job search activities, but in no event later
than the last day of the third calendar year following the calendar year in which your Date of
Termination occurs.
(vii) If you elect after termination of employment continued coverage under the Bank’s health
plan in accordance with the applicable provisions of the Consolidated Omnibus Reconciliation Act of
1985 (“COBRA”), the Bank will pay you on a monthly basis during such COBRA continuation period an
amount equal on an after-tax basis to the total cost of such coverage.
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(c) Reimbursements; Section 409A Exemptions; Delayed Payments Under Section 409A.
(i) Any reimbursements made or in-kind benefits provided under this Agreement shall be subject
to the following conditions:
(A) the amount of expenses eligible for reimbursement or in-kind benefits provided in any one
taxable year shall not affect the amount of expenses eligible for reimbursement or in-kind benefits
provided in any other taxable year;
(B) the reimbursement of any expense shall be made each calendar quarter and not later than
the last day of the taxable year following the taxable year in which the expense was incurred
(unless this Agreement specifically provides for reimbursement by an earlier date);
(C) the right to reimbursement of an expense or payment of an in-kind benefit shall not be
subject to liquidation or exchange for another benefit.
(ii) Any reimbursement under Section 3(b)(vii) for expenses for medical coverage that are made
during the period of time you are entitled to continuation coverage under the Bank’s health plan
pursuant to COBRA shall be exempt from Section 409A of the Code and the six-month delay in payment
described hereinbelow pursuant to Section 1.409A-1(b)(9)(v)(B) of the Treasury Regulations.
(iii) Any reimbursement under Section 3(b)(vi) relating to outplacement expenses shall be
exempt from Section 409A of the Code and the six-month delay in payment described hereinbelow
pursuant to Section 1.409A-1(b)(9)(v)(A) of the Treasury Regulations and shall not be subject to
Section 3(c)(i) above.
(iv) Your right to reimbursements under this Agreement shall be treated as a right to a series
of separate payments under Section 1.409A-2(b)(2)(iii) of the Treasury Regulations.
(v) It is intended that: (A) payments made under this Agreement due to your termination of
employment that are paid on or before the 15th day of the third month following the end
of the taxable year in which your termination of employment occurs shall be exempt from compliance
with Section 409A of the Code pursuant to the exemption for short-term deferrals set forth in
Section 1.409A-1(b)(4) of the Treasury Regulations (the “Exempt Short-Term Deferral Payments”); and
(B) payments under this Agreement, other than Exempt Short-Term Deferral Payments, that are made on
or before the last day of the second taxable year following the taxable year in which you terminate
employment in an aggregate amount not exceeding two times the lesser of: (I) the sum of your
annualized compensation based on your annual rate of pay for the taxable year preceding the taxable
year in which you terminate employment (adjusted for any increase during that year that was
expected to continue indefinitely if you had not terminated employment); or (II) the maximum amount
that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code
for the year in which you terminate employment shall be exempt from compliance with Section 409A of
the Code pursuant to the exception for payments under a separation pay plan as set forth in Section
1.409A-1(b)(9)(iii) of the Treasury Regulations.
(vi) Anything in this Agreement to the contrary notwithstanding, payments to be made under
this Agreement upon your termination of employment which are subject to Section 409A of the Code
shall be delayed for six months following such termination of employment if you are a Specified
Employee as defined in Section 3(f)(vi) on the date of your termination of employment. Any payment
or reimbursement due within such six-month period shall be delayed to the end of such six-month
period. The Bank will adjust the payment or reimbursement to reflect the deferred payment date by
multiplying the payment or reimbursement by the product of the six-month CMT Treasury ▇▇▇▇
annualized yield rate as published by the U.S. Treasury for the date on which such payment or
reimbursement would have been made but for the delay multiplied by a fraction, the numerator of
which is the number of days by which such payment or reimbursement was delayed and the denominator
of which is 365. The Bank will pay the
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adjusted payment or reimbursement at the beginning of the
seventh month following your termination of
employment. Notwithstanding the foregoing, if calculation of the amounts payable by any payment
date specified in this Agreement is not administratively practicable due to events beyond your
control (or the control of your beneficiary or estate) and for reasons that are commercially
reasonable, payment will be made as soon as administratively practicable in compliance with Section
409A of the Code and the Treasury Regulations thereunder. In the event of your death during such
six-month period, payment will be made in the payroll period next following the payroll period in
which your death occurs.
(d) Limitation on Change in Control Payments. In the event that:
(i) the aggregate payments or benefits to be made to you pursuant to this Agreement, together
with other payments and benefits which you have a right to receive from the Bank, which are deemed
to be parachute payments as defined in Section 280G of the Code (the “Termination Benefits”) would
be deemed to include an “excess parachute payment” under Section 280G of the Code; and
(ii) if such Termination Benefits were reduced to an amount (the “Non-Triggering Amount”), the
value of which is one dollar ($1.00) less than an amount equal to three times your “base amount”,
as determined in accordance with said Section 280G and the Non-Triggering Amount less the product
of the marginal rate of any applicable state and federal income tax and the Non-Triggering Amount
would be greater than the aggregate value of the Termination Benefits (without such reduction)
minus (A) the amount of tax required to be paid by you by Section 4999 of the Code and further
minus (B) the product of the Termination Benefits and the marginal rate of any applicable state and
federal income tax,
then the Termination Benefits shall be reduced to the Non-Triggering Amount. The reduction
required hereby among the Termination Benefits shall be allocated to the payments and benefits set
forth in Section 3(b) in the following order until the reduction is fully accomplished: Section
3(b)(ii), 3(b)(iii), 3(b)(vi) and 3(b)(vii).
(e) Notice. During the Protected Period, any purported termination of your employment
by the Bank or the Company or by you shall be communicated by written Notice of Termination to the
other party hereto.
(f) Certain Definitions. Except as otherwise indicated in this Agreement, all
definitions in this Section 3(f) shall be applicable during the Protected Period only.
(i) Disability. “Disability” shall have the meaning provided in Section 409A of the
Code and the Treasury Regulations thereunder.
(ii) Cause. “Cause” shall mean termination on account of (A) the willful and
continued failure by you to substantially perform your duties with the Bank (other than any such
failure resulting from your incapacity due to physical or mental illness or Disability or any
failure after the issuance of a Notice of Termination by you for Good Reason) which failure is
demonstrably and materially damaging to the financial condition or reputation of the Company, the
Bank and/or their affiliates, and which failure continues more than 48 hours after a written demand
for substantial performance is delivered to you by the Chief Executive Officer of the Bank, which
demand specifically identifies the manner in which the Chief Executive Officer believes that you
have not substantially performed your duties and the demonstrable and material damage caused
thereby or (B) the willful engaging by you in conduct which is demonstrably and materially
injurious to the Company, the Bank or their affiliates, monetarily or otherwise. No act, or
failure to act, on your part shall be deemed “willful” unless done, or omitted to be done, by you
not in good faith and without reasonable belief that your action or omission was in the best
interest of the Bank and the Company.
(iii) Good Reason. “Good Reason” shall mean, without your express written consent,
the occurrence upon or after a Change in Control of any of the following circumstances provided
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that you shall have given notice of such circumstance(s) to the Bank within a period not to exceed
90 days
of the initial existence of such circumstance(s) and the Bank shall not have remedied such
circumstance(s) within 30 days after receipt of such notice:
(A) the assignment to you of any duties materially inconsistent with the position in
the Bank that you held immediately prior to the Change in Control, or a material adverse
alteration in the nature or status of your responsibilities or the conditions of your
employment from those in effect immediately prior to such Change in Control;
(B) a material reduction in your annual base salary or perquisites as in effect
immediately prior to the Change in Control or as the same may be increased from time to
time except for across-the-board perquisite reductions similarly affecting all senior
executives of the Bank and all senior executives of any Person in control of the Bank or
the Company;
(C) the relocation of the principle place of your employment to a location more than
50 miles from the location of such place of employment on the date of this Agreement;
except for required travel on the Bank’s business to an extent substantially consistent
with your business travel obligations prior to the Change in Control;
(D) the failure by the Bank to pay to you any material portion of your compensation
or to pay to you any material portion of an installment of deferred compensation under
any deferred compensation program of the Bank within a reasonable time after the date
such compensation is due;
(E) the failure by the Bank to continue in effect any material compensation or
benefit plan in which you participated immediately prior to the Change in Control, unless
an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by the Bank to continue your participation
therein (or in such substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amounts of benefits provided and the level of your
participation relative to other participants, as existed at the time of the Change in
Control;
(F) the failure of the Bank to obtain a satisfactory agreement from any successor to
the Bank or the Company to assume and agree to perform this Agreement, as contemplated in
Section 7 hereof; or
(G) any purported termination of your employment that is not effected pursuant to a
Notice of Termination that is in material compliance with the requirements of Section
3(f)(iv) hereof (and, if applicable, the requirements of Section 3(f)(ii) hereof), which
purported termination shall not be effective for purposes of this Agreement.
(iv) Notice of Termination. “Notice of Termination” shall mean notice indicating the
specific termination provision in this Agreement relied upon and setting forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of your employment under the
provision so indicated.
(v) Date of Termination. “Date of Termination” shall mean (A) if your employment is
terminated for Disability, 30 days after Notice of Termination is given (provided that you shall
not have returned to the full-time performance of your duties during such 30-day period) or (B) if
your employment is terminated for any other reason, the date specified in the Notice of Termination
(which, in the case of a termination for Cause, shall not be less than 30 days from the date such
Notice of Termination is given and, in the case of a termination for Good Reason, shall not be less
than 30 nor more than 60 days from the date such Notice of Termination is given).
(vi) Specified Employee. “Specified Employee” shall mean an employee of the Bank, at a
time when any stock of the Company is publicly traded on an established securities market or
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otherwise, who satisfies the requirements for being designated a “key employee” under Section
416(i)(1)(A)(i), (ii) or (iii) of the Code without regard to Section 416(i)(5) of the Code at any
time during a calendar year, in which case such employee shall be considered a Specified Employee
for the twelve-month period beginning on the first day of the fourth month immediately following
the end of such calendar year. In the event of any corporate spinoff or merger, the determination
of which employees meet the requirements of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code
without regard to Section 416(i)(5) of the Code for any calendar year shall be determined in
accordance with Regulations Section 1.409A-1(i)(6).
4. Non-Competition and Non-Disclosure; Executive Cooperation; Non-Disparagement; Certain
Forfeitures.
(a) Non-Competition. In consideration for the compensation and benefits provided
under this Agreement, without the consent in writing of the Chief Executive Officer of the Bank,
you will not, at any time during the term of this Agreement and for a period of two years following
your termination of employment during the Protected Period, acting alone or in conjunction with
others, directly or indirectly (i) engage (either as owner, investor, partner, stockholder,
employer, employee, consultant, advisor, or director) in any business of any savings bank, savings
and loan association, savings and loan holding company, bank, bank holding company, or other
institution engaged in the business of accepting deposits or making loans, or any direct or
indirect subsidiary or affiliate of any such entity, that conducts business in any county in which
the Company or the Bank maintains an office as of your date of termination or in any county in
which the Company or the Bank had plans to open an office within six months after your date of
termination; (ii) induce any customers of the Bank or any of its affiliates with whom you have had
contacts or relationships, directly or indirectly, during and within the scope of your employment
with the Bank, to curtail or cancel their business with the Bank or any such affiliate; (iii)
induce, or attempt to influence, any employee of the Bank or any of its affiliates to terminate
employment; or (iv) solicit, hire or retain as an employee or independent contractor, or assist any
third party in the solicitation, hire, or retention as an employee or independent contractor, any
person who during the previous twelve months was an employee of the Bank or any affiliate;
provided, however, that activities engaged in by or on behalf of the Bank are not restricted by
this covenant. The provisions of subparagraphs (i), (ii), (iii), and (iv) above are separate and
distinct commitments independent of each of the other subparagraphs. It is agreed that the
ownership of not more than one percent of the equity securities of any company having securities
listed on an exchange or regularly traded in the over-the-counter market shall not, of itself, be
deemed inconsistent with clause (i) of this Section 4(a).
(b) Non-Disclosure; Ownership of Work. You shall not, at any time during the term of
this Agreement and thereafter (including following your termination of employment for any reason),
disclose, use, transfer, or sell, except in the course of employment with or other service to the
Bank or the Company, any proprietary information, secrets, organizational or employee information,
or other confidential information belonging or relating to the Bank or the Company and its
affiliates and customers so long as such information has not otherwise been disclosed or is not
otherwise in the public domain, except as required by law or pursuant to legal process. In
addition, upon termination of employment for any reason, you will return to the Bank and the
Company or its affiliates all documents and other media containing information belonging or
relating to the Bank and the Company or its affiliates.
(c) Cooperation With Regard to Litigation. You agree to cooperate with the Bank and
the Company, during the term of this Agreement and thereafter (including following your termination
of employment for any reason), by making yourself available to testify on behalf of the Bank or the
Company or any subsidiary or affiliate of the Bank or the Company, in any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, and to assist the Bank and
the Company, or any subsidiary or affiliate of the Company, in any such action, suit, or
proceeding, by providing information and meeting and consulting with the Board or its
representatives or counsel, or representatives or counsel to the Bank or the Company, or any
subsidiary or affiliate of the Company, as requested. The Bank agrees to reimburse you for all
expenses actually incurred in connection with your provision of testimony or assistance. Such
reimbursement shall be made, on an after tax basis, each calendar quarter in accordance with the
provisions of Section 3(c) of this Agreement, but not later than the last day of the year in which
the expense was incurred.
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(d) Non-Disparagement. You shall not, at any time during the term of this Agreement
and thereafter, make statements or representations, or otherwise communicate, directly or
indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly,
disparage the Bank or the Company or any of its subsidiaries or affiliates or their respective
officers, directors, employees, advisors, businesses or reputations. Notwithstanding the
foregoing, nothing in this Agreement shall preclude you from making truthful statements that are
required by applicable law, regulation or legal process.
(e) Release of Employment Claims. You agree, as a condition to your receipt of any
payments or benefits provided for in Section 3(b) herein (other than compensation accrued at
termination as provided in Section 3(b)(i)), that you will execute a general release agreement, in
substantially the form set forth in Attachment A to this Agreement, releasing any and all claims
arising out of your employment other than enforcement of this Agreement and rights to
indemnification under any agreement, law, Bank or Company organizational document or policy, or
otherwise. The Bank will provide you with a copy of such release simultaneously with or as soon as
practicable following the delivery of the Notice of Termination but not later than 21 days before
(45 days before if your termination is part of an exit incentive or other employment termination
program offered to a group or class of employees) the Date of Termination. You must deliver the
executed release to the Bank not later than eight days before the date of payment of your
compensation and benefits provided for under this Agreement.
(f) Forfeiture of Outstanding Options. Anything in this Agreement to the contrary
notwithstanding, if you willfully and materially fail to substantially comply with any restrictive
covenant under this Section 4 or willfully and materially fail to substantially comply with any
material obligation under this Agreement, all options to purchase common stock granted by the Bank
and then held by you or your transferee shall be immediately forfeited and thereupon such options
shall be cancelled. Any such forfeiture shall apply to such options notwithstanding any term or
provision of any option agreement. In addition, options granted to you and gains resulting from the
exercise of such options, shall be subject to forfeiture in accordance with the Bank’s standard
policies relating to such forfeitures and clawbacks, as such policies are in effect at the time of
grant of such options.
(h) Forfeiture Due to Regulatory Restrictions. Anything in this Agreement to the
contrary notwithstanding, (i) any payments made pursuant to this Agreement shall be subject to and
conditioned upon compliance with 12 U.S.C. §1828(k) and any regulations promulgated thereunder; and
(ii) payments contemplated to be made by the Bank pursuant to this Agreement shall not be
immediately payable to the extent such payments are barred or prohibited by an action or order
issued by the Connecticut Banking Commissioner or the Federal Deposit Insurance Corporation.
(i) Survival. The provisions of this Section 4 shall survive the end of the term of
this Agreement and any termination or expiration of this Agreement.
5. Mitigation. You shall not be required to mitigate the amount of payment provided
for under this Agreement by seeking other employment or otherwise, nor shall the amount of payment
or benefit provided for under this Agreement be reduced by any compensation earned by you as the
result of employment by another employer, by retirement benefits, by offset against any amount
claimed to be owed by you to the Bank, or otherwise.
6. Costs of Proceedings. The Bank shall pay all costs and expenses, including all
attorneys’ fees and disbursements, of the Bank and the Company and you, in connection with any
legal proceedings undertaken pursuant to Section 13, whether or not instituted by the Bank, the
Company or you, relating to the interpretation or enforcement of any provision of this Agreement;
provided that if you instituted the proceeding and a finding is entered that you instituted
the proceeding in bad faith, you shall pay all of your costs and expenses, including attorneys’
fees and disbursements. The Bank or the Company shall pay prejudgment interest on any money
judgment obtained by you as a result of such proceeding, calculated at the prime rate determined by
the Bank as in effect from time to time from the date that payment should have been made to you
under this Agreement. Any such payment or reimbursement to you shall be made on an after-tax basis
each calendar quarter for all costs and expenses actually incurred as provided in this
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Section 6 and in accordance with the provisions of Section 3(c) of this Agreement, but not later
than the last day of the year in which the expense was incurred.
7. Successors; Binding Agreement.
(a) The Bank and the Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Bank or the Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Bank and the Company would be required to perform it if
no such succession had taken place. As used in this Agreement, “Bank “and “Company” shall mean
the Bank and the Company respectively as hereinbefore defined and any successor to its or their
business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation
of law, or otherwise and, in the case of an acquisition of the Bank or the Company in which the
corporate existence of the Bank or the Company, as the case may be, continues, the ultimate parent
company following such acquisition. Subject to the foregoing, the Bank and the Company may transfer
and assign this Agreement and the Bank’s and the Company’s rights and obligations hereunder.
Neither this Agreement nor the rights or obligations hereunder of the parties hereto shall be
transferable or assignable by you, except in accordance with the laws of descent and distribution
or as specified in (b) below.
(b) This Agreement shall inure to the benefit of and be enforceable by you and your personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees. In the event of your death, all amounts otherwise payable to you hereunder shall, unless
otherwise provided herein, be paid in accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to your estate.
8. Notice. Whenever under this Agreement it becomes necessary to give notice, such
notice shall be in writing, signed by the party or parties giving or making the same, and shall be
served on the person or persons for whom it is intended or who should be advised or notified, by
Federal Express or other similar overnight service or by certified or registered mail, return
receipt requested, postage prepaid and addressed to such party at the address set forth below or at
such other address as may be designated by such party by like notice:
If to the Bank or the Company:
ROCKVILLE BANK
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: Chief Executive Officer
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Att: Chief Executive Officer
If to you:
To the address first provided hereinabove.
If the parties by mutual agreement supply each other with telecopier numbers for the purposes
of providing notice by facsimile, such notice shall also be proper notice under this Agreement. In
the case of Federal Express or other similar overnight service, such notice or advice shall be
effective when sent, and, in the cases of certified or registered mail, shall be effective two days
after deposit into the mails by delivery to the U.S. Post Office.
9. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and signed by you
and such officer as may be designated by the Board. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the time or at any prior or subsequent time. Any payments provided for
hereunder shall be paid net of any applicable withholding required under federal, state or local
law. The obligations of the Company and the Bank under this
10
Agreement shall survive the expiration of this Agreement to the extent necessary to give
effect to this Agreement.
10. Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and the same instrument.
12. Entire Agreement. This Agreement sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and during the term of this Agreement
cancels and supersedes the provisions of all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any officer, employee or
representative of any party hereof with respect to the subject matter contained herein. No
agreements or representations, oral or otherwise, express or implied, with respect to the subject
matter hereof have been made by either party which are not expressly set forth in this Agreement.
13 .Dispute Resolution
(a) Negotiation. The Bank and the Company (collectively, the “Employer”) and you
shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiation between the Chief Executive Officer of the Bank and you. Any party may
give the other party written notice of any dispute in accordance with the notice procedures set
forth in Section 8. Within 15 days after delivery of the notice, the receiving party shall submit
to the other, in accordance with the notice procedures set forth in Section 8, a written response.
The notice and response shall include a statement of that party’s position and summary of arguments
supporting that position. Within 30 days after delivery of the initial notice, the parties shall
meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem
necessary, to attempt to resolve the dispute. All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence.
(b) Mediation. If the dispute has not been resolved by negotiation as provided
herein within 45 days after delivery of the initial notice of negotiation, or if the parties failed
to meet within 30 days after delivery, the parties shall endeavor to settle the dispute by
mediation under the CPR Mediation Procedure then currently in effect; provided, however, that if
one party fails to participate in the negotiation as provided herein, the other party can initiate
mediation prior to the expiration of the 45 days. Unless otherwise agreed, the parties will select
a mediator from the CPR Panels of Distinguished Neutrals.
(c) Arbitration. Any dispute arising under or in connection with this Agreement which
has not been resolved by mediation as provided herein within 45 days after initiation of the
mediation procedure, shall be finally resolved by arbitration in accordance with the CPR Rules for
Non-Administered Arbitration then currently in effect, by three independent and impartial
arbitrators, of whom each party shall designate one; provided, however, that if one party fails to
participate in either the negotiation or mediation as agreed herein, the other party can commence
arbitration prior to the expiration of the time periods set forth above. The arbitration shall be
governed by the Federal Arbitration Act, 9 U.S.C. §§1-16, and judgment upon the award rendered by
the arbitrators may be entered by any court having jurisdiction thereof. The place of arbitration
shall be Hartford, Connecticut. For purposes of entering any judgment upon an award rendered by
the arbitrators, the Company, the Bank and you hereby consent to the jurisdiction of any or all of
the following courts: (i) the United States District Court for the District of Connecticut, (ii)
any of the courts of the State of Connecticut, or (iii) any other court having jurisdiction.
The Company, the Bank and you hereby agree that a judgment upon an award rendered by the
arbitrators may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
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Subject to Section 6 of this Agreement, the Bank shall bear all costs and expenses arising in
connection with any arbitration proceeding pursuant to this Section 13(c). Notwithstanding any
provision in this Section 13(c), you shall be entitled to seek specific performance of your right
to be paid during the pendency of any dispute or controversy arising under or in connection with
this Agreement.
(d) Interest on Unpaid Amounts. Any amount which has become payable pursuant to the
terms of this Agreement or any decision by arbitrators or judgment by a court of law pursuant to
this Section 12 but which has not been timely paid shall bear interest at the prime rate in effect
at the time such amount first becomes payable, as quoted by the Bank, except as otherwise provided
in Section 3(c)(vi) of this Agreement (concerning interest payable with respect to certain delayed
payments that are subject to Section 409A of the Code).
14. Governing Law. This Agreement is governed by and is to be construed,
administered, and enforced in accordance with the laws of the State of Connecticut, without regard
to its conflicts of law principles. If under the governing law, any portion of this Agreement is at
any time deemed to be in conflict with any applicable statute, rule, regulation, ordinance, or
other principle of law, such portion shall be deemed to be modified or altered to the extent
necessary to conform thereto or, if that is not possible, to be omitted from this Agreement. The
invalidity of any such portion shall not affect the force, effect, and validity of the remaining
portion thereof. If any court determines that any provision of Section 4 of this Agreement is
unenforceable because of the duration or geographic scope of such provision, it is the parties’
intent that such court shall have the power to modify the duration or geographic scope of such
provision, as the case may be, to the extent necessary to render the provision enforceable and, in
its modified form, such provision shall be enforced. Anything in this Agreement to the contrary
notwithstanding, the terms of this Agreement shall be interpreted and applied in a manner
consistent with the requirements of Section 409A of the Code and the Treasury Regulations so as not
to subject you to the payment of any tax penalty or interest which may be imposed by Section 409A
of the Code and the Company shall have no right to accelerate or make any payment under this
Agreement except to the extent such action would not subject you to the payment of any tax penalty
or interest under Section 409A of the Code. If all or a portion of the benefits and payments
provided under this Agreement constitute taxable income to you for any taxable year that is prior
to the taxable year in which such payments and/or benefits are to be paid to you as a result of the
Agreement’s failure to comply with the requirements of Section 409A of the Code and the
Regulations, the applicable payment or benefit shall be paid immediately to you to the extent such
payment or benefit is required to be included in your income. If you become subject to any tax
penalty or interest under Section 409A of the Code by reason of this Agreement, the Company shall
reimburse you on a fully grossed-up and after-tax basis for any such tax penalty or interest (so
that you are held economically harmless) ten business days prior to the date such tax penalty or
interest is due and payable by you to the government.
If this letter sets forth our agreement on the subject matter hereof, kindly sign and return
to the Bank the enclosed copy of this letter, which will then constitute our agreement on this
subject.
| ROCKVILLE BANK | ROCKVILLE FINANCIAL, INC. | |||||||||
By:
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By: | |||||||||
Name: |
Name: | |||||||||
Title:
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Title: | |||||||||
Agreed to this __ day of , 2009.
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ATTACHMENT A
RELEASE
We advise you to consult an attorney before you sign this Release. You have until the date
which is seven (7) days after the Release is signed and returned to Rockville Bank to change your
mind and revoke your Release. Your Release shall not become effective or enforceable until after
that date.
In consideration for the benefits provided under your Change in Control and Restrictive Covenant
Agreement with Rockville Bank (the “Agreement”), and more specifically enumerated in Exhibit 1
hereto, by your signature below, you, for yourself and on behalf of your heirs, executors, agents,
representatives, successors and assigns, hereby release and forever discharge Rockville Financial,
Inc., its past and present parent corporations, subsidiaries, divisions, subdivisions, affiliates
and related companies (collectively, the “Company”) and the Company’s past, present and future
agents, directors, officers, employees, representatives, assigns, stockholders, attorneys, agents,
insurers, employee benefit programs (and the trustees, administrators, fiduciaries and insurers of
such programs), and any other persons acting by, through, under or in concert with any of the
persons or entities listed herein, and their successors (hereinafter “those associated with the
Company”) and with respect to any and all claims, demands, actions and liabilities, whether in law
or equity, which you may have against the Company or those associated with the Company of whatever
kind, including but not limited to those arising out of your employment with the Company or the
termination of that employment. You agree that this Release covers, but is not limited to, claims
arising under the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq., Title VII
of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans with Disabilities Act of
1990, 42 U.S.C. § 12101 et seq., the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., the
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., the Connecticut Fair
Employment Practices Act, C.G.S. § 46a-51 et seq., Family and Medical Leave Act of 1993 and any
local, state or federal law, regulation or order providing workers’ compensation benefits,
restricting an employer’s right to terminate employees or otherwise regulating employment,
enforcing express or implied employment contracts or requiring an employer to deal with employees
fairly or in good faith, or dealing with discrimination in employment on the basis of sex, race,
color, national origin, veteran status, marital status, religion, disability, handicap, or age.
You also agree that this Release includes claims based on wrongful termination of employment,
breach of contract (express or implied), tort, or claims otherwise related to your employment or
termination of employment with the Company and any claim for attorneys’ fees, expenses or costs of
litigation.
This Release covers all claims based on any facts or events, whether known or unknown by you, that
occurred on or before the date of this Release. You expressly waive all rights you might have under
any law that is intended to protect you from waiving unknown claims and by your signature below
indicate your understanding of the significance of doing so. Examples of released claims include,
but are not limited to: (a) claims that in any way relate to your employment with the Company, or
the termination of that employment, such as claims for compensation, bonuses, commissions, lost
wages, or unused accrued vacation or sick pay (other than under your Agreement); (b) claims that in
any way relate to the design or administration of any employee benefit program; (c) claims that you
have irrevocable or vested rights to severance or similar benefits (other than under your
Agreement) or to post-employment health or group insurance benefits (other than under your
Agreement); (d) any claim, such as a benefit claim, that was explicitly or implicitly denied before
you signed this Release; (e) any claim you might have for extra benefits as a consequence of
payments you receive because of signing this Release; or (f) any claim to attorneys’ fees or other
indemnities. Except to enforce your Agreement or this Release, you agree that you will never
commence, prosecute, or cause to be commenced or prosecuted any lawsuit or proceeding of any kind
against the Company or those associated with the Company in any forum and agree to withdraw with
prejudice all complaints or charges, if any, that you have filed against the Company or those
associated with the Company.
Anything in this Release to the contrary notwithstanding, this Release does not include a release
of: (i) your rights under the Agreement or your right to enforce the Agreement; (ii) any rights
you may have to indemnification under any agreement, law, Company organizational document or
policy, or otherwise; (iii) any rights you may have to
benefits under the Company’s benefit plans; (iv) any rights or claims under the Age Discrimination
in Employment Act or any other law that arise after you sign this Release; or (v) your right to
enforce this Release or any of the foregoing items described in this paragraph.
By signing this Release, you further agree as follows:
i. You have read this Release carefully and fully understand its terms;
ii. You have had at least twenty-one (21) days to consider the terms of the Release;
iii. You have seven (7) days from the date you sign this Release to revoke it by written
notification to the Company. After this seven (7) day period, this Release is final and binding
and may not be revoked;
iv. You have been advised to seek legal counsel and have had an opportunity to do so;
v. You would not otherwise be entitled to the benefits provided under your Agreement had you
not agreed to execute this Release; and
vi. Your agreement to the terms set forth above is voluntary.
Name: |
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Signature:
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Date: | |||||
Received by:
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Date: | |||||
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