MAGYAR BANCORP, INC.
CHANGE IN CONTROL AGREEMENT
FOR
_______________________
This AGREEMENT is made effective as of ______________ __, 2005 by and
between MAGYAR BANCORP, INC., a Delaware corporation with its principal place of
business at 400 Somerset Street, New Brunswick, New Jersey 08903 (the
"Company"), and _____________________ (the "Executive"). Any reference to "Bank"
herein shall mean Magyar Bank, a New Jersey chartered stock savings bank or any
successor thereto.
WHEREAS, the Company recognizes the substantial contribution the
Executive has made to the Company and wishes to protect his position therewith
for the period provided in this Agreement; and
WHEREAS, the Executive has been elected to, and has agreed to serve in
the position of _______________for the Company, a position of substantial
responsibility;
NOW, THEREFORE, in consideration of the contribution of the Executive,
and upon the other terms and conditions hereinafter provided, the parties hereto
agree as follows:
1. TERM OF AGREEMENT
The "term" of this Agreement shall be twenty-four (24) full calendar
months from the effective date of this Agreement set forth above, and shall
include any extension or renewal made pursuant to this Section. Commencing on
_______________, 2006 and continuing on ___________ of each year thereafter (the
"Anniversary Date"), this Agreement shall renew for an additional year such that
the remaining term shall be two (2) years unless written notice of non-renewal
("Non-Renewal Notice") is provided to Executive at least thirty (30) days and
not more than sixty (60) days prior to any such Anniversary Date, that this
Agreement shall terminate at the end of twenty-four (24) months following such
Anniversary Date.
2. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL
This Agreement provides for certain payments and benefits to Executive
only in the event of Change in Control followed by a termination of Executive's
services as described in this Agreement.
(a) Upon the occurrence of a Change in Control of the Company or the
Bank (as herein defined) followed at any time during the term of this Agreement
by Executive's voluntary termination of employment in accordance with this
Section 2(a) or involuntary termination of the Executive's employment, other
than for Just Cause (as defined in Section 2(c) hereof), the provisions of
Section 3 shall apply. Upon the occurrence of a Change in Control, the Executive
shall have the right to elect to voluntarily terminate his employment at any
time during the term of this Agreement following a demotion, loss of title,
office or significant authority (in each case, other than as a result of the
fact that either the Bank or the Company is merged into another entity in
connection with the Change in Control and will not operate as a stand-alone,
independent entity), a reduction in his annual compensation or benefits, or
relocation of his principal place of employment by more than 30 miles from its
location immediately prior to the Change in Control.
(b) A "Change in Control" of the Company or the Bank shall mean a
change in control of a nature that: (i) would be required to be reported in
response to Item 5.01 of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"); or (ii) results in a Change in Control of the Company
or the Bank within the meaning of the Bank Holding Company Act, as amended, and
applicable rules and regulations promulgated thereunder (collectively, the
"BHCA") as in effect at the time of the Change in Control; or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (a) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Bank
representing 25% or more of the combined voting power of Company's outstanding
securities, except for any securities purchased by the Bank's employee stock
ownership plan or trust; or (b) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, PROVIDED that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Company's stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause (b),
considered as though he were a member of the Incumbent Board; or (c) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Company or the Bank or similar transaction in which the Company or
Bank is not the surviving institution occurs; or (d) a proxy statement
soliciting proxies from stockholders of the Company, by someone other than the
current management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or similar transaction
with one or more corporations as a result of which the outstanding shares of the
class of securities then subject to the plan are exchanged for or converted into
cash or property or securities not issued by the Company; or (e) a tender offer
is made for 25% or more of the voting securities of the Company and the
shareholders owning beneficially or of record 25% or more of the outstanding
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror. Notwithstanding anything in this subsection to the contrary, a Change
in Control shall not be deemed to have occurred upon the conversion of the
Company's mutual holding company parent to stock form, or in connection with any
reorganization used to effect such a conversion.
(c) Even if a Change in Control shall occur, the Executive shall not
have the right to receive termination benefits pursuant to Section 3 hereof upon
termination for Just Cause. The phrase "Just Cause" as used herein, shall exist
when there has been a good faith determination by the Board that there shall
have occurred one or more of the following events with respect to the Executive:
(i) the conviction of the Executive of a felony or of any lesser criminal
offense involving moral turpitude; (ii) the willful commission by the Executive
of a criminal or other act that, in the judgment of the Board will likely cause
substantial economic damage to the Company or the Bank or substantial injury to
the business reputation of the Company or Bank; (iii) the commission by the
Executive of an act of fraud in the performance of his duties on behalf of the
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Company or Bank; (iv) the continuing willful failure of the Executive to perform
his duties to the Company or Bank (other than any such failure resulting from
the Executive's incapacity due to physical or mental illness) after written
notice thereof (specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to be heard and cure such failure are given to the
Executive by the Board; or (v) an order of a federal or state regulatory agency
or a court of competent jurisdiction requiring the termination of the
Executive's employment by the Company. Notwithstanding the foregoing, Just Cause
shall not be deemed to exist unless there shall have been delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board at a meeting of the
Board called and held for the purpose (after reasonable notice to the Executive
and an opportunity for the Executive to be heard before the Board), finding that
in the good faith opinion of the Board the Executive was guilty of conduct
described above and specifying the particulars thereof. Prior to holding a
meeting at which the Board is to make a final determination whether Just Cause
exists, if the Board determines in good faith at a meeting of the Board, by not
less than a majority of its entire membership, that there is probable cause for
it to find that the Executive was guilty of conduct constituting Just Cause as
described above, the Board may suspend the Executive from his duties hereunder
for a reasonable period of time not to exceed fourteen (14) days pending a
further meeting at which the Executive shall be given the opportunity to be
heard before the Board. For purposes of this subparagraph, no act or failure to
act, on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith without reasonable believe that his
action or omission was in the best interest of the Company and the Bank. Upon a
finding of Just Cause, the Board shall deliver to the Executive a Notice of
Termination, as more fully described in Section 4 below.
3. TERMINATION
(a) Upon the occurrence of a Change in Control, followed at any time
during the term of this Agreement by the involuntary termination of the
Executive's employment other than due to termination for Just Cause, or
voluntary termination for one or more of the reasons set forth in Section 2(a)
hereof, the Company shall be obligated to pay the Executive, or in the event of
his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay, a sum equal to two times the sum of (i) the
highest rate of base salary, and (ii) highest rate of bonus awarded to the
Executive during the prior three years, subject to applicable withholding taxes.
(b) Upon the occurrence of a Change in Control of the Company
followed at any time during the term of this Agreement by the Executive's
involuntary termination of employment other than for termination for Just Cause,
or voluntary termination for one or more of the reasons set forth in Section
2(a) hereof, the Company shall cause to be continued at no cost to Executive,
life, medical and dental coverage substantially identical to the coverage
maintained by the Company for the Executive prior to his severance. Such
coverage and payments shall cease upon expiration of twenty-four months.
(c) Upon the occurrence of a Change in Control, the Executive will
have such rights as specified in any other employee benefit plan with respect to
options and such other rights as may have been granted to the Executive under
such plans.
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(d) Any cash severance payments shall be made in a lump sum within
thirty (30) days (or, in the event Section 409A of the Code is applicable, on
the first day of the seventh full month) of Executive's termination of
employment. Such payments shall not be reduced in the event the Executive
obtains other employment following termination of employment with the Company.
(e) Notwithstanding the preceding paragraphs of this Section 3, in
no event shall the aggregate payments or benefits to be made or afforded to the
Executive under said paragraphs (the "Termination Benefits") constitute an
"excess parachute payment" under Section 280G of the Code or any successor
thereto, and in order 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 the
Executive's "base amount", as determined in accordance with said Section 280G.
The allocation of the reduction required hereby among Termination Benefits
provided by the preceding paragraphs of this Section 3 shall be determined by
the Executive.
4. NOTICE OF TERMINATION
Any purported termination by the Company or by the 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 Date of Termination and, in the event of termination by the
Executive, the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. "Date of Termination" shall mean the date specified in
the Notice of Termination (which, in the case of a termination for Just Cause,
shall be immediate). In no event shall the Date of Termination exceed 30 days
from the date Notice of Termination is given.
5. SOURCE OF PAYMENTS
It is intended by the parties hereto that all payments provided in this
Agreement shall be paid in cash or check from the general funds of the Company,
provided, however, that in the event that the payment of any amounts due under
Section 3 above is made by the Bank, such payment shall offset the payment due
from the Company hereunder.
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 Company and the Executive,
except that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to the Executive of a kind elsewhere provided. No provision
of this Agreement shall be interpreted to mean that the Executive is subject to
receiving fewer benefits than those available to him without reference to this
Agreement.
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,
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pledge, or hypothecation, or to execution, attachment, levy, or similar process
or assignment by operation of law, and any attempt, voluntary or involuntary, to
effect any such action shall be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit
of, the Executive, the Company 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.
9. REQUIRED PROVISIONS
Notwithstanding anything herein contained to the contrary, any payments
to Executive by the Company, whether pursuant to this Agreement or otherwise,
are subject to and conditioned upon their compliance with Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations
promulgated thereunder in 12 C.F.R. Part 359.
10. 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.
11. 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.
12. GOVERNING LAW
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Delaware.
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 the employee within fifty
(50) miles from the location of the Association, in accordance with the rules of
the Judicial Mediation and Arbitration Systems (JAMS) then in
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effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that subject to Section 3(c) hereof, the
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 the Executive pursuant to
any dispute or question of interpretation relating to this Agreement shall be
paid or reimbursed by the Company if the Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement.
14. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Company, expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Agreement, in the same manner and to the same extent that the Company would
be required to perform if no such succession or assignment had taken place.
15. OBLIGATIONS OF COMPANY
The termination of Executive's employment, other than following a Change
in Control, shall not result in any obligation of the Company under this
Agreement.
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16. SIGNATURES
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and the Executive has signed this Agreement, on
the day and date first above written.
ATTEST: MAGYAR BANCORP, INC.
________________________________ By:__________________________________
President
WITNESS: EXECUTIVE
________________________________ By:__________________________________
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