Exhibit 10.7
AMENDED AND
RESTATED
OCEAN CITY HOME
BANK
TWO-YEAR CHANGE IN CONTROL
AGREEMENT
This AGREEMENT originally
entered into on December 21 , 2004 (the
“Agreement”), by and between Ocean City Home
Bank (the “Bank”), a federally-chartered savings
bank with its principal offices at 1001 Asbury Avenue, Ocean City,
New Jersey 08226-3392 and Donald Morgenweck
(“Executive”) and Ocean Shore Holding Co. (the
“Company”), a federally-chartered corporation and the
holding company of the Bank, as guarantor is amended and restated
in its entirety as of December 17, 2008.
WHEREAS, the Bank continues to recognize the importance
of Executive to the Bank’s operations and wishes to protect
his position with the Bank in the event of a change in control of
the Bank or the Company for the period provided for in this
Agreement; and
WHEREAS, Executive and the Board of Directors of the Bank
desire to enter into an agreement setting forth the terms and
conditions of payments due to Executive in the event of a change in
control and the related rights and obligations of each of the
parties and to bring the Agreement into compliance with
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and regulations and guidance issued with
respect to Section 409A of the Code.
NOW, THEREFORE,
in consideration of the promises and
mutual covenants herein contained, it is hereby agreed as
follows:
(a) The term of this Agreement shall
be (i) the initial term, consisting of the period commencing
on December 21, 2004 (the “Effective Date”) and
ending on the second anniversary of the Effective Date, plus
(ii) any and all extensions of the initial term made pursuant
to this Section 1 of this Agreement. As of the date of this
restatement, the term of this Agreement had been extended to
December 17, 2010.
(b) Commencing on the first
anniversary of the Effective Date and continuing each anniversary
date thereafter, the Board of Directors of the Bank (the
“Board of Directors”) may extend the term of this
Agreement for an additional one (1) year period beyond the
then effective expiration date, provided that Executive shall not
have given at least sixty (60) days’ written notice of
his desire that the term not be extended.
(c) Notwithstanding anything in this
Section to the contrary, this Agreement shall terminate if
Executive or the Bank terminates Executive’s employment prior
to a Change in Control.
(a) Upon the occurrence of a Change
in Control of the Bank or the Company followed at any time during
the term of this Agreement by the termination of Executive’s
employment in accordance with the terms of this Agreement, other
than for Just Cause, as defined in Section 2(c) of this
Agreement, the provisions of Section 3 of this Agreement shall
apply. Upon the occurrence of a Change in Control, Executive shall
have the right to elect to voluntarily terminate his employment for
“Good Reason.”
For purposes of this Agreement,
“Good Reason” shall mean the occurrence of any of the
following events without the Executive’s consent:
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(i)
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The assignment
to Executive of duties that constitute a material diminution of
Executive’s authority, duties, or responsibilities (including
reporting requirements);
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(ii)
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A material
diminution in Executive’s base salary;
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(iii)
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Relocation of
Executive to a location outside a radius of thirty-five
(35) miles of the Company’s Ocean City, New Jersey
office; or
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(iv)
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Any other
action or inaction by the Bank or the Company that constitutes a
material breach of this Agreement;
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provided, that within ninety
(90) days after the initial existence of such event, the Bank
shall be given notice and an opportunity, not less than thirty
(30) days, to effectuate a cure for such asserted “Good
Reason” by Executive. Executive’s resignation hereunder
for Good Reason shall not occur later than one hundred fifty
(150) days following the initial date on which the event
Executive claims constitutes Good Reason occurred.
(b) For purposes of this Agreement,
a “Change in Control” shall be deemed to occur on the
earliest of any of the following events:
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(i)
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Merger : The Company merges into or consolidates with
another corporation, or merges another corporation into the
Company, and as a result less than a majority of the combined
voting power of the resulting corporation immediately after the
merger or consolidation is held by persons who were stockholders of
the Company immediately before the merger or
consolidation.
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(ii)
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Acquisition
of Significant Share Ownership : The Company files, or is required to file, a
report on Schedule 13D or another form or schedule (other than
Schedule 13G) required under Sections 13(d) or 14(d) of the
Securities Exchange Act of 1934, if the schedule discloses that the
filing person or persons acting in concert has or have become the
beneficial owner of 25% or more of a class of the Company’s
voting securities, but this clause (b) shall not apply to
beneficial ownership of Company voting shares held in a fiduciary
capacity by an entity of which the Company directly or indirectly
beneficially owns 50% or more of its outstanding voting
securities.
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(iii)
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Change in
Board Composition :
During any period of two consecutive years, individuals who
constitute the Company’s Board of Directors at the beginning
of the two-year period cease for any reason to constitute at least
a majority of the Company’s Board of Directors; provided,
however, that for purposes of this clause (iii), each director who
is first elected by the board (or first nominated by the board for
election by the stockholders) by a vote of at least two-thirds
(2/3) of the directors who were directors at the beginning of
the two-year period shall be deemed to have also been a director at
the beginning of such period; or
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(iv)
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Sale of
Assets : The Company
sells to a third party all or substantially all of its
assets.
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Notwithstanding anything in this
Agreement to the contrary, in no event shall the conversion of OC
Financial MHC, the Bank and the Company from mutual holding company
form to stock holding company form (including without limitation,
through the formation of a stock holding company) constitute a
“Change in Control” for purposes of this
Agreement.
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(c) Executive shall not have the
right to receive termination benefits pursuant to Section 3
hereof upon termination for Just Cause. The term “Just
Cause” shall mean termination because of Executive’s
personal dishonesty, incompetence, willful misconduct, any breach
of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule,
regulation (other than traffic violations or similar offenses),
final cease and desist order, or any material breach of any
provision of this Agreement. Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for Just
Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of a
majority of the entire membership of the Board of Directors at a
meeting of the Board of Directors called and held for that purpose
(after reasonable notice to Executive and an opportunity for him,
together with counsel, to be heard before the Board of Directors),
finding that in the good faith opinion of the Board of Directors,
Executive was guilty of conduct justifying termination for Just
Cause and specifying the particulars thereof in detail. Executive
shall not have the right to receive compensation or other benefits
for any period after termination for Just Cause. During the period
beginning on the date of the Notice of Termination for Just Cause
pursuant to Section 4 hereof through the Date of Termination,
stock options granted to Executive under any stock option plan
shall not be exercisable nor shall any unvested stock awards
granted to Executive under any stock benefit plan of the Bank, the
Company or any subsidiary or affiliate thereof, vest. At the Date
of Termination, such stock options and any such unvested stock
awards shall become null and void and shall not be exercisable by
or delivered to Executive at any time subsequent to such
termination for Just Cause.
(a) If, within one (1) year of
a Change in Control, Executive voluntarily terminates his
employment with the Bank or the Company or if the Bank or the
Company involuntarily terminates his employment, Executive shall
receive:
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(i)
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a lump sum cash
payment equal to two (2) times the Executive’s
“base amount,” within the meaning of
Section 280G(b)(3) of the Internal Revenue Code of 1986, as
amended (the “Code”). Such payment shall be made not
later than five (5) days following Executive’s
termination of employment under this Section 3.
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(ii)
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Continued
benefit coverage under all Bank health and welfare plans which
Executive participated in as of the date of the Change in Control
(collectively, the “Employee Benefit Plans”) for a
period of twenty-four (24) months following Executive’s
termination of employment. Said coverage shall be provided under
the same terms and conditions in effect on the date of
Executive’s termination of employment. Solely for purposes of
benefits continuation under the Employee Benefit Plans, Executive
shall be deemed to be an active employee.
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(b) Notwithstanding the preceding
provisions of this Section 3, in no event shall the aggregate
payments or benefits to be made or afforded to Executive under said
paragraphs (the “Termination Benefits”) constitute an
“excess parachute payment” under Section 280G of
the Code or any successor thereto, and to avoid such a result,
Termination Benefits will be reduced, if necessary, to an amount
(the “Non-Triggering Amount”), the value of which is
one dollar ($1.00) less than an amount equal to three
(3) times Executive’s “base amount,” as
determined in accordance with said Section 280G. The
allocation of the reduction required hereby among the Termination
Benefits provided by this Section 3 shall be determined by
Executive.
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4.
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Notice of
Termination.
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(a) Any purported termination by the
Bank or by Executive shall be communicated by Notice of Termination
to the other party hereto. For purposes of this Agreement, a
“Notice of Termination” shall mean a written notice
which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in detail the facts and
circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so
indicated.
(b) “Date of
Termination” shall mean the date specified in the Notice of
Termination (which, in the case of a termination for Just Cause,
shall not be less than thirty (30) days from the date such
Notice of Termination is given).
Unless otherwise determined by the
Board of Directors of the Company, all payments and benefits
provided in this Agreement shall be paid or provided sol
