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EXHIBIT
10.3
RESTATED PAMRAPO BANCORP,
INC.
CHANGE IN CONTROL
AGREEMENT
This AGREEMENT is made
effective as of this 23 rd day
of October, 2007, by and between Pamrapo Bancorp, Inc. (the
“Holding Company”), a corporation organized under the
laws of the State of New Jersey, with its principal office at 611
Avenue C, Bayonne, New Jersey, and Kenneth D. Walter
(“Executive”). The term “Institution”
refers to Pamrapo Savings Bank, SLA, a wholly-owned subsidiary of
the Holding Company or any successor thereto.
WHEREAS, Pamrapo Bancorp, Inc., (the
“Holding Company”) and Kenneth D. Walter
(“Executive”) entered into a Change in Control
Agreement (“Original Agreement”) effective
January 1, 2002;
WHEREAS, Section 8(a) of the
Original Agreement provides that it may be modified by written
instrument signed by both parties; and
WHEREAS, the amendment of the Original
Agreement now is considered desirable by the parties;
NOW, THEREFORE, it is agreed that the
Original Agreement is amended and restated as follows:
The period of this Agreement
shall be deemed to have commenced as of the date first written
above and shall continue for a period of thirty-six (36) full
calendar months thereafter. The term of this Agreement shall be
extended for one day each day until such time as the board of
directors of the Holding Company (the “Board”) or
Executive elects not to extend the term of the Agreement by giving
written notice to the other party, in which case the term of this
Agreement shall be fixed and shall end on the third anniversary of
the date of such written notice.
(a) Upon the occurrence of a
Change in Control of the Holding Company or the Institution (as
herein defined), the provisions of Section 3 shall
apply.
(b) For purposes of this
Agreement, a “Change in Control” of the Holding Company
or the Institution shall mean a “change in the
ownership” of the Holding Company or the Institution, a
“change in effective control” of the Holding Company or
the Institution, or a “change in the ownership of a
substantial portion of the assets” of the Holding Company or
the Institution as these terms are defined in Section 409A of
the Code and the regulations promulgated thereunder.
| 3. |
CHANGE IN CONTROL BENEFITS. |
(a) Upon the occurrence of a
Change in Control, the Holding Company shall pay Executive, or in
the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, a sum equal to
three (3) times Executive’s average annual compensation
for the three (3) most recent taxable years that Executive has
been employed by the Holding Company and/or the Institution or such
lesser number of years in the event that Executive shall have
been
employed by the Holding Company and/or
the Institution for less than three years. Such annual compensation
shall include base salary, commissions, bonuses, any other cash
compensation, contributions or accruals on behalf of Executive to
any pension and/or profit sharing plan, severance payments,
retirement payment, director or committee fees and fringe benefits
paid or to be paid to the Executive in any such year and payment of
any expense item without accountability or business purpose or that
do not meet the Internal Revenue Service requirements for
deductibility by the Holding Company or the Institution. Such
payment shall be made in a lump sum within 60 days following the
Change in Control. Notwithstanding the preceding sentence, payment
pursuant to this paragraph (a) shall not commence earlier than
January 1, 2008.
(b) Notwithstanding the
preceding paragraph of this Section 3, in the event that the
aggregate payments or benefits to be made or afforded to Executive
under said paragraphs (the “Change in Control Termination
Benefits”) would be deemed to include an “excess
parachute payment” under Section 280G of the Code or any
successor thereto, subject to the excise tax (the “Excise
Tax”) imposed under Section 4999 of the Code, the
Holding Company shall pay to the Executive an additional amount
(the “Gross-Up Payment”) such that the net amount
retained by the Executive, after deduction of the Excise Tax on the
Change in Control Payments and any Federal, state and local income
and employment taxes and the Excise Tax upon the Gross-Up payment,
shall be equal to the Change in Control Benefits.
(i) For purposes of
determining whether any of the Change in Control Benefits will be
subject to the Excise Tax and the amount of such Excise Tax,
(A) all of the Change in Control Benefits shall be treated as
“parachute payments” (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax
counsel (“Tax Counsel”) reasonably acceptable to the
Executive and selected by the accounting firm which was,
immediately prior to the Change in Control, the Holding
Company’s independent auditor (the “Auditor”),
such payments or benefits (in whole or in part) should not be
treated by the courts as constituting parachute payments, including
by reason of Section 280G(b)(4)(A) of the Code, (B) all
“excess parachute payments” within the meaning of
Section 280G(b)(l) of the Code shall be treated as subject to
the Excise Tax unless, in the opinion of Tax Counsel, such excess
parachute payments (in whole or in part) should be treated by the
courts as representing reasonable compensation for services
actually rendered (within the meaning of Section 280G(b)(4)(B)
of the Code), or are otherwise not subject to the Excise Tax, and
(C) the value of any noncash benefits or any deferred payment
or benefit shall be determined by the Auditor in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code. All
fees and expenses of the Tax Counsel and the Auditor shall be borne
solely by the Holding Company.
(ii) For purposes of
determining the amount of the Gross-Up Payment, the Executive shall
be deemed to pay Federal income tax at the highest marginal rate of
Federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the
Executive’s residence in the calendar year in which the
Gross-Up Payment is to be made, net of the maximum reduction in
Federal income taxes which could be obtained from deduction of such
state and local taxes, taking into account the reduction in
itemized deduction under Section 68 of the Code.
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(iii) The Gross-Up Payment
shall be made upon the payment to the Executive of the Change in
Control Benefits unless it is initially determined by the Holding
Company or the Tax Counsel that the Change in Control Benefits are
not subject to the Excise Tax but after payment of the Change in
Control Benefits, it is finally that the Change in Control Benefits
are subject to the Excise Tax, in which case it shall be made upon
the imposition upon the Executive of the Excise Tax.
(iv) The Executive shall
notify the Holding Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by
the Holding Company of a Gross-Up Payment. Such notification shall
be given as soon as practicable but no later than ten
(10) business days after the Executive is informed in writing
of such claim and shall apprise the Holding Company of the nature
of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on
which the Executive gives such notice to the Holding Company (or
such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Holding Company notifies
the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive
shall:
a. give the Holding Company
any information reasonably requested by the Holding Company
relating to such claim;
b. take such action in
connection with contesting such claim as the Holding Company shall
reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Holding Company and
reasonably satisfactory to the Executive;
c. cooperate with the Holding
Company in good faith in order to effectively contest such claim;
and
d. permit the Holding Company
to control any proceedings relating to such claim as provided
below; provided, however, that the Holding Company shall bear and
pay directly all costs and expenses (including, but not
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