MANAGEMENT
CONTINUITY AGREEMENT
This
Management Continuity Agreement (“Agreement”) is
entered into this 21 st
day of
February, 2005 between Monarch Community Bancorp, Inc., a Maryland
corporation (the “Company”), and Ralph A. Micalizzi,
Jr. (“Executive”).
WHEREAS , the Executive is currently employed by the
Company’s affiliate, Monarch Community Bank (the
“Bank”), as its Internal Auditor; and
WHEREAS , the Company desires to provide certain security to
Executive in connection with a change in control of the Company or
the Bank;
NOW, THEREFORE , in consideration of the mutual covenants
and promises contained herein, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
Section 1. Definition
of Change in Control; Change in Control Period
1.1 Change in Control. For purpose of this Agreement, a
“Change in Control” of the Company shall be deemed to
have occurred upon:
(A)
any third person, including a “group” as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, shall
become the beneficial owner of shares of the Company with respect
to which 25% or more of the total number of votes for the election
of the Board maybe cast;
(B)
there occurs a change in control of the Bank within the meaning of
the Home Owners Loan Act of 1933 or 12 C.F.R.
Part 574;
(C)
as a result of, or in connection with, any merger or other business
combination, sale of assets or contested election, wherein the
persons who were directors of the Company before such transaction
or event cease to constitute a majority of the Board of Directors
of the Company or any successor to the Company; or
(D)
the Company transfers substantially all of its assets to another
corporation or entity which is not an affiliate of the
Company.
Notwithstanding
the foregoing, a Change of Control will not be deemed to have
occurred:
(A)
solely because more than 25% of the combined voting power of the
then outstanding voting securities of the Company are acquired by
(1) a trustee or other fiduciary holding securities under one
or more employee benefit plans maintained for employees of the Bank
or the Company, or (2) in the event of a merger or similar
transaction involving the Company or the Bank occurs and
immediately following such transaction, persons who were
shareholders of the Company immediately prior to such transaction
remain shareholders of the Company or other party to the
transaction in the same proportion as their previous ownership of
stock; or
(B)
if Executive agrees in writing that the transaction or event in
question does not constitute a Change of Control for the purposes
of this Agreement.
1.2 Change in Control Period. The Change-in-Control Period
shall mean the period commencing on the date of a Change in Control
and ending on the twelve (12) month anniversary of the date
thereof.
Section 2.
Obligations of the Company upon Termination.
2.1 Other than for Cause, Death, Disability or Retirement.
If, during the Change-in-Control Period, Executive’s
employment is terminated by the Company or the Bank other than for
Cause (as hereinafter defined), Death, Disability (as hereinafter
defined), or Retirement (as hereinafter defined) or if Executive
terminates (his/her) employment for Good Reason (as hereinafter
defined), Executive shall receive:
98
(A)
(his/her) annual base salary for a period of twelve
(12) months following the date of termination in an amount not
less than (his/her) base salary in effect immediately prior to the
Change in Control; plus
(B)
Executive and Executive’s family shall continue to be
provided, at the expense of the Company, continuing health care
coverage under health care programs in effect immediately prior to
the Change of Control (or health care programs substantially
similar thereto) for a period of twelve (12) months after the
date of termination, provided that, to the extent Executive paid a
portion of the premium for such benefit while employed, Executive
shall continue to pay such portion during the period of
continuation hereunder and provided further, that if such benefit
is subject to the health care continuation rules of the
Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) then any period of continuation hereunder
shall be credited against the continuation rights under COBRA and
Executive will be required to complete all COBRA election and other
forms.
2.2 Cause; Death; Disability; Retirement . If
Executive’s employment is terminated by reason of Death,
Disability or Retirement during the Change-in-Control Period, this
Agreement shall terminate without further obligation to Executive
or (his/her) legal representatives other than the obligation to pay
to Executive (his/her) annual base salary through the date of
termination and to provide Executive any other benefits which have
accrued prior to the date of termination.
2.3 Cause . If Executive’s employment shall be
terminated for Cause during the Change-in-Control Period, this
Agreement shall terminate without further obligations to
Executive.
3.1 Cause . For purposes of this Agreement, Cause shall mean
termination due to Executive’s personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated
duties or to follow one or more specific written directives of the
Board, reasonable in nature and scope, willful violation of any
law, rule or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order, or material breach of
any provision of this Agreement (which is not cured within thirty
(30) days after its occurrence and notice to Executive). Any
determination of “Cause” as defined by this
Section 4.1 shall be determined by a majority vote of the
Board of Directors of the Company or the Bank.
3.2 Disability. “Disability” shall have the
meaning as such term has under the Company’s Long-Term
Disability Plan.
3.3. Good Reason. For purposes of this Agreement,
“Good Reason” shall mean the occurrence of any of the
following events which have not
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