EX-10.9 13 clifton10kexb10-9.txt 1 EXHIBIT 10.9 CLIFTON SAVINGS BANK, S.L.A. CHANGE IN CONTROL AGREEMENT This AGREEMENT ("Agreement") is hereby entered into as of March 17th, 2004, by and between CLIFTON SAVINGS BANK, S.L.A. (the "Bank"), a New Jersey-chartered financial institution, with its principal offices at 1433 Van Houten Avenue, Clifton, New Jersey 07015, and CHRISTINE R. PIANO ("Executive"). WHEREAS, the Bank recognizes the substantial contributions of Executive and wishes to protect her position with the Bank in the event of a change in control of the Bank or Clifton Savings Bancorp, Inc. (the "Company"), a federally-chartered corporation and the holding company of the Bank, 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. NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, it is hereby agreed as follows: 1. TERM OF AGREEMENT. (a) The term of this Agreement shall be (i) the initial term, consisting of the period commencing on the date of this Agreement (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. (b) Commencing on the first anniversary of the Effective Date and as of each anniversary 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 her desire that the term not be extended. 2. CHANGE IN CONTROL. (a) Upon the occurrence of a Change in Control of the Bank or the Company (as herein defined) 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 her employment at any time during the term of this Agreement following any demotion, loss of title, office or significant authority, material reduction in her annual compensation or benefits, or relocation of her principal place of employment by more than twenty-five (25) miles from its location immediately prior to the 2 Change in Control; provided, however, Executive may consent in writing to any such demotion, loss, reduction or relocation. The effect of any written consent of Executive under this Section 2(a) shall be strictly limited to the terms specified in such written consent. (b) For purposes of this Agreement, a "Change in Control" of the Bank or Company shall mean one of the following events: (i) there occurs a change in control of the Bank, as defined or determined either by the Bank's primary federal regulator or under regulations promulgated by such regulator; (ii) as a result of, or in connection with, a merger or other business combination, sale of assets or contested election, the persons who were directors of the Bank before such transaction or event cease to constitute a majority of the Board of Directors of the Bank or its successor; (iii) the Bank transfers all or substantially all of its assets to another corporation or entity which is not an affiliate of the Bank; (iv) the Bank is merged or consolidated with another corporation or entity and, as a result of such merger or consolidation, less than 60% of the equity interest in the surviving or resulting corporation is owned by the former shareholders or depositors of the Bank; (v) 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; (vi) the Company files, or is required to file, a report on Schedule 13D, or another form or schedule required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, disclosing that the filing person or persons acting in concert has or have become the beneficial owner(s) of 25% or more of a class of the Company's voting securities, except for beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly owns 50% or more of its outstanding voting securities; (vii) 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 thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least two-thirds (?) 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 (viii) the Company sells to a third party all or substantially all of its assets. (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 her a copy of a resolution duly adopted by the affirmative vote of not less than three-fourths (3/4) of the members 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 her, 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 2 3 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 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 related limited rights and any such unvested 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. 3. TERMINATION BENEFITS. (a) Upon the occurrence of a Change in Control, followed at any time during the term of this Agreement by the voluntary (in accordance with Section 2(a) of this Agreement) or involuntary termination of Executive's employment, other than a termination for Just Cause, the Bank shall be obligated to pay Executive, or in the event of her subsequent death, her beneficiary or beneficiaries, or her estate, as the case may be, a sum equal to two (2) times the following items: (i) the average of any taxable income included by the Bank or the Company on Executive's Form W-2 or reflected on a Form 1099 provided by the Bank or the Company to Executive, excluding A) income attributable to Executive's exercise of a non-statutory stock option, B) income related to Executive's disqualifying disposition of an incentive stock option to acquire Company common stock, or C) income related to the distribution of benefits under any tax-qualified or non-tax-qualified retirement or deferred compensation plan or arrangement sponsored by the Company or the Bank, during each of the five (5) most recently completed calendar years preceding the Change in Control. (ii) the sum of the average of the value of the deferrals, allocations, or contributions made by Executive or on behalf of Executive by the Bank, during each of the five (5) most recently completed calendar years preceding the Change in Control, under the Bank's employee stock ownership and 401(k) savings plans. For purposes of this clause (ii), the value of allocations made to Executive under the employee stock ownership plan or the supplemental executive retirement plan shall be valued by reference to the fair market value of Company common stock as of the date of allocation. (b) Upon the occurrence of a Change in Control and Executive's termination of employment in connection therewith, to the extent that the Bank continues to offer any life, medical, health, dental and disability insurance coverage or arrangements in which Executive or her dependents participated immediately prior to the Change in Control (each being a "Welfare Plan"), Executive and her covered dependents shall continue participating in such Welfare Plans, subject to the same premium contributions as were required immediately prior to the Change in Control, until the earlier of (i) the Executive's death; (ii) her employment by another employer other than one of which she is the majority owner; or (iii) the expiration of twenty-four months. If the company or the Bank does not offer the Welfare Plans at any time after the Change in Control, the Company shall provide Executive with a payment equal to the premiums for such benefits for the period which runs until the earlier of (i) her death; (ii) her employment by an employer other than one of which she is the majority owner; or (iii) the expiration of twenty-four months. 3 4 (c) 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 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 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. 4. NOTICE OF TERMINATION. (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). 5. SOURCE OF PAYMENTS. All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company. 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 Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to her without reference to this Agreement. Nothing in this Agreement shall confer upon Executive the right to continue in the employ of the Bank or shall impose on the Bank any obligation to employ or retain Executive in its employ for any period. 4 5 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, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void and of no effect. (b) This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank 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. 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. 10. 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. In addition, references herein to the masculine shall apply to both the masculine and the feminine. 11. GOVERNING LAW. The validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of New Jersey, without regard to principles of conflicts of law of that State. 5 6 12. ARBITRATION. 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 Executive within fifty (50) miles from the location of the Bank, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of her 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 Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, only if Executive is successful pursuant to a legal judgment, arbitration or settlement. 14. INDEMNIFICATION. The Company or the Bank shall provide Executive (including her heirs, executors and administrators) with coverage under a standard directors' and officers' liability insurance policy at its expense and shall indemnify Executive (and her heirs, executors and administrators) to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred in connection with or arising out of any action, suit or proceeding in which she may be involved by reason of having been a director or officer of the Company or the Bank (whether or not she continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs, attorneys' fees and the cost of reasonable settlements. 15. SUCCESSORS TO THE BANK AND THE COMPANY. The Bank and the Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Bank or the Company, expressly and unconditionally to assume and agree to perform the Bank's and the Company's obligations under this Agreement, in the same manner and to the same extent that the Bank and the Company would be required to perform if no such succession or assignment had taken place. 6 7 SIGNATURES IN WITNESS WHEREOF, Clifton Savings Bank and Clifton Savings Bancorp, Inc. have caused this Agreement to be executed and their seals to be affixed hereunto by their duly authorized officers, and Executive has signed this Agreement, on the 17th day of March, 2004. ATTEST: CLIFTON SAVINGS BANK, S.L.A. /s/ Walter Celuch By: /s/ John A. Celentano, Jr. ------------------------------------ ------------------------------------- Corporate Secretary For the Entire Board of Directors ATTEST: CLIFTON SAVINGS BANCORP, INC. /s/ Walter Celuch By: /s/ John A. Celentano, Jr. ------------------------------------ ------------------------------------- Corporate Secretary For the Entire Board of Directors [SEAL] WITNESS: EXECUTIVE /s/ Walter Celuch /s/ Christine R. Piano ------------------------------------ ------------------------------------- Corporate Secretary Christine R. Piano 7