Document:

Freddie Mac Loan Number ______________

Exhibit
10.21

 

Freddie Mac Loan Number
981199747

Freddie Mac Deal Number 110201

 

MULTIFAMILY NOTE-CME

MULTISTATE – FIXED RATE

(REVISION DATE 6-1-2010)

 

 

	
US
$12,869,000
	
Effective Date: as of May 2, 2011

 

 

           
FOR VALUE RECEIVED, the undersigned (together with such party’s or parties’
successors and assigns, “Borrower”) jointly and severally (if more than
one) promises to pay to the order of KEYCORP REAL ESTATE CAPITAL MARKETS,
INC., an Ohio corporation, the principal sum of Twelve Million Eight Hundred
Sixty-Nine Thousand and No/100ths Dollars (US $12,869,000), with interest
on the unpaid principal balance, as hereinafter provided.

 

           
1.         Defined Terms.  

 

           
(a)        As used in this Note: 

                       

“Base
Recourse” means a portion of the Indebtedness equal to zero percent
(0%) of the original principal balance of this Note.

 

“Business
Day” means any day other than a Saturday, a Sunday or any other day on which
Lender or the national banking associations are not open for business. 

 

“Cut-off
Date” means the twelfth (12th) Installment Due Date. 

 

“Default
Rate” means an annual interest rate equal to four (4) percentage points
above the Fixed Interest Rate.  However, at no time will the Default Rate
exceed the Maximum Interest Rate.

 

“Defeasance
Period” is the period beginning the day after the Defeasance Date until but
not including the first day of the Window Period.  The Defeasance Period
only applies if this Note is assigned to a REMIC trust prior to the Cut-off
Date.

 

“Fixed
Interest Rate” means the annual interest rate of five and fifty-nine
hundredths percent (5.59%). 

 

“Installment
Due Date” means, for any monthly installment of interest only or principal
and interest, the date on which such monthly installment is due and payable pursuant to Section 3 of this Note. The “First
Installment Due Date” under this Note is July 1, 2011. 

 

“Lender”
means the holder from time to time of this Note.

 

“Loan”
means the loan evidenced by this Note.

 

“Lockout
Period” means the period beginning on the day that this Note is assigned to
a REMIC trust until and including the Defeasance Date.  The Lockout Period
only applies if this Note is assigned to a REMIC trust prior to the Cut-off
Date.

 

“Maturity
Date” means the earlier of (i) June 1, 2021 (the “Scheduled
Maturity Date”), and (ii) the date on which the unpaid
principal balance of this Note becomes due and payable by acceleration or
otherwise pursuant to the Loan Documents or the exercise by Lender of any right
or remedy under any Loan Document. 

 

“Maximum
Interest Rate” means the rate of interest that results in the maximum amount
of interest allowed by applicable law. 

 

“Prepayment
Premium Period” means the period during which, if a prepayment of principal
occurs, a prepayment premium will be payable by Borrower to Lender.  The
Prepayment Premium Period is the period from and including the date of this Note
until but not including the earlier to occur of the following (i) the day that
this Note is assigned to a REMIC trust if this Note is assigned to a REMIC trust
prior to the Cut-off Date or (ii) the first day of the Window Period.  The
Prepayment Premium Period only applies if this Note is not assigned to a REMIC
trust or if this Note is assigned to a REMIC trust on or after the Cut-off
Date.

 

“Security
Instrument” means the multifamily mortgage, deed to secure debt or deed of
trust effective as of the effective date of this Note, from Borrower to or for
the benefit of Lender and securing this Note.

 

“Window
Period” means the three (3) consecutive calendar month period prior to the
Scheduled Maturity Date.

 

“Yield
Maintenance Period” means the period from and including the date of this
Note until but not including the earlier to occur of the following (i) the first
day that the Note is assigned to a REMIC trust or (ii) December 1, 2020 (the
“Yield Maintenance Expiration Date”).  The Yield Maintenance Period
only applies if this Note is not assigned to a REMIC trust or if this Note is
assigned to a REMIC trust on or after the Cut-off Date.

 

           
(b)        Other capitalized terms used but
not defined in this Note shall have the meanings given to such terms in the
Security Instrument.

 

           
2.         Address for
Payment.  All payments due under this Note shall be payable at KeyBank
Real Estate Capital, P.O. Box 145404, Cincinnati, Ohio 45250, or such other
place as may be designated by Notice to Borrower from or on behalf of
Lender.

 

           
3.         Payments.  

 

           
(a)        Interest will accrue on the
outstanding principal balance of this Note at the Fixed Interest Rate, subject
to the provisions of Section 8 of this Note.  

 

           
(b)        Interest under this Note shall be
computed, payable and allocated on the basis of a 360-day year consisting of
twelve 30-day months. 

 

           
(c)        Unless disbursement of principal
is made by Lender to Borrower on the first day of a calendar month, interest for
the period beginning on the date of disbursement and ending on and including the
last day of such calendar month shall be payable by Borrower simultaneously with
the execution of this Note.  If disbursement of principal is made by Lender
to Borrower on the first day of a calendar month, then no payment will be due
from Borrower at the time of the execution of this Note.  The Installment
Due Date for the first monthly installment payment under Section 3(d) of
interest only or principal and interest, as applicable, will be the First
Installment Due Date set forth in Section 1(a) of this Note.  Except as
provided in this Section 3(c), Section 10 and in Section 11, accrued interest
will be payable in arrears. 

 

           
(d)        Beginning on the First Installment
Due Date, and continuing until and including the monthly installment due on the
Maturity Date, principal and accrued interest shall be payable by Borrower in
consecutive monthly installments due and payable on the first day of each
calendar month.  The amount of the monthly installment of principal and
interest payable pursuant to this Section 3(d) on an Installment Due Date shall
be Seventy-Three Thousand Seven Hundred Ninety-Seven and 10/100ths Dollars
($73,797.10).

                       

           
(e)        All remaining Indebtedness,
including all principal and interest, shall be due and payable by Borrower on
the Maturity Date.  

 

           
(f)         All payments under this Note
shall be made in immediately available U.S. funds.

           

           
(g)        Any regularly scheduled monthly
installment of interest only or principal and interest payable pursuant to this
Section 3 that is received by Lender before the date it is due shall be
deemed to have been received on the due date for the purpose of calculating
interest due.

 

           
(h)        Any accrued interest remaining
past due for 30 days or more, at Lender’s discretion, may be added to and become
part of the unpaid principal balance of this Note and any reference to “accrued
interest” shall refer to accrued interest which has not become part of the
unpaid principal balance.  Any amount added to principal pursuant to the
Loan Documents shall bear interest at the applicable rate or rates specified in
this Note and shall be payable with such interest upon
demand by Lender and absent such demand, as provided in this Note for the
payment of principal and interest.    

 

           
4.         Application of
Payments.  If at any time Lender receives, from Borrower or otherwise,
any amount applicable to the Indebtedness which is less than all amounts due and
payable at such time, Lender may apply the amount received to amounts then due
and payable in any manner and in any order determined by Lender, in Lender’s
discretion.  Borrower agrees that neither Lender’s acceptance of a payment
from Borrower in an amount that is less than all amounts then due and payable
nor Lender’s application of such payment shall constitute or be deemed to
constitute either a waiver of the unpaid amounts or an accord and
satisfaction.

                       

           
5.         Security.  The
Indebtedness is secured by, among other things, the Security Instrument, and
reference is made to the Security Instrument for other rights of Lender as to
collateral for the Indebtedness.

 

           
6.         Acceleration.  If an
Event of Default has occurred and is continuing, the entire unpaid principal
balance, any accrued interest, any prepayment premium payable under Section 10
and Section 11, and all other amounts payable under this Note and any other Loan
Document, shall at once become due and payable, at the option of Lender, without
any prior Notice to Borrower (except if notice is required by applicable law,
then after such notice).  Lender may exercise this option to accelerate
regardless of any prior forbearance.  For
purposes of exercising such option, Lender shall calculate the prepayment
premium as if prepayment occurred on the date of acceleration.  If
prepayment occurs thereafter, Lender shall recalculate the prepayment premium as
of the actual prepayment date.

 

           
7.         Late Charge.

 

           
(a)        If any monthly installment of
interest or principal and interest or other amount payable under this Note or
under the Security Instrument or any other Loan Document is not received in full
by Lender within ten (10) days after the installment or other amount is due,
counting from and including the date such installment or other amount is due
(unless applicable law requires a longer period of time before a late charge may
be imposed, in which event such longer period shall be substituted), Borrower
shall pay to Lender, immediately and without demand by Lender, a late charge
equal to five percent (5%) of such installment or other amount due (unless
applicable law requires a lesser amount be charged, in which event such lesser
amount shall be substituted).  

 

           
(b)        Borrower acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the Loan and that it is extremely difficult and
impractical to determine those additional expenses.  Borrower agrees that
the late charge payable pursuant to this Section represents a fair and
reasonable estimate, taking into account all circumstances existing on the date
of this Note, of the additional expenses Lender will incur by reason of such
late payment.  The late charge is payable in addition to, and not in lieu
of, any interest payable at the Default Rate pursuant to Section 8.

 

           
8.         Default Rate.  

 

           
(a)        So long as (i) any
monthly installment under this Note remains past due for thirty (30) days or
more or (ii) any other Event of Default has occurred and is continuing,
then notwithstanding anything in Section 3 of this Note to the contrary,
interest under this Note shall accrue on the unpaid principal balance from the
Installment Due Date of the first such unpaid monthly installment or the
occurrence of such other Event of Default, as applicable, at the Default
Rate.  

 

           
(b)        From and after the Maturity Date,
the unpaid principal balance shall continue to bear interest at the Default Rate
until and including the date on which the entire principal balance is paid in
full.  

 

           
(c)        Borrower acknowledges that
(i) its failure to make timely payments will cause Lender to incur
additional expenses in servicing and processing the Loan, (ii) during the
time that any monthly installment under this Note is delinquent for thirty (30)
days or more, Lender will incur additional costs and expenses arising from its
loss of the use of the money due and from the adverse impact on Lender’s ability
to meet its other obligations and to take advantage of other investment
opportunities; and (iii)  it is extremely difficult and impractical to
determine those additional costs and expenses.  Borrower also acknowledges
that, during the time that any monthly installment under this Note is delinquent
for thirty (30) days or more or any other Event of Default has occurred and is
continuing, Lender’s risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased
risk.  Borrower agrees that the increase in the rate of interest payable
under this Note to the Default Rate represents a fair and reasonable estimate,
taking into account all circumstances existing on the date of this Note, of the
additional costs and expenses Lender will incur by reason of the Borrower’s
delinquent payment and the additional compensation Lender is entitled to receive
for the increased risks of nonpayment associated with a delinquent loan.

 

           
9.         Limits on Personal
Liability. 

 

           
(a)        Except as otherwise provided in
this Section 9, Borrower shall have no personal liability under this Note,
the Security Instrument or any other Loan Document for the repayment of the
Indebtedness or for the performance of any other obligations of Borrower under
the Loan Documents and Lender’s only recourse for the satisfaction of the
Indebtedness and the performance of such obligations shall be Lender’s exercise
of its rights and remedies with respect to the Mortgaged Property and to any
other collateral held by Lender as security for the Indebtedness.  This
limitation on Borrower’s liability shall not limit or impair Lender’s
enforcement of its rights against any guarantor of the Indebtedness or any
guarantor of any other obligations of Borrower.

 

           
(b)        Borrower shall be personally
liable to Lender for the amount of the Base Recourse, plus any other amounts for
which Borrower has personal liability under this Section 9. 

 

           
(c)        In addition to the Base Recourse,
Borrower shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of the occurrence of any of the following events:

 

(i)        
Borrower fails to pay to Lender upon demand after an Event of Default all Rents
to which Lender is entitled under Section 3(a) of the Security Instrument
and the amount of all security deposits collected by Borrower from tenants then
in residence.  However, Borrower will not be personally liable for any
failure described in this subsection (i) if Borrower is unable to pay to
Lender all Rents and security deposits as required by the Security Instrument
because of a valid order issued in a bankruptcy, receivership, or similar
judicial proceeding.

 

(ii)       
Borrower fails to apply all insurance proceeds and condemnation proceeds as
required by the Security Instrument.  However, Borrower will not be
personally liable for any failure described in this subsection (ii) if
Borrower is unable to apply insurance or condemnation proceeds as required by
the Security Instrument because of a valid order issued in a bankruptcy,
receivership, or similar judicial proceeding.

 

(iii)      
Borrower fails to comply with Section 14(g) or (i) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.  

 

 (iv)     
Borrower fails to pay when due in accordance with the terms of the Security
Instrument the amount of any item below marked “Deferred”; provided
however, that if no item is marked “Deferred”, this Section 9(c)(iv) shall
be of no force or effect. 

           
[Deferred]        Hazard Insurance
premiums or other insurance premiums,

[Deferred]       
Taxes, 

[Deferred]       
water and sewer charges (that could become a lien on the Mortgaged
Property),

[N/A]  
            ground rents,

[Deferred]       
assessments or other charges (that could become a lien on the Mortgaged
Property)

 

(v)       
Borrower engages in any willful act of material waste of the Mortgaged
Property.

 

           
(d)        In addition to the Base Recourse,
Borrower shall be personally liable to Lender for:

 

                       
(i)         the performance of all of
Borrower’s obligations under Section 18 of the Security Instrument
(relating to environmental matters);

 

                       
(ii)        the costs of any audit under
Section 14(g) of the Security Instrument; and 

 

                       
(iii)       any costs and expenses incurred by
Lender in connection with the collection of any amount for which Borrower is
personally liable under this Section 9, including
Attorneys’ Fees and Costs and the costs of conducting any independent audit of
Borrower’s books and records to determine the amount for which Borrower has
personal liability.

 

           
(e)        All payments made by Borrower with
respect to the Indebtedness and all amounts received by Lender from the
enforcement of its rights under the Security Instrument and the other Loan
Documents shall be applied first to the portion of the Indebtedness for which
Borrower has no personal liability.   

 

           
(f)         Notwithstanding the Base
Recourse, Borrower shall become personally liable to Lender for the repayment of
all of the Indebtedness upon the occurrence of any of the following Events of
Default: 

 

                       
(i)         Borrower or any SPE Equity
Owner fails to comply with Section 33 of the Security Instrument;

 

                       
(ii)        a Transfer (including, but not
limited to, a lien or encumbrance) that is an Event of Default under
Section 21 of the Security Instrument, other than a Transfer consisting
solely of the involuntary removal or involuntary withdrawal of a general partner
in a limited partnership or a manager in a limited liability company; 

 

(iii)              
fraud or written material misrepresentation by Borrower or any officer,
director, partner, member or employee of Borrower in connection with the
application for or creation of the Indebtedness or any request for any action or
consent by Lender;

 

(iv)             
Borrower or any SPE Equity Owner
voluntarily files for bankruptcy protection under the United States Bankruptcy
Code; 

 

(v)               
Borrower or any SPE Equity Owner
voluntarily becomes subject to any reorganization, receivership, insolvency
proceeding, or other similar proceeding pursuant to any other federal or state
law affecting debtor and creditor rights; 

 

(vi)             
The Mortgaged Property or any part
thereof becomes an asset in a voluntary bankruptcy or becomes subject to any
reorganization, receivership, insolvency proceeding, or other similar proceeding
pursuant to any other federal or state law affecting debtor and creditor
rights;

 

(vii)            
an order of relief is entered against
Borrower or any SPE Equity Owner pursuant to the United States Bankruptcy Code
or other federal or state law affecting debtor and creditor rights in any
involuntary bankruptcy proceeding initiated or joined in by a “Related
Party;” or

 

(viii)          
an involuntary bankruptcy or other
involuntary insolvency proceeding is commenced against Borrower or any SPE
Equity Owner (by a party other than Lender) but only if Borrower or such SPE
Equity Owner has failed to use commercially reasonable efforts to dismiss such
proceeding or has consented to such proceeding.

 

           
For purposes of this Section, the term “Related Party” means:

 

(A)       Borrower, any
guarantor or any SPE Equity Owner; and

(B)       any Person that
holds, directly or indirectly, any ownership interest in or right to manage
Borrower, any guarantor or any SPE Equity Owner, including without limitation,
any shareholder, member or partner of Borrower, any guarantor or any SPE Equity
Owner; and

(C)       any Person in which
any ownership interest (direct or indirect) or right to manage is held by
Borrower, any guarantor, any SPE Equity Owner or any partner, shareholder or
member of, or any other Person holding an interest in, Borrower, any guarantor
or any SPE Equity Owner; and

(D)       any other creditor
of Borrower that is related by blood, marriage or adoption to Borrower, any
guarantor, any SPE Equity Owner or any partner, shareholder or member of, or any
other Person holding an interest in, Borrower, any guarantor or any SPE Equity
Owner.  

 

           
If Borrower, any guarantor, any SPE Equity Owner or any Related Party has
solicited creditors to initiate or participate in any proceeding referred to in
this Section 9, regardless of whether any of the creditors solicited actually
initiates or participates in the proceeding, then such proceeding shall be
considered as having been initiated by a Related Party.

 

           
(g)        To the extent that Borrower has
personal liability under this Section 9, Lender may exercise its rights
against Borrower personally without regard to whether Lender has exercised any
rights against the Mortgaged Property or any other security, or pursued any
rights against any guarantor, or pursued any other rights available to Lender
under this Note, the Security Instrument, any other Loan Document or applicable
law.  To the fullest extent
permitted by applicable law, in any action to enforce Borrower’s personal
liability under this Section 9, Borrower waives any right to set off the
value of the Mortgaged Property against such personal liability.

 

10.      
Voluntary and Involuntary Prepayments During the Prepayment Premium Period
(Section Applies Prior to Securitization and if Loan is Assigned to REMIC Trust
On or After the Cut-off Date).  

 

(a)               
This Section 10 shall apply (i) prior to the date that this Note is
assigned to a REMIC trust and (ii) if this Note is assigned to a REMIC trust on
or after the Cut-off Date.  This Section 10 shall be of no effect if this
Note is assigned to a REMIC trust prior to the Cut-off Date.

 

(b)        Any receipt by
Lender of principal due under this Note prior to the Maturity Date, other than
principal required to be paid in monthly installments pursuant to
Section 3, constitutes a prepayment of principal under this Note. 
Without limiting the foregoing, any application by Lender, prior to the Maturity
Date, of any proceeds of collateral or other security to the repayment of any
portion of the unpaid principal balance of this Note constitutes a prepayment
under this Note. 

 

(c)       
During the Prepayment Premium Period, the Borrower may
voluntarily prepay all of the unpaid principal balance of this Note on an
Installment Due Date so long as Borrower designates the date for
such prepayment in a Notice from Borrower to Lender given at least 30 days prior
to the date of such prepayment.  Unless Lender has previously notified
Borrower of the expiration of the Prepayment Premium Period, upon receipt of
such Notice from Borrower, Lender will notify Borrower if the Note has been
assigned to a REMIC trust and the Prepayment Premium Period has expired. 
If an Installment Due Date (as
defined in Section 1(a)) falls on a day which is not a Business Day,
then with respect to payments made under this Section 10 only, the
term “Installment Due Date” shall mean the Business Day immediately preceding
the scheduled Installment Due Date.

 

(d)       
Notwithstanding Section 10(c) above, Borrower may voluntarily prepay all of the
unpaid principal balance of this Note on a Business Day other than an
Installment Due Date if Borrower provides Lender with the Notice set forth in
Section 10(c) above and meets the other requirements set forth in this
subsection.  Borrower acknowledges that Lender has agreed that Borrower may
prepay principal on a Business Day other than an Installment Due Date only
because Lender shall deem any prepayment received by Lender on any day other
than an Installment Due Date to have been received on the Installment Due Date
immediately following such prepayment and Borrower shall be responsible for all
interest that would have been due if the prepayment had actually been made on
the Installment Due Date immediately following such prepayment.

 

(e)        Unless
otherwise expressly provided in the Loan Documents, Borrower may not voluntarily
prepay less than all of the unpaid principal balance of this Note.  In
order to voluntarily prepay all of the principal of this Note, Borrower must pay
to Lender, together with the amount of principal being prepaid, (i) all accrued
and unpaid interest due under this Note, plus (ii) all other sums due to Lender
at the time of such prepayment, plus (iii) any prepayment premium calculated
pursuant to Section 10(f). 

 

(f)         Except as
provided in Section 10(g), a prepayment premium shall be due and payable by
Borrower in connection with any prepayment of principal under this Note during
the Prepayment Premium Period.  The prepayment premium shall be computed as
follows:

 

                       
(i)         For any prepayment made
during the Yield Maintenance Period, the prepayment premium shall be whichever
is the greater of subsections (A) and (B) below:

 

                       
(A)       1.0% of the amount of principal being
prepaid; or 

 

                       
(B)       the product obtained by multiplying:

 

                                   
(1)        the amount of principal being
prepaid or accelerated, 

                                               
by

                                   
(2)        the excess (if any) of the Monthly
Note Rate over the Assumed Reinvestment Rate, 

                                               
by

                                   
(3)        the Present Value Factor.

 

                       
For purposes of subsection (B), the following definitions shall apply:

 

                       
Monthly Note Rate: one-twelfth (1/12) of the Fixed Interest Rate, expressed
as a decimal calculated to five digits.

 

                       
Prepayment Date:  in the case of a voluntary prepayment, the date on
which the prepayment is made; in the case of the application by Lender of
collateral or security to a portion of the principal balance, the date of such
application.

 

Assumed
Reinvestment Rate:  one twelfth (1/12) of the yield rate expressed as a
decimal to two digits, as of the close of the trading session which is five
Business Days before the Prepayment Date, found among the Daily Treasury Yield
Curve Rates, commonly known as Constant Maturity Treasury (“CMT”) rates, with a
maturity equal to the remaining Yield Maintenance Period, as reported on the
U.S. Department of the Treasury website. If no published CMT maturity matches
the remaining Yield Maintenance Period, Lender shall interpolate as a decimal to
two digits the yield rate between (a) the CMT with a maturity closest to, but
shorter than, the remaining Yield Maintenance Period, and (b) the CMT with a
maturity closest to, but longer than, the remaining Yield Maintenance Period, as
follows:

 

{[(B-A)/(D-C)]x[E-C]}+A

 

A
= yield rate for the CMT with a maturity shorter than the remaining Yield
Maintenance Period 

B
= yield rate for the CMT with a maturity longer than the remaining Yield
Maintenance Period

C
= number of months to maturity for the CMT maturity shorter than the remaining
Yield Maintenance Period

D
= number of months to maturity for the CMT maturity longer than the remaining
Yield Maintenance Period

E
= number of months remaining in the Yield Maintenance Period

 

 

In
the event the U.S. Department of the Treasury ceases publication of the CMT
rates, the Assumed Reinvestment Rate shall equal the yield rate on the first
U.S. Treasury security which is not callable or indexed to inflation and which
matures after the expiration of the Yield Maintenance Period.

 

                       
Present Value Factor:  the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates during the
months remaining in the Yield Maintenance Period, using the Assumed Reinvestment
Rate as the discount rate, with monthly compounding, expressed numerically as
follows:

 

[1-{1/(1+ARR)}n]/ARR

 

                       
n = the number of months remaining in Yield Maintenance Period; provided,
however, if a prepayment occurs on an Installment Due Date, then the number of
months remaining in the Yield Maintenance Period shall be calculated
beginning with the month in which such prepayment occurs and if such prepayment
occurs on a Business Day other than an Installment Due Date, then the number of
months remaining in the Yield Maintenance Period shall be calculated beginning
with the month immediately following the date of such prepayment. 

                       

                                   
ARR = Assumed Reinvestment Rate

 

(ii)       
For any prepayment made after the expiration of the Yield Maintenance Period but
during the remainder of the Prepayment Premium Period, the prepayment premium
shall be 1.0% of the amount of principal being prepaid.

           

(g)       
Notwithstanding any other provision of this Section 10, no prepayment
premium shall be payable with respect to (i) any prepayment made during the
Window Period, or (ii) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument. 

 

(h)       
Unless Lender agrees otherwise in writing, a permitted or required prepayment of
less than the unpaid principal balance of this Note shall not extend or postpone
the due date of any subsequent monthly installments or change the amount of such
installments. 

 

(i)        
Borrower recognizes that any prepayment of any of the unpaid principal balance
of this Note, whether voluntary or involuntary or resulting from an Event of
Default by Borrower, will result in Lender’s incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender’s
ability to meet its commitments to third parties.  Borrower agrees to pay
to Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages.  Borrower therefore acknowledges and
agrees that the formula for calculating prepayment premiums set forth in this
Note represents a reasonable estimate of the damages Lender will incur because
of a prepayment.  Borrower further acknowledges that the prepayment premium
provisions of this Note are a material part of the consideration for the Loan,
and that the terms of this Note are in other respects more favorable to Borrower
as a result of the Borrower’s voluntary agreement to the prepayment premium
provisions.

 

11.      
Voluntary and Involuntary Prepayments During the Lockout Period and
During the Defeasance Period (Section Applies if Loan is Assigned to REMIC Trust
Prior to the Cut-off Date).  

 

(a)       
This Section 11 shall apply in the event this Note is assigned to a REMIC trust
prior to the Cut-off Date.  This Section 11 shall be of no effect if this
Note is assigned to a REMIC trust on or after the Cut-off Date.

 

           
(b)        Any receipt by Lender of principal
due under this Note prior to the Maturity Date, other than principal required to
be paid in monthly installments pursuant to Section 3, constitutes a
prepayment of principal under this Note.  Without limiting the foregoing,
any application by Lender, prior to the Maturity Date, of any proceeds of
collateral or other security to the repayment of any portion of the unpaid
principal balance of this Note constitutes a prepayment under this Note. 

 

(c)       
Borrower may not voluntarily prepay any portion of the principal balance of this
Note during the Lockout Period or during the Defeasance Period; provided,
however, any prepayment occurring as a result of the application of any
insurance proceeds or condemnation award under the Security Instrument shall be
permitted during the Lockout Period and during the Defeasance Period.  If
any portion of the principal balance of this Note is prepaid during the Lockout
Period or during the Defeasance Period by reason of the application by Lender of
any proceeds of collateral or other security to any portion of the unpaid
principal balance of this Note or following a determination that the prohibition
on voluntary prepayments during the Lockout Period or during the Defeasance
Period is in contravention of applicable law, then Borrower must also pay to
Lender upon demand by Lender, a prepayment premium equal to five percent (5.0%)
of the amount of principal being prepaid.  

 

(d)       
Notwithstanding any other provision of this Section 11, no prepayment
premium shall be payable with respect to (i) any prepayment made during the
Window Period, or (ii) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.

 

(e)       
After the expiration of the Lockout Period and the Defeasance Period, Borrower
may voluntarily prepay all of the unpaid principal balance of this Note on an
Installment Due Date so long as Borrower designates the date for such prepayment
in a Notice from Borrower to Lender given at least 30 days prior to the date of
such prepayment.  If an Installment Due Date (as
defined in Section 1(a)) falls on a day which is not a Business Day,
then with respect to payments made under this Section 11 only, the
term “Installment Due Date” shall mean the Business Day immediately preceding
the scheduled Installment Due Date.

 

           
(f)         Notwithstanding Section
11(e) above, following the end of the Lockout Period and the Defeasance Period,
Borrower may voluntarily prepay all of the unpaid principal balance of this Note
on a Business Day other than an Installment Due Date if Borrower provides Lender
with the Notice set forth in Section 11(e) and meets the other requirements set
forth in this subsection.  Borrower acknowledges that Lender has agreed
that Borrower may prepay principal on a Business Day other than an Installment
Due Date only because Lender shall deem any prepayment received by Lender on any
day other than an Installment Due Date to have been received on the Installment
Due Date immediately following such prepayment and Borrower shall be responsible
for all interest that would have been due if the prepayment had actually been
made on the Installment Due Date immediately following such prepayment. 

 

           
(g)        Unless otherwise expressly
provided in the Loan Documents, Borrower may not voluntarily prepay less than
all of the unpaid principal balance of this Note.  In order to voluntarily
prepay all of the principal of this Note, Borrower must also pay to Lender,
together with the amount of principal being prepaid, (i) all accrued
and unpaid interest due under this Note, plus (ii) all other sums due to
Lender at the time of such prepayment.

 

(h)       
Unless Lender agrees otherwise in writing, a permitted or required prepayment of
less than the unpaid principal balance of this Note shall not extend or postpone
the due date of any subsequent monthly installments or change the amount of such
installments. 

 

(i)        
Borrower recognizes that any prepayment of any of the unpaid principal balance
of this Note, whether voluntary or involuntary or resulting from an Event of
Default by Borrower, will result in Lender’s incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender’s
ability to meet its commitments to third parties.  Borrower agrees to pay
to Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages.  Borrower therefore acknowledges and agrees that the formula
for calculating prepayment premiums set forth in Section 11(c) of this Note
represents a reasonable estimate of the damages Lender will incur because of a
prepayment.  Borrower further acknowledges that the lockout and prepayment
premium provisions of this Note are a material part of the consideration for the
Loan, and that the terms of this Note are in other respects more favorable to
Borrower as a result of the Borrower’s voluntary agreement to the prepayment
premium provisions.

 

(j)                
If, after the
expiration of the Lockout Period, the Borrower defeases the Loan as described in
Section 44 of the Security Instrument during the Defeasance Period, Borrower
shall not have the right to voluntarily prepay any of the principal of this Note
at any time.  

 

12.      
DEFEASANCE (Section Applies if Loan is Assigned to REMIC Trust Prior
to the Cut-off Date).  

(a)       
This Section 12 shall apply in the event this Note is assigned to a REMIC trust
prior to the Cut-off Date.  This Section 12 shall be of no effect if this
Note is assigned to a REMIC trust on or after the Cut-off Date.

 

(b)       
Section 5 of this Note is amended by adding a new paragraph at
the end thereof as follows:

If
Borrower obtains a release of the Mortgaged Property from the lien of the
Security Instrument pursuant to Section 44 of the Security Instrument, the
Indebtedness shall be secured by the Pledge Agreement and reference shall be
made to the Pledge Agreement for other rights of Lender as to collateral for the
Indebtedness.

 

           
(c)        Section 9 of this Note is amended
by adding a new paragraph at the end thereof as follows:

 

If
Borrower obtains a release of the Mortgaged Property from the lien of the
Security Instrument pursuant to Section 44 of the Security Instrument, Borrower
shall have no personal liability under this Note or the Pledge Agreement for the
repayment of the Indebtedness or for the performance of any other obligations of
Borrower under this Note or the Pledge Agreement (other than any liability under
Section 18 of the Security Instrument for events that occur prior to the
Defeasance Closing Date, whether discovered before or after the Defeasance
Closing Date), and Lender’s only recourse for the satisfaction of the
Indebtedness and the performance of such obligations shall be Lender’s exercise
of its rights and remedies with respect to the collateral held by Lender under
the Pledge Agreement as security for the
Indebtedness.             

 

           
(d)        Section 21(a) of this Note is
amended by adding a new paragraph at the end thereof as follows:

 

If
Borrower obtains a release of the Mortgaged Property from the lien of the
Security Instrument pursuant to Section 44 of the Security Instrument, all
Notices, demands and other communications required or permitted to be given
pursuant to this Note shall be given in accordance with the Pledge
Agreement.  

 

           
13.       Costs and Expenses.  To the
fullest extent allowed by applicable law, Borrower shall pay all expenses and
costs, including Attorneys’ Fees and Costs incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.  Borrower acknowledges and agrees that, in connection with each
request by Borrower under this Note or any Loan Document, Borrower shall pay all
reasonable Attorneys’ Fees and Costs and expenses incurred by Lender, including
any fees charged by the Rating Agencies, regardless of whether the matter is
approved, denied or withdrawn.

 

           
14.       Forbearance.  Any forbearance
by Lender in exercising any right or remedy under this Note, the Security
Instrument, or any other Loan Document or otherwise afforded by applicable law,
shall not be a waiver of or preclude the exercise of that or any other right or
remedy.  The acceptance by Lender of any payment
after the due date of such payment, or in an amount which is less than the
required payment, shall not be a waiver of Lender’s right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment.  Enforcement by Lender of
any security for Borrower’s obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender. 

 

           
15.       Waivers.  Borrower and all
endorsers and guarantors of this Note and all other third party obligors waive
presentment, demand, notice of dishonor, protest, notice of acceleration, notice
of intent to demand or accelerate payment or maturity, presentment for payment,
notice of nonpayment, grace, and diligence in collecting the Indebtedness.

 

           
16.       Loan Charges.  Neither this
Note nor any of the other Loan Documents shall be construed to create a contract
for the use, forbearance or detention of money requiring payment of interest at
a rate greater than the Maximum Interest Rate.  If any applicable law
limiting the amount of interest or other charges permitted to be collected from
Borrower in connection with the Loan is interpreted so that any interest or
other charge provided for in any Loan Document, whether considered separately or
together with other charges provided for in any other Loan Document, violates
that law, and Borrower is entitled to the benefit of that law, that interest or
charge is hereby reduced to the extent necessary to eliminate that
violation.  The amounts, if any, previously paid to Lender in excess of the
permitted amounts shall be applied by Lender to reduce the unpaid principal
balance of this Note. For the purpose of determining whether any applicable law
limiting the amount of interest or other charges permitted to be collected from
Borrower has been violated, all Indebtedness that constitutes interest, as well
as all other charges made in connection with the Indebtedness that constitute
interest, shall be deemed to be allocated and spread ratably over the stated
term of this Note.  Unless otherwise required by applicable law, such
allocation and spreading shall be effected in such a manner that the rate of
interest so computed is uniform throughout the stated term of this Note. 

 

           
17.       Commercial Purpose.  Borrower
represents that Borrower is incurring the Indebtedness solely for the purpose of
carrying on a business or commercial enterprise, and not for personal, family,
household, or agricultural purposes.

 

           
18.       Counting of Days.  Except where
otherwise specifically provided, any reference in this Note to a period of
“days” means calendar days, not Business Days.

 

           
19.       Governing Law.  This Note shall
be governed by the law of the Property Jurisdiction.

 

           
20.       Captions.  The captions of the
Sections of this Note are for convenience only and shall be disregarded in
construing this Note.

 

           
21.       Notices; Written Modifications.
 

 

           
(a)        All Notices, demands and other
communications required or permitted to be given pursuant to this Note shall be
given in accordance with Section 31 of the Security Instrument.  

 

           
(b)        Any modification or amendment to
this Note shall be ineffective unless in writing signed by the party sought to
be charged with such modification or amendment; provided, however, in the event
of a Transfer under the terms of the Security Instrument that requires Lender’s
consent, any or some or all of the Modifications to Multifamily Note set forth
in Exhibit A to this Note may be modified or rendered void by Lender at
Lender’s option, by Notice to Borrower and the transferee, as a condition of
Lender’s consent.

 

           
22.       Consent to Jurisdiction and
Venue.  Borrower agrees that any controversy arising under or in
relation to this Note may be litigated in the Property Jurisdiction.  The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have jurisdiction over all controversies that shall arise
under or in relation to this Note.  Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.  However, nothing in this Note is intended
to limit any right that Lender may have to bring any suit, action or proceeding
relating to matters arising under this Note in any court of any other
jurisdiction.

 

23.      
WAIVER OF TRIAL BY JURY.  BORROWER AND LENDER EACH (A) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH
ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY
AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. 

 

           
24.       State-Specific Provisions. N/A

 

           
ATTACHED EXHIBIT.  The Exhibit noted below, if marked with an “X” in the
space provided, is attached to this Note:  

 

           
[X]         Exhibit A
      Modifications to Multifamily Note 

 

 

           
IN WITNESS WHEREOF, and in consideration of the Lender’s agreement to lend
Borrower the principal amount set forth above, Borrower has signed and delivered
this Note under seal or has caused this Note to be signed and delivered under
seal by its duly authorized representative.

 

CPF
CREEKSIDE, LLC,

a
Delaware limited liability company

 

By:      
CENTURY PROPERTIES FUND XVII, LP,

           
a Delaware limited partnership

           
its sole member

 

           
 By:      FOX PARTNERS,

                       
a California general partnership,

                       
its general partner

 

                       
By:       FOX CAPITAL MANAGEMENT CORPORATION,

                                   
a California corporation,

                                   
its managing general partner

 

 

 

                                   
 By:      /s/Patti K. Fielding

                                               
Name:  Patti K. Fielding

                                               
Title:     Executive Vice President

                                                           
and Treasurerform10q_033111exh10-32.htm

EXHIBIT 10.32

 

CHANGE OF CONTROL

EMPLOYMENT AGREEMENT

 

AGREEMENT by and between State Bancorp, Inc., a New York corporation (the “Company”) and __________ (the “Executive”), dated as of __________  ____, 20__.

 

The Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company to enter into this Agreement.

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.           Certain Definitions.  (a)  The “Effective Date” shall mean the first date during the Change of Control Period (as defined in Section 1(b)) on which a Change of Control (as defined in Section 2) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior to the date of such termination of employment.

 

(b)             The “Change of Control Period” shall mean the period commencing on the date hereof and ending on the [_______] anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the “Renewal Date”), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate [_______] years from such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Change of Control Period shall not be so extended.

 

2.           Change of Control.  For the purpose of this Agreement, a “Change of Control” shall mean:

 

(a)           The acquisition by any individual, entity or group (within the meaning of Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or

 

  

  

  

(b)             Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(c)             Consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficial owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

 

(d)             Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

  

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3.           Employment Period.  The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the [_______] anniversary of such date (the “Employment Period”).

 

4.           Terms of Employment.  (a)  Position and Duties. (i) During the Employment Period, (A) the Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned to the Executive at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 10 miles from such location.

 

(ii)             During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the Company.

 

(b)             Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a monthly rate. The Annual Base Salary will be at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company and its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

 

(ii)             Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the “Annual Bonus”) in cash at least equal to the Executive’s highest bonus for the last three full fiscal years prior to the Effective Date (annualized in the event that the Executive was not employed by the Company for the whole of any such fiscal year and received a pro-rated bonus as a consequence) (the “Recent Annual Bonus”). Each such Annual Bonus shall be paid no later than two and one-half months after the end of the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus pursuant to a written deferred compensation plan of the Company or an affiliated company.

 

  

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(iii)             Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

 

(iv)             Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.

 

(v)             Expenses.  During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

 

(vi)             Fringe Benefits.  During the Employment Period, the Executive shall be entitled to fringe benefits, including, without limitation, tax and financial planning services, payment of club dues, and, if applicable, use of an automobile and payment of related expenses, in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

 

  

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(vii)             Office and Support Staff.  During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

 

(viii)             Vacation.  During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies.

 

(ix)             Equity Compensation Awards.  On the Effective Date, all awards of stock options and stock appreciation rights granted to the Executive prior to the date of this Agreement shall become fully vested and immediately exercisable, all restrictions on shares of restricted stock awarded to the Executive prior to the date of this Agreement shall immediately lapse and all performance based equity compensation awards made to the Executive prior to the date of this Agreement shall be deemed fully earned as if all performance goals had been fully attained and the performance period ended prior to the date of this Agreement on the Effective Date.  The treatment of awards of stock options, stock appreciation rights, restricted stock, performance based equity awards or similar equity awards made on or after the date of this Agreement shall be determined under the terms of the instruments evidencing such awards.

 

5.           Termination of Employment.  (a)  Death or Disability.  The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.

 

  

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(b)             Cause.  The Company may terminate the Executive’s employment during the Employment Period for Cause. For purposes of this Agreement, “Cause” shall mean:

 

(i)             fraud, misappropriation or intentional material damage to the property or business of the Company, or

 

(ii)            commission of a felony whose determination is final and non-appealable, or entry of a plea of guilty or no contest to the commission of a felony, or

 

(iii)           material violation of any material law, rule or regulation applicable to the Company or its business.

 

For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “intentional” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Company or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) or (iii) above, and specifying the particulars thereof in detail.

 

(c)           Good Reason.  The Executive’s employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

 

(i)           without the express written consent of the Executive, the assignment to the Executive of any duties inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

 

(ii)           any failure by the Company to comply with any of the provisions of Section 4(b) of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

 

(iii)           without the express written consent of the Executive, the Company’s requiring the Executive to be based at any office or location other than as provided in Section 4(a)(i)(B) hereof or the Company’s requiring the Executive to travel on Company business to a substantially greater extent than required during the one-year period prior to the Effective Date;

 

  

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(iv)           any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

 

(v)           any failure by the Company to comply with and satisfy Section 11(c) of this Agreement.

 

For purposes of this Section 5(c), any good faith determination of “Good Reason” made by the Executive shall be conclusive. Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for any reason during the 30-day period immediately following the first anniversary of the Effective Date shall be deemed to be a termination for Good Reason for all purposes of this Agreement.

 

(d)             Notice of Termination.  Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets 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 and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

(e)             Date of Termination.  “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (ii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the date on which the Company notifies the Executive of such termination and (iii) if the Executive’s employment is terminated by reason of death or Disability, the date of death of the Executive or the Disability Effective Date, as the case may be.

 

6.           Obligations of the Company upon Termination.  (a)  Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause, Death or Disability or the Executive shall terminate employment for Good Reason:

 

(i)           the Company shall pay to the Executive the following amounts:

 

A.           in a lump sum in cash 30 days after the Date of Termination, the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the Executive’s Annual Bonus for the most recently completed fiscal year, to the extent not theretofore paid or deferred by the Executive, and (3) the product of (x) the Annual Bonus in effect at such date and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365, and (4) any accrued vacation pay, to the extent not theretofore paid; and

 

  

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B.           at the time and in the manner provided in, or in accordance with, the applicable written deferral arrangement, any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon), to the extent not theretofore paid (such deferred compensation, together with the amounts referred to in subclauses (1), (2) (3) and (4) of clause (A) above, the “Accrued Obligations”);

 

C.           the amount equal to the product of (1) [________] and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Annual Bonus and (z) the aggregate employer contributions made for the Executive’s account for the most recently completed fiscal year under all qualified and non-qualified defined contribution plans.

 

(ii)             for  ____ years after the Executive’s Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue group health, medical, dental, vision, prescription drug and life insurance benefits to the Executive and/or the Executive’s family (collectively, the “Other Benefits”) at least equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if the Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families, provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other benefits under another employer-provided plan, the medical and other benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility, and for purposes of determining eligibility (but not the time of commencement of benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until ____ years after the Date of Termination and to have retired on the last day of such period;

 

(iii)             without limiting the generality of clause (ii) above, the Executive’s participation in the Company’s hospital/medical/surgical insurance plan shall be continued on the same basis as prior to the Date of Termination, or equivalent benefits shall be provided by the Company, at no direct cost to the Executive for a period of [________] years from the Date of Termination; and

 

(iv)             the Company shall, at its sole expense as incurred, provide the Executive with outplacement services the scope and provider of which shall be selected by the Executive in the Executive’s sole discretion, but shall in no event cost the Company more than $10,000 in any calendar year or continue for more than [_______] years.

 

(b)             Death.  If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits.

 

  

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(c)             Disability.  If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash 30 days after the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable of those generally provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect generally with respect to other peer executives and their families at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter generally with respect to other peer executives of the Company and its affiliated companies and their families.

 

(d)             Cause; Other than for Good Reason.  If the Executive’s employment shall be terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (x) the Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously deferred by the Executive, to the extent vested, and (z) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination.

 

(e)             Payment Schedule.  Notwithstanding anything to the contrary in this Agreement, to the extent required to comply with Section 409A(a)(2)(B) of the Code, (i) if the Executive’s termination of employment does not constitute a “separation from service” within the meaning of Section 409A of the Code, any taxable payment or benefit which becomes due under this Agreement as a result of such termination of employment shall be deferred to the earliest date on which the Executive has a separation from service within the meaning of Section 409A of the Code; and (ii) if the Executive is deemed to be a ‘specified employee’ for purposes of Section 409A(a)(2)(B) of the Code at his separation from service, payments due to him that would otherwise have been payable at any time during the six month period immediately following separation from service (within the meaning of Section 409A of the Code) shall not be paid prior to, and shall instead be payable in a lump sum upon, the expiration of such six-month period. Any amounts deferred under this Section 4(e) shall bear interest at an annual rate equal to the long-term rate from the date originally scheduled to be paid through and including the date of actual payment, compounded monthly.

 

(f)             Payment Cap.  Notwithstanding anything to the contrary in this Agreement, if any payment under this Section 6, either alone or together with other payments and benefits which the Executive has the right to receive from the Company and its affiliated companies, would constitute a “parachute payment” under Section 280G of the Code, payments shall be reduced by the amount, if any, which is the minimum necessary to result in no portion of such payments being non-deductible to the Company or its affiliated companies pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The allocation of the reduction required hereby among such payments shall be determined by the Executive.

 

  

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7.           Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor, subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.

 

8.           Full Settlement; Legal Fees.  The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and except as specifically provided in Section 6(a)(ii), such amounts shall not be reduced whether or not the Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability or entitlement under, any provision of this Agreement or any guarantee of performance thereof (whether such contest is between the Company and the Executive or between either of them and any third party, and including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.

 

9.           Determinations Required under Section 280G of the Code. All calculations required to be made in order to determine whether payments constitute an “excess parachute payment” within the meaning of Section 280G of the Code , including the assumptions to be utilized in arriving at such determination, shall be made by Crowe Chizek and Company LLC or such other registered public accounting firm as may be designated by acting as the Company’s independent auditors (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of demand from the Executive, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executive.

 

  

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10.           Restrictive Covenants.  (a) The Company conducts a consumer and business banking business (the “Company’s Business”). The Executive acknowledges that the Company is entering into this Agreement with him for the purpose of preserving and cultivating the Company’s Business in preparation for a possible Change of Control of the Company. Therefore, the Executive agrees to the following covenants:

 

(i)           Definition of Company’s Geographic Market.  For all purposes of this Section 10, the Company’s Geographic Market shall be any town, county, village or other municipal unit by which the Company or any applicable Company maintains an office, but that contiguous town, county, village or municipal unit.

 

(ii)             Confidential Information.  Unless he obtains the prior written consent of the Company, the Executive shall keep confidential and shall refrain from using for the benefit of himself, or any person or entity other than the Company and its parents and subsidiaries (the Company and such parents and subsidiaries collectively, the “Company’s Affiliated Group”), any material document or information obtained from a member of the Company’s Affiliated Group in the course of his employment with any of them concerning their current or planned future properties, operations or business, including but not limited to information concerning the Company’s customers (the “Confidential Information”) unless and until such document or information is readily ascertainable from public or published information or trade sources or has otherwise been made available to the public through no fault of his own; provided, however, that nothing in this Section 10(a)(ii) shall prevent the Executive, with or without the Company’s consent, from participating in or disclosing documents or information in connection with any judicial or administrative investigation, inquiry or proceeding to the extent that such participation or disclosure is compelled under applicable law; in such event, the Executive shall, to the extent practicable under the circumstances, notify the Company in advance of and afford the Company an opportunity, at its own expense, to take action to prevent or limit the scope of such participation or disclosure.

 

(iii)             Proprietary Information.  The Executive acknowledges that, during the course of his employment, he will, alone or jointly with others, develop or have access to information (whether in written, oral, electronic or other form) concerning the Company’s Affiliated Group’s business plans, marketing plans, methods and surveys, product and service design, development and pricing plans and methods, customer lists, prospect lists, customer relationship information and need assessments, profitability assessments, technology, service marks, trademarks and other intellectual property, trade secrets, know-how and other proprietary information concerning the Company’s Affiliated Group (the “Proprietary Information”). The Executive acknowledges that all such Proprietary Information is, as between the Executive and the Company’s Affiliated Group, the sole property of the Company’s Affiliated Group and that the Executive has no right, title or interest therein. During his employment with the Company and at all times thereafter, the Executive shall refrain from using any Proprietary Information for the benefit of any person or entity other than the Company’s Affiliated Group. At any time upon the Company’s request, and in any event upon his termination of employment with the Company, the Executive shall promptly return to the Company all Proprietary Information in his possession in any form or media and all laptop computers, cell phones and other property of the Company’s Affiliated Group in his possession and shall, if requested to do so by the Company, certify in writing that any Proprietary Information not so returned has been destroyed.

 

  

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(iv)             Non-derogation.  While employed by the Company and at all times thereafter, the Executive shall refrain from making any statement (whether or not in writing) concerning the Company’s Affiliated Group or its business, operations, customers, directors, officers, employees or owners that he intends, or that a reasonable person acting in like circumstances would expect, to impair in any respect the Company’s Affiliated Group’s business, operations or reputation.

 

(v)             Solicitation.  The Executive, for a period of one (1) year following his termination of employment with the Company, shall not, without the written consent of the Company, either directly or indirectly:

 

(A)             solicit, offer employment to, or take any other action intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Company’s Affiliated Group to terminate his or her employment and accept employment or become affiliated with, or provide services with or without compensation in any capacity whatsoever to, any person or entity engaged in a business or line of business or providing a product or service in direct or indirect competition with the Company’s Business in the Company’s Geographic Market;

 

(B)             provide any information, advice or recommendation with respect to any such officer or employee to any person or entity that is intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing, encouraging or enabling any officer or employee of the Company’s Affiliated Group to terminate his employment and accept employment or become affiliated with, or provide services with or without compensation in any capacity whatsoever to, any person or entity engaged in a business or line of business or providing a product or service in direct or indirect competition with the Company’s Business in the Company’s Geographic Market; or

 

(C)             directly or indirectly solicit, or facilitate in any manner any other person’s or entity’s solicitation of, business in competition with the Company’s Business in the Company’s Geographic Market from (I) any of the Company’s customers with whom the Executive served as a relationship manager, or whom the Executive was assigned to solicit on behalf of the Company, at any time during the period of one (1) year ending on the date of his termination of employment; (II) any other person or entity which the Executive knows to be one of the Company’s customers, or (III) any other person or entity which the Executive knows is being actively solicited by the Company on, or had been identified for active solicitation by the Company at any time during the period of one (1) year ending on the date of his termination of employment with the Company.

 

  

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(b)             Reasonableness of Covenants.  The Executive acknowledges that: (i) the Company has a legitimate business interest in preserving its investment in its Confidential Information and Proprietary Information, and the Company’s customers; (ii) the restrictions set forth in this Section 10 constitute reasonable restrictions to protect the Company’s legitimate business interests; (iii) such restrictions are reasonable in duration, geographic scope and scope of business protected; (iv) observing such restrictions will not unreasonably impair the Employee’s ability to seek or secure employment following his termination of employment with the Company; and (v) his employment by the Company constitute adequate consideration for his adherence to such restrictions. The Executive hereby waives his right, in any action or proceeding relating to the enforcement or enforceability of the provisions of this Section 10, to make any argument or assertion to the contrary.

 

(c)             Nonexclusive Monetary Damages.  If the Executive violates any of the covenants set forth in Section 10(a), then in addition to any other remedies that may be available to the Company at law or equity: (i) the Executive shall forfeit his right to receive any future compensation and benefits under this Agreement, other than earned but unpaid compensation under vested benefits under benefit plans; (ii) the Executive shall repay to the Company on demand the amount of any payments (other than earned compensation and vested benefits under benefit plans) theretofore paid, together with interest thereon from the date of payment by the Company to the date of repayment by the Executive at the rate of six percent (6%) per annum, compounded annually; and (iii) the Executive shall forfeit and pay over to the Company any monetary payments made, and the fair market value of any benefits in kind (including but not limited to benefits under any indemnification agreements or arrangements) provided, by any person or entity for the purpose of inducing the Executive to violate, or rendering the Executive financially indifferent to the consequences of violating, any of such covenants. The Executive hereby acknowledges that the foregoing constitute reasonable but non-exclusive damages and waives his right, in any action or proceeding relating to the enforcement or enforceability of the provisions of this Section 10, to make any argument or assertion to the contrary.

 

(d)           Specific Performance.  The Executive acknowledges that money damages will not be an adequate remedy for his failure to observe or perform any of the covenants set forth in Section 10(a). Therefore, the Company shall have the right to apply to any court of competent jurisdiction for equitable relief, including but not limited to a temporary restraining order or injunction ordering specific performance. The Executive hereby waives his right, in any action or proceeding relating to any application for equitable relief, to make any argument or assertion to the contrary.

 

  

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(e)           Notification to Subsequent Employers and Potential Employers.  Prior to accepting employment with any person or entity other than a member of the Company’s Affiliated Group, the Executive shall disclose to such person or entity the existence of this Agreement and furnish such person or entity with a copy hereof. The Company reserves the right, and the Executive hereby authorizes the Company (i) to notify any person or entity making a pre-hire or post-hire inquiry of the Company concerning the Executive of the existence of this Agreement and to furnish to such person or entity a copy hereof and (ii) to notify any person or entity engaged in a business or line of business or providing products or services in direct or indirect competition with the Company’s Business in the Company’s Geographic Market by whom the Executive is subsequently employed, or with whom the Executive is subsequently affiliated as an owner, investor, financier, director, officer, employee, independent contractor, vendor or service provider, whether for or without compensation, of the existence of this Agreement and to furnish to such person or entity a copy hereof.

 

(f)           Reformation or Modification.  In the event that this Section 10 or any portion hereof shall be found by an arbitrator or court of competent jurisdiction to be unenforceable as written, such court or arbitrator shall, and is hereby authorized to, modify this Section 10 or any portion hereof in such manner as he or it determines to be necessary to render this section 10 enforceable to the maximum possible extent and to enforce this Section 10 as so modified.

 

11.           Successors.  (a)  This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

 

(b)           This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

(c)           The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

12.           Miscellaneous.  (a)  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

 

(b)           All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

  

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If to the Executive:

	  
	  	  
	  	  
	  	  
	
If to the Company:

	
State Bancorp, Inc.

	  	
Two Jericho Plaza, Wing C

	  	
Jericho, New York 11753

	  	
Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

 

(c)             The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

 

(d)             The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

(e)             The Executive’s or the Company’s failure to insist upon strict compliance with any provision hereof or any other provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

 

(f)             The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is “at will” and, prior to the Effective Date, the Executive’s employment may be terminated by either the Executive or the Company at any time, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

 

	
  

	
13.

	
Compliance with the Emergency Economic Stabilization Act of 2008.

 

For as long as the Company has any debt or equity outstanding to the United States Treasury ("UST") pursuant to the Capital Purchase Program (the "CPP") (disregarding any warrants to purchase common stock of the Company) implemented under the Emergency Economic Stabilization Act of 2008 ("EESA"), as amended by the American Recovery and Reinvestment Act of 2009 (“ARRA”), the following provisions shall take precedence over any contrary provisions of this Agreement or any other compensation or benefit plan, program, agreement or arrangement in which the Executive participates:

 

  

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(a)           The Executive shall repay to the Company any bonus, retention award or incentive compensation paid or accrued to the Executive while (i) the Executive is a senior executive officer (within the meaning of the Interim Final Rule interpreting the provisions of section 111 of EESA as amended by ARRA (the “Interim Final Rule”)) ("Senior Executive Officer") or one of the next twenty most highly compensated employees (“most highly compensated employee”) and (ii) the UST holds any debt or equity interest in the Company acquired under the CPP (disregarding any warrants to purchase common stock of the Company) (such period, the "CPP Compliance Period"), if and to the extent that such bonus, retention award or incentive compensation was paid on the basis of materially inaccurate financial statements (including, but not limited to, statements of earnings, revenues or gains) or any other materially inaccurate performance metric criteria (each, a "Performance Criterion," and in the aggregate, “Performance Criteria”).  A Performance Criterion shall be proven to be materially inaccurate if so determined by a court of competent jurisdiction or in the written opinion of the Accounting Firm or, if the Accounting Firm is unable to provide the determination, an independent attorney or firm of certified public accountants selected by the Company and approved by the Executive (which approval shall not be unreasonably withheld or delayed), which determination shall both state the accurate Performance Criterion and that the difference between the accurate Performance Criterion and the Performance Criterion on which the payment was based is material (a "Determination").  Upon receipt of a Determination, the Company may supply to the Executive a copy of the Determination, a computation of the bonus, retention award or other incentive compensation that would have been payable on the basis of the accurate Performance Criterion set forth in the Determination (the "Determination Amount") and a written demand for repayment of the amount (if any) by which the bonus, retention award or incentive compensation actually paid exceeded the Determination Amount.

 

(b)           During the CPP Compliance Period and while the Executive is a Senior Executive Officer or any of the next five most highly compensated employees, the Company shall not pay the Executive (i) any payment for the departure of the Executive from the Company or any affiliate for any reason or (ii) any payment due to a change in control of the Company, (including in either (i) or (ii), any amounts actually payable after the CPP Compliance Period on account of a departure or a change in control that occurred during the CPP Compliance Period and while the Executive is a Senior Executive Officer) ((i) and (ii), each a “golden parachute payment”), except for payments for services performed or benefits accrued.

 

(c)           The Executive hereby waives any right to or in respect of any right to any bonus or incentive payment accrued or payable (i) during the CPP Compliance Period and (ii) while he is among the five most highly compensated employees of the Company (within the meaning of the Interim Final Rule) except as may be permitted under the Interim Final Rule; provided that this waiver shall not apply to rights under valid employment contracts in effect on February 11, 2009.

 

  

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This section 13 shall apply during the CPP Compliance Period whether or not a Change of Control has occurred or any other provision of this Agreement has taken effect.  This section 13 shall be operated, administered and construed to comply with section 111(b) of EESA, as amended by ARRA, and as implemented by guidance or regulation thereunder that has been issued and is then in effect (such date, the “Relevant Date”, and such implementation, the “Relevant Implementation”).  If after such Relevant Date the clawback requirement of section 13(a) shall not be required by the Relevant Implementation of section 111(b) of EESA, as amended by ARRA, such requirement shall have no further effect.  If after such Relevant Date the limitation on golden parachute payments under section 13(b) shall not be required by the Relevant Implementation of section 111(b) of EESA, as amended by ARRA, such limitation shall have no further effect.

 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written.

 

______________________________

Name

STATE BANCORP, INC.

 

By:  __________________________

        Thomas M. O’Brien

        President and Chief Executive Officer

 

 

  

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