EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into this 16th day of August 2001, ("Effective Date")
by and between Peoples Home Savings Bank (the "Bank") and Xxxxxxx X. Xxxxxxx
(the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by the Bank as the
Chief Financial Officer and is experienced in all phases of the business of the
Bank; and
WHEREAS, the Bank desires to be ensured of the Executive's continued
active participation in the business of the Bank; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Bank and in consideration of the Executive's agreeing to remain in the
employ of the Bank, the parties desire to specify the continuing employment
relationship between the Bank and the Executive;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereby agree as follows:
1. Employment. The Bank hereby employs the Executive in the capacity of
Chief Financial Officer. The Executive hereby accepts said employment and agrees
to render such administrative and management services to the Bank and to any
present or to-be-formed parent holding company ("Parent") as are currently
rendered and as are customarily performed by persons situated in a similar
executive capacity. The Executive shall promote the business of the Bank and
Parent. The Executive's other duties shall be such as the Board of Directors for
the Bank (the "Board of Directors" or "Board") may from time to time reasonably
direct, including normal duties as an officer of the Bank. The Executive's
employment shall be for no definite period of time, and the Executive or the
Bank may terminate such employment relationship at any time for any reason or no
reason. The employment at-will relationship remains in full force and effect
regardless of any statements to the contrary made by company personnel or set
forth in any documents other than those explicitly made to the contrary and
signed by the President of the Bank.
2. Term of Agreement. The term of this Agreement shall be for the
period commencing on the Effective Date and ending thirty-six (36) months
thereafter ("Term"). Additionally, on, or before, each annual anniversary date
from the Effective Date, the Term of this Agreement shall be extended for up to
an additional period beyond the then effective expiration date upon a
determination and resolution of the Board of Directors that the performance of
the Executive has met the requirements and standards of the Board, and that the
Term of such Agreement shall be extended. References herein to the Term of this
Agreement shall refer both to the initial term and successive terms.
3. Compensation, Benefits and Expenses.
(a) Base Salary. The Bank shall compensate and pay the Executive
during the Term of this Agreement a minimum base salary at the rate of
$107,800.00 per annum ("Base Salary"), payable in cash not less frequently than
monthly; provided, that the rate of such salary shall be reviewed by the Board
of Directors not less often than annually, and the Executive shall be entitled
to receive increases at such percentages or in such amounts as determined by the
Board of Directors. The base salary may not be decreased without the Executive's
express written consent.
(b) Discretionary Bonus. The Executive shall be entitled to
participate in an equitable manner with all other senior management employees of
the Bank in discretionary bonuses that may be authorized and declared by the
Board of Directors to its senior management executives from time to time. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Executive's right to participate in such discretionary bonuses when and
as declared by the Board.
(c) Participation in Benefit and Retirement Plans. The Executive
shall be entitled to participate in and receive the benefits of any plan of the
Bank which may be or may become applicable to senior management relating to
pension or other retirement benefit plans, profit-sharing, stock options or
incentive plans, or other plans, benefits and privileges given to employees and
executives of the Bank, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Bank.
(d) Participation in Medical Plans and Insurance Policies. The
Executive shall be entitled to participate in and receive the benefits of any
plan or policy of the Bank which may be or may become applicable to senior
management relating to life insurance, short and long term disability, medical,
dental, eye-care, prescription drugs or medical reimbursement plans.
(e) Vacations and Sick Leave. The Executive shall be entitled to
paid annual vacation leave in accordance with the policies as established from
time to time by the Board of Directors, which shall in no event be less than
three weeks per annum. The Executive shall also be entitled to an annual sick
leave benefit as established by the Board for senior management employees of the
Bank. The Executive shall not be entitled to receive any additional compensation
from the Bank for failure to take a vacation or sick leave, nor shall he be able
to accumulate unused vacation or sick leave from one year to the next, except to
the extent authorized by the Board of Directors.
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(f) Expenses. The Bank shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of, or in connection with the business of the Bank, including, but
not by way of limitation, automobile and traveling expenses, and all reasonable
entertainment expenses, subject to such reasonable documentation and other
limitations as may be established by the Board of Directors of the Bank. If such
expenses are paid in the first instance by the Executive, the Bank shall
reimburse the Executive therefor.
(g) Changes in Benefits. The Bank shall not make any changes in
such plans, benefits or privileges previously described in Section 3(c), (d) and
(e) which would adversely affect the Executive's rights or benefits thereunder,
unless such change occurs pursuant to a program applicable to all executive
officers of the Bank and does not result in a proportionately greater adverse
change in the rights of, or benefits to, the Executive as compared with any
other executive officer of the Bank. Nothing paid to Executive under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of the salary payable to Executive pursuant to Section 3(a)
hereof.
4. Loyalty; Noncompetition.
(a) The Executive shall devote his full time and attention to the
performance of his employment under this Agreement. During the term of the
Executive's employment under this Agreement, the Executive shall not engage in
any business or activity contrary to the business affairs or interests of the
Bank or Parent.
(b) Nothing contained in this Section 4 shall be deemed to
prevent or limit the right of Executive to invest in the capital stock or other
securities of any business dissimilar from that of the Bank or Parent, or,
solely as a passive or minority investor, in any business.
5. Standards. During the term of this Agreement, the Executive shall
perform his duties in accordance with such reasonable standards expected of
executives with comparable positions in comparable organizations and as may be
established from time to time by the Board of Directors.
6. Termination and Termination Pay. The Executive's employment under
this Agreement shall be terminated upon any of the following occurrences:
(a) The death of the Executive during the term of this Agreement,
in which event the Executive's estate shall be entitled to receive the
compensation due the Executive through the last day of the calendar month in
which Executive's death shall have occurred.
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(b) The Bank may terminate the Executive's employment at any time
with or without Just Cause within its sole discretion. This Agreement shall not
be deemed to give Executive any right to be retained in the employment or
service of the Bank, or to interfere with the right of the Bank to terminate the
employment of the Executive at any time, but any termination by the Bank other
than termination for Just Cause, shall not prejudice the Executive's right to
compensation or other benefits under the Agreement. The Executive shall have no
right to receive compensation or other benefits for any period after termination
for Just Cause. The Bank may within its sole discretion, acting in good faith,
terminate the Executive for Just Cause and shall notify such Executive
accordingly. Termination for "Just Cause" shall include termination because of
the Executive's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of the Agreement.
(c) Except as provided pursuant to Section 9 hereof, in the event
Executive's employment under this Agreement is terminated by the Bank without
Just Cause, the Bank shall be obligated to continue to pay the Executive the
salary provided pursuant to Section 3(a) herein, up to the date of termination
of the remaining Term of this Agreement, but in no event for a period of less
than nine months, and the cost of Executive obtaining all health, life,
disability, and other benefits which the Executive would be eligible to
participate in through such date based upon the benefit levels substantially
equal to those being provided Executive at the date of termination of
employment. The provisions of this Section 6(c) shall survive the expiration of
this Agreement.
(d) The voluntary termination by the Executive during the term of
this Agreement with the delivery of no less than 60 days written notice to the
Board of Directors, other than pursuant to Section 9(b), in which case the
Executive shall be entitled to receive only the compensation, vested rights, and
all employee benefits up to the date of such termination.
7. Regulatory Exclusions. Notwithstanding anything herein to the
contrary, any payments made to the Executive pursuant to the Agreement, or
otherwise, shall be subject to and conditioned upon compliance with 12
USCss.1828(k) and any regulations promulgated thereunder.
8. Disability. If the Executive shall become disabled or incapacitated
to the extent that he is unable to perform his duties hereunder, by reason of
medically determinable physical or mental impairment, as determined by a doctor
engaged by the Board of Directors, Executive shall nevertheless continue to
receive the compensation and benefits provided under the terms of this Agreement
as follows: 100% of such compensation and benefits for a period of 6 months, but
not exceeding the remaining term of the Agreement, and 65% thereafter for the
remainder of the term of the Agreement. Such benefits noted herein shall be
reduced by any benefits otherwise provided to the Executive during such period
under the provisions of disability insurance coverage in effect
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for Bank employees. Thereafter, Executive shall be eligible to receive benefits
provided by the Bank under the provisions of disability insurance coverage in
effect for Bank employees. Upon returning to active full-time employment, the
Executive's full compensation as set forth in this Agreement shall be reinstated
as of the date of commencement of such activities. In the event that the
Executive returns to active employment on other than a full-time basis, then his
compensation (as set forth in Section 3(a) of this Agreement) shall be reduced
in proportion to the time spent in said employment, or as shall otherwise be
agreed to by the parties.
9. Change in Control.
(a) Notwithstanding any provision herein to the contrary, in the event
of the involuntary termination of Executive's employment during the term of this
Agreement following any Change in Control of the Bank or Parent, or within 18
months thereafter of such Change in Control, absent Just Cause, Executive shall
be paid an amount equal to the product of 2.999 times the Executive's "base
amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code") and regulations promulgated thereunder. Said sum shall
be paid, at the option of Executive, either in one (1) lump sum as of the date
of such termination of service or in periodic payments over the next 36 months
or the remaining term of this Agreement, whichever is less, as if Executive's
employment had not been terminated, and such payments shall be in lieu of any
other future payments which the Executive would be otherwise entitled to receive
under Section 6 of this Agreement. Additionally, the Executive and his or her
dependents shall remain eligible to participate in the medical and dental
insurance programs offered by the Bank to its employees through the remaining
term of the Agreement. Notwithstanding the forgoing, all sums payable hereunder
shall be reduced in such manner and to such extent so that no such payments made
hereunder when aggregated with all other payments to be made to the Executive by
the Bank or the Parent shall be deemed an "excess parachute payment" in
accordance with Section 280G of the Code and be subject to the excise tax
provided at Section 4999(a) of the Code. The term "Change in Control" shall
refer to: (i) the sale of all, or a material portion, of the assets of the Bank
or the Parent; (ii) the merger or recapitalization of the Bank or the Parent
whereby the Bank or the Parent is not the surviving entity; or (iii) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Bank or the
Parent by any person, trust, entity or group. A Change in Control shall not be
deemed to occur whereby the Bank undertakes a recapitalization whereby its
parent holding company and/or its mutual holding company is merged into the Bank
and the Bank thereafter completes a recapitalization and formation on a new
parent bank holding company. The term "person" means an individual other than
the Executive, or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed
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herein. The provisions of this Section 9(a) shall survive the expiration of this
Agreement occurring after a Change in Control.
(b) Notwithstanding any other provision of this Agreement to the
contrary, Executive may voluntarily terminate his employment during the term of
this Agreement following a Change in Control of the Bank or Parent, or within 18
months following such Change in Control, and upon the occurrence, or within 120
days thereafter, of any of the following events, which have not been consented
to in advance by the Executive in writing: (i) if Executive would be required to
move his personal residence or perform his principal executive functions more
than thirty-five (35) miles from the Executive's primary office as of the
signing of this Agreement; (ii) if in the organizational structure of the Bank,
Executive would be required to report to a person or persons other than the
Board of Directors of the Bank or its President; (iii) if the Bank should fail
to maintain Executive's base compensation in effect as of the date of the Change
in Control and the existing employee benefits plans, including material fringe
benefit, stock option and retirement plans; (iv) if Executive would be assigned
duties and responsibilities other than those normally associated with his
position as referenced at Section 1, herein; (v) if Executive's responsibilities
or authority have in any way been materially diminished or reduced; or (vi) if
Executive would not be reelected to the Board of Directors of the Bank. Upon
such voluntary termination of employment by the Executive in accordance with
this subsection, Executive shall thereupon be entitled to receive the payments
described in Section 9(a) of this Agreement. The provisions of this Section 9(b)
shall survive the expiration of this Agreement occurring after a Change in
Control.
10. Withholding. All payments required to be made by the Bank hereunder
to the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.
11. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Bank or Parent which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Parent.
(b) Since the Bank is contracting for the unique and personal
skills of the Executive, the Executive shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Bank.
12. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing, signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Bank to sign on its
behalf. No waiver by any party hereto at any time of any breach by any
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other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.
14. Nature of Obligations. Nothing contained herein shall create or
require the Bank to create a trust of any kind to fund any benefits which may be
payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Bank hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Bank.
15. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
17. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in accordance with the rules then in effect of the district office
of the American Arbitration Association ("AAA") nearest to the home office of
the Bank, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof, except to the extent that the parties may otherwise
reach a mutual settlement of such issue. The provisions of this Section 17 shall
survive the expiration of this Agreement.
18. Confidential Information. The Executive acknowledges that during
his or her employment he or she will learn and have access to confidential
information regarding the Bank and the Parent and its customers and businesses
("Confidential Information"). The Executive agrees and covenants not to disclose
or use for his or her own benefit, or the benefit of any other person or entity,
any such Confidential Information, unless or until the Bank or the Parent
consents to such disclosure or use or such information becomes common knowledge
in the industry or is otherwise legally in the public domain. The Executive
shall not knowingly disclose or reveal to any unauthorized person any
Confidential Information relating to the Bank, the Parent, or any subsidiaries
or affiliates, or to any of the businesses operated by them, and the Executive
confirms that such information constitutes the exclusive property of the Bank
and the Parent. The Executive shall not otherwise knowingly act or conduct
himself (a) to the material detriment of the Bank or the Parent, or its
subsidiaries, or affiliates, or (b) in a manner which is inimical or contrary to
the interests of the Bank or the Parent. Executive acknowledges and agrees that
the existence of this Agreement and its terms and conditions constitutes
Confidential Information of the Bank, and the
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Executive agrees not to disclose the Agreement or its contents without the prior
written consent of the Bank. Notwithstanding the foregoing, the Bank reserves
the right in its sole discretion to make disclosure of this Agreement as it
deems necessary or appropriate in compliance with its regulatory reporting
requirements. Notwithstanding anything herein to the contrary, failure by the
Executive to comply with the provisions of this Section may result in the
immediate termination of the Agreement within the sole discretion of the Bank,
disciplinary action against the Executive taken by the Bank, including but not
limited to the termination of employment of the Executive for breach of the
Agreement and the provisions of this Section, and other remedies that may be
available in law or in equity.
19. Entire Agreement. This Agreement together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
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