FIRST SENTINEL BANCORP, INC.
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement"), originally entered into on November 18,
1998, is amended and restated, effective as of November 15, 2000 (the "Effective
Date"), by and between First Sentinel Bancorp, Inc. (the "Holding Company"), a
corporation organized under the laws of Delaware, with its principal
administrative offices at 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000, and Xxxx X. Xxxxxxxx ("Executive"). Any reference to the "Institution" in
this Agreement shall mean First Savings Bank or any successor to First Savings
Bank.
WHEREAS, the Holding Company wishes to continue to assure itself of the
services of Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to continue to serve in the employ of the
Holding Company and its subsidiaries on a full-time basis for the term of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment under this Agreement,
Executive agrees to serve as President and Chief Executive Officer of the
Holding Company. Executive shall render administrative and management services
to the Holding Company such as are customarily performed by persons in a similar
executive capacity. During the term of this Agreement, Executive also agrees to
serve as a director and officer of the Institution, as well as a director of the
Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first written above and shall continue
for a period of thirty-six (36) full calendar months from the Effective Date of
this Agreement, as amended and restated. Commencing on the date of execution of
this Agreement, the term of this Agreement shall be extended for one day each
day, so that a constant thirty-six (36) calendar month term shall remain in
effect, until such time as the Board of Directors of the Holding Company (the
"Board") or Executive elects not to extend the term of the Agreement by giving
written notice to the other party in accordance with Section 8 of this
Agreement, in which case the term of this Agreement shall be fixed and shall end
on the third anniversary of the date of such written notice.
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, vacation, and other reasonable leaves
of absence, Executive shall devote substantially all of his business time,
attention, skill,
and efforts to the faithful performance of his duties under this Agreement,
including activities and services related to the organization, operation and
management of the Holding Company and its direct or indirect subsidiaries
("Subsidiaries") and participation in industry, community and civic
organizations; provided, however, that, with Board notification of said
participation, from time to time, Executive may serve, or continue to serve, on
the boards of directors of, and hold any other offices or positions in,
companies or organizations, which, in the Board's judgment, will not present any
conflict of interest with the Holding Company or its Subsidiaries, or materially
affect the performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything herein contained to the contrary, either
Executive or the Holding Company may terminate Executive's employment with the
Holding Company at any time during the term of this Agreement, subject to the
terms and conditions of this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
consideration paid by the Holding Company in exchange for the duties described
in Section 1 of this Agreement. The Holding Company shall pay Executive, as
compensation, a salary of not less than $315,000 ("Base Salary"). Base Salary
shall include any amounts of compensation deferred by Executive under any
tax-qualified retirement or welfare benefit plan or any other deferred
compensation arrangement maintained by the Holding Company or its Subsidiaries.
Base Salary shall be payable in accordance with the normal payroll practices of
the Holding Company. During the period of this Agreement, Executive's Base
Salary shall be reviewed at least annually; on or about the first of January of
each year. Such review shall be conducted by the Board or by a committee of the
Board delegated such responsibility by the Board. The Board or the committee may
increase Executive's Base Salary at any time. Any increase in Base Salary shall
thereafter become the new "Base Salary" for purposes of this Agreement.
(b) Executive shall be entitled to participate in any employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, as amended and restated, and the
Holding Company and its Subsidiaries will not, without Executive's prior written
consent, make any changes in such plans, arrangements or perquisites (or any
plans, arrangements or perquisites with respect to which Executive begins to
participate at any time during the term of this Agreement, as amended and
restated) which would adversely affect Executive's rights or benefits
thereunder, without separately providing for an arrangement that ensures
Executive receives or will receive the economic value that Executive would
otherwise lose as a result of such adverse affect, unless such change is general
in nature and applies in a nondiscriminatory manner to all employees covered by
the plan, arrangement or perquisite. Without limiting the generality of the
foregoing provisions of this Subsection (b), Executive shall be entitled to
participate in and receive benefits
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under any employee benefit plans including, but not limited to, retirement plans
(such as pension, profit sharing and employee stock ownership plans),
supplemental retirement plans, incentive plans, health and welfare plans and any
other employee benefit plan or arrangement made available by the Holding Company
or its Subsidiaries now or in the future to full-time employees of the Holding
Company or its Subsidiaries and/or senior executives and key management
employees of the Holding Company or its Subsidiaries, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Nothing paid to Executive under any such plans or arrangements
will be deemed to be in lieu of other compensation and benefits to which
Executive is otherwise entitled under this Agreement.
(c) The Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred by Executive in performing his obligations under
this Agreement.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, but prior to the
date Executive attains age 65, the provisions of this Section 4 shall apply. As
used in this Agreement, an "Event of Termination" shall mean and include any one
or more of the following: (i) the termination by the Holding Company of
Executive's full-time employment hereunder for any reason other than termination
governed by Section 5(a) of this Agreement, or Termination for Cause, as defined
in Section 7 of this Agreement, or Retirement or Disability, as defined in
paragraph (f) of this Section 4 or; (ii) Executive's resignation from the
Holding Company's employ, upon, any (A) notice to Executive by the Holding
Company of non-renewal of the term of this Agreement, (B) failure to re-elect or
re-appoint Executive as President and Chief Executive Officer of the Holding
Company or a failure to nominate or re-elect Executive to the Board of Directors
of the Holding Company or of the Institution, unless Executive otherwise
consents (C) material change in Executive's function, duties, or
responsibilities with the Holding Company, which change would cause Executive's
position to become one of lesser responsibility, importance, or scope from the
position and attributes thereof described in Section 1 of this Agreement (and
any such material change shall be deemed as continuing breach of this
Agreement), unless Executive otherwise consents, (D) relocation of Executive's
principal place of employment by more than 25 miles from its location at the
effective date of this Agreement, (E) material reduction in the benefits,
arrangements or perquisites to Executive which is not general in nature and
applicable on a nondiscriminatory basis to all employees covered by such
benefits, arrangements, or perquisites or, pursuant to Section 3(b) of this
Agreement, to which Executive does not consent or for which Executive is not or
will not be provided the economic benefit, (F) liquidation or dissolution of the
Holding Company or the Institution, or (G) breach of this Agreement by the
Holding Company. Upon the occurrence of any event described in clauses (A), (B),
(C), (D), (E), (F) or (G), above, Executive shall have the right to elect to
terminate employment under this Agreement by resignation upon not less than
sixty
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(60) days prior written notice given within six full calendar months after the
event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8 of this Agreement, the Holding Company
shall be obligated to pay Executive, or, in the event of Executive's subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be, the
amount of the remaining payments and benefits that Executive would have earned
if he had continued his employment with the Holding Company during the remaining
unexpired term of this Agreement, based on Executive's Base Salary and the
benefits provided to Executive as of the date of the Event of Termination, as
set forth in Sections 3(a) and (b) of this Agreement, as the case may be, and
the amount still due Executive under any paragraph of Section 3 for service
rendered through the Date of Termination. Except as provided for in paragraphs
(c) and (d) of Section 4, the determination of Executive's benefits as of the
date of the Event of Termination shall be made based on (i) the value of the
allocation attributable to employer contributions for the most recent plan year
under any defined contribution type plan; (ii) the percentage of salary of any
incentive or bonus payment for the most recently-completed fiscal year; and
(iii) the employer-provided cost of any other benefit for the most
recently-completed fiscal year. At the election of Executive, which election is
to be made within thirty (30) days of the Date of Termination, such payments
shall be made in a lump sum (without discount for early payment) or paid monthly
during the remaining term of the Agreement following Executive's termination. In
the event that no election is made, payment to Executive will be made in a lump
sum. Such payments shall not be reduced in the event Executive obtains other
employment following termination of employment. Notwithstanding anything to the
contrary elsewhere in this Agreement, to the extent Executive is entitled to
continued coverage or benefit accrual under any retirement or welfare benefit
plan during the remaining unexpired term of this Agreement, as amended and
restated, the amount payable under this Section 4(b) should be adjusted to the
extent necessary to avoid any duplication of such benefits.
(c) Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Holding Company
or its Subsidiaries on his behalf pursuant to any retirement, incentive, profit
sharing, employee stock ownership, bonus, performance, disability or other
employee benefit plan or arrangement maintained by the Holding Company or its
Subsidiaries to the extent such benefits are not otherwise paid to Executive
under a separate provision of this Agreement. In addition, for purposes of
determining his vested accrued benefit, Executive shall be credited either under
any defined benefit pension plan maintained by the Institution or, if not
permitted under such plan, under a separate arrangement, with the additional
"years of service" that he would have earned for vesting and benefit accrual
purposes for the remaining term of the Agreement had his employment not
terminated.
(d) To the extent that the Holding Company or its Subsidiaries continue
to offer any life, medical, health, disability or dental insurance plan or
arrangement in
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which Executive participates in on the last day of his employment (each being a
"Welfare Plan"), after an Event of Termination (as herein defined), Executive
and his dependents shall continue participating in such Welfare Plans, subject
to the same premium contributions on the part of Executive as were required
immediately prior to the Event of Termination until the earlier of (i) his death
(ii) his employment by another employer other than one of which he is the
majority owner or (iii) the end of the remaining term of this Agreement. If the
Holding Company or its Subsidiaries does not offer the Welfare Plans (or if for
any reason Executive's participation in said plans is prohibited) after the
Event of Termination, then the Holding Company shall provide Executive with a
payment equal to the actuarial value of the provision of such benefit for the
period which runs until the earlier of (i) his death; (ii) his employment by
another employer other than one of which he is the majority owner; or (iii) the
end of the remaining term of this Agreement.
(e) In the event that Executive is receiving monthly payments pursuant
to Section 4(b) of this Agreement, on an annual basis, thereafter, between the
dates of January 1 and January 31 of each year, Executive shall have the right
to elect whether the balance of the amount payable under the Agreement for that
year shall be paid in a lump sum or on a pro rata basis. Such election shall be
irrevocable for the year for which such election is made.
(f) Termination of Executive based on Disability shall mean termination
by written notice from either the Executive, the Holding Company or its
Subsidiaries upon a determination by a physician chosen by the Holding Company,
who is reasonably acceptable to Executive or Executive's personal
representatives, that the Executive is not capable of fulfilling Executive's
responsibilities as an officer of the Holding Company. Upon termination of
Executive upon Disability, Executive shall be entitled to all benefits under any
disability plan of the Holding Company or its Subsidiaries or any other plans to
which Executive is a party or a participant in accordance with the terms of the
plan or arrangement. Executive shall be entitled to all compensation and
benefits provided for in Section 3 of this Agreement through the date of his
termination of employment as specified in the written notice.
5. CHANGE IN CONTROL.
(a) Change in Control of the Holding Company or the Institution shall
mean an event of a nature that: (i) would be required to be reported in response
to Item 1(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx"); or (ii) results in a Change in Control of the Holding Company
or the Institution within the meaning of the Change in Bank Control Act and the
Rules and Regulations promulgated by the Federal Deposit Insurance Corporation
("FDIC") at 12 C.F.R. SS. 303.4(a), with respect to the Institution, and the
Rules and Regulations promulgated by the Office of Thrift Supervision ("OTS")
(or its predecessor agency), with respect to the Holding Company, as in effect
on the date of this Agreement; or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term
5
is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of voting securities of the Institution or the Holding Company
representing 20% or more of the Institution's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Institution purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Holding Company's stockholders was approved by a Nominating Committee
solely composed of members which are Incumbent Board members, shall be, for
purposes of this clause (B), considered as though he were a member of the
Incumbent Board, or (C) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Institution or the Holding Company or
similar transaction occurs or is effectuated in which the Institution or Holding
Company is not the resulting entity, or (D) a proxy statement has been
distributed soliciting proxies from stockholders of the Holding Company, by
someone other than the current management of the Holding Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Holding Company or Institution with one or more corporations as a result of
which the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or property or
securities not issued by the Institution or the Holding Company shall be
distributed, or (E) a tender offer is made for 20% or more of the voting
securities of the Institution or Holding Company then outstanding.
(b) If any of the events described in Section 5(a) of this Agreement
constituting a Change in Control have occurred, or the Board has determined that
a Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c), (d), (e), (f), and (g) of this Section 5 upon his
termination of employment on or after the date the Change in Control occurs due
to (i) Executive's dismissal at any time during the term of this Agreement, (ii)
Executive's resignation for any reason within the sixty (60) day period
following the date that is one-year from the date the Change in Control occurred
or (iii) Executive's resignation during the remaining term of this Agreement
following any demotion, loss of title, office or significant authority or
responsibility, reduction in the annual compensation or benefits or relocation
of Executive's principal place of employment by more than 25 miles from its
location immediately prior to the Change in Control, unless such termination is
because of Executive's Termination for Cause; provided, however, Executive may
consent in writing to any such demotion, loss, reduction or relocation. The
effect of any written consent of the Executive under this Section 5(b) shall be
strictly limited to the terms specified in such written consent. Under no
circumstances can a termination of employment during the term of this Agreement
on or after the date of a Change in Control occurs be considered a termination
on account of retirement or disability for
6
purposes of determining Executive's rights to the payment of benefits provided
in paragraphs (c), (d), (e), (f), and (g) of this Section 5.
(c) Upon Executive's entitlement to payment pursuant to Section 5(b) of
this Agreement, the Holding Company shall pay Executive, or in the event of
Executive's subsequent death, Executive's beneficiary or beneficiaries, or
estate, as the case may be, as severance pay or liquidated damages, or both, a
sum equal to the greater of: (1) the payments and benefits that would have been
due pursuant to Section 3 of this Agreement for the remaining term of the
Agreement; or (2) three (3) times the Executive's average annual compensation
(excluding compensation attributable to the exercise of stock options) for the
three most recently completed taxable years of Executive. Except as provided for
in the preceding sentence, for purposes of this Section 5(c), annual
compensation shall include Base Salary and any other taxable income paid by the
Holding Company or its Subsidiaries, including but not limited to amounts
related to the granting, vesting or exercise of restricted stock, commissions,
bonuses, severance payments, retirement benefits, director or committee fees and
fringe benefits paid or to be paid to Executive or paid for Executive's benefit
during any such year, as well as profit sharing, employee stock ownership plan
and other retirement contributions or benefits, including to any tax-qualified
or non-tax-qualified plan or arrangement (whether or not taxable) made or
accrued on behalf of Executive for such year. At the election of Executive,
which election is to be made prior to or within thirty (30) days of the Date of
Termination on or following a Change in Control, such payment may be made in a
lump sum (without discount for early payment) on or immediately following the
Date of Termination (which may be the date a Change in Control occurs) or paid
in equal monthly installments during the thirty-six (36) months following
Executive's termination. In the event that no election is made, payment to
Executive will be made in a lump sum. Such payments shall not be reduced in the
event Executive obtains other employment following termination of employment.
(d) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, Executive will be entitled to receive benefits due
him under or contributed by the Holding Company or its Subsidiaries on his
behalf pursuant to any retirement, incentive, profit sharing, employee stock
ownership, bonus, performance, disability or other employee benefit plan or
other arrangement maintained by the Institution or the Holding Company on
Executive's behalf to the extent such benefits are not otherwise paid to
Executive under a separate provision of this Agreement. In addition, for
purposes of determining his vested accrued benefit, Executive shall be credited
either under any defined benefit pension plan and related supplemental executive
retirement plan maintained by the Institution or, if not permitted under such
plans, under a separate arrangement, with the additional "years of service" that
he would have earned for vesting and benefit accrual purposes for the remaining
term of the Agreement had his employment not terminated.
(e) Upon the occurrence of a Change in Control and Executive's
termination of employment pursuant to the provisions of Section 5(b) of this
Agreement in connection therewith, the Holding Company will cause to be
continued any welfare Plan
7
benefit (as described in Section 4(d) of this Agreement) substantially identical
to the benefit coverage maintained by the Holding Company or its Subsidiaries
for Executive and any of his dependents covered under such plans prior to the
Change in Control. Such coverage shall cease upon the expiration of thirty-six
(36) full calendar months following the Date of Termination. In the event
Executive's or Executive's dependent's participation in any such plan or program
is barred, the Holding Company shall arrange to provide Executive and his
dependents with benefits coverage substantially similar to those which Executive
and his dependents would otherwise have been entitled to receive under such
plans and programs by operation of this provision or provide their economic
equivalent to executive and his dependents.
(f) The use or provision of any membership, license, automobile use, or
other perquisites shall be continued during the remaining term of the Agreement
on the same financial terms and obligations as were in place immediately prior
to the Change in Control. To the extent that any item referred to in this
paragraph will at the end of the term of this Agreement no longer be available
to Executive, Executive will have the option to purchase all rights then held by
the Holding Company or its Subsidiaries to such item for a price equal to the
then fair market value of the item.
(g) In the event that Executive is receiving monthly payments pursuant
to Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall have the right to elect
whether the balance of the amount payable under the Agreement for that year
shall be paid in a lump sum pursuant to such section. Such election shall be
irrevocable for the year for which such election is made.
6. CHANGE OF CONTROL RELATED PROVISIONS.
(a) Notwithstanding the preceding provisions of Section 5 of this
Agreement, for any taxable year in which Executive shall be liable for the
payment of an excise tax under Section 4999 of the Internal Revenue Code (or any
successor provision thereto), with respect to any payment in the nature of the
compensation made by the Holding Company or its Subsidiaries to (or for the
benefit of) Executive pursuant to this Agreement or otherwise, the Holding
Company (or any successor thereto) shall pay to Executive an amount determined
under the following formula:
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An amount equal to: (E x P) + X
WHERE:
X = E x P
----------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
and
E = the rate at which the excise tax is assessed under Section 4999 of
the Code;
P = the amount with respect to which such excise tax is assessed,
determined without regard to this Section 6;
FI = the highest marginal rate of federal income, employment, and other
taxes (other than taxes imposed under Section 4999 of the Code)
applicable to Executive for the taxable year in question with
respect to such payment (including any effective increase in
Executive's tax rate attributable to the resultant disallowance of
any deduction or the phase-out of any personal exemption or similar
items);
SLI = the sum of the highest marginal rates of income and payroll tax
applicable to Executive under applicable state and local laws for
the taxable year in question (including any effective increase in
Executive's tax rate attributable to the resultant disallowance of
any deduction or the phase-out of any personal exemption or similar
items);
M = highest marginal rate of Medicare tax; and
With respect to any payment in the nature of compensation that is made to
(or for the benefit of) Executive under the terms of this Section 6 or otherwise
and on which an excise tax under Section 4999 of the Code may or will be
assessed, the payment determined under this Section 6 shall be made to Executive
on the earliest of (i) the date the Holding Company is required to withhold such
tax, (ii) the date the tax is required to be paid by Executive, or (iii) at the
time of termination resulting from the Change in Control. It is the intention of
the parties that the Holding Company provide Executive with a full tax gross-up
under the provisions of this Section 6, so that on a net after-tax basis, the
result to Executive shall be the same as if the excise tax under Section 4999
(or any successor provisions) of the Code had not been imposed. The tax gross-up
may be adjusted, as appropriate, if alternative minimum tax rules are applicable
to Executive.
(b) Notwithstanding the foregoing, if it is (i) initially determined by
the Holding Company's tax advisors that no excise tax under Section 4999 of the
Code is due with respect to any payment or benefit described in the first
paragraph of Section 6(a) and thereafter it is determined in a final judicial
determination or administrative settlement that the Section 4999 excise tax is
due with respect to such payments or benefits or
9
subsequently determined in a final judicial determination or a final
administrative settlement to which Executive is a party that the excise tax
under Section 4999 of the Code is due or that the excess parachute payment as
defined in Section 4999 of the Code is more than the amount determined as "P",
above (such revised determination under (i) or (ii) above thereafter being
referred to as the "Determinative Excess Parachute Payment"), then the tax
advisors of the Holding Company (or any successor thereto) shall determine the
amount (the "Adjustment Amount"), the Holding Company (or any successor thereto)
must pay to Executive, in order to put Executive in the same position as
Executive would have been if the amount determined as "P" above had been equal
to the Determinative Excess Parachute Payment. In determining the Adjustment
Amount, the tax advisors shall take into account any and all taxes (including
any penalties and interest) paid or payable by Executive in connection with such
final judicial determination or final administrative settlement. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
(c) The Holding Company (or its successor) shall indemnify and hold
Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorney's fees, reasonable accountant's fees,
interest, fines and penalties of any kind) which Executive incurs as a result of
any administrative or judicial review of Executive's liability under Section
4999 of the Code by the Internal Revenue Service or any comparable state agency
through and including a final judicial determination or final administrative
settlement of any dispute arising out of Executive's liability for the Section
4999 excise tax or otherwise relating to the classification for purposes of
Section 280G of the Code of any payment or benefit in the nature of compensation
made or provided to Executive by the Holding Company or any successor thereto.
Executive shall promptly notify the Holding Company in writing whenever
Executive receives notice of the commencement of any judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Supplemental Agreement
is being reviewed or is in dispute (including a notice of audit or other inquiry
concerning the reporting of Executive's liability under Section 4999). The
Holding Company (or its successor) may assume control at its expense over all
legal and accounting matters pertaining to such federal or state tax treatment
(except to the extent necessary or appropriate for Executive to resolve any such
proceeding with respect to any matter unrelated to amounts paid or payable
pursuant to this Agreement) and Executive shall cooperate fully with the Holding
Company in any such proceeding. Executive shall not enter into any compromise or
settlement or otherwise prejudice any rights the Holding Company (or its
successor) may have in connection therewith without prior consent to the Holding
Company (or its successor). In the event that the Holding Company (or any
successor thereto) elects not to assume control over such matters, the Holding
Company (or any successor thereto) shall promptly reimburse Executive for all
expenses related thereto as and when incurred upon presentation of appropriate
documentation relating thereto.
7. TERMINATION FOR CAUSE.
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The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses), final cease and desist order or material breach of any
provision of this Agreement. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to Executive a Notice of Termination which shall include a copy
of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for Executive, together with counsel, to be heard before the Board and which
such meeting shall be held not more than 30 days from the date of notice during
which period Executive may be suspended with pay), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail.
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause except for compensation and benefits
already vested. Any stock options and related limited rights granted to
Executive under any stock option plan, or any unvested awards granted to
Executive under any restricted stock benefit plan of the Holding Company or its
Subsidiaries, shall become null and void effective upon Executive's receipt of
Notice of Termination for Cause pursuant to Section 8 hereof, and shall not be
exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause except all benefits shall be deemed to have remained in
effect if Executive is reinstated.
8. NOTICE.
(a) Any purported termination by the Holding Company or by Executive
shall be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) Except as otherwise provided for in this Agreement, "Date of
Termination" shall mean the date specified in the Notice of Termination (which,
in the case of a Termination for Cause, shall not be less than thirty (30) days
from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a reasonable dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be
11
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Holding Company will continue to pay Executive's Base Salary and continue to
cover Executive under each Welfare Benefit Plan in which Executive participated
at the time of such notice in effect when the notice giving rise to the dispute
was given until the dispute is finally resolved in accordance with this
Agreement. Amounts paid under this Section 8(c) are in addition to all other
amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company with regard to matters as to which he has personal knowledge and as may
reasonably be required by the Holding Company in connection with any litigation
in which it or any of its Subsidiaries or affiliates is, or may become, a party.
The Holding Company shall reimburse Executive for all out-of-pocket expenses
incurred and at an hourly rate equivalent to the hourly rate (based on an
eight-hour work day) of his Base Salary in effect at the time of his termination
from employment for any time incurred in connection with services rendered
pursuant to this Section 9.
10. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 of this Agreement, Executive agrees not to compete with the Holding
Company or its Subsidiaries for a period of one (1) year following such
termination in the county in which the Holding Company's executive office is
located as of the effective date of such termination, except as agreed to
pursuant to a resolution duly adopted by the Board. Executive agrees that during
such period and within said location, Executive shall not work for or advise,
consult or otherwise serve with, directly or indirectly, any entity whose
business materially competes with the depository, lending or other business
activities of the Holding Company or its Subsidiaries. The parties hereto,
recognizing that irreparable injury will result to the Holding Company or its
Subsidiaries, its business and property in the event of Executive's breach of
this Subsection 10(a) agree that in the event of any such breach by Executive,
the Holding Company or its Subsidiaries, will be entitled, in addition to any
other remedies and damages available, to an injunction to restrain the violation
hereof by Executive, Executive's partners, agents, servants, employees and all
persons acting for or under the direction of Executive. Executive represents and
admits that in the event of the termination of his employment pursuant to
Section 4 hereof, Executive's experience and capabilities are such that
Executive can obtain employment in a business engaged in other lines and/or of a
different nature than the Holding Company or its Subsidiaries, and that the
enforcement of a remedy by way of injunction will not prevent Executive
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from earning a livelihood. Nothing herein will be construed as prohibiting the
Holding Company or its Subsidiaries from pursuing any other remedies available
to the Holding Company or its Subsidiaries for such breach or threatened breach,
including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of Executive's employment, disclose
any knowledge of the past, present, planned or considered business activities of
the Holding Company and its Subsidiaries thereof to any person, firm,
corporation, or other entity for any reason or purpose whatsoever unless
expressly authorized by the Board of Directors or required by law.
Notwithstanding the foregoing, Executive may disclose any knowledge of banking,
financial and/or economic principles, concepts or ideas which are not solely and
exclusively derived from the business plans and activities of the Holding
Company. In the event of a breach or threatened breach by the Executive of the
provisions of this Section 10, the Holding Company will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Holding Company or its Subsidiaries or from rendering any services to any
person, firm, corporation, or other entity to whom such knowledge, in whole or
in part, has been disclosed or is threatened to be disclosed. Nothing herein
will be construed as prohibiting the Holding Company from pursuing any other
remedies available to the Holding Company for such breach or threatened breach,
including the recovery of damages from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in
cash, check or other mutually agreed upon method from the general funds of the
Holding Company subject to Section 11(b) of this Agreement.
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under the Employment Agreement in effect between Executive
and the Institution, such payments and benefits paid by the Institution will be
subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement. Payments pursuant to this Agreement and the
Institution Agreement shall be allocated in proportion to the level of activity
and the time expended on such activities by Executive as determined by the
Holding Company and the Institution on a quarterly basis; provided, however,
that except for the reduction provided by the first sentence of this Section
11(b), the Holding Company will be obligated to pay 100% of the amounts due
Executive hereunder.
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12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Holding Company
or any predecessor of the Holding Company and Executive, except that this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to the Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
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16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware,
unless otherwise specified herein.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Institution, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of Executive's right to
be paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
19. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Holding Company, if Executive is successful pursuant to a
legal judgment, arbitration or settlement.
20. INDEMNIFICATION.
The Holding Company shall provide Executive (including Executive's heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense and shall indemnify
Executive (and Executive's heirs, executors and administrators) to the fullest
extent permitted under Delaware law against all expenses and liabilities
reasonably incurred by Executive in connection with or arising out of any
action, suit or proceeding in which Executive may be involved by reason of
Executive having been a director or officer of the Holding Company or its
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Subsidiaries (whether or not Executive continues to be a director or officer at
the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, First Sentinel Bancorp, Inc. has caused this
Agreement, as amended and restated, to be executed and its seal to be affixed
hereunto by its duly authorized officer and its directors, and Executive has
signed this Agreement, on ____________________________.
ATTEST: FIRST SENTINEL BANCORP, INC.
By:
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Secretary For the Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
By:
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