EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into this 17th day of October 2005
("Effective Date"), by and between Xxxxxxxxxx Bancorp, Inc. (the "Parent") and
Xxxx X. Xxxxxxxx (the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by the Parent as
the President and Chief Executive Officer and is experienced in all phases of
the business of the Parent; and
WHEREAS, the Parent desires to be ensured of the Executive's continued
active participation in the business of the Parent, and that in the event of a
potential future change in control transaction involving the Parent, the
Executive will remain available to facilitate such transaction for the benefit
of the Parent and its stockholders; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Parent and in consideration of the Executive's agreeing to remain in the
employ of the Parent, the parties wish to specify the continuing employment
relationship between the Parent and the Executive;
NOW THEREFORE, in consideration of the covenants and the mutual
agreements herein contained, the parties, intending to be legally bound, do
hereby agree as follows:
1. Employment. The Parent hereby employs the Executive in the capacity
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of President and Chief Executive Officer. The Executive hereby accepts said
employment and agrees to render such administrative and management services to
the Parent and People Savings Bank ("Bank") 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 Parent and the Bank. The Executive's
other duties shall be such as the Board of Director for the Parent ("Board of
Directors" or "Board") may from time to time reasonably direct, including normal
duties as an officer of the Parent.
2. Term of Employment. The term of employment of Executive under this
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Agreement shall be for the period commencing on the Effective Date and ending
thirty-six (36) months thereafter ("Term"). Additionally, as of the first day of
the calendar quarter (i.e., January 1, April 1, July 1 or September 1) after the
Effective Date and each subsequent calendar quarter thereafter, the Term of
employment under this Agreement shall be extended for an additional period
beyond the then effective expiration date so that the remaining term of the
Agreement shall be thirty-six (36) months thereafter unless or until the Parent
shall deliver written notice ("Notice") to the Executive that such Agreement
shall not be extended beyond the then effective expiration date. Such Notice
shall include a statement as to the reason for such Board action to not extend
such Term. References herein to the Term of this Agreement shall refer both to
the initial term and successive terms.
3. Compensation, Benefits and Expenses.
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(a) Base Salary. The Parent shall compensate and pay the
Executive during the Term of this Agreement a minimum base salary at the rate of
$187,000 per annum, reduced by the amount of any base salary to be paid by the
Bank to the Executive ("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 Parent 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 Parent or Bank which may be or may become applicable to senior
management of the Parent or the Bank 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 Parent or the
Bank, to the extent commensurate with his then duties and responsibilities, as
fixed by the Board of Directors of the Parent.
(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 Parent which may be or may become applicable to senior
management of the Parent or the Bank relating to life insurance, short and long
term disability, medical, dental, eye-care, prescription drugs or medical
reimbursement plans. Additionally, Executive's dependent family shall be
eligible to participate in medical and dental insurance plans sponsored by the
Savings Bank or Parent with the cost of such premiums paid by the Parent.
(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 [four] 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 Parent. The Executive shall not be entitled to receive any additional
compensation from the Parent 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.
(f) Expenses. The Parent shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
Executive in furtherance of, or in
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connection with the business of the Parent, 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 Parent. If such expenses are
paid in the first instance by the Executive, the Parent shall reimburse the
Executive therefor.
(g) Changes in Benefits. The Parent 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 Parent 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 Parent. 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.
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(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
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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
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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.
(b) The Board of Directors may terminate the Executive's
employment at any time, but any termination by the Board of Directors 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 Board 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,
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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 Board of
Directors without Just Cause, the Parent 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 one year, 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 or
termination 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
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contrary, any payments made to the Executive pursuant to the Agreement, or
otherwise, shall be subject to and conditioned upon compliance with 12 USC
1828(k) and any regulations promulgated thereunder.
8. Disability. If the Executive shall become disabled or incapacitated
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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 12 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 for Parent
employees. Thereafter, Executive shall be eligible to receive benefits provided
by the Parent under the provisions of disability insurance coverage in effect
for Parent 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.
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9. Change in Control.
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(a) Notwithstanding any provision herein to the contrary, in the event
of any Change in Control of the Bank or the Parent, the Executive shall be paid
by the Parent an amount equal to 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") based upon the aggregate of compensation paid by the Parent and the
Bank to the Executive. Such sum shall be reduced by all sums paid by the Bank,
if any, pursuant to Section 9 of the Employment Agreement dated October 17,
2005, between the Executive and the Bank in connection with such Change in
Control of the Parent or the Bank, but the payments hereunder shall not
otherwise affect, or be affected by, any amounts that the Executive is entitled
to receive under any other provision of this Agreement, or any other agreement
between the Executive and the Parent or the Executive and the Bank. Such sum
shall be paid in one (1) lump sum as soon as practicable on or before the
occurrence of such Change in Control, without regard to whether or not the
Executive's employment is terminated at such time. Notwithstanding the
foregoing, 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.
Additionally, the Executive and his dependent family shall be entitled to
continue to participate in all medical, dental, eye-care, prescription drugs or
medical reimbursement or other similar plans applicable to employees of the Bank
or the Parent, or successors thereto, for a period of not less than thirty-six
(36) months following the date of termination of employment following a Change
in Control of the Parent or the Bank. 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; (iii) a Change in Control of
the Bank or the Parent, as otherwise defined or determined by the Office of
Thrift Supervision or regulations promulgated by it; or (iv) 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
other person, trust, entity or group other than by the Parent. 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
herein. The provisions of this Section 9(a) shall survive the expiration of this
Agreement occurring after a Change in Control.
(b) Notwithstanding anything herein to the contrary, the Parent and the
Executive agree that for a period of thirty-six (36) months following the
termination of employment of the Executive in connection with or following a
Change in Control that is approved by the Board of Directors, the Executive
shall provide consulting services to the Parent on a transitional basis. The
Executive's compensation for such services shall be at the sum of the Base
Salary in effect between the Executive and the Parent and the Executive and the
Bank
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immediately prior to such Change in Control. 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 Parent
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hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Parent may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
11. Successors and Assigns.
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(a) This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the 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 Parent 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 Parent.
12. Amendment; Waiver. No provisions of this Agreement may be modified,
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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 Parent to sign on its
behalf. No waiver by any party hereto at any time of any breach by any 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
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performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of New
Jersey.
14. Nature of Obligations. Nothing contained herein shall create or
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require the Parent 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 Parent hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Parent.
15. Headings. The section headings contained in this Agreement are for
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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
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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.
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17. Arbitration. Any controversy or claim arising out of or relating to
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this Agreement, or the breach thereof, shall be settled 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 Parent, 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. Further, the settlement of the dispute to be approved
by the Board of the Parent may include a provision for the reimbursement by the
Parent to the Executive for all reasonable costs and expenses, including
reasonable attorneys' fees, arising from such dispute, proceedings or actions,
or the Board of the Parent may authorize such reimbursement of such reasonable
costs and expenses by separate action upon a written action and determination of
the Board following settlement of the dispute. Such reimbursement shall be paid
within ten (10) days of Executive furnishing to the Parent evidence, which may
be in the form, among other things, of a canceled check or receipt, of any costs
or expenses incurred by Executive.
18. Confidential Information. The Executive acknowledges that during
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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 or Parent, and the Executive agrees not to
disclose the Agreement or its contents without the prior written consent of the
Bank or Parent. 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 or Parent, 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
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
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