SYNERGY FINANCIAL GROUP, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is effective as of this 1st day of January 2005,
(hereinafter the ("Effective Date") by and between Synergy Financial Group,
Inc., Cranford, New Jersey (hereinafter the "Company") and Xxxx X. Xxxxx
(hereinafter the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by Synergy Bank
(the "Savings Bank") and the Company as the President and Chief Executive
Officer and is experienced in all phases of the business of the Company; and
WHEREAS, the Company desires to be ensured of the Executive's continued
active participation in the business of the Company; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Company and in consideration of the Executive's agreeing to remain in the
employ of the Company, the parties desire to specify the continuing employment
relationship between the Company and the Executive;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Employment. The Company 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 Company 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 Company. The Executive's other duties shall be such as the
Board of Directors for the Company (the "Board of Directors" or "Board") may
from time to time reasonably direct, including normal duties as an officer of
the Company.
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 (hereinafter the "Term"). Additionally, on, or
before, each annual anniversary date from the Effective Date, the Term of such
Agreement shall be extended for an additional year so that the contract is
always for a thirty-six (36) month term, unless the Board of Directors makes an
affirmative decision not to extend the Term and gives written notice to the
Executive of such decision not to extend such Term not later than November 1 of
such year. 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 Company shall compensate and pay the Executive
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during the Term of this Agreement a minimum base salary at the rate of
$345,000.00 per annum (hereinafter the "Base Salary"), payable in cash not less
frequently than bi-weekly; 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. The Base Salary shall
be offset by any Base Salary paid to the Executive by the Savings Bank.
(b) Discretionary Bonus. The Executive shall be entitled to
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participate in an equitable manner with all other senior management employees of
the Company 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 shall be deemed a substitute for the Executive's right to
participate in such discretionary bonuses and as declared by the Board.
(c) Participation in Benefit and Retirement Plans. The Executive
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shall be entitled to participate in and receive the benefits of any plan of the
Company which may be or may become applicable to senior management relating to
pension or other retirement benefit plans, supplementary retirement plan,
profit-sharing, stock options or incentive plans, or other plans, benefits and
privileges given to employees and executives of the Company, to the extent
commensurate with his then duties and responsibilities, as fixed by the Board of
Directors of the Company.
(d) Participation in Medical Plans and Insurance Policies. The
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Executive shall be entitled to participate in and receive the benefits of any
plan or policy of the Company which may be or may become applicable to senior
management relating to life insurance, short and long term disability, medical,
dental, vision, prescription drugs or medical reimbursement plans. During the
term of the Executive's employment with the Company, the Executive's dependent
family may participate in such programs, with the cost of premiums paid by the
Company. Additionally, upon termination with Good Reason, without cause or as a
result of a change in control, Executive and Executive's dependent family shall
continue to be eligible to participate in medical and dental insurance plans
sponsored by the Company for the remaining Term of the Agreement with the total
cost of such premiums paid by the Company.
(e) Vacations and Sick Leave. The Executive shall be entitled to
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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
five weeks per annum. In the event of termination of employment, Executive shall
be paid for unused and accrued vacation at the then-current salary. The
Executive shall also be entitled to an annual sick leave benefit as established
by the Board for senior management employees of the Company.
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(f) Expenses. The Company shall reimburse the Executive or otherwise
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provide for or pay for or pay for all reasonable expenses incurred by the
Executive in furtherance of, or in connection with, the business of the Company,
including, but not by way of limitation, premium country club dues, automobile
and traveling expenses, industry conventions and meetings and all reasonable
entertainment expenses, subject to such reasonable documentation and other
limitations as may be established by the Board of Directors of the Company. In
addition, the Company shall reimburse the Executive for the costs associated
with preparation of his federal and state tax returns.
(g) Automobile. The Company will provide the Executive with an
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automobile for business use. Upon termination of employment of the Executive for
any reason, the Company will transfer title of ownership of such automobile to
the Executive and the Executive will pay any applicable taxes.
(h) Changes in Benefits. The Company shall not make any changes in
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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 Company 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 Company. 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.
(i) Other Arrangements. Notwithstanding anything herein to the
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contrary, the Company and the Executive may enter into additional agreements
related to compensation, retirement, bonus arrangements, insurance arrangements
and the like. No such additional arrangements will reduce or replace any
obligations of the Company set forth herein unless specifically provided for in
writing as set forth in such additional agreements.
4. Loyalty.
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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
Company.
(b) Nothing contained in this Section 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 Company, 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
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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) Death. The death of the Executive during the Term of this
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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) Just Cause. The Board of Directors may terminate the Executive's
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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 this 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, 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) Without Just Cause. Except as provided pursuant to Section 9
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hereof, in the event Executive's employment under this Agreement is terminated
by the Board of Directors without Just Cause, the Company shall be obligated to
continue to pay the Executive the salary provided pursuant to Section 3(a)
herein plus the highest rate of bonus granted to the Executive during the prior
three calendar years, for a period of thirty six (36) months from the date of
termination of employment, and continued participation in all benefit plans,
retirement plans and perquisites during such period or comparable compensation
for such benefits to the extent that continued participation is not permissible,
including, but not limited to the cost of the Executive and Executive's
dependent family 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.
(d) With Good Reason.
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(i) The Executive may, by written notice to the Board of
Directors, terminate this Agreement at any time within sixty
(60) days following an event constituting "Good Reason." In
the event, the Executive terminates this Agreement with Good
Reason, the Company shall be obligated to continue to pay
the Executive the salary provided pursuant to Section 3(a)
of this Agreement for a period of thirty-six months
thereafter, and the cost of the Executive obtaining all
health, life, disability and other benefits which the
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Executive would be eligible to participate in through such
date based upon benefit levels substantially equal to those
being provided the Executive at the date of termination of
employment.
(ii) "Good Reason" shall exist if, without the Executive's
express written consent, the Company materially
breaches any of its obligations under this Agreement.
Without limitation, such a material breach shall be
deemed to occur upon any of the following:
(1) A material reduction in the Executive's
function, duties or responsibilities, which
change would cause the Executive's position
to become one of lesser responsibility,
importance or scope from the position and
attributes described herein;
(2) A liquidation of dissolution of the Company;
(3) Failure to appoint or reappoint the
Executive as Chief Executive Officer or
failure to nominate or re-nominate the
Executive to the Board;
(4) A reduction in salary or a material
reduction in benefits or perquisites
contrary to the terms of this Agreement;
(5) Termination of incentive and benefit plans,
programs or arrangements, or reduction of
the Executive's participation to such an
extent as to materially reduce their
aggregate value below their aggregate value
as of the Effective Date; or
(6) A requirement that the Executive relocate
his principal business office outside of the
area consisting of a thirty (30) mile radius
from its location at the effective date of
this Agreement.
(iii) Notwithstanding the foregoing, a reduction or
elimination of the Executive's benefits under one or
more benefit plans maintained by the Company or its
subsidiaries as a part of a good faith, overall
reduction or elimination of such plan or plans or
benefits thereunder applicable to all participants in
a manner that does not discriminate against the
Executive (except as such discrimination may be
necessary to comply with law) shall not constitute an
event of Good Reason or a material breach of this
Agreement, provided that benefits of the type or to
the elimination are not available to other officers
of the Company or its subsidiaries or any company
that controls either of them under a plan or plans in
or under which the Executive is not entitled to
participate.
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(e) Voluntary Termination. The voluntary termination by the
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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 Exclusion. 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
ss.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, the Company will pay Executive, as disability
pay, a weekly payment equal to one hundred percent (100%) of Executive's weekly
rate of Base Salary, on the effective date of such termination. These disability
payments shall commence on the effective date of Executive's termination and
will end on the earlier of (i) the date Executive returns to the full-time
employment of the Company in the same capacity as he was employed prior to his
termination for Disability and pursuant to an employment agreement between
Executive and the Company; (ii) Executive's full-time employment by another
employer; (iii) Executive's death; or (iv) the expiration of the term of
Executive's disability insurance policy at age 65 as currently provided by the
Company. 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 the Executive. Executive shall be eligible to
receive benefits provided by the Company under the provisions of supplemental
disability insurance coverage in effect for Company employees.
9. Change in Control.
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(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 Savings Bank or
Company, or within 24 months thereafter of such Change in Control, absent Just
Cause, the Executive shall be paid an amount equal three (3) times the average
annual taxable compensation paid by the Savings Bank and the Company to the CEO
during the five calendar year period ending on or before such date of a Change
in Control as reported on IRS Form W-2, Box 1 and IRS Form 1099, less $1.00.
Said sum shall be paid in one (1) lump sum prior to such termination of service,
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. Notwithstanding the forgoing, all sums payable hereunder shall be
reduced in such manner and to such extent that the Savings Bank shall make
payments to the Executive under the Employment Agreement between the Savings
Bank and the Executive upon such termination of employment. 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 Company 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:
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(i) the sale of all, or a material portion, of the assets of the Savings Bank or
the Company; (ii) the merger or recapitalization of the Savings Bank or the
Company whereby the Savings Bank or the Company is not the surviving entity;
(iii) a change in control of the Savings Bank or the Company, 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 Savings Bank or the Company by any person, trust,
entity or group. 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 any prior termination or 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 Savings Bank or the Company,
or within twenty-four (24) months following such Change in Control, and
Executive shall thereupon be entitled to receive the payment described in
Section 9(a) of this Agreement. The provisions of this Section 9(b) shall
survive any prior termination or expiration of this Agreement occurring after a
Change in Control.
10. Source of Payments. All payments provided in this Agreement shall
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be timely paid in cash or check from the general funds of the Company. The
Company unconditionally guarantees payment and provision of all amounts and
benefits due hereunder to Executive.
11. Withholding. All payments required to be made by the Company
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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 Company may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
12. Payment of Costs and Legal Fees. All reasonable costs and legal
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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
Company if Executive is successful pursuant to a legal judgment, arbitration or
settlement.
13. 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 Company which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Company.
(b) The Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation, to all or substantially
all the business or assets of the
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Company, expressly and unconditionally to assume and agree to perform the
Company's obligations under this Agreement, in the same manner and to the same
extent that the Company would be required to perform if no such succession or
assignment had taken place.
(c) Since the Company 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 Company.
14. Indemnification.
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(a) The Company shall provide Executive (including his heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense, and shall indemnify
Executive (and his heirs, executors and administrators) as permitted under
federal law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the Company
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not to be limited to, judgments, court costs, and attorneys' fees
and the cost of reasonable settlements.
(b) Any payments made to Executive pursuant to this Section 15 are
subject to and conditioned upon compliance with 12 C.F.R. Section 545.121 and
any rules or regulations promulgated thereunder.
(c) The provisions of this Section 14 shall survive any prior
termination or expiration of this Agreement.
15. 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 Company 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.
16. 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.
17. Nature of Obligations. Nothing contained herein shall create or
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require the Company 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 Company hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Company.
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18. 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.
19. 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.
20. Non-Exclusivity. This Agreement is not intended to be the exclusive
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agreement covering the employment and compensation of the Executive. Any other
agreements, contracts or understandings covering the compensation and services
between the Executive and the Company or any of its subsidiaries shall remain in
effect and unchanged. All sums payable under this Agreement, shall be reduced in
such manner and to such extent that the Savings Bank shall make payments to the
Executive under the Employment Agreement between the Savings Bank and the
Executive.
21. 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 Company, 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. Furthermore, the settlement of the dispute to be
approved by the Board of the Company may include a provision for the
reimbursement by the Company 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 Company 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 Company evidence, which may be in the form, among other
things, of a canceled check or receipt, of any costs or expenses incurred by
Executive. The provisions of this Section shall survive any prior termination or
expiration of this Agreement.
22. Confidential Information. The Executive acknowledges that during
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his employment he will learn and have access to confidential information
regarding the Company and its customers and businesses (hereinafter
"Confidential Information"). The Executive agrees and covenants not to disclose
or use for his own benefit, or the benefit of any other person or entity, any
such Confidential Information, unless or until the Company 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 Company, 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 Company. The Executive shall not
otherwise knowingly act or conduct himself (a) to the material detriment of the
Company, or its subsidiaries, or affiliates, or (b) in a manner which is
inimical or contrary to the interests of the Company. Executive acknowledges and
agrees that the existence of this Agreement and its terms and conditions
constitutes Confidential Information of the Company, and the Executive agrees
not to disclose the
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Agreement or its contents without the prior written consent of the Company.
Notwithstanding the foregoing, the Company 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 22 may result in the immediate
termination of the Agreement within the sole discretion of the Company,
disciplinary action against the Executive taken by the Company, including, but
not limited to the termination of employment of the Executive for breach of the
Agreement and the provisions of this Section 22, and other remedies that may be
available in law or in equity.
23. Restrictive Covenant. Executive acknowledges that his services are
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special and of unique value to the Company and therefore covenants and agrees
that for a period of one (1) year after termination of this Agreement, or any
extensions, for any reason, whether with or without cause, he will not be
employed by a financial institution or financial institution holding company
whose principal office is located within twenty-five (25) miles of the main
office of the Company. As a specific exception to the arbitration provision
noted above, Executive acknowledges that the Company shall be entitled to seek
injunctive relief in court to enforce the terms and provisions of this
restrictive covenant. Nothing contained in this restrictive covenant shall
prevent the Executive from serving as a consultant for the purpose of
establishing a de novo financial institution provided the Executive is an
independent contractor and not an employee of the financial institution. The
provisions of this Section 23 shall survive any prior termination or expiration
of this Agreement.
24. 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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IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the date written hereinabove.
SYNERGY FINANCIAL GROUP, INC.
ATTEST:
/s/ Xxxx X. XxXxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Xxxx X. XxXxxxx Xxxxxxx X. Xxxxxx, Chairman
WITNESS:
/s/ Xxxxx X. Xxxxxxx /s/ Xxxx X. Xxxxx
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Xxxxx X. Xxxxxxx, Secretary Xxxx X. Xxxxx, Executive
President and Chief Executive Officer
