Exhibit 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into as of ________, 2002 by and between BRIDGE STREET FINANCIAL, INC., a
national corporation having an office at 00 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx
00000 (the "Company") and XXXXXXX X. XXXXX, an individual residing at X.X. Xxx
0000, Xxxxxx, Xxx Xxxx 00000 (the "Executive").
INTRODUCTORY STATEMENT
OSWEGO COUNTY NATIONAL BANK, a national bank having an office at
00 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 (the "Bank") has reorganized from
a New York savings bank to a national bank and has become a wholly-owned
subsidiary of the Company (the "Reorganization"). In connection with the
Reorganization, certain shares of the Company's common stock were sold in a
public stock offering. The Executive has served the Bank in an executive
capacity for many years and is familiar with the Bank's operations.
The Board of Directors of the Company has concluded that it is in
the best interests of the Company and their prospective shareholders to secure a
continuity in management following the Reorganization. They also consider it
desirable to establish a working environment for the Executive which minimizes
the personal distractions that might result from possible business combinations
in which the Company might be involved. For these reasons, the Board of
Directors of the Company has decided to offer to enter into a contract with the
Executive for his future services. The Executive has accepted this offer.
The terms and conditions which the Company and the Executive have
agreed to are as follows.
AGREEMENT
Section 1. Employment.
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The Company hereby continues to employ the Executive, and the
Executive hereby accepts such continued employment, during the period and upon
the terms and conditions set forth in this Agreement.
Section 2. Employment Period; Remaining Unexpired Employment
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Period.
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(a) The Company shall employ the Executive during an initial
period of three (3) years beginning on the effective date of the Reorganization
(the "Employment Commencement Date") and ending on the day before the third
(3rd) anniversary of the Employment Commencement Date, and during the period of
any additional extensions described in section 2(b) (the "Employment Period").
(b) For purposes of determining the rights and obligations of
the Executive and the Company with respect to each other, on the day after the
Employment Commencement Date and oneach day thereafter, the Employment Period
shall be extended by one day, such that on any date the Employment Period will
expire on the day before the third (3rd) anniversary of such date. These
extensions shall continue in perpetuity until discontinued by: (i) notice to the
Executive given by the Company that they have elected to discontinue the
extensions; (ii) notice by the Executive to the Company that he has elected to
discontinue the extensions; or (iii) termination of the Executive's employment
with the Company, whether by resignation, discharge or otherwise. On the date on
which such a notice is deemed given, or on the effective date of a termination
of the Executive's employment with the Company, the Employment Period shall be
converted to a fixed period of three (3) years ending on the day before the
third (3rd) anniversary of such date.
(c) Except as otherwise expressly provided in this Agreement,
any reference in this Agreement to the term "Remaining Unexpired Employment
Period" as of any date shall mean the period beginning on such date and ending
on the day before the third (3rd) anniversary of the Employment Commencement
Date or, if later, on the day before the third (3rd) anniversary of the last
Anniversary Date as of which the Employment Period was extended pursuant to
section 2(b).
(d) Nothing in this Agreement shall be deemed to prohibit the
Company from terminating the Executive's employment before the end of the
Employment Period with or without notice for any reason. This Agreement shall
determine the relative rights and obligations of the Company and the Executive
in the event of any such termination. In addition, nothing in this Agreement
shall require the termination of the Executive's employment at the expiration of
the Employment Period. Any continuation of the Executive's employment beyond the
expiration of the Employment Period shall be on an "at-will" basis unless the
Company and the Executive agree otherwise.
Section 3. Duties.
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The Executive shall serve as Chief Executive Officer and President
of the Company, having such power, authority and responsibility and performing
such duties as are prescribed by or under the Company's By-Laws and as are
customarily associated with such positions. The Executive shall devote his full
business time and attention (other than during weekends, holidays, approved
vacation periods, and periods of illness or approved leaves of absence) to the
business and affairs of the Company and shall use his best efforts to advance
their respective best interests.
Section 4. Cash Compensation.
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In consideration for the services to be rendered by the Executive
hereunder, the Company shall pay to him a salary at an initial annual rate of
____________ DOLLARS ($_______), payable in approximately equal installments in
accordance with their respective customary payroll practices for senior
officers. The Company's Board of Directors shall review the Executive's annual
rate of salary at such times during the Employment Period as it deems
appropriate, but not less frequently than once every twelve (12) months, and
may, at its discretion, approve a salary increase.
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In addition to salary, the Executive may receive other cash compensation from
the Company forservices hereunder at such times, in such amounts and on such
terms and conditions as the Board of Directors of the Company may determine.
Section 5. Employee Benefit Plans and Programs.
-----------------------------------
During the Employment Period, the Executive shall be treated as an
employee of the Company and shall be entitled to participate in and receive
benefits under any and all qualified or non-qualified retirement, pension,
savings, profit-sharing or stock bonus plans, any and all group life, health
(including hospitalization, medical and major medical), dental, accident and
long-term disability insurance plans, and any other employee benefit and
compensation plans (including, but not limited to, any incentive compensation
plans or programs, stock option and appreciation rights plans and restricted
stock plans) as may from time to time be maintained by, or cover employees of,
the Company, in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and consistent
with the Company's customary practices.
Section 6. Indemnification and Insurance.
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(a) During the Employment Period and for a period of six years
thereafter, the Company shall cause the Executive to be covered by and named as
an insured under any policy or contract of insurance obtained by them to insure
their directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Company or the Bank or
service in other capacities at their request. The coverage provided to the
Executive pursuant to this section 6 shall be of the same scope and on the same
terms and conditions as the coverage (if any) provided to other officers or
directors of the Company.
(b) To the maximum extent permitted under applicable law,
during the Employment Period and for a period of six years thereafter, the
Company shall indemnify the Executive against and hold him harmless from any
costs, liabilities, losses and exposures to the fullest extent and on the most
favorable terms and conditions that similar indemnification is offered to any
director or officer of the Company or any subsidiary or affiliate thereof.
Section 7. Outside Activities.
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The Executive may serve as a member of the boards of directors
of such business, community and charitable organizations as he may disclose to
and as may be approved by the Board of Directors of the Company (which approval
shall not be unreasonably withheld); provided, however, that such service shall
not materially interfere with the performance of his duties under this
Agreement. The Executive may also engage in personal business and investment
activities which do not materially interfere with the performance of his duties
hereunder; provided, however, that such activities are not prohibited under any
code of conduct or investment or securities trading policy established by the
Company and generally applicable to all similarly situated executives.
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Section 8. Working Facilities and Expenses.
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The Executive's principal place of employment shall be at the
Company's executive offices at the address first above written, or at such other
location as the Company and the Executive may mutually agree upon. The Company
shall provide the Executive at his principal place of employment with a private
office, secretarial services and other support services and facilities suitable
to his positions with the Company and necessary or appropriate in connection
with the performance of his assigned duties under this Agreement. The Company
shall reimburse the Executive for his ordinary and necessary business expenses,
including, without limitation, fees for memberships in such clubs and
organizations as the Executive and the Company shall mutually agree are
necessary and appropriate for business purposes, and his travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the payer of an itemized
account of such expenses in such form as the payer may reasonably require.
Section 9. Termination Due to Death.
------------------------
The Executive's employment with the Company shall terminate,
automatically and without any further action on the part of any party to this
Agreement, on the date of the Executive's death. In such event:
(a) The Company shall pay to the Executive's estate his earned
but unpaid compensation (including, without limitation, salary and all
other items which constitute wages under applicable law) as of the date
of his termination of employment. This payment shall be made at the
time and in the manner prescribed by law applicable to the payment of
wages but in no event later than thirty (30) days after the date of the
Executive's termination of employment.
(b) The Company shall provide the benefits, if any, due to the
Executive's estate, surviving dependents or his designated
beneficiaries under the employee benefit plans and programs and
compensation plans and programs maintained for the benefit of the
officers and employees of the Company. The time and manner of payment
or other delivery of these benefits and the recipients of such benefits
shall be determined according to the terms and conditions of the
applicable plans and programs.
The payments and benefits described in sections 9(a) and (b) shall be referred
to in this Agreement as the "Standard Termination Entitlements."
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Section 10. Termination Due to Disability.
-----------------------------
The Company may terminate the Executive's employment upon a
determination, by vote of a majority of the members of the Board of Directors of
the Company, acting in reliance on the written advice of a medical professional
acceptable to them, that the Executive is suffering from a physical or mental
impairment which, at the date of the determination, has prevented the Executive
from performing his assigned duties on a substantially full-time basis for a
period of at least one hundred and fifty (150) days during the period of one (1)
year ending with the date of the determination or is likely to result in death
or prevent the Executive from performing his assigned duties on a substantially
full-time basis for a period of at least one hundred and fifty (150) days during
the period of one (1) year beginning with the date of the determination. In such
event:
(a) The Company shall pay and deliver to the Executive (or in
the event of his death before payment, to his estate and surviving
dependents and beneficiaries, as applicable) the Standard Termination
Entitlements.
(b) In addition to the Standard Termination Entitlements, the
Company shall continue to pay the Executive his base salary, at the
annual rate in effect for him immediately prior to the termination of
his employment, during a period ending on the earliest of: (i) the
expiration of one hundred and eighty (180) days after the date of
termination of his employment; (ii) the date on which long-term
disability insurance benefits are first payable to him under any
long-term disability insurance plan covering employees of the Company
(the "LTD Eligibility Date"); (iii) the date of his death; and (iv) the
expiration of the Remaining Unexpired Employment Period (the "Initial
Continuation Period"). If the end of the Initial Continuation Period is
neither the LTD Eligibility Date nor the date of his death, the Company
shall continue to pay the Executive his base salary, at an annual rate
equal to sixty percent (60%) of the annual rate in effect for him
immediately prior to the termination of his employment, during an
additional period ending on the earliest of the LTD Eligibility Date,
the date of his death and the expiration of the Remaining Unexpired
Employment Period.
A termination of employment due to disability under this section 10 shall be
effected by notice of termination given to the Executive by the Company and
shall take effect on the later of the effective date of termination specified in
such notice or the date on which the notice of termination is deemed given to
the Executive.
Section 11. Discharge with Cause.
--------------------
(a) The Company may terminate the Executive's employment
during the Employment Period, and such termination shall be deemed to have
occurred with "Cause", only if:
(i) The Board of Directors of the Company, by majority vote of
their entire membership, determine that the Executive should be
discharged because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty
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involving personal profit, intentional failure to perform stated
duties, willful violationof any law, rule or regulation (other than
traffic violations or similar offenses) or final cease and desist
order, or any material breach of this Agreement; and
(ii) at least forty-five (45) days prior to the votes
contemplated by section 11(a)(i), the Company has provided the
Executive with notice of its intent to discharge the Executive for
Cause, detailing with particularity the facts and circumstances which
are alleged to constitute Cause (the "Notice of Intent to Discharge");
and
(iii) after the giving of the Notice of Intent to Discharge
and before the taking of the votes contemplated by section 11(a)(i),
the Executive (together with his legal counsel, if he so desires) is
afforded a reasonable opportunity to make both written and oral
presentations before the Board of Directors of the Company for the
purpose of refuting the alleged grounds for Cause for his discharge;
and
(iv) after the votes contemplated by section 11(a)(i), the
Company have furnished to the Executive a notice of termination which
shall specify the effective date of his termination of employment
(which shall in no event be earlier than the date on which such notice
is deemed given) and include a copy of a resolution or resolutions
adopted by the Board of Directors of the Company, certified by its
corporate secretary and signed by each member of the Board of Directors
voting in favor of adoption of the resolution(s), authorizing the
termination of the Executive's employment with Cause and stating with
particularity the facts and circumstances found to constitute Cause for
his discharge (the "Final Discharge Notice").
(b) If the Executive is discharged during the Employment Period
with Cause, the Company shall pay and provide to him (or, in the event of his
death, to his estate, his surviving beneficiaries and his dependents) the
Standard Termination Entitlements only. Following the giving of a Notice of
Intent to Discharge, the Company may temporarily suspend the Executive's duties
and authority and, in such event, may also suspend the payment of salary and
other cash compensation, but not the Executive's participation in retirement,
insurance and other employee benefit plans. If the Executive is not discharged,
or is discharged without Cause, within forty-five (45) days after the giving of
a Notice of Intent to Discharge, payments of salary and cash compensation shall
resume, and all payments withheld during the period of suspension shall be
promptly restored. If the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent to Discharge, all
payments withheld during the period of suspension shall be deemed forfeited and
shall not be included in the Standard Termination Entitlements. If a Final
Discharge Notice is given later than forty-five (45) days, but sooner than
ninety (90) days, after the giving of the Notice of Intent to Discharge, all
payments made to the Executive during the period beginning with the giving of
the Notice of Intent to Discharge and ending with the Executive's discharge with
Cause shall be retained by the Executive and shall not be applied to offset the
Standard Termination Entitlements. If the Company does not give a Final
Discharge Notice to the Executive within ninety (90) days after giving a Notice
of Intent to Discharge, the Notice of Intent to Discharge shall be deemed
withdrawn and any future action to discharge the Executive with Cause shall
require the giving of a new Notice of Intent to Discharge.
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Section 12. Discharge without Cause.
-----------------------
The Company may discharge the Executive at any time during the
Employment Period and, unless such discharge constitutes a discharge with Cause:
(a) The Company shall pay and deliver to the Executive (or in
the event of his death before payment, to his estate and surviving
dependents and beneficiaries, as applicable) the Standard Termination
Entitlements.
(b) In addition to the Standard Termination Entitlements:
(i) During the Remaining Unexpired Employment Period, the
the Company shall provide for the Executive and his dependents
continued group life, health (including hospitalization, medical
and major medical), dental, accident and long-term disability
insurance benefits on substantially the same terms and conditions
(including any required premium-sharing arrangements, co-payments
and deductibles) in effect for them immediately prior to the
Executive's termination. The coverage provided under this section
12(b)(i) may, at the election of the Company, be secondary to the
coverage provided as part of the Standard Termination
Entitlements and to any employer-paid coverage provided by a
subsequent employer or through Medicare, with the result that
benefits under the other coverages will offset the coverage
required by this section 12(b)(i).
(ii) The Company shall make a lump sum payment to the
Executive (or, in the event of his death before payment, to his
estate), in an amount equal to the estimated present value of the
salary that Executive would have earned if he had continued
working for the Company during the Remaining Unexpired Employment
Period at the highest annual rate of salary achieved during that
portion of the Employment Period which is prior to Executive's
termination of employment with the Company, where such present
value is to be determined using a discount rate equal to the
applicable short-term federal rate prescribed under section
1274(d) of the Internal Revenue Code of 1986 ("Code"), compounded
using the compounding period corresponding to the Company's
regular payroll periods for its officers. Such lump sum shall be
paid in lieu of all other payments of salary provided for under
this Agreement in respect of the period following any such
termination.
(iii) The Company shall make a lump sum payment to the
Executive (or, in the event of his death before payment, to his
estate), in an amount equal to the payments that would have been
made to Executive under any cash bonus or long-term or short-term
cash incentive compensation plan maintained by, or covering
employees of, the Company if he had continued working for the
Company during the Remaining Unexpired Employment
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Period and had earned the maximum bonus or incentive award in each
calendar year that ends during the Remaining Unexpired Employment
Period, such payments to be equal to the product of:
(A) the maximum percentage rate at which an award was
ever available to Executive under such incentive compensation
plan; multiplied by
(B) the salary that would have been paid to Executive
during each such calendar year at the highest annual rate of
salary achieved during that portion of the Employment Period which
is prior to Executive's termination of employment with the
Company.
Such payment shall be made (without discounting for early payment)
within thirty (30) days following the Executive's termination of
employment.
(iv) The Company shall pay to the Executive (or in the
event of his death, to his estate), a lump sum payment in an
amount equal to the excess (if any) of: (A) the present value of
the aggregate benefits to which he would be entitled under any and
all tax-qualified and non-tax-qualified defined benefit plans
maintained by, or covering employees of, the Company or the Bank
(the "Pension Plans") if he had continued working for the Company
and the Bank during the Remaining Unexpired Employment Period;
over (B) the present value of the benefits to which the Executive
and his spouse and/or designated beneficiaries are actually
entitled under such plans (the "Pension Severance Payment"). The
Pension Severance Payment shall be computed according to the
following formula:
PSP = PPB - APB
where "PSP" is the amount of the Pension Severance Payment (before
deductions for applicable federal, state and local withholding
taxes); "APB" is the aggregate lump sum present value of the
actual vested pension benefits payable under the Pension Plans in
the form of a straight life annuity beginning at the earliest date
permitted under the Pension Plans, computed on the basis of the
Executive's life expectancy at the earliest date on which payments
under the Pension Plans could begin, determined by reference to
Table VI of section 1.72-9 of the Income Tax Regulations (the
"Assumed Life Expectancy"), and on the basis of an interest rate
assumption equal to the average bond-equivalent yield on United
States Treasury Securities with a Constant Maturity of 30 Years
(or equivalent published rate) for the month prior to the month in
which the Executive's termination of employment occurs (the
"30-Year Treasury Rate"); and "PPB" is the lump sum present value
of the pension benefits (whether or not vested) that would be
payable under the Pension Plans in the form of a straight life
annuity beginning at the
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earliest date permitted under the Pension Plans, computed on the
basis that the Executive's actual age at termination of
employment is his attained age as of his last birthday that would
occur during the Remaining Unexpired Employment Period, that his
service for benefit accrual purposes under the Pension Plans is
equal to the aggregate of his actual service plus the Remaining
Unexpired Employment Period, that his average compensation figure
used in determining his accrued benefit is equal to the highest
annual rate of salary achieved by the Executive during the period
of three (3) years ending immediately prior to the date of
termination, that the Executive's life expectancy at the earliest
date on which payments under the Pension Plans could begin is the
Assumed Life Expectancy and that the interest rate assumption
used is equal to the 30-Year Treasury Rate. The Pension Severance
Payment shall be made within five (5) business days after the
Executive's termination of employment and shall be in lieu of any
claim to any actual increase in his accrued in the Pension Plans
in respect of the Remaining Unexpired Employment Period.
(v) The Company shall pay to the Executive (or in the
event of his death, to his estate) a lump sum payment in an
amount equal to the present value of the additional employer
contributions that would have been credited directly to his
account(s) under any and all tax-qualified and non-tax qualified
defined contribution plans maintained by, or covering employees
of, the Bank and the Company (the "Non-ESOP DC Plans"), plus the
fair market value of the additional shares of employer securities
or other property that would have been allocated to his account
as a result of employer contributions or dividends under any
tax-qualified leveraged employee stock ownership plan and any
related non-tax-qualified supplemental plan maintained by, or
covering employees of, the Bank and the Company (the "ESOP
Plans") if he had continued in employment during the Remaining
Unexpired Employment Period (the "Defined Contribution Severance
Payment"). The Defined Contribution Severance Payment shall be
computed according to the following formula:
DCSP = [SSP x (EC / BS)] + [(STK + PROP) x Y]
where: "DCSP" is the amount of the Defined Contribution Severance
Payment before deductions for applicable federal, state and local
withholding taxes); "SSP" is the amount of the Salary Severance
Payment (before deductions for applicable federal, state and local
withholding taxes); "EC" is the amount of employer contributions
actually credited to the Executive's accounts under the Non-ESOP
Plans for the last plan year to end before his termination of
employment; "BS" is the Executive's compensation taken into
account in computing EC; "Y" is the aggregate (expressed in years
and fractions of years) of the Remaining Unexpired Employment
Period and the number of years and fractions of years that have
elapsed between the end
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of plan year for which EC was computed and the date of the
Executive's termination of employment; "STK" is the fair market
value (determined by the final reported sales price for stock of
the same class on the last trading day before the Executive's
termination of employment) of the employer securities actually
allocated to the Executive's accounts under the ESOP Plans in
respect of employer contributions and dividends applied to loan
amortization payments for the last plan year to end before his
termination of employment; and "PROP" is the fair market value
(determined as of the day before the Executive's termination of
employment using the same valuation methodology used to value the
assets of the ESOP Plans) of the property other than employer
securities actually allocated to the Executive's accounts under
the ESOP Plans in respect of employer contributions and dividends
applied to loan amortization payments for the last plan year to
end before his termination of employment.
The payments and benefits described in section 12(b) are referred to in this
Agreement as the "Additional Termination Entitlements".
Section 13. Resignation.
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(a) The Executive may resign from his employment with the
Company at any time. A resignation under this section 13 shall be effected by
notice of resignation given by the Executive to the Company and shall take
effect on the later of the effective date of termination specified in such
notice or the date on which the notice of termination is deemed given by the
Executive. The Executive's resignation of any of the positions within the Bank
or the Company to which he has been assigned shall be deemed a resignation from
all such positions.
(b) The Executive's resignation shall be deemed to be for "Good
Reason" if the effective date of resignation occurs within ninety (90) days
after any of the following:
(i) the failure of the Company (whether by act or omission of
its Board of Directors, or otherwise) to appoint or re-appoint or elect
or re-elect the Executive to the position(s) with the Company,
specified in section 3 of this Agreement or to a more senior office;
(ii) if the Executive is or becomes a member of the Board of
Directors of the Company or the Bank, the failure of their respective
shareholders (whether in an election in which the Executive stands as a
nominee or in an election where the Executive is not a nominee) to
elect or re-elect the Executive to membership at the expiration of his
term of membership, unless such failure is a result of the Executive's
refusal to stand for election;
(iii) any reduction of the Executive's rate of base salary in
effect from time to time, whether or not material, or any failure
(other than due to reasonable
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administrative error that is cured promptly upon notice) to pay any
portion of the Executive's compensation as and when due;
(iv) any change in the terms and conditions of any
compensation or benefit program in which the Executive participates
which, either individually or together with other changes, has a
material adverse effect on the aggregate value of his total
compensation package; provided that the Executive shall have given
notice of such material adverse effect to the Company, and the Company
has not fully cured such failure within thirty (30) days after such
notice is deemed given; provided, however, that this section 13(b)(v)
shall not apply if the change in terms and conditions of the
compensation or benefit program affects all participants in such
program equally;
(v) any material breach by the Company of any material term,
condition or covenant contained in this Agreement; provided that the
Executive shall have given notice of such material adverse effect to
the Company, and the Company has not fully cured such failure within
thirty (30) days after such notice is deemed given; or
(vi) a change in the Executive's principal place of employment
to a place that is not the principal executive office of the Company,
or a relocation of the Company's principal executive office to a
location that is both more than fifty (50) miles away from the
Executive's principal residence and more than fifty (50) miles away
from the location of the Company's principal executive office on the
date of this Agreement.
In all other cases, a resignation by the Executive shall be deemed to be without
Good Reason.
(c) In the event of the Executive's resignation before the
expiration of the Employment Period, the Company shall pay and deliver the
Standard Termination Entitlements. In addition, if the Executive's resignation
is deemed to be a resignation with Good Reason, the Company shall also pay and
deliver the Additional Termination Entitlements.
Section 14. Terms and Conditions of the Additional Termination
Entitlements.
------------
The Company and the Executive hereby stipulate that the damages
which may be incurred by the Executive following any termination of employment
are not capable of accurate measurement as of the date first above written and
that the Additional Termination Entitlements constitute reasonable damages under
the circumstances and shall be payable without any requirement of proof of
actual damage and without regard to the Executive's efforts, if any, to mitigate
damages. The Company and the Executive further agree that the Company may
condition the payment and delivery of the Additional Termination Entitlements on
the receipt of the Executive's resignation from any and all positions which he
holds as an officer, director or committee member with respect to the Company,
the Bank or any subsidiary or affiliate of either of them.
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Section 15. Termination Upon or Following a Change of Control.
-------------------------------------------------
(a) A "Change of Control" shall be deemed to have occurred
upon the happening of any of the following events:
(i) the consummation of a reorganization, merger or
consolidation of the Company with one or more other persons, other than
a transaction following which:
(A) at least 51% of the equity ownership interests of the
entity resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act")) in
substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) at
least 51% of the outstanding equity ownership interests in the
Company; and
(B) at least 51% of the securities entitled to vote
generally in the election of directors of the entity resulting
from such transaction are beneficially owned (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) at
least 51% of the securities entitled to vote generally in the
election of directors of the Company;
(ii) the acquisition of all or substantially all of the assets
of the Company or beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 25% or more of the
outstanding securities of the Company entitled to vote generally in the
election of directors by any person or by any persons acting in
concert;
(iii) a complete liquidation or dissolution of the Company;
(iv) the occurrence of any event if, immediately following
such event, at least 50% of the members of the Board of Directors of
the Company do not belong to any of the following groups:
(A) individuals who were members of the Board of Directors
of the Company on the date of this Agreement; or
(B) individuals who first became members of the Board of
Directors of the Company after the date of this Agreement either:
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(1) upon election to serve as a member of
the Board of Directors of the Company by affirmative
vote of three-quarters of the members of such board,
or of a nominating committee thereof, in office at
the time of such first election; or
(2) upon election by the shareholders of
the Board of Directors of the Company to serve as a
member of such board, but only if nominated for
election by affirmative vote of three-quarters of the
members of the Board of Directors of the Company, or
of a nominating committee thereof, in office at the
time of such first nomination;
provided, however, that such individual's election or
nomination did not result from an actual or threatened
election contest or other actual or threatened solicitation of
proxies or consents other than by or on behalf of the Board of
Directors of the Company; or
(v) any event which would be described in section 15(a)(i),
(ii), (iii) or (iv) if the term "Bank" were substituted for the
term "Company" therein.
In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary of
either of them, or by any employee benefit plan maintained by any of them. For
purposes of this section 15(a), the term "person" shall have the meaning
assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(b) For purposes of this Agreement, a "Pending Change of
Control" shall mean: (i) the signing of a definitive agreement for a transaction
which, if consummated, would result in a Change of Control; (ii) the
commencement of a tender offer which, if successful, would result in a Change of
Control; or (iii) the circulation of a proxy statement seeking proxies in
opposition to management in an election contest which, if successful, would
result in a Change of Control.
(c) Notwithstanding anything in this Agreement to the contrary,
if the Executive's employment with the Bank and Company terminates due to death
or disability within one (1) year after the occurrence of a Pending Change of
Control and if a Change of Control occurs within two (2) years after such
termination of employment, he (or in the event of his death, his estate) shall
be entitled to receive the Standard Termination Entitlements and the Additional
Termination Entitlements that would have been payable if a Change of Control had
occurred on the date of his termination of employment and he had resigned with
Good Reason immediately thereafter; provided, that payment shall be deferred
without interest until, and shall be payable immediately upon, the actual
occurrence of a Change of Control.
(d) Notwithstanding anything in this Agreement to the contrary:
(i) in the event of the Executive's resignation within sixty (60) days after the
occurrence of a Change of Control, he shall be entitled to receive the Standard
Termination Entitlements and Additional Termination Entitlements that would be
payable if his resignation were a resignation for Good Reason, without
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regard to the actual circumstances of his resignation; and (ii) for a period of
one (1) year after the occurrence of a Change of Control, no discharge of the
Executive shall be deemed a discharge with Cause unless the votes contemplated
by section 11(a) of this Agreement are supported by at least two-thirds of the
members of the Board of Directors of the Company and the Bank at the time the
vote is taken who were also members of the Board of Directors of the Company and
the Bank immediately prior to the Change of Control.
(e) Notwithstanding anything in this Agreement to the contrary,
for purposes of computing the Additional Termination Entitlements due upon a
termination of employment that occurs, or is deemed to have occurred, after a
Change of Control, the Remaining Unexpired Employment Period shall be deemed to
be three (3) full years.
Section 16. Covenant Not To Compete.
-----------------------
The Executive hereby covenants and agrees that, in the event of
his termination of employment with the Company prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Company, he shall not, without the written
consent of the Company, become an officer, employee, consultant, director or
trustee of any savings bank, savings and loan association, savings and loan
holding company, bank or bank holding company, any other entity engaged in the
business of accepting deposits or making loans or any direct or indirect
subsidiary or affiliate of any such entity, that entails working within 100
miles of the Bank's office at 00 Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000;
provided, however, that this section 16 shall not apply if the Executive is
entitled to the Additional Termination Entitlements.
Section 17. Confidentiality.
---------------
Unless he obtains the prior written consent of the Company, the
Executive shall keep confidential and shall refrain from using for the benefit
of himself, or any person or entity other than the Company or any entity which
is a subsidiary of the Company or of which the Company is a subsidiary, any
material document or information obtained from the Company, or from its parent
or subsidiaries, in the course of his employment with any of them concerning
their properties, operations or business (unless such document or information is
readily ascertainable from public or published information or trade sources or
has otherwise been made available to the public through no fault of his own)
until the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 17 shall prevent the Executive,
with or without the Company's consent, from participating in or disclosing
documents or information in connection with any judicial or administrative
investigation, inquiry or proceeding to the extent that such participation or
disclosure is required under applicable law.
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Section 18. Solicitation.
------------
The Executive hereby covenants and agrees that, for a period of
one year following his termination of employment with the Company or the Bank,
he shall not, without the written consent of the Company, either directly or
indirectly:
(a) solicit, offer employment to, or take any other action
intended, or that a reasonable person acting in like circumstances
would expect, to have the effect of causing any officer or employee of
the Company, the Bank or any of their respective subsidiaries or
affiliates to terminate his or her employment and accept employment or
become affiliated with, or provide services for compensation in any
capacity whatsoever to, any savings bank, savings and loan association,
bank, bank holding company, savings and loan holding company, or other
institution engaged in the business of accepting deposits, making loans
or doing business within the counties specified in section 16;
(b) provide any information, advice or recommendation with
respect to any such officer or employee of any savings bank, savings
and loan association, bank, bank holding company, savings and loan
holding company, or other institution engaged in the business of
accepting deposits, making loans or doing business within the counties
specified in section 16; that is intended, or that a reasonable person
acting in like circumstances would expect, to have the effect of
causing any officer or employee of the Company, the Bank, or any of
their respective subsidiaries or affiliates to terminate his employment
and accept employment or become affiliated with, or provide services
for compensation in any capacity whatsoever to, any savings bank,
savings and loan association, bank, bank holding company, savings and
loan holding company, or other institution engaged in the business of
accepting deposits, making loans or doing business within the counties
specified in section 16;
(c) solicit, provide any information, advice or recommendation
or take any other action intended, or that a reasonable person acting
in like circumstances would expect, to have the effect of causing any
customer of the Company or the Bank to terminate an existing business
or commercial relationship with the Company or the Bank.
Section 19. No Effect on Employee Benefit Plans or Programs.
-----------------------------------------------
The termination of the Executive's employment during the term of
this Agreement or thereafter, whether by the Company or by the Executive, shall
have no effect on the rights and obligations of the parties hereto under the
Company's or the Bank's qualified or non-qualified retirement, pension, savings,
thrift, profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of,
the Company or the Bank from time to time; provided, however, that nothing in
this Agreement shall be deemed to duplicate any compensation or benefits
-15-
provided under any agreement, plan or program covering the Executive to which
the Company or Bank is a party and any duplicative amount payable under any such
agreement, plan or program shall be applied as an offset to reduce the amounts
otherwise payable hereunder.
Section 20. Tax Indemnification.
-------------------
(a) If the Executive's employment terminates under
circumstances entitling him (or in the event of his death, his estate) to the
Additional Termination Entitlements, the Company shall pay to the Executive (or
in the event of his death, his estate) an additional amount intended to
indemnify him against the financial effects of the excise tax imposed on excess
parachute payments under section 280G of the Code (the "Tax Indemnity Payment").
The Tax Indemnity Payment shall be determined under the following formula:
E x P
X = --------------------------------------------------
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the percentage rate at which an 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
20;
FI = the highest marginal rate of income tax applicable to
the Executive under the Code for the taxable year in
question;
SLI = the sum of the highest marginal rates of income tax
applicable to the Executive under all applicable
state and local laws for the taxable year in
question; and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for the
taxable year in question.
Such computation shall be made at the expense of the Company by an attorney or a
firm of independent certified public accountants selected by the Executive and
reasonably satisfactory to the Company (the "Tax Advisor") and shall be based on
the following assumptions: (i) that a change in ownership, a change in effective
ownership or control, or a change in the ownership of a substantial portion of
the assets, of the Bank or the Company has occurred within the meaning of
section 280G of the Code (a "280G Change of Control"); (ii) that all direct or
indirect payments made to or benefits conferred upon the Executive on account of
his termination of employment are "parachute payments" within the meaning of
section 280G of the Code; and (iii) that no portion of such payments is
reasonable compensation for services rendered prior to the Executive's
termination of employment.
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(b) With respect to any payment that is presumed to be a
parachute payment for purposes of section 280G of the Code, the Tax Indemnity
Payment shall be made to the Executive on the earlier of the date the Company,
the Bank or any direct or indirect subsidiary or affiliate of the Company or the
Bank is required to withhold such tax or the date the tax is required to be paid
by the Executive, unless, prior to such date, the Company delivers to the
Executive the written opinion, in form and substance reasonably satisfactory to
the Executive, of the Tax Advisor or of an attorney or firm of independent
certified public accountants selected by the Company and reasonably satisfactory
to the Executive, to the effect that the Executive has a reasonable basis on
which to conclude that (i) no 280G Change in Control has occurred, or (ii) all
or part of the payment or benefit in question is not a parachute payment for
purposes of section 280G of the Code, or (iii) all or a part of such payment or
benefit constitutes reasonable compensation for services rendered prior to the
280G Change of Control, or (iv) for some other reason which shall be set forth
in detail in such letter, no excise tax is due under section 4999 of the Code
with respect to such payment or benefit (the "Opinion Letter"). If the Company
delivers an Opinion Letter, the Tax Advisor shall recompute, and the Company
shall make, the Tax Indemnity Payment in reliance on the information contained
in the Opinion Letter.
(c) In the event that the Executive's liability for the excise
tax under section 4999 of the Code for a taxable year is subsequently determined
to be different than the amount with respect to which the Tax Indemnity Payment
is made, the Executive or the Company, as the case may be, shall pay to the
other party at the time that the amount of such excise tax is finally
determined, an appropriate amount, plus interest, such that the payment made
under section 20(b), when increased by the amount of the payment made to the
Executive under this section 20(c), or when reduced by the amount of the payment
made to the Company under this section 20(c), equals the amount that should have
properly been paid to the Executive under section 20(a). The interest paid to
the Company under this section 20(c) shall be determined at the rate provided
under section 1274(b)(2)(B) of the Code. The payment made to the Executive shall
include such amount of interest as is necessary to satisfy any interest
assessment made by the Internal Revenue Service and an additional amount equal
to any monetary penalties assessed by the Internal Revenue Service on account of
an underpayment of the excise tax. To confirm that the proper amount, if any,
was paid to the Executive under this section 20, the Executive shall furnish to
the Company a copy of each tax return which reflects a liability for an excise
tax, at least 20 days before the date on which such return is required to be
filed with the Internal Revenue Service. Nothing in this Agreement shall give
the Company any right to control or otherwise participate in any action, suit or
proceeding to which the Executive is a party as a result of positions taken on
his federal income tax return with respect to his liability for excise taxes
under section 4999 of the Code.
Section 21. Successors and Assigns.
----------------------
This Agreement will inure to the benefit of and be binding upon
the Executive, his legal representatives and testate or intestate distributees,
and the Company and their respective successors and assigns, including any
successor by merger or consolidation or a statutory receiver or any other person
or firm or corporation to which all or substantially all of the assets and
business of the Company may be sold or otherwise transferred. Failure of the
Company to obtain from any successor its express written assumption of the
Company's obligations hereunder at least sixty (60)
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days in advance of the scheduled effective date of any such succession shall be
deemed a material breach of this Agreement.
Section 22. Notices.
-------
Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such other
address as one such party may by written notice specify to the other party:
If to the Executive:
Xxxxxxx X. Xxxxx
X.X. Xxx 0000
Xxxxxx, Xxx Xxxx 00000
If to the Company:
Bridge Street Financial, Inc.
00 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Chairman, Personnel and Compensation Committee
of the Board of Directors
Section 23. Waiver.
------
Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
Section 24. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, and all of which shall constitute one and
the same Agreement.
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Section 25. Governing Law.
-------------
This Agreement shall be governed by and construed and enforced in
accordance with the federal laws of the United States and, to the extent that
federal law is inapplicable, in accordance with the laws of the State of New
York applicable to contracts entered into and to be performed entirely within
the State of New York.
Section 26. Headings and Construction.
-------------------------
The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.
Section 27. Entire Agreement; Modifications.
-------------------------------
This instrument contains the entire agreement of the parties
relating to the subject matter hereof, and supersedes in its entirety any and
all prior agreements, understandings or representations relating to the subject
matter hereof. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.
Section 28. Non-duplication.
---------------
In the event that the Executive shall perform services for the
Bank or any other direct or indirect subsidiary or affiliate of the Company or
the Bank, any compensation or benefits provided to the Executive by such other
employer shall be applied to offset the obligations of the Company hereunder, it
being intended that this Agreement set forth the aggregate compensation and
benefits payable to the Executive for all services to the Company and all of its
respective direct or indirect subsidiaries and affiliates.
Section 29. Survival.
--------
The provisions of sections 6, 16, 17, 18, 19 and 20 shall survive
the expiration of the Employment Period or termination of the Agreement.
Section 30. Indemnification for Attorneys' Fees.
-----------------------------------
The Company shall indemnify, hold harmless and defend Executive
against reasonable costs, including legal fees, incurred by him in connection
with or arising out of any action, suit or proceeding in which he may be
involved, as a result of his efforts, in good faith, to defend or enforce the
terms of this Agreement; provided, however, that Executive shall have
substantially prevailed on the merits pursuant to a judgment, decree or order of
a court of competent jurisdiction or of an arbitrator in an arbitration
proceeding. The determination whether the Executive shall have substantially
prevailed on the merits and is therefore entitled to such indemnification, shall
be made by the court or arbitrator, as applicable. In the event of a settlement
pursuant to a settlement agreement, any indemnification payment under this
section 30 shall
-19-
be made only after a determination by the members of the Board (other than the
Executive and any other member of the Board to which the Executive is related by
blood or marriage) that the Executive has acted in good faith and that such
indemnification payment is in the best interests of the Company.
Section 31. Required Regulatory Provisions.
------------------------------
Notwithstanding anything herein contained to the contrary, any
payments to the Executive by the Company or the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their compliance
with section 18(k) of the Federal Deposit Insurance Act ("FDI Act"), 12 U.S.C.
ss.1828(k), and any regulations promulgated thereunder.
Section 31. Guarantee.
---------
The Company hereby agrees to guarantee the payment by the Bank of
any benefits and compensation to which the Executive is or may be entitled to
under the terms and conditions of the employment agreement of even date herewith
between the Bank and the Executive.
Section 32. Effective Date.
--------------
This Agreement shall become effective (the "Effective Date") upon
the effective date of the Bank's conversion from a New York savings bank to a
national bank pursuant to the Reorganization. The Company and the Executive each
hereby acknowledge and agree that the terms of this Agreement shall have no
force or effect prior to such Effective Date.
-20-
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Executive has hereunto set his hand, all as of the day and year
first above written.
---------------------------------
XXXXXXX X. XXXXX
BRIDGE STREET FINANCIAL, INC.
Attest:
By By
---------------------------------- -------------------------------
Name: Name:
Title: Title:
[Seal]
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