Exhibit 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
______________, 1998 by and between XXXXXX RIVER BANK & TRUST COMPANY, a
state-chartered savings bank organized and existing under the laws of the State
of New York, the ("Bank"), and Xxxx X. Xxxxxx, an individual residing at
________________________ (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive currently serves as the President and Chief
Executive Officer of the Bank and as the President and Chief Executive Officer
of Xxxxxx River Bancorp, Inc. (the "Company"), and effective as of the date of
this Agreement, the Bank has converted from mutual to capital stock form and has
become the wholly owned subsidiary of the Company; and
WHEREAS, the Bank desires to assure for itself the continued
availability of the Executive's services as provided in this Agreement, and the
Board of Directors of the Bank (the "Board") recognizes the need for the
Executive to be able to perform such services with a minimum of personal
distraction in the event of a pending or threatened Change in Control (as
hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Bank on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Bank and the Executive
hereby agree as follows:
SECTION 1. EMPLOYMENT.
The Bank agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of two
years beginning on the date of this Agreement and ending on the second
anniversary date of this Agreement (each, an "Anniversary Date"), plus such
extensions, if any, as are provided pursuant to section 2(b).
(b) Except as provided in section 2(c), beginning on the date of this
Agreement, the Employment Period shall automatically be extended for one
additional day each day, unless either the Bank or the Executive elects not to
extend the Agreement further by giving written notice thereof to the other
party, in which case the Employment Period shall end on the second anniversary
of the date on which such written notice is given. For all purposes of this
Agreement, the term "Remaining Unexpired Employment Period" as of any date shall
mean the period beginning on such date and ending on the last day of the
Employment Period taking into account any extensions under this section 2(b).
Upon termination of the Executive's employment with the Bank for any reason
whatsoever, any daily extensions provided pursuant to this section 2(b), if not
theretofore discontinued, shall automatically cease.
(c) Nothing in this Agreement shall be deemed to prohibit the Bank at
any time from terminating the Executive's employment during the Employment
Period with or without notice for any reason; provided, however, that the
relative rights and obligations of the Bank and the Executive in the event of
any such termination shall be determined under this Agreement.
SECTION 3. DUTIES.
The Executive shall serve as President and Chief Executive Officer of
the Bank, having such power, authority and responsibility and performing such
duties as are prescribed by or under the By-Laws of the Bank and as are
customarily associated with such position. 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 Bank and shall use his best efforts to advance the
interests of the Bank.
SECTION 4. CASH COMPENSATION.
In consideration for the services to be rendered by the Executive
hereunder, the Bank shall pay to him a salary equal to the base salary from the
Company and the Bank in effect on the date of this Agreement, less the amount of
base salary actually paid to the Executive by the Company during the Employment
Period. The Executive's salary shall be payable in approximately equal
installments in accordance with the Bank's customary payroll practices for
senior officers. The Board 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 months, and may, in its discretion, approve an
increase therein. In addition to salary, the Executive may receive other cash
compensation from the Bank for services hereunder at such times, in such amounts
and on such terms and conditions as the Board may determine from time to time.
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SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as an
employee of the Bank 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 Bank, in accordance with the terms and conditions of such employee benefit
plans and programs and compensation plans and programs and consistent with the
Bank's customary practices.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six years
thereafter, the Bank shall cause the Executive to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Bank or service in
other capacities at the request of the Bank. 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 Bank.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six years thereafter, the Bank 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 Bank or any subsidiary or affiliate thereof.
SECTION 7. OUTSIDE ACTIVITIES.
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 (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 Bank and generally applicable to
all similarly situated Executives. The Executive may also serve as an officer or
director of the Company on such terms and conditions as the Company and the Bank
may mutually agree upon, and such service shall not be deemed to materially
interfere with the Executive's performance of his duties hereunder or otherwise
result in a material breach of this Agreement. If the Executive is discharged or
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suspended, or is subject to any regulatory prohibition or restriction with
respect to participation in the affairs of the Company, he shall continue to
perform services for the Bank in accordance with this Agreement but shall not
directly or indirectly provide services to or participate in the affairs of the
Company in a manner inconsistent with the terms of such discharge or suspension
or any applicable regulatory order.
SECTION 8. WORKING FACILITIES AND EXPENSES.
The Executive's principal place of employment shall be at the Bank's
executive offices located in Hudson, New York, or at such other location within
50 miles of the address at which the Bank shall maintain its principal executive
offices, or at such other location as the Bank and the Executive may mutually
agree upon. The Bank 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 position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall reimburse the Executive for his ordinary and necessary
business expenses, including, without limitation, the Executive's travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the Bank of an itemized
account of such expenses in such form as the Bank may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH BENEFITS.
(a) The Executive shall be entitled to the benefits described in
section 9(b) in the event that:
(i) his employment with the Bank terminates during the Employment
Period as a result of the Executive's voluntary resignation within 90 days
following:
(A) the failure of the Board to appoint or re-appoint or elect or
re-elect the Executive to the position with the Bank stated in section
3 of this Agreement (or a more senior office);
(B) if the Executive is a member of the Board, the failure of the
shareholders of the Bank to elect or re-elect the Executive to the
Board or the failure of the Board (or the nominating committee
thereof) to nominate the Executive for such election or re-election;
(C) the expiration of a 30-day period following the date on which
the Executive gives written notice to the Bank of its material
failure, whether by amendment of the Bank's Restated Organization
Certificate, the Bank's By-Laws, action of the Board or the Bank's
shareholders or otherwise, to vest in the Executive the functions,
duties, or responsibilities prescribed in section 3 of this Agreement,
unless, during such 30-day period, the Bank cures such failure;
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(D) the expiration of a 30-day period following the date on which
the Executive gives written notice to the Bank of its material breach
of any term, condition or covenant contained in this Agreement
(including, without limitation, any reduction of the Executive's rate
of base salary in effect from time to time and 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), unless, during such 30-day period,
the Bank cures such failure; or
(E) a change in the Executive's principal place of employment for
a distance in excess of 50 miles from the Bank's principal office in
Hudson, New York; or
(F) the liquidation, dissolution, bankruptcy, or insolvency of
the Bank, the Bank or any of their respective subsidiaries or
affiliates; or
(ii) the Executive's employment with the Bank is terminated by the
Bank during the Employment Period for any reason other than for "cause," as
provided in section 10(a).
(b) Upon the occurrence of any of the events described in section 9(a)
of this Agreement, the Bank shall pay and provide to the Executive (or, in
the event of his death, to his estate):
(i) his earned but unpaid salary (including, without limitation, all
items which constitute wages under applicable law and the payment of which
is not otherwise provided for in this section 9(b)) as of the date of the
termination of his employment with the Bank, such payment to be made at the
time and in the manner prescribed by law applicable to the payment of wages
but in no event later than 30 days after termination of employment;
(ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and programs maintained for the benefit of the Bank's officers and
employees;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long term disability insurance
benefits, in addition to that provided pursuant to section 9(b)(ii), and
after taking into account the coverage provided by any subsequent employer,
if and to the extent necessary to provide for the Executive, for the
Remaining Unexpired Employment Period, coverage equivalent to the coverage
to which he would have been entitled under such plans (as in effect on the
date of his termination of employment, or, if his termination of employment
occurs after a Change of Control, on the date of such Change of Control,
whichever benefits are greater), if he had continued working for the Bank
during the Remaining Unexpired Employment Period at the highest annual rate
of salary achieved during the Employment Period;
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(iv) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment, in an amount equal to the
present value of the salary (excluding any additional payments made to the
Executive in lieu of the use of an automobile) that the Executive would
have earned if he had continued working for the Bank during the Remaining
Unexpired Employment Period at the highest annual rate of salary achieved
during the Employment Period, 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, as
amended (the "Code"), compounded using the compounding periods
corresponding to the Bank's regular payroll periods for its officers, such
lump sum to be paid in lieu of all other payments of salary provided for
under this Agreement in respect of the period following any such
termination;
(v) within 30 days following the Executive's termination of employment
with the Bank, 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 The Retirement Plan of the Xxxxxx River Bank & Trust
Company (together with the defined benefit portion of the Benefit
Restoration Plan of Xxxxxx River Bank & Trust Company and any other
supplemental defined benefit plan) and any and all other qualified and
non-qualified defined benefit pension plans maintained by, or covering
employees of, the Bank if he were 100% vested thereunder and had
continued working for the Bank during the Remaining Unexpired
Employment Period at the highest annual rate of salary achieved during
the Employment Period; over
(B) the present value of the benefits to which he is actually
entitled under such defined benefit pension plans as of the date of his
termination; where such present values are to be determined using the
mortality tables prescribed under section 415(b)(2)(E)(v) of the Code
and a discount rate, compounded monthly equal to the annualized rate of
interest prescribed by the Pension Benefit Guaranty Corporation for the
valuation of immediate annuities payable under terminating
single-employer defined benefit plans for the month in which the
Executive's termination of employment occurs ("Applicable PBGC Rate");
(vi) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment in an amount equal to the
present value of the additional employer contributions to which he would
have been entitled under the Xxxxxx River Bank & Trust Company 401(k)
Savings Plan, the Xxxxxx River Bancorp, Inc. Employee Stock Ownership Plan
(together with the defined contribution portion of the Benefit Restoration
Plan of Xxxxxx River Bank & Trust Company or any other supplemental defined
contribution plan) and any and all other qualified and non-qualified
defined contribution plans maintained by, or covering employees of, the
Bank as if he were 100% vested thereunder and had continued working for the
Bank during the Remaining Unexpired Employment Period at the highest annual
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rate of salary achieved during the Employment Period and making the maximum
amount of employee contributions, if any, required or permitted under such
plan or plans, such present value to be determined on the basis of a
discount rate, compounded using the compounding period that corresponds to
the frequency with which employer contributions are made to the relevant
plan, equal to the Applicable PBGC Rate;
(vii) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment in an amount equal to the
payments that would have been made (without discounting for early payment)
to the Executive under any cash bonus or long-term or short-term cash
incentive compensation plan maintained by, or covering employees of, the
Bank if he had continued working for the Bank during the Remaining
Unexpired Employment 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 the Executive under such incentive compensation plan;
multiplied by
(B) the salary that would have been paid to the Executive during
each such calendar year at the highest annual rate of salary achieved
during the Employment Period.
(viii) at the election of the Bank made within 30 days following the
occurrence of the event described in section 9(a), upon the surrender of
options or appreciation rights issued to the Executive under any stock
option and appreciation rights plan or program maintained by, or covering
employees of, the Bank, a lump sum payment in an amount equal to the
product of:
(A) the excess of (I) the fair market value of a share of stock
of the same class as the stock subject to the option or appreciation
right, determined as of the date of termination of employment, over
(II) the exercise price per share for such option or appreciation
right, as specified in or under the relevant plan or program;
multiplied by
(B) the number of shares with respect to which options or
appreciation rights are being surrendered.
For purposes of this section 9(b)(viii), the Executive shall be deemed
fully vested in all options and appreciation rights under any stock option
or appreciation rights plan or program maintained by, or covering employees
of, the Bank, even if he is not vested under the terms of such plan or
program; and
(ix) at the election of the Bank made within 30 days following the
occurrence of the event described in section 9(a), upon the surrender of
any shares awarded to the Executive under any restricted stock plan
maintained by, or covering employees of, the Bank, a lump sum payment in an
amount equal to the product of:
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(A) the fair market value of a share of stock of the same class
of stock granted under such plan, determined as of the date of the
Executive's termination of employment; multiplied by
(B) the number of shares which are being surrendered.
For purposes of this section 9(b)(ix), the Executive shall be deemed fully
vested in all shares awarded under any restricted stock plan maintained by,
or covering employees of, the Bank, even if he is not vested under the
terms of such plan.
The Bank and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) 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 Bank and the Executive further agree that the Bank may
condition the payments and benefits (if any) due under sections 9(b)(iii), (iv),
(v), (vi) and (vii) 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 Bank or any of its subsidiaries or affiliates.
SECTION 10. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY.
In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
(a) the discharge of the Executive for "cause," which, for purposes of
this Agreement, shall mean a discharge because the Board determines that the
Executive: (i) has intentionally failed to perform his assigned duties under
this Agreement (including, for these purposes, the Executive's inability to
perform such duties as a result of drug or alcohol dependency); (ii) has
intentionally engaged in dishonest or illegal conduct in connection with his
performance of services for the Bank or has been convicted of a felony; (iii)
has willfully violated, in any material respect, any law, rule, regulation,
written agreement or final cease-and-desist order with respect to his
performance of services for the Bank, as determined by the Board; or (iv) has
intentionally breached the material terms of this Agreement;
(b) the Executive's voluntary resignation from employment with the Bank
for reasons other than those specified in section 9(a)(i); or
(c) the death of the Executive while employed by the Bank, or the
termination of the Executive's employment because of "total and permanent
disability" within the meaning of the Company's or the Bank's long-term
disability plan for employees; then the Bank shall have no further obligations
under this Agreement, other than the payment to the Executive of his earned but
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unpaid salary as of the date of the termination of his employment and the
provision of such other benefits, if any, to which he is entitled as a former
employee under the Bank's employee benefit plans and programs and compensation
plans and programs.
For purposes of this section 10, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Bank. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the written advice of counsel for the Bank
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Bank. Prior to the date
on which a Change in Control occurs, the cessation of employment of the
Executive shall not be deemed to be for "cause" within the meaning of section
10(a) unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of three-fourths of the
members of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to the Executive and the Executive is given
an opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in section 10(a) above, and specifying the particulars thereof
in detail. On and after the date that a Change in Control occurs, a
determination under this section 10 shall require the affirmative vote of at
least three-fourths of the members of the Board acting in good faith, and such
vote shall not be made prior to the expiration of a 60-day period following the
date on which the Board shall, by written notice to the Executive, furnish to
him a statement of its grounds for proposing to make such determination, during
which period the Executive shall be afforded a reasonable opportunity to make
oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations to refute the grounds for
the proposed determination.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE IN CONTROL.
(a) A Change in Control of the Bank ("Change in Control") shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the shareholders of the Bank of a transaction
that would result and does result in the reorganization, merger or
consolidation of the Bank, respectively, 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
Bank; and
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(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 Bank;
(ii) the acquisition of all or substantially all of the assets of
the Bank 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 Bank entitled to vote generally in the election of
directors by any person or by any persons acting in concert, or
approval by the shareholders of the Bank of any transaction which
would result in such an acquisition;
(iii) a complete liquidation or dissolution of the Bank, or
approval by the shareholders of the Bank of a plan for such
liquidation or dissolution;
(iv) the occurrence of any event if, immediately following such
event, at least 50% of the members of the Board do not belong to any
of the following groups:
(A) individuals who were members of the Board on the date of
this Agreement; or
(B) individuals who first became members of the Board after
the date of this Agreement either:
(1) upon election to serve as a member of the Board 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 to
serve as a member of the Board, but only if nominated for
election by affirmative vote of three-quarters of the
members of the board of directors of the Board, 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 (within the meaning of
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) other than by or on behalf of the Board of the Bank; or
(v) any event which would be described in section 11(a)(i), (ii),
(iii) or (iv) if the term "Company" were substituted for the term "Bank"
therein and the term "Company Board" were substituted for the term "Board"
therein.
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In no event, however, shall a Change in 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 11(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) In the event that the Executive=s employment with the Bank
terminates within eighteen months following a Change in Control for any reason
other than for "cause," as described in section 10, the Bank shall pay to the
Executive, in addition to the amounts payable pursuant to section 9, a severance
benefit in a lump sum payment, within 25 days after the later of the effective
time of such Change in Control or his termination of employment, equal to the
greater of (i) the sum of the amounts payable as salary pursuant to section 4
hereof during the Remaining Unexpired Employment Period and as additional cash
compensation pursuant to the terms of section 9(b)(vii) hereof, or (ii) three
times the annual average of the amount paid or payable to the Executive under
section 4 of this Agreement or the corresponding section of any prior employment
agreement with the Bank or its predecessor during the five preceding taxable
years of the Executive (or during the entire period of the Executive= employment
with the Bank or its predecessor if such period is less than five years). The
Bank shall also continue to provide to the Executive and to his eligible
dependents the benefits described in section 9(b)(iii) hereof for a period of at
least 36 months following the later of the effective time of such Change in
Control or his termination of employment.
SECTION 12. TAX INDEMNIFICATION.
(a) This section 12 shall apply if the Executive's employment is
terminated upon or following (i) a Change in Control (as defined in section 11
of this Agreement); or (ii) a change "in the ownership or effective control" of
the Company or the Bank or "in the ownership of a substantial portion of the
assets" of the Company or the Bank within the meaning of section 280G of the
Code. If this section 12 applies, then, if for any taxable year, the Executive
shall be liable for the payment of an excise tax under section 4999 of the Code
with respect to any payment in the nature of compensation made by the Bank or
any direct or indirect subsidiary or affiliate of the Bank to (or for the
benefit of) the Executive, the Bank shall pay to the Executive an amount equal
to X determined under the following formula:
E x P
X= ---------------------------------------
1 - [F I x (1-SLI)) + SLI + E + M]
where
E= the rate at which the excise tax is assessed under section
4999 of the Code;
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P= the amount with respect to which such excise tax is
assessed, determined without regard to this section 12;
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.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) the Executive under the terms of this Agreement, the
Executive's employment agreement with the Company, or otherwise, and on which an
excise tax under section 4999 of the Code will be assessed, the payment
determined under this section 12(a) shall be made to the Executive on the
earlier of (i) 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 (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this section 12 to the contrary, 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 determined by the formula (X + P) x E, where X, P and E have the meanings
provided in section 12(a), the Executive or the Bank, 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 12(a), when increased by the amount of the payment made to the
Executive under this section 12(b) by the Bank, or when reduced by the amount of
the payment made to the Bank under this section 12(b) by the Executive, equals
the amount that should have properly been paid to the Executive under section
12(a). The interest paid under this section 12(b) shall be determined at the
rate provided under section 1274(b)(2)(B) of the Code. To confirm that the
proper amount, if any, was paid to the Executive under this section 12, the
Executive shall furnish to the Bank a copy of each tax return which reflects a
liability for an excise tax payment made by the Bank, at least 20 days before
the date on which such return is required to be filed with the Internal Revenue
Service.
SECTION 13. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that, in the event of his
termination of employment with the Bank prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Bank (or, if less, for the Remaining
Unexpired Employment Period), he shall not, without the written consent of the
Bank, become an officer, employee, consultant, director or trustee of any
savings bank, savings and loan association, savings and loan holding company,
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bank or bank holding company, or any direct or indirect subsidiary or affiliate
of any such entity, that entails working within any county in which the Bank
maintains an office; provided, however, that this section 13 shall not apply if
the Executive's employment is terminated for the reasons set forth in section
9(a).
SECTION 14. CONFIDENTIALITY.
Unless he obtains the prior written consent of the Bank, the Executive
shall keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Bank or any entity which is a subsidiary
of the Bank or of which the Bank is a subsidiary, any material document or
information obtained from the Bank, 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 14 shall prevent the Executive,
with or without the Bank'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.
SECTION 15. SOLICITATION.
The Executive hereby covenants and agrees that, for a period of one
year following his termination of employment with the Bank, he shall not,
without the written consent of the Bank, 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 Bank or any of
its 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 bank,
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 13;
(b) provide any information, advice or recommendation with respect to
any such officer or employee of any savings bank, savings and loan bank,
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 13, 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 Bank
or any of its subsidiaries or affiliates to terminate his employment and
accept employment or become affiliated with, or provide services for
13
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 13;
(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 Bank to terminate an existing business or commercial relationship with
the Bank.
SECTION 16. 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 Bank or by the Executive, shall have no
effect on the rights and obligations of the parties hereto under 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 Bank from time to
time; provided, however, that nothing in this Agreement shall be deemed to
duplicate any compensation or benefits provided under any agreement, plan or
program covering the Executive to which the 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 17. 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 Bank and its 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 Bank may be
sold or otherwise transferred. Failure of the Bank to obtain from any successor
its express written assumption of the Bank's obligations hereunder at least 60
days in advance of the scheduled effective date of any such succession shall be
deemed a material breach of this Agreement.
SECTION 18. 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 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:
14
If to the Executive:
----------------------
----------------------
----------------------
If to the Bank:
Xxxxxx River Bank & Trust Company
0 Xxxxxx Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: President
with a copy to:
Silver, Xxxxxxxx & Taff, L.L.P.
0000 Xxx Xxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, P.C.
SECTION 19. INDEMNIFICATION FOR ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees and expenses, 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. For purposes of this Agreement, any settlement
agreement which provides for payment of any amounts in settlement of the Bank's
obligations hereunder shall be conclusive evidence of the Executive's
entitlement to indemnification hereunder, and any such indemnification payments
shall be in addition to amounts payable pursuant to such settlement agreement,
unless such settlement agreement expressly provides otherwise.
(b) The Bank's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement, and such amounts shall not be reduced whether
or not the Executive obtains other employment. Unless it is determined that a
claim made by the Executive was either frivolous or made in bad faith, the Bank
agrees to pay as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of or in
connection with his consultation with legal counsel or arising out of any
action, suit, proceeding or contest (regardless of the outcome thereof) by the
Bank, the Executive or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in section
7872(f)(2)(A) of the Code. This section 19(b) shall apply whether such
consultation, action, suit, proceeding or contest arises before, on, after or as
a result of a Change in Control.
15
SECTION 20. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 21. 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 22. 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.
SECTION 23. 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 24. 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.
16
SECTION 25. 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 26. NON-DUPLICATION.
In the event that the Executive shall perform services for the Company
or any other direct or indirect subsidiary or affiliate of the Bank, it is
intended that any compensation or benefits provided to the Executive by such
other employer shall not duplicate the compensation or benefits provided under
this Agreement. The compensation and benefits payable under this Agreement shall
be reduced to the extent necessary to effectuate this intention.
SECTION 27. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by 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, 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
IN WITNESS WHEREOF, the Bank 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.
----------------------------------------
EXECUTIVE
ATTEST: XXXXXX RIVER BANK & TRUST COMPANY
By_____________________________ By____________________________________
Secretary Name:
Title:
17
[Seal]
STATE OF NEW YORK )
: ss.:
COUNTY OF __________ )
On this ________ day of ____________________, 1998, before me
personally came __________________, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that he resides at the address set forth in said instrument,
and that he signed his name to the foregoing instrument.
-----------------------------------
Notary Public
My commission expires:
--------------------------
00
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF __________ )
On this ________ day of ____________________, 1998, before me
personally came ___________, to me known, who, being by me duly sworn, did
depose and say that he resides at _______________________________________, that
he is the _______________________ of XXXXXX RIVER BANK & TRUST COMPANY, the New
York State chartered stock savings bank described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such seal; that it was so affixed by order of the
Board of Directors of said corporation; and that he or she signed his name
thereto by like order.
-----------------------------------
Notary Public
My commission expires:
--------------------------
19
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
______________, 1998 by and between XXXXXX RIVER BANK & TRUST COMPANY, a
state-chartered savings bank organized and existing under the laws of the State
of New York, the ("Bank"), and Xxxxxxx X. Blow, an individual residing at
________________________ (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive currently serves as the Chief Financial Officer
of the Bank and as the Chief Financial Officer of Xxxxxx River Bancorp, Inc.
(the "Company"), and effective as of the date of this Agreement, the Bank has
converted from mutual to capital stock form and has become the wholly owned
subsidiary of the Company; and
WHEREAS, the Bank desires to assure for itself the continued
availability of the Executive's services as provided in this Agreement, and the
Board of Directors of the Bank (the "Board") recognizes the need for the
Executive to be able to perform such services with a minimum of personal
distraction in the event of a pending or threatened Change in Control (as
hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Bank on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Bank and the Executive
hereby agree as follows:
SECTION 1. EMPLOYMENT.
The Bank agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of two
years beginning on the date of this Agreement and ending on the second
anniversary date of this Agreement (each, an "Anniversary Date"), plus such
extensions, if any, as are provided pursuant to section 2(b).
(b) Except as provided in section 2(c), beginning on the date of this
Agreement, the Employment Period shall automatically be extended for one
additional day each day, unless either the Bank or the Executive elects not to
extend the Agreement further by giving written notice thereof to the other
party, in which case the Employment Period shall end on the second anniversary
of the date on which such written notice is given. For all purposes of this
Agreement, the term "Remaining Unexpired Employment Period" as of any date shall
mean the period beginning on such date and ending on the last day of the
Employment Period taking into account any extensions under this section 2(b).
Upon termination of the Executive's employment with the Bank for any reason
whatsoever, any daily extensions provided pursuant to this section 2(b), if not
theretofore discontinued, shall automatically cease.
(c) Nothing in this Agreement shall be deemed to prohibit the Bank at
any time from terminating the Executive's employment during the Employment
Period with or without notice for any reason; provided, however, that the
relative rights and obligations of the Bank and the Executive in the event of
any such termination shall be determined under this Agreement.
SECTION 3. DUTIES.
The Executive shall serve as Chief Financial Officer of the Bank,
having such power, authority and responsibility and performing such duties as
are prescribed by or under the By-Laws of the Bank and as are customarily
associated with such position. 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 Bank and shall use his best efforts to advance the interests of
the Bank.
SECTION 4. CASH COMPENSATION.
In consideration for the services to be rendered by the Executive
hereunder, the Bank shall pay to him a salary equal to the base salary from the
Company and the Bank in effect on the date of this Agreement, less the amount of
base salary actually paid to the Executive by the Company during the Employment
Period. The Executive's salary shall be payable in approximately equal
installments in accordance with the Bank's customary payroll practices for
senior officers. The Board 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 months, and may, in its discretion, approve an
increase therein. In addition to salary, the Executive may receive other cash
compensation from the Bank for services hereunder at such times, in such amounts
and on such terms and conditions as the Board may determine from time to time.
2
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as an
employee of the Bank 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 Bank, in accordance with the terms and conditions of such employee benefit
plans and programs and compensation plans and programs and consistent with the
Bank's customary practices.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six years
thereafter, the Bank shall cause the Executive to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Bank or service in
other capacities at the request of the Bank. 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 Bank.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six years thereafter, the Bank 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 Bank or any subsidiary or affiliate thereof.
SECTION 7. OUTSIDE ACTIVITIES.
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 (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 Bank and generally applicable to
all similarly situated Executives. The Executive may also serve as an officer or
director of the Company on such terms and conditions as the Company and the Bank
may mutually agree upon, and such service shall not be deemed to materially
interfere with the Executive's performance of his duties hereunder or otherwise
result in a material breach of this Agreement. If the Executive is discharged or
3
suspended, or is subject to any regulatory prohibition or restriction with
respect to participation in the affairs of the Company, he shall continue to
perform services for the Bank in accordance with this Agreement but shall not
directly or indirectly provide services to or participate in the affairs of the
Company in a manner inconsistent with the terms of such discharge or suspension
or any applicable regulatory order.
SECTION 8. WORKING FACILITIES AND EXPENSES.
The Executive's principal place of employment shall be at the Bank's
executive offices located in Xxxxxx, New York, or at such other location within
50 miles of the address at which the Bank shall maintain its principal executive
offices, or at such other location as the Bank and the Executive may mutually
agree upon. The Bank 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 position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall reimburse the Executive for his ordinary and necessary
business expenses, including, without limitation, the Executive's travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the Bank of an itemized
account of such expenses in such form as the Bank may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH BENEFITS.
(a) The Executive shall be entitled to the benefits described in
section 9(b) in the event that:
(i) his employment with the Bank terminates during the Employment
Period as a result of the Executive's voluntary resignation within 90 days
following:
(A) the failure of the Board to appoint or re-appoint or elect or
re-elect the Executive to the position with the Bank stated in section
3 of this Agreement (or a more senior office);
(B) if the Executive is a member of the Board, the failure of the
shareholders of the Bank to elect or re-elect the Executive to the
Board or the failure of the Board (or the nominating committee
thereof) to nominate the Executive for such election or re-election;
(C) the expiration of a 30-day period following the date on which
the Executive gives written notice to the Bank of its material
failure, whether by amendment of the Bank's Restated Organization
Certificate, the Bank's By-Laws, action of the Board or the Bank's
shareholders or otherwise, to vest in the Executive the functions,
duties, or responsibilities prescribed in section 3 of this Agreement,
unless, during such 30-day period, the Bank cures such failure;
4
(D) the expiration of a 30-day period following the date on which
the Executive gives written notice to the Bank of its material breach
of any term, condition or covenant contained in this Agreement
(including, without limitation, any reduction of the Executive's rate
of base salary in effect from time to time and 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), unless, during such 30-day period,
the Bank cures such failure; or
(E) a change in the Executive's principal place of employment for
a distance in excess of 50 miles from the Bank's principal office in
Hudson, New York; or
(F) the liquidation, dissolution, bankruptcy, or insolvency of
the Bank, the Bank or any of their respective subsidiaries or
affiliates; or
(ii) the Executive's employment with the Bank is terminated by the
Bank during the Employment Period for any reason other than for "cause," as
provided in section 10(a).
(b) Upon the occurrence of any of the events described in section 9(a)
of this Agreement, the Bank shall pay and provide to the Executive (or, in
the event of his death, to his estate):
(i) his earned but unpaid salary (including, without limitation, all
items which constitute wages under applicable law and the payment of which
is not otherwise provided for in this section 9(b)) as of the date of the
termination of his employment with the Bank, such payment to be made at the
time and in the manner prescribed by law applicable to the payment of wages
but in no event later than 30 days after termination of employment;
(ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and programs maintained for the benefit of the Bank's officers and
employees;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long term disability insurance
benefits, in addition to that provided pursuant to section 9(b)(ii), and
after taking into account the coverage provided by any subsequent employer,
if and to the extent necessary to provide for the Executive, for the
Remaining Unexpired Employment Period, coverage equivalent to the coverage
to which he would have been entitled under such plans (as in effect on the
date of his termination of employment, or, if his termination of employment
occurs after a Change of Control, on the date of such Change of Control,
whichever benefits are greater), if he had continued working for the Bank
during the Remaining Unexpired Employment Period at the highest annual rate
of salary achieved during the Employment Period;
5
(iv) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment, in an amount equal to the
present value of the salary (excluding any additional payments made to the
Executive in lieu of the use of an automobile) that the Executive would
have earned if he had continued working for the Bank during the Remaining
Unexpired Employment Period at the highest annual rate of salary achieved
during the Employment Period, 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, as
amended (the "Code"), compounded using the compounding periods
corresponding to the Bank's regular payroll periods for its officers, such
lump sum to be paid in lieu of all other payments of salary provided for
under this Agreement in respect of the period following any such
termination;
(v) within 30 days following the Executive's termination of employment
with the Bank, 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 The Retirement Plan of the Xxxxxx River Bank & Trust
Company (together with the defined benefit portion of the Benefit
Restoration Plan of Xxxxxx River Bank & Trust Company and any other
supplemental defined benefit plan) and any and all other qualified and
non-qualified defined benefit pension plans maintained by, or covering
employees of, the Bank if he were 100% vested thereunder and had
continued working for the Bank during the Remaining Unexpired
Employment Period at the highest annual rate of salary achieved during
the Employment Period; over
(B) the present value of the benefits to which he is actually
entitled under such defined benefit pension plans as of the date of his
termination; where such present values are to be determined using the
mortality tables prescribed under section 415(b)(2)(E)(v) of the Code
and a discount rate, compounded monthly equal to the annualized rate of
interest prescribed by the Pension Benefit Guaranty Corporation for the
valuation of immediate annuities payable under terminating
single-employer defined benefit plans for the month in which the
Executive's termination of employment occurs ("Applicable PBGC Rate");
(vi) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment in an amount equal to the
present value of the additional employer contributions to which he would
have been entitled under the Xxxxxx River Bank & Trust Company 401(k)
Savings Plan, the Xxxxxx River Bancorp, Inc. Employee Stock Ownership Plan
(together with the defined contribution portion of the Benefit Restoration
Plan of Xxxxxx River Bank & Trust Company or any other supplemental defined
contribution plan) and any and all other qualified and non-qualified
defined contribution plans maintained by, or covering employees of, the
Bank as if he were 100% vested thereunder and had continued working for the
Bank during the Remaining Unexpired Employment Period at the highest annual
6
rate of salary achieved during the Employment Period and making the maximum
amount of employee contributions, if any, required or permitted under such
plan or plans, such present value to be determined on the basis of a
discount rate, compounded using the compounding period that corresponds to
the frequency with which employer contributions are made to the relevant
plan, equal to the Applicable PBGC Rate;
(vii) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment in an amount equal to the
payments that would have been made (without discounting for early payment)
to the Executive under any cash bonus or long-term or short-term cash
incentive compensation plan maintained by, or covering employees of, the
Bank if he had continued working for the Bank during the Remaining
Unexpired Employment 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 the Executive under such incentive compensation plan;
multiplied by
(B) the salary that would have been paid to the Executive during
each such calendar year at the highest annual rate of salary achieved
during the Employment Period.
(viii) at the election of the Bank made within 30 days following the
occurrence of the event described in section 9(a), upon the surrender of
options or appreciation rights issued to the Executive under any stock
option and appreciation rights plan or program maintained by, or covering
employees of, the Bank, a lump sum payment in an amount equal to the
product of:
(A) the excess of (I) the fair market value of a share of stock
of the same class as the stock subject to the option or appreciation
right, determined as of the date of termination of employment, over
(II) the exercise price per share for such option or appreciation
right, as specified in or under the relevant plan or program;
multiplied by
(B) the number of shares with respect to which options or
appreciation rights are being surrendered.
For purposes of this section 9(b)(viii), the Executive shall be deemed
fully vested in all options and appreciation rights under any stock option
or appreciation rights plan or program maintained by, or covering employees
of, the Bank, even if he is not vested under the terms of such plan or
program; and
(ix) at the election of the Bank made within 30 days following the
occurrence of the event described in section 9(a), upon the surrender of
any shares awarded to the Executive under any restricted stock plan
maintained by, or covering employees of, the Bank, a lump sum payment in an
amount equal to the product of:
7
(A) the fair market value of a share of stock of the same class
of stock granted under such plan, determined as of the date of the
Executive's termination of employment; multiplied by
(B) the number of shares which are being surrendered.
For purposes of this section 9(b)(ix), the Executive shall be deemed fully
vested in all shares awarded under any restricted stock plan maintained by,
or covering employees of, the Bank, even if he is not vested under the
terms of such plan.
The Bank and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) 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 Bank and the Executive further agree that the Bank may
condition the payments and benefits (if any) due under sections 9(b)(iii), (iv),
(v), (vi) and (vii) 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 Bank or any of its subsidiaries or affiliates.
SECTION 10. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY.
In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
(a) the discharge of the Executive for "cause," which, for purposes of
this Agreement, shall mean a discharge because the Board determines that the
Executive: (i) has intentionally failed to perform his assigned duties under
this Agreement (including, for these purposes, the Executive's inability to
perform such duties as a result of drug or alcohol dependency); (ii) has
intentionally engaged in dishonest or illegal conduct in connection with his
performance of services for the Bank or has been convicted of a felony; (iii)
has willfully violated, in any material respect, any law, rule, regulation,
written agreement or final cease-and-desist order with respect to his
performance of services for the Bank, as determined by the Board; or (iv) has
intentionally breached the material terms of this Agreement;
(b) the Executive's voluntary resignation from employment with the Bank
for reasons other than those specified in section 9(a)(i); or
(c) the death of the Executive while employed by the Bank, or the
termination of the Executive's employment because of "total and permanent
disability" within the meaning of the Company's or the Bank's long-term
disability plan for employees; then the Bank shall have no further obligations
under this Agreement, other than the payment to the Executive of his earned but
8
unpaid salary as of the date of the termination of his employment and the
provision of such other benefits, if any, to which he is entitled as a former
employee under the Bank's employee benefit plans and programs and compensation
plans and programs.
For purposes of this section 10, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Bank. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the written advice of counsel for the Bank
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Bank. Prior to the date
on which a Change in Control occurs, the cessation of employment of the
Executive shall not be deemed to be for "cause" within the meaning of section
10(a) unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of three-fourths of the
members of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to the Executive and the Executive is given
an opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in section 10(a) above, and specifying the particulars thereof
in detail. On and after the date that a Change in Control occurs, a
determination under this section 10 shall require the affirmative vote of at
least three-fourths of the members of the Board acting in good faith, and such
vote shall not be made prior to the expiration of a 60-day period following the
date on which the Board shall, by written notice to the Executive, furnish to
him a statement of its grounds for proposing to make such determination, during
which period the Executive shall be afforded a reasonable opportunity to make
oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations to refute the grounds for
the proposed determination.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE IN CONTROL.
(a) A Change in Control of the Bank ("Change in Control") shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the shareholders of the Bank of a transaction
that would result and does result in the reorganization, merger or
consolidation of the Bank, respectively, 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
Bank; and
9
(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 Bank;
(ii) the acquisition of all or substantially all of the assets of
the Bank 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 Bank entitled to vote generally in the election of
directors by any person or by any persons acting in concert, or
approval by the shareholders of the Bank of any transaction which
would result in such an acquisition;
(iii) a complete liquidation or dissolution of the Bank, or
approval by the shareholders of the Bank of a plan for such
liquidation or dissolution;
(iv) the occurrence of any event if, immediately following such
event, at least 50% of the members of the Board do not belong to any
of the following groups:
(A) individuals who were members of the Board on the date of
this Agreement; or
(B) individuals who first became members of the Board after
the date of this Agreement either:
(1) upon election to serve as a member of the Board 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 to
serve as a member of the Board, but only if nominated for
election by affirmative vote of three-quarters of the
members of the board of directors of the Board, 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 (within the meaning of
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) other than by or on behalf of the Board of the Bank; or
(v) any event which would be described in section 11(a)(i), (ii),
(iii) or (iv) if the term "Company" were substituted for the term "Bank"
therein and the term "Company Board" were substituted for the term "Board"
therein.
10
In no event, however, shall a Change in 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 11(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) In the event that the Executive=s employment with the Bank
terminates within eighteen months following a Change in Control for any reason
other than for "cause," as described in section 10, the Bank shall pay to the
Executive, in addition to the amounts payable pursuant to section 9, a severance
benefit in a lump sum payment, within 25 days after the later of the effective
time of such Change in Control or his termination of employment, equal to the
greater of (i) the sum of the amounts payable as salary pursuant to section 4
hereof during the Remaining Unexpired Employment Period and as additional cash
compensation pursuant to the terms of section 9(b)(vii) hereof, or (ii) three
times the annual average of the amount paid or payable to the Executive under
section 4 of this Agreement or the corresponding section of any prior employment
agreement with the Bank or its predecessor during the five preceding taxable
years of the Executive (or during the entire period of the Executive= employment
with the Bank or its predecessor if such period is less than five years). The
Bank shall also continue to provide to the Executive and to his eligible
dependents the benefits described in section 9(b)(iii) hereof for a period of at
least 36 months following the later of the effective time of such Change in
Control or his termination of employment.
SECTION 12. TAX INDEMNIFICATION.
(a) This section 12 shall apply if the Executive's employment is
terminated upon or following (i) a Change in Control (as defined in section 11
of this Agreement); or (ii) a change "in the ownership or effective control" of
the Company or the Bank or "in the ownership of a substantial portion of the
assets" of the Company or the Bank within the meaning of section 280G of the
Code. If this section 12 applies, then, if for any taxable year, the Executive
shall be liable for the payment of an excise tax under section 4999 of the Code
with respect to any payment in the nature of compensation made by the Bank or
any direct or indirect subsidiary or affiliate of the Bank to (or for the
benefit of) the Executive, the Bank shall pay to the Executive an amount equal
to X determined under the following formula:
E x P
X= ---------------------------------------
1 - [F I x (1-SLI)) + SLI + E + M]
where
E= the rate at which the excise tax is assessed under section
4999 of the Code;
11
P= the amount with respect to which such excise tax is
assessed, determined without regard to this section 12;
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.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) the Executive under the terms of this Agreement, the
Executive's employment agreement with the Company, or otherwise, and on which an
excise tax under section 4999 of the Code will be assessed, the payment
determined under this section 12(a) shall be made to the Executive on the
earlier of (i) 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 (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this section 12 to the contrary, 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 determined by the formula (X + P) x E, where X, P and E have the meanings
provided in section 12(a), the Executive or the Bank, 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 12(a), when increased by the amount of the payment made to the
Executive under this section 12(b) by the Bank, or when reduced by the amount of
the payment made to the Bank under this section 12(b) by the Executive, equals
the amount that should have properly been paid to the Executive under section
12(a). The interest paid under this section 12(b) shall be determined at the
rate provided under section 1274(b)(2)(B) of the Code. To confirm that the
proper amount, if any, was paid to the Executive under this section 12, the
Executive shall furnish to the Bank a copy of each tax return which reflects a
liability for an excise tax payment made by the Bank, at least 20 days before
the date on which such return is required to be filed with the Internal Revenue
Service.
SECTION 13. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that, in the event of his
termination of employment with the Bank prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Bank (or, if less, for the Remaining
Unexpired Employment Period), he shall not, without the written consent of the
Bank, become an officer, employee, consultant, director or trustee of any
savings bank, savings and loan association, savings and loan holding company,
12
bank or bank holding company, or any direct or indirect subsidiary or affiliate
of any such entity, that entails working within any county in which the Bank
maintains an office; provided, however, that this section 13 shall not apply if
the Executive's employment is terminated for the reasons set forth in section
9(a).
SECTION 14. CONFIDENTIALITY.
Unless he obtains the prior written consent of the Bank, the Executive
shall keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Bank or any entity which is a subsidiary
of the Bank or of which the Bank is a subsidiary, any material document or
information obtained from the Bank, 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 14 shall prevent the Executive,
with or without the Bank'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.
SECTION 15. SOLICITATION.
The Executive hereby covenants and agrees that, for a period of one
year following his termination of employment with the Bank, he shall not,
without the written consent of the Bank, 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 Bank or any of
its 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 bank,
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 13;
(b) provide any information, advice or recommendation with respect to
any such officer or employee of any savings bank, savings and loan bank,
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 13, 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 Bank
or any of its subsidiaries or affiliates to terminate his employment and
accept employment or become affiliated with, or provide services for
13
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 13;
(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 Bank to terminate an existing business or commercial relationship with
the Bank.
SECTION 16. 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 Bank or by the Executive, shall have no
effect on the rights and obligations of the parties hereto under 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 Bank from time to
time; provided, however, that nothing in this Agreement shall be deemed to
duplicate any compensation or benefits provided under any agreement, plan or
program covering the Executive to which the 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 17. 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 Bank and its 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 Bank may be
sold or otherwise transferred. Failure of the Bank to obtain from any successor
its express written assumption of the Bank's obligations hereunder at least 60
days in advance of the scheduled effective date of any such succession shall be
deemed a material breach of this Agreement.
SECTION 18. 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 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:
14
If to the Executive:
----------------------
----------------------
----------------------
If to the Bank:
Xxxxxx River Bank & Trust Company
0 Xxxxxx Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: President
with a copy to:
Silver, Xxxxxxxx & Taff, L.L.P.
0000 Xxx Xxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, P.C.
SECTION 19. INDEMNIFICATION FOR ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees and expenses, 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. For purposes of this Agreement, any settlement
agreement which provides for payment of any amounts in settlement of the Bank's
obligations hereunder shall be conclusive evidence of the Executive's
entitlement to indemnification hereunder, and any such indemnification payments
shall be in addition to amounts payable pursuant to such settlement agreement,
unless such settlement agreement expressly provides otherwise.
(b) The Bank's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement, and such amounts shall not be reduced whether
or not the Executive obtains other employment. Unless it is determined that a
claim made by the Executive was either frivolous or made in bad faith, the Bank
agrees to pay as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of or in
connection with his consultation with legal counsel or arising out of any
action, suit, proceeding or contest (regardless of the outcome thereof) by the
Bank, the Executive or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in section
7872(f)(2)(A) of the Code. This section 19(b) shall apply whether such
consultation, action, suit, proceeding or contest arises before, on, after or as
a result of a Change in Control.
15
SECTION 20. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 21. 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 22. 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.
SECTION 23. 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 24. 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.
16
SECTION 25. 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 26. NON-DUPLICATION.
In the event that the Executive shall perform services for the Company
or any other direct or indirect subsidiary or affiliate of the Bank, it is
intended that any compensation or benefits provided to the Executive by such
other employer shall not duplicate the compensation or benefits provided under
this Agreement. The compensation and benefits payable under this Agreement shall
be reduced to the extent necessary to effectuate this intention.
SECTION 27. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by 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, 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
IN WITNESS WHEREOF, the Bank 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.
----------------------------------------
EXECUTIVE
ATTEST: XXXXXX RIVER BANK & TRUST COMPANY
By_____________________________ By____________________________________
Secretary Name:
Title:
17
[Seal]
STATE OF NEW YORK )
: ss.:
COUNTY OF __________ )
On this ________ day of ____________________, 1998, before me
personally came __________________, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that he resides at the address set forth in said instrument,
and that he signed his name to the foregoing instrument.
-----------------------------------
Notary Public
My commission expires:
--------------------------
00
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF __________ )
On this ________ day of ____________________, 1998, before me
personally came ___________, to me known, who, being by me duly sworn, did
depose and say that he resides at _______________________________________, that
he is the _______________________ of XXXXXX RIVER BANK & TRUST COMPANY, the New
York State chartered stock savings bank described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such seal; that it was so affixed by order of the
Board of Directors of said corporation; and that he or she signed his name
thereto by like order.
-----------------------------------
Notary Public
My commission expires:
--------------------------
19
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
______________, 1998 by and between XXXXXX RIVER BANK & TRUST COMPANY, a
state-chartered savings bank organized and existing under the laws of the State
of New York, the ("Bank"), and Xxxxxx X. Xxxxxxx, an individual residing at
________________________ (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive currently serves as the Senior Vice President of
the Bank and as the Senior Vice President of Xxxxxx River Bancorp, Inc. (the
"Company"), and effective as of the date of this Agreement, the Bank has
converted from mutual to capital stock form and has become the wholly owned
subsidiary of the Company; and
WHEREAS, the Bank desires to assure for itself the continued
availability of the Executive's services as provided in this Agreement, and the
Board of Directors of the Bank (the "Board") recognizes the need for the
Executive to be able to perform such services with a minimum of personal
distraction in the event of a pending or threatened Change in Control (as
hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Bank on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Bank and the Executive
hereby agree as follows:
SECTION 1. EMPLOYMENT.
The Bank agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of two
years beginning on the date of this Agreement and ending on the second
anniversary date of this Agreement (each, an "Anniversary Date"), plus such
extensions, if any, as are provided pursuant to section 2(b).
(b) Except as provided in section 2(c), beginning on the date of this
Agreement, the Employment Period shall automatically be extended for one
additional day each day, unless either the Bank or the Executive elects not to
extend the Agreement further by giving written notice thereof to the other
party, in which case the Employment Period shall end on the second anniversary
of the date on which such written notice is given. For all purposes of this
Agreement, the term "Remaining Unexpired Employment Period" as of any date shall
mean the period beginning on such date and ending on the last day of the
Employment Period taking into account any extensions under this section 2(b).
Upon termination of the Executive's employment with the Bank for any reason
whatsoever, any daily extensions provided pursuant to this section 2(b), if not
theretofore discontinued, shall automatically cease.
(c) Nothing in this Agreement shall be deemed to prohibit the Bank at
any time from terminating the Executive's employment during the Employment
Period with or without notice for any reason; provided, however, that the
relative rights and obligations of the Bank and the Executive in the event of
any such termination shall be determined under this Agreement.
SECTION 3. DUTIES.
The Executive shall serve as Senior Vice President of the Bank, having
such power, authority and responsibility and performing such duties as are
prescribed by or under the By-Laws of the Bank and as are customarily associated
with such position. 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 Bank and shall use his best efforts to advance the interests of the Bank.
SECTION 4. CASH COMPENSATION.
In consideration for the services to be rendered by the Executive
hereunder, the Bank shall pay to him a salary equal to the base salary from the
Company and the Bank in effect on the date of this Agreement, less the amount of
base salary actually paid to the Executive by the Company during the Employment
Period. The Executive's salary shall be payable in approximately equal
installments in accordance with the Bank's customary payroll practices for
senior officers. The Board 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 months, and may, in its discretion, approve an
increase therein. In addition to salary, the Executive may receive other cash
compensation from the Bank for services hereunder at such times, in such amounts
and on such terms and conditions as the Board may determine from time to time.
2
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as an
employee of the Bank 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 Bank, in accordance with the terms and conditions of such employee benefit
plans and programs and compensation plans and programs and consistent with the
Bank's customary practices.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six years
thereafter, the Bank shall cause the Executive to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Bank or service in
other capacities at the request of the Bank. 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 Bank.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six years thereafter, the Bank 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 Bank or any subsidiary or affiliate thereof.
SECTION 7. OUTSIDE ACTIVITIES.
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 (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 Bank and generally applicable to
all similarly situated Executives. The Executive may also serve as an officer or
director of the Company on such terms and conditions as the Company and the Bank
may mutually agree upon, and such service shall not be deemed to materially
interfere with the Executive's performance of his duties hereunder or otherwise
result in a material breach of this Agreement. If the Executive is discharged or
3
suspended, or is subject to any regulatory prohibition or restriction with
respect to participation in the affairs of the Company, he shall continue to
perform services for the Bank in accordance with this Agreement but shall not
directly or indirectly provide services to or participate in the affairs of the
Company in a manner inconsistent with the terms of such discharge or suspension
or any applicable regulatory order.
SECTION 8. WORKING FACILITIES AND EXPENSES.
The Executive's principal place of employment shall be at the Bank's
executive offices located in Xxxxxx, New York, or at such other location within
50 miles of the address at which the Bank shall maintain its principal executive
offices, or at such other location as the Bank and the Executive may mutually
agree upon. The Bank 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 position with the Bank and necessary or
appropriate in connection with the performance of his assigned duties under this
Agreement. The Bank shall reimburse the Executive for his ordinary and necessary
business expenses, including, without limitation, the Executive's travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the Bank of an itemized
account of such expenses in such form as the Bank may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH BENEFITS.
(a) The Executive shall be entitled to the benefits described in
section 9(b) in the event that:
(i) his employment with the Bank terminates during the Employment
Period as a result of the Executive's voluntary resignation within 90 days
following:
(A) the failure of the Board to appoint or re-appoint or elect or
re-elect the Executive to the position with the Bank stated in section
3 of this Agreement (or a more senior office);
(B) if the Executive is a member of the Board, the failure of the
shareholders of the Bank to elect or re-elect the Executive to the
Board or the failure of the Board (or the nominating committee
thereof) to nominate the Executive for such election or re-election;
(C) the expiration of a 30-day period following the date on which
the Executive gives written notice to the Bank of its material
failure, whether by amendment of the Bank's Restated Organization
Certificate, the Bank's By-Laws, action of the Board or the Bank's
shareholders or otherwise, to vest in the Executive the functions,
duties, or responsibilities prescribed in section 3 of this Agreement,
unless, during such 30-day period, the Bank cures such failure;
4
(D) the expiration of a 30-day period following the date on which
the Executive gives written notice to the Bank of its material breach
of any term, condition or covenant contained in this Agreement
(including, without limitation, any reduction of the Executive's rate
of base salary in effect from time to time and 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), unless, during such 30-day period,
the Bank cures such failure; or
(E) a change in the Executive's principal place of employment for
a distance in excess of 50 miles from the Bank's principal office in
Hudson, New York; or
(F) the liquidation, dissolution, bankruptcy, or insolvency of
the Bank, the Bank or any of their respective subsidiaries or
affiliates; or
(ii) the Executive's employment with the Bank is terminated by the
Bank during the Employment Period for any reason other than for "cause," as
provided in section 10(a).
(b) Upon the occurrence of any of the events described in section 9(a)
of this Agreement, the Bank shall pay and provide to the Executive (or, in
the event of his death, to his estate):
(i) his earned but unpaid salary (including, without limitation, all
items which constitute wages under applicable law and the payment of which
is not otherwise provided for in this section 9(b)) as of the date of the
termination of his employment with the Bank, such payment to be made at the
time and in the manner prescribed by law applicable to the payment of wages
but in no event later than 30 days after termination of employment;
(ii) the benefits, if any, to which he is entitled as a former
employee under the employee benefit plans and programs and compensation
plans and programs maintained for the benefit of the Bank's officers and
employees;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long term disability insurance
benefits, in addition to that provided pursuant to section 9(b)(ii), and
after taking into account the coverage provided by any subsequent employer,
if and to the extent necessary to provide for the Executive, for the
Remaining Unexpired Employment Period, coverage equivalent to the coverage
to which he would have been entitled under such plans (as in effect on the
date of his termination of employment, or, if his termination of employment
occurs after a Change of Control, on the date of such Change of Control,
whichever benefits are greater), if he had continued working for the Bank
during the Remaining Unexpired Employment Period at the highest annual rate
of salary achieved during the Employment Period;
5
(iv) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment, in an amount equal to the
present value of the salary (excluding any additional payments made to the
Executive in lieu of the use of an automobile) that the Executive would
have earned if he had continued working for the Bank during the Remaining
Unexpired Employment Period at the highest annual rate of salary achieved
during the Employment Period, 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, as
amended (the "Code"), compounded using the compounding periods
corresponding to the Bank's regular payroll periods for its officers, such
lump sum to be paid in lieu of all other payments of salary provided for
under this Agreement in respect of the period following any such
termination;
(v) within 30 days following the Executive's termination of employment
with the Bank, 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 The Retirement Plan of the Xxxxxx River Bank & Trust
Company (together with the defined benefit portion of the Benefit
Restoration Plan of Xxxxxx River Bank & Trust Company and any other
supplemental defined benefit plan) and any and all other qualified and
non-qualified defined benefit pension plans maintained by, or covering
employees of, the Bank if he were 100% vested thereunder and had
continued working for the Bank during the Remaining Unexpired
Employment Period at the highest annual rate of salary achieved during
the Employment Period; over
(B) the present value of the benefits to which he is actually
entitled under such defined benefit pension plans as of the date of his
termination; where such present values are to be determined using the
mortality tables prescribed under section 415(b)(2)(E)(v) of the Code
and a discount rate, compounded monthly equal to the annualized rate of
interest prescribed by the Pension Benefit Guaranty Corporation for the
valuation of immediate annuities payable under terminating
single-employer defined benefit plans for the month in which the
Executive's termination of employment occurs ("Applicable PBGC Rate");
(vi) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment in an amount equal to the
present value of the additional employer contributions to which he would
have been entitled under the Xxxxxx River Bank & Trust Company 401(k)
Savings Plan, the Xxxxxx River Bancorp, Inc. Employee Stock Ownership Plan
(together with the defined contribution portion of the Benefit Restoration
Plan of Xxxxxx River Bank & Trust Company or any other supplemental defined
contribution plan) and any and all other qualified and non-qualified
defined contribution plans maintained by, or covering employees of, the
Bank as if he were 100% vested thereunder and had continued working for the
Bank during the Remaining Unexpired Employment Period at the highest annual
6
rate of salary achieved during the Employment Period and making the maximum
amount of employee contributions, if any, required or permitted under such
plan or plans, such present value to be determined on the basis of a
discount rate, compounded using the compounding period that corresponds to
the frequency with which employer contributions are made to the relevant
plan, equal to the Applicable PBGC Rate;
(vii) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment in an amount equal to the
payments that would have been made (without discounting for early payment)
to the Executive under any cash bonus or long-term or short-term cash
incentive compensation plan maintained by, or covering employees of, the
Bank if he had continued working for the Bank during the Remaining
Unexpired Employment 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 the Executive under such incentive compensation plan;
multiplied by
(B) the salary that would have been paid to the Executive during
each such calendar year at the highest annual rate of salary achieved
during the Employment Period.
(viii) at the election of the Bank made within 30 days following the
occurrence of the event described in section 9(a), upon the surrender of
options or appreciation rights issued to the Executive under any stock
option and appreciation rights plan or program maintained by, or covering
employees of, the Bank, a lump sum payment in an amount equal to the
product of:
(A) the excess of (I) the fair market value of a share of stock
of the same class as the stock subject to the option or appreciation
right, determined as of the date of termination of employment, over
(II) the exercise price per share for such option or appreciation
right, as specified in or under the relevant plan or program;
multiplied by
(B) the number of shares with respect to which options or
appreciation rights are being surrendered.
For purposes of this section 9(b)(viii), the Executive shall be deemed
fully vested in all options and appreciation rights under any stock option
or appreciation rights plan or program maintained by, or covering employees
of, the Bank, even if he is not vested under the terms of such plan or
program; and
(ix) at the election of the Bank made within 30 days following the
occurrence of the event described in section 9(a), upon the surrender of
any shares awarded to the Executive under any restricted stock plan
maintained by, or covering employees of, the Bank, a lump sum payment in an
amount equal to the product of:
7
(A) the fair market value of a share of stock of the same class
of stock granted under such plan, determined as of the date of the
Executive's termination of employment; multiplied by
(B) the number of shares which are being surrendered.
For purposes of this section 9(b)(ix), the Executive shall be deemed fully
vested in all shares awarded under any restricted stock plan maintained by,
or covering employees of, the Bank, even if he is not vested under the
terms of such plan.
The Bank and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) 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 Bank and the Executive further agree that the Bank may
condition the payments and benefits (if any) due under sections 9(b)(iii), (iv),
(v), (vi) and (vii) 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 Bank or any of its subsidiaries or affiliates.
SECTION 10. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY.
In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
(a) the discharge of the Executive for "cause," which, for purposes of
this Agreement, shall mean a discharge because the Board determines that the
Executive: (i) has intentionally failed to perform his assigned duties under
this Agreement (including, for these purposes, the Executive's inability to
perform such duties as a result of drug or alcohol dependency); (ii) has
intentionally engaged in dishonest or illegal conduct in connection with his
performance of services for the Bank or has been convicted of a felony; (iii)
has willfully violated, in any material respect, any law, rule, regulation,
written agreement or final cease-and-desist order with respect to his
performance of services for the Bank, as determined by the Board; or (iv) has
intentionally breached the material terms of this Agreement;
(b) the Executive's voluntary resignation from employment with the Bank
for reasons other than those specified in section 9(a)(i); or
(c) the death of the Executive while employed by the Bank, or the
termination of the Executive's employment because of "total and permanent
disability" within the meaning of the Company's or the Bank's long-term
disability plan for employees; then the Bank shall have no further obligations
under this Agreement, other than the payment to the Executive of his earned but
8
unpaid salary as of the date of the termination of his employment and the
provision of such other benefits, if any, to which he is entitled as a former
employee under the Bank's employee benefit plans and programs and compensation
plans and programs.
For purposes of this section 10, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Bank. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the written advice of counsel for the Bank
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Bank. Prior to the date
on which a Change in Control occurs, the cessation of employment of the
Executive shall not be deemed to be for "cause" within the meaning of section
10(a) unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of three-fourths of the
members of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to the Executive and the Executive is given
an opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in section 10(a) above, and specifying the particulars thereof
in detail. On and after the date that a Change in Control occurs, a
determination under this section 10 shall require the affirmative vote of at
least three-fourths of the members of the Board acting in good faith, and such
vote shall not be made prior to the expiration of a 60-day period following the
date on which the Board shall, by written notice to the Executive, furnish to
him a statement of its grounds for proposing to make such determination, during
which period the Executive shall be afforded a reasonable opportunity to make
oral and written presentations to the members of the Board, and to be
represented by his legal counsel at such presentations to refute the grounds for
the proposed determination.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE IN CONTROL.
(a) A Change in Control of the Bank ("Change in Control") shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the shareholders of the Bank of a transaction
that would result and does result in the reorganization, merger or
consolidation of the Bank, respectively, 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
Bank; and
9
(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 Bank;
(ii) the acquisition of all or substantially all of the assets of
the Bank 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 Bank entitled to vote generally in the election of
directors by any person or by any persons acting in concert, or
approval by the shareholders of the Bank of any transaction which
would result in such an acquisition;
(iii) a complete liquidation or dissolution of the Bank, or
approval by the shareholders of the Bank of a plan for such
liquidation or dissolution;
(iv) the occurrence of any event if, immediately following such
event, at least 50% of the members of the Board do not belong to any
of the following groups:
(A) individuals who were members of the Board on the date of
this Agreement; or
(B) individuals who first became members of the Board after
the date of this Agreement either:
(1) upon election to serve as a member of the Board 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 to
serve as a member of the Board, but only if nominated for
election by affirmative vote of three-quarters of the
members of the board of directors of the Board, 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 (within the meaning of
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) other than by or on behalf of the Board of the Bank; or
(v) any event which would be described in section 11(a)(i), (ii),
(iii) or (iv) if the term "Company" were substituted for the term "Bank"
therein and the term "Company Board" were substituted for the term "Board"
therein.
10
In no event, however, shall a Change in 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 11(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) In the event that the Executive=s employment with the Bank
terminates within eighteen months following a Change in Control for any reason
other than for "cause," as described in section 10, the Bank shall pay to the
Executive, in addition to the amounts payable pursuant to section 9, a severance
benefit in a lump sum payment, within 25 days after the later of the effective
time of such Change in Control or his termination of employment, equal to the
greater of (i) the sum of the amounts payable as salary pursuant to section 4
hereof during the Remaining Unexpired Employment Period and as additional cash
compensation pursuant to the terms of section 9(b)(vii) hereof, or (ii) three
times the annual average of the amount paid or payable to the Executive under
section 4 of this Agreement or the corresponding section of any prior employment
agreement with the Bank or its predecessor during the five preceding taxable
years of the Executive (or during the entire period of the Executive= employment
with the Bank or its predecessor if such period is less than five years). The
Bank shall also continue to provide to the Executive and to his eligible
dependents the benefits described in section 9(b)(iii) hereof for a period of at
least 36 months following the later of the effective time of such Change in
Control or his termination of employment.
SECTION 12. TAX INDEMNIFICATION.
(a) This section 12 shall apply if the Executive's employment is
terminated upon or following (i) a Change in Control (as defined in section 11
of this Agreement); or (ii) a change "in the ownership or effective control" of
the Company or the Bank or "in the ownership of a substantial portion of the
assets" of the Company or the Bank within the meaning of section 280G of the
Code. If this section 12 applies, then, if for any taxable year, the Executive
shall be liable for the payment of an excise tax under section 4999 of the Code
with respect to any payment in the nature of compensation made by the Bank or
any direct or indirect subsidiary or affiliate of the Bank to (or for the
benefit of) the Executive, the Bank shall pay to the Executive an amount equal
to X determined under the following formula:
E x P
X= ---------------------------------------
1 - [F I x (1-SLI)) + SLI + E + M]
where
E= the rate at which the excise tax is assessed under section
4999 of the Code;
11
P= the amount with respect to which such excise tax is
assessed, determined without regard to this section 12;
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.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) the Executive under the terms of this Agreement, the
Executive's employment agreement with the Company, or otherwise, and on which an
excise tax under section 4999 of the Code will be assessed, the payment
determined under this section 12(a) shall be made to the Executive on the
earlier of (i) 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 (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this section 12 to the contrary, 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 determined by the formula (X + P) x E, where X, P and E have the meanings
provided in section 12(a), the Executive or the Bank, 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 12(a), when increased by the amount of the payment made to the
Executive under this section 12(b) by the Bank, or when reduced by the amount of
the payment made to the Bank under this section 12(b) by the Executive, equals
the amount that should have properly been paid to the Executive under section
12(a). The interest paid under this section 12(b) shall be determined at the
rate provided under section 1274(b)(2)(B) of the Code. To confirm that the
proper amount, if any, was paid to the Executive under this section 12, the
Executive shall furnish to the Bank a copy of each tax return which reflects a
liability for an excise tax payment made by the Bank, at least 20 days before
the date on which such return is required to be filed with the Internal Revenue
Service.
SECTION 13. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that, in the event of his
termination of employment with the Bank prior to the expiration of the
Employment Period, for a period of one year following the date of his
termination of employment with the Bank (or, if less, for the Remaining
Unexpired Employment Period), he shall not, without the written consent of the
Bank, become an officer, employee, consultant, director or trustee of any
savings bank, savings and loan association, savings and loan holding company,
12
bank or bank holding company, or any direct or indirect subsidiary or affiliate
of any such entity, that entails working within any county in which the Bank
maintains an office; provided, however, that this section 13 shall not apply if
the Executive's employment is terminated for the reasons set forth in section
9(a).
SECTION 14. CONFIDENTIALITY.
Unless he obtains the prior written consent of the Bank, the Executive
shall keep confidential and shall refrain from using for the benefit of himself,
or any person or entity other than the Bank or any entity which is a subsidiary
of the Bank or of which the Bank is a subsidiary, any material document or
information obtained from the Bank, 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 14 shall prevent the Executive,
with or without the Bank'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.
SECTION 15. SOLICITATION.
The Executive hereby covenants and agrees that, for a period of one
year following his termination of employment with the Bank, he shall not,
without the written consent of the Bank, 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 Bank or any of
its 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 bank,
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 13;
(b) provide any information, advice or recommendation with respect to
any such officer or employee of any savings bank, savings and loan bank,
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 13, 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 Bank
or any of its subsidiaries or affiliates to terminate his employment and
accept employment or become affiliated with, or provide services for
13
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 13;
(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 Bank to terminate an existing business or commercial relationship with
the Bank.
SECTION 16. 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 Bank or by the Executive, shall have no
effect on the rights and obligations of the parties hereto under 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 Bank from time to
time; provided, however, that nothing in this Agreement shall be deemed to
duplicate any compensation or benefits provided under any agreement, plan or
program covering the Executive to which the 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 17. 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 Bank and its 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 Bank may be
sold or otherwise transferred. Failure of the Bank to obtain from any successor
its express written assumption of the Bank's obligations hereunder at least 60
days in advance of the scheduled effective date of any such succession shall be
deemed a material breach of this Agreement.
SECTION 18. 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 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:
14
If to the Executive:
----------------------
----------------------
----------------------
If to the Bank:
Xxxxxx River Bank & Trust Company
0 Xxxxxx Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: President
with a copy to:
Silver, Xxxxxxxx & Taff, L.L.P.
0000 Xxx Xxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, P.C.
SECTION 19. INDEMNIFICATION FOR ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees and expenses, 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. For purposes of this Agreement, any settlement
agreement which provides for payment of any amounts in settlement of the Bank's
obligations hereunder shall be conclusive evidence of the Executive's
entitlement to indemnification hereunder, and any such indemnification payments
shall be in addition to amounts payable pursuant to such settlement agreement,
unless such settlement agreement expressly provides otherwise.
(b) The Bank's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement, and such amounts shall not be reduced whether
or not the Executive obtains other employment. Unless it is determined that a
claim made by the Executive was either frivolous or made in bad faith, the Bank
agrees to pay as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of or in
connection with his consultation with legal counsel or arising out of any
action, suit, proceeding or contest (regardless of the outcome thereof) by the
Bank, the Executive or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in section
7872(f)(2)(A) of the Code. This section 19(b) shall apply whether such
consultation, action, suit, proceeding or contest arises before, on, after or as
a result of a Change in Control.
15
SECTION 20. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 21. 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 22. 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.
SECTION 23. 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 24. 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.
16
SECTION 25. 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 26. NON-DUPLICATION.
In the event that the Executive shall perform services for the Company
or any other direct or indirect subsidiary or affiliate of the Bank, it is
intended that any compensation or benefits provided to the Executive by such
other employer shall not duplicate the compensation or benefits provided under
this Agreement. The compensation and benefits payable under this Agreement shall
be reduced to the extent necessary to effectuate this intention.
SECTION 27. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by 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, 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
IN WITNESS WHEREOF, the Bank 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.
----------------------------------------
EXECUTIVE
ATTEST: XXXXXX RIVER BANK & TRUST COMPANY
By_____________________________ By____________________________________
Secretary Name:
Title:
17
[Seal]
STATE OF NEW YORK )
: ss.:
COUNTY OF __________ )
On this ________ day of ____________________, 1998, before me
personally came __________________, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that he resides at the address set forth in said instrument,
and that he signed his name to the foregoing instrument.
-----------------------------------
Notary Public
My commission expires:
--------------------------
00
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF __________ )
On this ________ day of ____________________, 1998, before me
personally came ___________, to me known, who, being by me duly sworn, did
depose and say that he resides at _______________________________________, that
he is the _______________________ of XXXXXX RIVER BANK & TRUST COMPANY, the New
York State chartered stock savings bank described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such seal; that it was so affixed by order of the
Board of Directors of said corporation; and that he or she signed his name
thereto by like order.
-----------------------------------
Notary Public
My commission expires:
--------------------------
19
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
______________, 1998 by and between XXXXXX RIVER BANK & TRUST COMPANY, a
state-chartered savings bank organized and existing under the laws of the State
of New York, the ("Bank"), and Xxxxxx X. Xxxx, an individual residing at
________________________ (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive currently serves as the Senior Vice President
and Secretary of the Bank and as the Senior Vice President and Secretary of
Xxxxxx River Bancorp, Inc. (the "Company"), and effective as of the date of this
Agreement, the Bank has converted from mutual to capital stock form and has
become the wholly owned subsidiary of the Company; and
WHEREAS, the Bank desires to assure for itself the continued
availability of the Executive's services as provided in this Agreement, and the
Board of Directors of the Bank (the "Board") recognizes the need for the
Executive to be able to perform such services with a minimum of personal
distraction in the event of a pending or threatened Change in Control (as
hereinafter defined); and
WHEREAS, the Executive is willing to continue to serve the Bank on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions hereinafter set forth, the Bank and the Executive
hereby agree as follows:
SECTION 1. EMPLOYMENT.
The Bank agrees to continue to employ the Executive, and the Executive
hereby agrees to such continued employment, during the period and upon the terms
and conditions set forth in this Agreement.
SECTION 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The terms and conditions of this Agreement shall be and remain in
effect during the period of employment established under this section 2
("Employment Period"). The Employment Period shall be for an initial term of two
years beginning on the date of this Agreement and ending on the second
anniversary date of this Agreement (each, an "Anniversary Date"), plus such
extensions, if any, as are provided pursuant to section 2(b).
(b) Except as provided in section 2(c), beginning on the date of this
Agreement, the Employment Period shall automatically be extended for one
additional day each day, unless either the Bank or the Executive elects not to
extend the Agreement further by giving written notice thereof to the other
party, in which case the Employment Period shall end on the second anniversary
of the date on which such written notice is given. For all purposes of this
Agreement, the term "Remaining Unexpired Employment Period" as of any date shall
mean the period beginning on such date and ending on the last day of the
Employment Period taking into account any extensions under this section 2(b).
Upon termination of the Executive's employment with the Bank for any reason
whatsoever, any daily extensions provided pursuant to this section 2(b), if not
theretofore discontinued, shall automatically cease.
(c) Nothing in this Agreement shall be deemed to prohibit the Bank at
any time from terminating the Executive's employment during the Employment
Period with or without notice for any reason; provided, however, that the
relative rights and obligations of the Bank and the Executive in the event of
any such termination shall be determined under this Agreement.
SECTION 3. DUTIES.
The Executive shall serve as Senior Vice President and Secretary of the
Bank, having such power, authority and responsibility and performing such duties
as are prescribed by or under the By-Laws of the Bank and as are customarily
associated with such position. The Executive shall devote her 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 Bank and shall use her best efforts to advance the interests of
the Bank.
SECTION 4. CASH COMPENSATION.
In consideration for the services to be rendered by the Executive
hereunder, the Bank shall pay to her a salary equal to the base salary from the
Company and the Bank in effect on the date of this Agreement, less the amount of
base salary actually paid to the Executive by the Company during the Employment
Period. The Executive's salary shall be payable in approximately equal
installments in accordance with the Bank's customary payroll practices for
senior officers. The Board 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 months, and may, in its discretion, approve an
increase therein. In addition to salary, the Executive may receive other cash
compensation from the Bank for services hereunder at such times, in such amounts
and on such terms and conditions as the Board may determine from time to time.
2
SECTION 5. EMPLOYEE BENEFIT PLANS AND PROGRAMS.
During the Employment Period, the Executive shall be treated as an
employee of the Bank 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 Bank, in accordance with the terms and conditions of such employee benefit
plans and programs and compensation plans and programs and consistent with the
Bank's customary practices.
SECTION 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six years
thereafter, the Bank shall cause the Executive to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Bank or service in
other capacities at the request of the Bank. 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 Bank.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six years thereafter, the Bank shall
indemnify the Executive against and hold her 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 Bank or any subsidiary or affiliate thereof.
SECTION 7. OUTSIDE ACTIVITIES.
The Executive may serve as a member of the boards of directors of such
business, community and charitable organizations as she may disclose to and as
may be approved by the Board (which approval shall not be unreasonably
withheld); provided, however, that such service shall not materially interfere
with the performance of her duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not materially
interfere with the performance of her duties hereunder; provided, however, that
such activities are not prohibited under any code of conduct or investment or
securities trading policy established by the Bank and generally applicable to
all similarly situated Executives. The Executive may also serve as an officer or
director of the Company on such terms and conditions as the Company and the Bank
may mutually agree upon, and such service shall not be deemed to materially
interfere with the Executive's performance of her duties hereunder or otherwise
result in a material breach of this Agreement. If the Executive is discharged or
3
suspended, or is subject to any regulatory prohibition or restriction with
respect to participation in the affairs of the Company, she shall continue to
perform services for the Bank in accordance with this Agreement but shall not
directly or indirectly provide services to or participate in the affairs of the
Company in a manner inconsistent with the terms of such discharge or suspension
or any applicable regulatory order.
SECTION 8. WORKING FACILITIES AND EXPENSES.
The Executive's principal place of employment shall be at the Bank's
executive offices located in Hudson, New York, or at such other location within
50 miles of the address at which the Bank shall maintain its principal executive
offices, or at such other location as the Bank and the Executive may mutually
agree upon. The Bank shall provide the Executive at her principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to her position with the Bank and necessary or
appropriate in connection with the performance of her assigned duties under this
Agreement. The Bank shall reimburse the Executive for her ordinary and necessary
business expenses, including, without limitation, the Executive's travel and
entertainment expenses incurred in connection with the performance of her duties
under this Agreement, in each case upon presentation to the Bank of an itemized
account of such expenses in such form as the Bank may reasonably require.
SECTION 9. TERMINATION OF EMPLOYMENT WITH BENEFITS.
(a) The Executive shall be entitled to the benefits described in
section 9(b) in the event that:
(i) her employment with the Bank terminates during the Employment
Period as a result of the Executive's voluntary resignation within 90 days
following:
(A) the failure of the Board to appoint or re-appoint or elect or
re-elect the Executive to the position with the Bank stated in section 3 of
this Agreement (or a more senior office);
(B) if the Executive is a member of the Board, the failure of the
shareholders of the Bank to elect or re-elect the Executive to the Board or
the failure of the Board (or the nominating committee thereof) to nominate
the Executive for such election or re-election;
(C) the expiration of a 30-day period following the date on which the
Executive gives written notice to the Bank of its material failure, whether
by amendment of the Bank's Restated Organization Certificate, the Bank's
By-Laws, action of the Board or the Bank's shareholders or otherwise, to
vest in the Executive the functions, duties, or responsibilities prescribed
in section 3 of this Agreement, unless, during such 30-day period, the Bank
cures such failure;
4
(D) the expiration of a 30-day period following the date on which the
Executive gives written notice to the Bank of its material breach of any
term, condition or covenant contained in this Agreement (including, without
limitation, any reduction of the Executive's rate of base salary in effect
from time to time and 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 her total compensation package), unless,
during such 30-day period, the Bank cures such failure; or
(E) a change in the Executive's principal place of employment for a
distance in excess of 50 miles from the Bank's principal office in Hudson,
New York; or
(F) the liquidation, dissolution, bankruptcy, or insolvency of the
Company, the Bank or any of their respective subsidiaries or affiliates; or
(ii) the Executive's employment with the Bank is terminated by the Bank
during the Employment Period for any reason other than for "cause," as provided
in section 10(a).
(b) Upon the occurrence of any of the events described in section 9(a)
of this Agreement, the Bank shall pay and provide to the Executive (or, in the
event of her death, to her estate):
(i) her earned but unpaid salary (including, without limitation, all
items which constitute wages under applicable law and the payment of which is
not otherwise provided for in this section 9(b)) as of the date of the
termination of her employment with the Bank, such payment to be made at the time
and in the manner prescribed by law applicable to the payment of wages but in no
event later than 30 days after termination of employment;
(ii) the benefits, if any, to which she is entitled as a former
employee under the employee benefit plans and programs and compensation plans
and programs maintained for the benefit of the Bank's officers and employees;
(iii) continued group life, health (including hospitalization, medical
and major medical), dental, accident and long term disability insurance
benefits, in addition to that provided pursuant to section 9(b)(ii), and after
taking into account the coverage provided by any subsequent employer, if and to
the extent necessary to provide for the Executive, for the Remaining Unexpired
Employment Period, coverage equivalent to the coverage to which she would have
been entitled under such plans (as in effect on the date of her termination of
employment, or, if her termination of employment occurs after a Change of
Control, on the date of such Change of Control, whichever benefits are greater),
if she had continued working for the Bank during the Remaining Unexpired
Employment Period at the highest annual rate of salary achieved during the
Employment Period;
5
(iv) within 30 days following the Executive's termination of employment
with the Bank, a lump sum payment, in an amount equal to the present value of
the salary (excluding any additional payments made to the Executive in lieu of
the use of an automobile) that the Executive would have earned if she had
continued working for the Bank during the Remaining Unexpired Employment Period
at the highest annual rate of salary achieved during the Employment Period,
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, as amended (the "Code"), compounded using the
compounding periods corresponding to the Bank's regular payroll periods for its
officers, such lump sum to be paid in lieu of all other payments of salary
provided for under this Agreement in respect of the period following any such
termination;
(v) within 30 days following the Executive's termination of employment
with the Bank, a lump sum payment in an amount equal to the excess, if any, of:
(A) the present value of the aggregate benefits to which she would be
entitled under The Retirement Plan of the Xxxxxx River Bank & Trust Company
(together with the defined benefit portion of the Benefit Restoration Plan of
Xxxxxx River Bank & Trust Company and any other supplemental defined benefit
plan) and any and all other qualified and non-qualified defined benefit pension
plans maintained by, or covering employees of, the Bank if she were 100% vested
thereunder and had continued working for the Bank during the Remaining Unexpired
Employment Period at the highest annual rate of salary achieved during the
Employment Period; over
(B) the present value of the benefits to which she is actually entitled
under such defined benefit pension plans as of the date of her termination;
where such present values are to be determined using the mortality tables
prescribed under section 415(b)(2)(E)(v) of the Code and a discount rate,
compounded monthly equal to the annualized rate of interest prescribed by the
Pension Benefit Guaranty Corporation for the valuation of immediate annuities
payable under terminating single-employer defined benefit plans for the month in
which the Executive's termination of employment occurs ("Applicable PBGC Rate");
(vi) within 30 days following the Executive's termination of employment
with the Bank, a lump sum payment in an amount equal to the present value of the
additional employer contributions to which she would have been entitled under
the Xxxxxx River Bank & Trust Company 401(k) Savings Plan, the Xxxxxx River
Bancorp, Inc. Employee Stock Ownership Plan (together with the defined
contribution portion of the Benefit Restoration Plan of Xxxxxx River Bank &
Trust Company or any other supplemental defined contribution plan) and any and
all other qualified and non-qualified defined contribution plans maintained by,
or covering employees of, the Bank as if she were 100% vested thereunder and had
continued working for the Bank during the Remaining Unexpired Employment Period
at the highest annual rate of salary achieved during the Employment Period and
6
making the maximum amount of employee contributions, if any, required or
permitted under such plan or plans, such present value to be determined on the
basis of a discount rate, compounded using the compounding period that
corresponds to the frequency with which employer contributions are made to the
relevant plan, equal to the Applicable PBGC Rate;
(vii) within 30 days following the Executive's termination of
employment with the Bank, a lump sum payment in an amount equal to the payments
that would have been made (without discounting for early payment) to the
Executive under any cash bonus or long-term or short-term cash incentive
compensation plan maintained by, or covering employees of, the Bank if she had
continued working for the Bank during the Remaining Unexpired Employment 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 the Executive under such incentive compensation plan; multiplied by
(B) the salary that would have been paid to the Executive during each
such calendar year at the highest annual rate of salary achieved during the
Employment Period.
(viii) at the election of the Bank made within 30 days following the
occurrence of the event described in section 9(a), upon the surrender of options
or appreciation rights issued to the Executive under any stock option and
appreciation rights plan or program maintained by, or covering employees of, the
Bank, a lump sum payment in an amount equal to the product of:
(A) the excess of (I) the fair market value of a share of stock of the
same class as the stock subject to the option or appreciation right,
determined as of the date of termination of employment, over (II) the
exercise price per share for such option or appreciation right, as
specified in or under the relevant plan or program; multiplied by
(B) the number of shares with respect to which options or appreciation
rights are being surrendered.
For purposes of this section 9(b)(viii), the Executive shall be deemed
fully vested in all options and appreciation rights under any stock option or
appreciation rights plan or program maintained by, or covering employees of, the
Bank, even if she is not vested under the terms of such plan or program; and
(ix) at the election of the Bank made within 30 days following the
occurrence of the event described in section 9(a), upon the surrender of any
shares awarded to the Executive under any restricted stock plan maintained by,
or covering employees of, the Bank, a lump sum payment in an amount equal to the
product of:
7
(A) the fair market value of a share of stock of the same class of
stock granted under such plan, determined as of the date of the Executive's
termination of employment; multiplied by
(B) the number of shares which are being surrendered.
For purposes of this section 9(b)(ix), the Executive shall be deemed
fully vested in all shares awarded under any restricted stock plan maintained
by, or covering employees of, the Bank, even if she is not vested under the
terms of such plan.
The Bank and the Executive hereby stipulate that the damages which may be
incurred by the Executive following any such termination of employment are not
capable of accurate measurement as of the date first above written and that the
payments and benefits contemplated by this section 9(b) 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 Bank and the Executive further agree that the Bank may
condition the payments and benefits (if any) due under sections 9(b)(iii), (iv),
(v), (vi) and (vii) on the receipt of the Executive's resignation from any and
all positions which she holds as an officer, director or committee member with
respect to the Bank or any of its subsidiaries or affiliates.
SECTION 10. TERMINATION WITHOUT ADDITIONAL BANK LIABILITY.
In the event that the Executive's employment with the Bank shall
terminate during the Employment Period on account of:
(a) the discharge of the Executive for "cause," which, for purposes of
this Agreement, shall mean a discharge because the Board determines that the
Executive: (i) has intentionally failed to perform her assigned duties under
this Agreement (including, for these purposes, the Executive's inability to
perform such duties as a result of drug or alcohol dependency); (ii) has
intentionally engaged in dishonest or illegal conduct in connection with her
performance of services for the Bank or has been convicted of a felony; (iii)
has willfully violated, in any material respect, any law, rule, regulation,
written agreement or final cease-and-desist order with respect to her
performance of services for the Bank, as determined by the Board; or (iv) has
intentionally breached the material terms of this Agreement;
(b) the Executive's voluntary resignation from employment with the Bank
for reasons other than those specified in section 9(a)(i); or
(c) the death of the Executive while employed by the Bank, or the
termination of the Executive's employment because of "total and permanent
disability" within the meaning of the Company's or the Bank's long-term
disability plan for employees; then the Bank shall have no further obligations
under this Agreement, other than the payment to the Executive of her earned but
8
unpaid salary as of the date of the termination of her employment and the
provision of such other benefits, if any, to which she is entitled as a former
employee under the Bank's employee benefit plans and programs and compensation
plans and programs.
For purposes of this section 10, no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Bank. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the written advice of counsel for the Bank
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Bank. Prior to the date
on which a Change in Control occurs, the cessation of employment of the
Executive shall not be deemed to be for "cause" within the meaning of section
10(a) unless and until there shall have been delivered to the Executive a copy
of a resolution duly adopted by the affirmative vote of three-fourths of the
members of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to the Executive and the Executive is given
an opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in section 10(a) above, and specifying the particulars thereof
in detail. On and after the date that a Change in Control occurs, a
determination under this section 10 shall require the affirmative vote of at
least three-fourths of the members of the Board acting in good faith, and such
vote shall not be made prior to the expiration of a 60-day period following the
date on which the Board shall, by written notice to the Executive, furnish to
her a statement of its grounds for proposing to make such determination, during
which period the Executive shall be afforded a reasonable opportunity to make
oral and written presentations to the members of the Board, and to be
represented by her legal counsel at such presentations to refute the grounds for
the proposed determination.
SECTION 11. TERMINATION UPON OR FOLLOWING A CHANGE IN CONTROL.
(a) A Change in Control of the Bank ("Change in Control") shall be
deemed to have occurred upon the happening of any of the following events:
(i) approval by the shareholders of the Bank of a transaction that
would result and does result in the reorganization, merger or consolidation of
the Bank, respectively, 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 Bank; and
9
(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 Bank;
(ii) the acquisition of all or substantially all of the assets of the
Bank 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 Bank
entitled to vote generally in the election of directors by any person or by any
persons acting in concert, or approval by the shareholders of the Bank of any
transaction which would result in such an acquisition;
(iii) a complete liquidation or dissolution of the Bank, or approval by
the shareholders of the Bank of a plan for such liquidation or dissolution;
(iv) the occurrence of any event if, immediately following such event,
at least 50% of the members of the Board do not belong to any of the following
groups:
(A) individuals who were members of the Board on the date of this
Agreement; or
(B) individuals who first became members of the Board after the date
of this Agreement either:
(1) upon election to serve as a member of the Board 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 to serve as a
member of the Board, but only if nominated for election by affirmative
vote of three-quarters of the members of the board of directors of the
Board, 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 (within the meaning of Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents (within the meaning of Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) other than by or on
behalf of the Board of the Bank; or
(v) any event which would be described in section 11(a)(i), (ii), (iii)
or (iv) if the term "Company" were substituted for the term "Bank" therein and
the term "Company Board" were substituted for the term "Board" therein.
10
In no event, however, shall a Change in 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 11(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) In the event that the Executive=s employment with the Bank
terminates within eighteen months following a Change in Control for any reason
other than for "cause," as described in section 10, the Bank shall pay to the
Executive, in addition to the amounts payable pursuant to section 9, a severance
benefit in a lump sum payment, within 25 days after the later of the effective
time of such Change in Control or her termination of employment, equal to the
greater of (i) the sum of the amounts payable as salary pursuant to section 4
hereof during the Remaining Unexpired Employment Period and as additional cash
compensation pursuant to the terms of section 9(b)(vii) hereof, or (ii) three
times the annual average of the amount paid or payable to the Executive under
section 4 of this Agreement or the corresponding section of any prior employment
agreement with the Bank or its predecessor during the five preceding taxable
years of the Executive (or during the entire period of the Executive= employment
with the Bank or its predecessor if such period is less than five years). The
Bank shall also continue to provide to the Executive and to her eligible
dependents the benefits described in section 9(b)(iii) hereof for a period of at
least 36 months following the later of the effective time of such Change in
Control or her termination of employment.
SECTION 12. TAX INDEMNIFICATION.
(a) This section 12 shall apply if the Executive's employment is
terminated upon or following (i) a Change in Control (as defined in section 11
of this Agreement); or (ii) a change "in the ownership or effective control" of
the Company or the Bank or "in the ownership of a substantial portion of the
assets" of the Company or the Bank within the meaning of section 280G of the
Code. If this section 12 applies, then, if for any taxable year, the Executive
shall be liable for the payment of an excise tax under section 4999 of the Code
with respect to any payment in the nature of compensation made by the Bank or
any direct or indirect subsidiary or affiliate of the Bank to (or for the
benefit of) the Executive, the Bank shall pay to the Executive an amount equal
to X determined under the following formula:
E x P
X= ----------------------------------------------
1 - [FI x (1-SLI)) + SLI + E + M]
where
E= the rate at which the excise tax is assessed under section
4999 of the Code;
11
P= the amount with respect to which such excise tax is
assessed, determined without regard to this section 12;
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.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) the Executive under the terms of this Agreement, the
Executive's employment agreement with the Company, or otherwise, and on which an
excise tax under section 4999 of the Code will be assessed, the payment
determined under this section 12(a) shall be made to the Executive on the
earlier of (i) 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 (ii) the date the tax is required to be paid by the Executive.
(b) Notwithstanding anything in this section 12 to the contrary, 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 determined by the formula (X + P) x E, where X, P and E have the meanings
provided in section 12(a), the Executive or the Bank, 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 12(a), when increased by the amount of the payment made to the
Executive under this section 12(b) by the Bank, or when reduced by the amount of
the payment made to the Bank under this section 12(b) by the Executive, equals
the amount that should have properly been paid to the Executive under section
12(a). The interest paid under this section 12(b) shall be determined at the
rate provided under section 1274(b)(2)(B) of the Code. To confirm that the
proper amount, if any, was paid to the Executive under this section 12, the
Executive shall furnish to the Bank a copy of each tax return which reflects a
liability for an excise tax payment made by the Bank, at least 20 days before
the date on which such return is required to be filed with the Internal Revenue
Service.
SECTION 13. COVENANT NOT TO COMPETE.
The Executive hereby covenants and agrees that, in the event of her
termination of employment with the Bank prior to the expiration of the
Employment Period, for a period of one year following the date of her
termination of employment with the Bank (or, if less, for the Remaining
Unexpired Employment Period), she shall not, without the written consent of the
Bank, 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, or any direct or indirect subsidiary or affiliate
12
of any such entity, that entails working within any county in which the Bank
maintains an office; provided, however, that this section 13 shall not apply if
the Executive's employment is terminated for the reasons set forth in section
9(a).
SECTION 14. CONFIDENTIALITY.
Unless she obtains the prior written consent of the Bank, the Executive
shall keep confidential and shall refrain from using for the benefit of herself,
or any person or entity other than the Bank or any entity which is a subsidiary
of the Bank or of which the Bank is a subsidiary, any material document or
information obtained from the Bank, or from its parent or subsidiaries, in the
course of her 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 her own) until
the same ceases to be material (or becomes so ascertainable or available);
provided, however, that nothing in this section 14 shall prevent the Executive,
with or without the Bank'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.
SECTION 15. SOLICITATION.
The Executive hereby covenants and agrees that, for a period of one
year following her termination of employment with the Bank, she shall not,
without the written consent of the Bank, 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 Bank or any of its subsidiaries
or affiliates to terminate 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 bank, 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 13;
(b) provide any information, advice or recommendation with respect to
any such officer or employee of any savings bank, savings and loan bank, 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 13, 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 Bank or any of its subsidiaries or
affiliates to terminate 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 13;
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(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
Bank to terminate an existing business or commercial relationship with the Bank.
SECTION 16. 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 Bank or by the Executive, shall have no
effect on the rights and obligations of the parties hereto under 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 Bank from time to
time; provided, however, that nothing in this Agreement shall be deemed to
duplicate any compensation or benefits provided under any agreement, plan or
program covering the Executive to which the 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 17. SUCCESSORS AND ASSIGNS.
This Agreement will inure to the benefit of and be binding upon the
Executive, her legal representatives and testate or intestate distributees, and
the Bank and its 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 Bank may be
sold or otherwise transferred. Failure of the Bank to obtain from any successor
its express written assumption of the Bank's obligations hereunder at least 60
days in advance of the scheduled effective date of any such succession shall be
deemed a material breach of this Agreement.
SECTION 18. 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 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:
14
If to the Executive:
----------------------
----------------------
----------------------
If to the Bank:
Xxxxxx River Bank & Trust Company
0 Xxxxxx Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: President
with a copy to:
Silver, Xxxxxxxx & Taff, L.L.P.
0000 Xxx Xxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, P.C.
SECTION 19. INDEMNIFICATION FOR ATTORNEYS' FEES.
(a) The Bank shall indemnify, hold harmless and defend the Executive
against reasonable costs, including legal fees and expenses, incurred by her in
connection with or arising out of any action, suit or proceeding in which she
may be involved, as a result of her efforts, in good faith, to defend or enforce
the terms of this Agreement. For purposes of this Agreement, any settlement
agreement which provides for payment of any amounts in settlement of the Bank's
obligations hereunder shall be conclusive evidence of the Executive's
entitlement to indemnification hereunder, and any such indemnification payments
shall be in addition to amounts payable pursuant to such settlement agreement,
unless such settlement agreement expressly provides otherwise.
(b) The Bank's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Bank may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement, and such amounts shall not be reduced whether
or not the Executive obtains other employment. Unless it is determined that a
claim made by the Executive was either frivolous or made in bad faith, the Bank
agrees to pay as incurred, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of or in
connection with her consultation with legal counsel or arising out of any
action, suit, proceeding or contest (regardless of the outcome thereof) by the
Bank, the Executive or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
15
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in section
7872(f)(2)(A) of the Code. This section 19(b) shall apply whether such
consultation, action, suit, proceeding or contest arises before, on, after or as
a result of a Change in Control.
SECTION 20. SEVERABILITY.
A determination that any provision of this Agreement is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
SECTION 21. 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 22. 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.
SECTION 23. 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 24. 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.
16
SECTION 25. 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 26. NON-DUPLICATION.
In the event that the Executive shall perform services for the Company
or any other direct or indirect subsidiary or affiliate of the Bank, it is
intended that any compensation or benefits provided to the Executive by such
other employer shall not duplicate the compensation or benefits provided under
this Agreement. The compensation and benefits payable under this Agreement shall
be reduced to the extent necessary to effectuate this intention.
SECTION 27. REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything herein contained to the contrary, any payments
to the Executive by 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, 12 U.S.C. Section 1828(k), and any regulations
promulgated thereunder.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed
and the Executive has hereunto set her hand, all as of the day and year first
above written.
----------------------------------------
EXECUTIVE
ATTEST: XXXXXX RIVER BANK & TRUST COMPANY
By_____________________________ By______________________________________
Secretary Name:
Title:
17
[Seal]
STATE OF NEW YORK )
: ss.:
COUNTY OF __________ )
On this ________ day of ____________________, 1998, before me
personally came __________________, to me known, and known to me to be the
individual described in the foregoing instrument, who, being by me duly sworn,
did depose and say that she resides at the address set forth in said instrument,
and that she signed her name to the foregoing instrument.
-----------------------------------
Notary Public
My commission expires:
--------------------------
00
XXXXX XX XXX XXXX )
: ss.:
COUNTY OF __________ )
On this ________ day of ____________________, 1998, before me
personally came ___________, to me known, who, being by me duly sworn, did
depose and say that he resides at _______________________________________, that
he is the _______________________ of XXXXXX RIVER BANK & TRUST COMPANY, the New
York State chartered stock savings bank described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such seal; that it was so affixed by order of the
Board of Directors of said corporation; and that he or she signed his name
thereto by like order.
-----------------------------------
Notary Public
My commission expires:
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19
