ATTACHMENT A
2000 STOCK AND TEMPORARY SEVERANCE AGREEMENT
WSFS FINANCIAL CORPORATION
2000 STOCK OPTION AND TEMPORARY SEVERANCE AGREEMENT
This 2000 Stock Option and Temporary Severance Agreement (the "2000
Agreement") is made and entered into by and among Wilmington Savings Fund
Society, Federal Savings Bank (the "Bank"), WSFS Financial Corporation (the
"Company") and Xxxxxx X. Xxxxxxxxxx (the "Associate") on this 24th day of
February, 2000 (the "Effective Date")
WHEREAS, WSFS, the Company and the Associate entered into an Employment
Agreement (the "Employment Agreement") dated May 1, 1993; and
WHEREAS, the Associate is employed as the president and chief executive
officer of the Company and WSFS and the Boards of Directors of the Company and
WSFS wish to retain the Associate in such capacity; and
WHEREAS, the Board of Directors of the Company, the Board of Directors
of WSFS and the Associate have determined that it is in the best interests of
the Company, WSFS and the Associate to terminate the Employment Agreement in
exchange for a one-time stock option grant to the Associate, pursuant to the
WSFS Financial Corporation 1997 Stock Option Plan, as amended (the "Plan"); and
WHEREAS, in order to partially protect the Associate during the vesting
period of the stock option grant, the Associate, the Company and WSFS will enter
into a transitional severance arrangement, for a term of two years beginning on
the Effective Date and ending two years after the Effective Date, as described
in this 2000 Stock Option and Temporary Severance Agreement (the "2000
Agreement"); and
WHEREAS, pursuant to Section 17 of the Employment Agreement, the
Employment Agreement may be amended in writing by all involved parties and the
parties desire to amend the Employment Agreement so that it is terminated and
completely superseded by this 2000 Agreement; and
WHEREAS, the parties desire to set forth the terms of this 2000
Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. Transitional Severance Arrangement.
(a) Involuntary Termination. In the event that the employment
of the Associate is involuntarily terminated by the Company or WSFS, during the
two-year period starting on the Effective Date of this 2000 Agreement and for a
reason other than Just Cause, the Company and WSFS shall be jointly and
severally responsible for making a lump-sum cash payment to the Associate,
within ten days after such termination, determined according to the following
formula:
Payment = 2 x A x .00137 x (730 - D)
where A equals the Associate's highest annual salary within three years of his
date of termination and D equals the number of days between the Effective Date
and the date of the Associate's termination. For the purposes of this paragraph,
"Just Cause" shall mean termination because of, in the good faith determination
of the Company's or WSFS' Board, the Associate's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, continuing material
failure to achieve stated employment objectives after reasonable notification
(which shall be stated in writing and given at least fifteen 15 days prior to
termination) by the Board of WSFS or the Company of such failure, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. Notwithstanding the foregoing, the Associate shall
not be deemed to have been terminated for Just Cause unless there shall have
been delivered to the Associate a copy of a resolution certified by the
Secretary as having been duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board of WSFS or the Company at a
meeting of the Board called and held for the purpose (after reasonable notice to
the Associate and an opportunity for the Associate to be heard before the
Board), finding that in the good faith opinion of the Board the Associate was
guilty of conduct described above and specifying the particulars thereof.
(b) Constructive Termination. The Associate may, within two
years after the Effective Date and within 90 days following an event
constituting Good Reason, voluntarily terminate employment and be entitled to
the lump sum payment described in Section 1(a) hereof. For this purpose, "Good
Reason" shall mean the occurrence of any of the following events, which have not
been consented to in advance by the Associate in writing: (i) the requirement
that the Associate move his personal residence, or perform his principal
executive functions, more than thirty-five (35) miles from his primary office as
of the Effective Date; (ii) a significant reduction in the Associate's
compensation and benefits, taken as a whole; (iii) the assignment to the
Associate of duties and responsibilities substantially inconsistent with those
normally associated with his position; (iv) a failure of the Associate to be
elected or reelected to the Board of Directors of WSFS or the Company; or (v) a
material reduction in the Associate's responsibilities or authority (including
reporting responsibilities) in connection with his employment with WSFS or the
Company.
(c) Reimbursement of Golden Parachute Excise Taxes. In the
event that accelerated vesting of stock options granted pursuant to this 2000
Agreement, taken together with any other payments or benefits received by the
Associate (including, but not limited to, the value of accelerated vesting of
stock options other than those granted pursuant to this 2000 Agreement), results
in the Associate incurring liabilities for federal golden parachute excise taxes
under section 4999 of the Internal Revenue Code, the Company and WSFS shall be
jointly and severally liable for making a lump-sum cash payment to the Associate
in an amount equal to such excise tax liability, upon the Associate's
determination of the liability and WSFS' and the Company's agreement therewith,
which shall not be unreasonably withheld.
(d) Limitations on Payment. The following sub-paragraphs have
been included in this Agreement in order to comply with requirements of the
Office of Thrift Supervision ("OTS") at 12 C.F.R. ss.563.39(b) in effect as of
the date hereof or at the specific direction of OTS staff.
(i) If the Associate is removed and/or permanently
prohibited from participating in the conduct of WSFS' affairs by an order issued
under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. xx.xx. 1818(e)(4) and (g)(1)), all obligations of WSFS to make cash
payments under Section 1 of this 2000 Agreement shall terminate, as of the
effective date of the order, but vested rights of the parties and the stock
options granted pursuant to this 2000 Agreement shall not be affected.
(ii) If WSFS is in default (as defined in Section
3(x)(1) of FDIA), all obligations of WSFS to make cash payments under Section 1
of this 2000 Agreement shall terminate as of the date of default; however, this
paragraph shall not affect the vested rights of the parties or the stock options
granted pursuant to this 2000 Agreement.
(iii) All obligations of WSFS to make cash payments
under Section 1 of this 2000 Agreement shall terminate, except to the extent
that continuation of Section 1 of this Agreement is necessary for the continued
operation of WSFS: (i) by the Director of the Office of Thrift Supervision
("Director of OTS"), or his or her designee, at the time that the Federal
Deposit Insurance Corporation ("FDIC") enters into an agreement to provide
assistance to or on behalf of WSFS under the authority contained in Section
13(c) of FDIA; or (ii) by the Director of the OTS, or his or her designee, at
the time that the Director of the OTS, or his or her designee approves a
supervisory merger to resolve problems related to operation of WSFS or when WSFS
is determined by the Director of the OTS to be in an unsafe or unsound
condition. Such action shall not affect any vested rights of the parties or the
stock options granted pursuant to this 2000 Agreement.
(iv) If a notice served under Sections 8(e)(3) or
(g)(1) of the FDIA (12 U.S.C.ss.ss.1818(e)(3) and (g)(1)) suspends and/or
temporarily prohibits the Associate from participating in the conduct of WSFS'
affairs, WSFS' obligations to make cash payments under Section 1 of this 2000
Agreement shall be suspended as of the date of such service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, WSFS may,
in its discretion, (i) pay the Associate all or part of the compensation
withheld while its contract obligations were suspended, and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.
(v) Any cash payments made to the Associate pursuant
to this Agreement or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the FDIA (12 U.S.C. ss. 1828 (k), relating to
"golden parachute" and indemnification payments and certain other benefits) and
any regulations promulgated thereunder.
(vi) Notwithstanding anything herein to the contrary,
total compensation paid out upon the termination of the Associate, including any
payments of salary for the remaining term of the Agreement and any severance
payments, may not exceed three times the average annual compensation paid to the
Associate for the five calendar years ending on the December 31 which
immediately preceded such termination. Compensation for purposes of this
sub-paragraph 9(e)(6), only, shall include, without limitation, the provision or
payment of base salary, commissions, bonuses, pension and profit sharing plans,
severance payments, retirement benefits, director and committee fees, fringe
benefits, and any expense items paid by WSFS or the Company without
accountability of business purposes or that do not meet the IRS requirements for
deduction by WSFS or the Company, but does not include the value of the grant or
exercise of awards under the 1997 Stock Option Plan or any successor plan.
2. Stock Option Grant. A stock option for a total of 110,000 shares of
Common Stock, par value $.01 per share, of the Company, is hereby granted to the
Associate at the price set forth herein, and in all respects subject to the
terms, definitions and provisions of the Plan which was adopted by the Company
and which is incorporated by reference herein except as otherwise set forth in
this 2000 Agreement, receipt of which is hereby acknowledged.
1. Tax Status of the Option. This Option shall be an incentive stock
option ("ISO"), within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), to the maximum extent permitted by law, and
shall otherwise be a non-incentive stock option ("Non-ISO").
4. Option Price. The option price is $14.875 for each share, being in
excess of 100% of the fair market value, as determined by the Company's Board of
Directors, of the Common Stock on the date of grant of this Option.
5. Exercise of Option. This Option shall be exercisable in accordance
with the provisions of the Plan. Notwithstanding the foregoing, this option
shall remain exercisable after the Associate's termination of employment for a
reason other than death, Disability, or Just Cause, for the longer of: (i) 30
days, or (ii) the period ending immediately after the twelfth business day
following the Company's next release of quarterly or annual financial
information occurring after the Associate's termination of employment.
(a) Schedule of rights to exercise. The Option will become exercisable
according to the following schedule:
Percentage of Total Shares
Years of Continuous Employment Subject to Option Which May
After Date of Grant of Option Be Exercised
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Upon Grant 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
(b) Method of Exercise. This Option shall be exercisable by a written
notice by the Associate which shall:
(i) state the election to exercise the Option, the number of shares
with respect to which it is being exercised, the person in whose name
the stock certificate or certificates for such shares of Common Stock
is to be registered, his address and Social Security Number (or if more
than one, the names, addresses and Social Security Numbers of such
persons);
(ii) contain such representations and agreements as to the holder's
investment intent with respect to such shares of Common Stock as may be
satisfactory to the Company's counsel;
(iii) be signed by the person or persons entitled to exercise the
Option and, if the Option is being exercised by any person or persons
other than the Associate, be accompanied by proof, satisfactory to
counsel for the Company, of the right of such person or persons to
exercise the Option; and
(iv) be in writing and delivered in person or by certified mail to the
Treasurer of the Company.
Payment of the purchase price of any shares with respect to which the
Option is being exercised shall be by cash, Common Stock owned for more than six
months or such combination of cash and Common Stock owned for more than six
months as the Associate elects. The certificate or certificates for shares of
Common Stock owned for more than six months as to which the Option shall be
exercised shall be registered in the name of the person or persons exercising
the Option.
(c) Restrictions on Exercise. This Option may not be exercised if the
issuance of the shares upon such exercise would constitute a violation of any
applicable federal or state securities or other law or valid regulation. As a
condition to the Associate's exercise of this Option, the Company may require
the person exercising this Option to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
6. Withholding. The Associate hereby agrees that the exercise of the
Option or any installment thereof will not be effective, and no shares will
become transferable to the Associate, until the Associate makes appropriate
arrangements with the Company for such tax withholding as may be required of the
Company under federal, state, or local law on account of such exercise.
7. Limited Transferability of Options. The Associate may transfer
Non-ISOs to his spouse, lineal ascendants, lineal descendants or to a duly
established trust for their benefit or the benefit of the Associate, provided
that such transferee shall be permitted to exercise Non-ISOs subject to all the
same terms and conditions applicable to the Associate. Otherwise, this Option is
not transferable other than by will and the laws of descent or distribution.
8. Term of Option. This Option may not be exercisable for more than
ten* years from the date of grant of this Option, as stated below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
9. Amendments. No amendments or additions to this 2000 Agreement shall
be binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
10. Applicable Law. Except to the extent preempted by federal law, the
laws of the State of Delaware shall govern this 2000 Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
11. Severability. The provisions of this 2000 Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
12. Headings. Headings contained herein are for convenience of
reference only.
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*Five years in the case of an Associate who owns shares representing more than
10% of the outstanding common stock of the Company on the date of grant of this
Option.
13. Entire Agreement. This agreement shall supersede the Employment
Agreement in its entirety and any other arrangement relating to cash severance
compensation between the Associate, the Company or WSFS.
WSFS FINANCIAL CORPORATION
By /s/ XXXX X. XXXX
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Xxxx X. Xxxx, Vice Chairman
Attest (Seal)
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WILMINGTON SAVINGS FUND SOCIETY,
FEDERAL SAVINGS BANK
By /s/ XXXX X. XXXX
---------------------------------
Xxxx X. Xxxx, Vice Chairman
Attest (Seal)
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ASSOCIATE
/s/ XXXXXX X. XXXXXXXXXX
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Xxxxxx X. Xxxxxxxxxx
