EXHIBIT 10-4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the first day of July, 1998, by and between Cortland Savings Bank (the "Bank"),
and Xxxxx X. Xxxxxx ("Xx. Xxxxxx").
In consideration of the mutual covenants set forth below, the parties agree
as follows:
1. EMPLOYMENT. The Bank hereby employs Xx. Xxxxxx as the Senior Vice
President and Senior Lending Officer of Cortland Savings Bank and Xx. Xxxxxx
accepts such employment.
2. EMPLOYMENT PERIOD. This Agreement shall be in effect for two years
beginning on the date set forth above (the "Employment Period").
3. DUTIES. During the Employment Period, Xx. Xxxxxx shall:
(a) devote his full business time and attention to the business and affairs
of the Bank, its parent and subsidiary corporations (if any), and use his best
efforts to advance their interests;
(b) serve as Senior Vice President and Senior Lending Officer of the
Cortland Savings Bank; and
(c) have such functions, duties and responsibilities not inconsistent with
his title and office as may be assigned to him by or under the authority of the
Board.
4. COMPENSATION; SALARY AND BONUS.
(a) During the Employment Period, the Bank shall pay to Xx. Xxxxxx a salary
at an annual rate of $80,000, payable in the same manner and on the same dates
as apply to the payment of salary to other employees of the Bank generally. The
Bank may, in its sole discretion, increase said amount from time to time.
(b) Xx. Xxxxxx shall be entitled to a paid annual vacation during the
Employment Period as provided in the Bank's applicable personnel policy.
5. EMPLOYEE BENEFITS PLANS AND PROGRAMS; OTHER COMPENSATION. Xx. Xxxxxx
shall be entitled to participate in and receive benefits under the Bank's
pension plan, group life and health and disability insurance plans, and such
other employee benefit plans and programs as the Bank may maintain from time to
time, on terms no less favorable than any other similarly situated employee.
6. BOARD MEMBERSHIPS AND PERSONAL ACTIVITIES. Xx. Xxxxxx may serve as a
member of the board of directors of such business, community and charitable
organizations as he shall disclose to the Board from time to time, and he may
engage in personal business and investment activities for his own account;
provided, however, that such service and personal business and investment
activities shall not (a) interfere with the performance of his duties under this
Agreement or (b) involve entities which either compete with the Bank or may
reasonably be expected to impact negatively on the Bank's standing and
reputation in the community it serves.
7. EXPENSES. The Bank shall reimburse Xx. Xxxxxx for his ordinary and
necessary reasonable business expenses incurred in connection with the
performance of his duties under this Agreement upon presentation to the Bank of
itemized accounts in such form as the Bank may reasonably require.
8. TERMINATION GIVING RISE TO SEVERANCE BENEFITS.
(a) If Xx. Xxxxxx'x employment with the Bank is terminated during the
Employment Period for any reason other than the reasons described in 8(b) below,
including, without limitation, a resignation by Xx. Xxxxxx, then the Bank shall
pay Xx. Xxxxxx a termination payment equal to the lesser of one year's regular
salary at the annual rate being paid to Xx. Xxxxxx immediately prior to such
termination or the salary payable to Xx. Xxxxxx at such rate for the remainder
of the unexpired Employment Period.
(b) Xx. Xxxxxx shall not be entitled to receive the benefits described in
(a) if his employment is terminated:
(i) for Cause (as defined in section 10(a) of this Agreement);
(ii) upon his resignation not for a Good Reason (as defined in section
10(b) of this Agreement);
(iii) on account of his death; or
(iv) if (A) he has been absent from the full-time service of the Bank on
account of his Disability (as defined in section 12 of this Agreement) for at
least three consecutive months; and (B) he fails to return to work full-time
within thirty days after written notice requesting such return is given to Xx.
Xxxxxx by the Bank.
(c) Xx. Xxxxxx shall not be required to mitigate the amount of any payment
provided for in this section nor shall any payment be reduced by any
compensation or benefit earned by or paid to Xx. Xxxxxx after termination
regardless of source.
9. TERMINATION WITHOUT SEVERANCE BENEFITS. If Xx. Xxxxxx'x employment is
terminated for the reasons described in 8(b)(i) through 8(b)(iv), then the Bank
shall have no further obligations under this Agreement, other than to pay
accrued but unpaid salary.
10. DEFINITION OF FOR CAUSE AND RESIGNATION FOR GOOD REASON.
(a) Termination for "Cause," shall mean personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or final cease
and desist order, or material breach of any provision of this Agreement, in each
case as measured against standards generally prevailing at the relevant time in
the
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savings and community banking industry.
(b) Xx. Xxxxxx'x resignation shall be deemed a Good Reason resignation if
Xx. Xxxxxx resigns within one month after any one or more of the following
events:
(i) the assignment to Xx. Xxxxxx of any duties materially inconsistent
with Xx. Xxxxxx'x status of Senior Vice President and Senior Lending Officer;
(ii) any reduction in Xx. Xxxxxx'x salary unless mandated by any
regulatory authority having jurisdiction over the Bank;
(iii) the relocation of either the Bank's executive offices or the
principal location at which Xx. Xxxxxx works, to a place more than 50 miles
outside of the City of Cortland;
(iv) the failure of the Bank to pay, within seven days of the date when
due, any portion of Xx. Xxxxxx'x compensation, which failure is not inadvertent
and immaterial and which is not promptly cured by the Bank after notice of such
failure is given to the Bank by Xx. Xxxxxx; or
(v) a material breach of this Agreement by the Bank, which the Bank fails
to cure within thirty days following written notice thereof from Xx. Xxxxxx.
11. DEFINITION OF CHANGE IN CONTROL. For purposes of this Agreement, a
Change in Control of the Bank shall occur if:
(a) any "person" (as such term is used in sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")), other than (i)
the holding company to be formed in connection with the conversion of the Bank
to the stock form of ownership; or (ii) a trustee or other fiduciary holding
securities under an employee benefit plan maintained for the benefit of
employees of the Bank, becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the 1934 Act), directly or indirectly, of securities issued by
the Bank representing 25% or more of the combined voting power of all of the
Bank's then outstanding securities; or
(b) the individuals who on the date this Agreement is made are members of
the Board, together with their successors as defined below, cease for any reason
to constitute a majority of the members of the Board; or
(c) the shareholders of the Bank approve either:
(i) a merger or consolidation of the Bank with any other corporation,
other than a merger or consolidation following which both of the following
conditions are satisfied:
(A) either (x) the members of the Board of the Bank immediately
prior to such merger or consolidation constitute at least a majority of the
members of the governing body of the institution resulting from such merger or
consolidation; or (y) the shareholders of the Bank own securities of the
institution resulting from such merger or consolidation representing eighty
percent or more of the combined voting power of all such securities then
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outstanding in substantially the same proportions as their ownership of voting
securities of the Bank before such merger or consolidation; and
(B) the entity which results from such merger or consolidation
expressly agrees in writing to assume and perform the Bank's obligations under
this Agreement; or
(ii) a plan of complete liquidation of the Bank or an agreement for
the sale or disposition by the Bank of all or substantially all of its assets;
and
(d) any event which would be described in sections 11(a), (b) or (c) if the
term "Parent Corporation of the Bank" were substituted for the term "Bank"
therein. Such an event shall be deemed to be a Change in Control under the
relevant provision of sections 11(a), (b) or (c).
It is understood and agreed that more than one Change in Control may occur at
the same or different times during the Employment Period and that the provisions
of this Agreement shall apply with equal force and effect with respect to each
such Change in Control.
12. ADDITIONAL DEFINITIONS. "Disability" shall mean any physical or mental
condition which makes Xx. Xxxxxx reasonably unable to perform any material
portion of his services as an officer of the Bank, as defined in the Bank's
disability insurance program. "Successors" as used in Section 12(b) shall mean
any person who, in the future, is elected or nominated for election to the Board
by a majority of the directors of the Bank then in office who are either
directors of the Bank as of the date of this Agreement or who are themselves
successors as defined in this sentence.
13. ADDITIONAL RETENTION BENEFIT. If the employment of Xx. Xxxxxx is
terminated within six months after a Change in Control and such termination does
not result from a termination as described in Section 8(b), then the Bank shall
pay to Xx. Xxxxxx an amount equal to two hundred and ninety-nine percent (299%)
of his annual salary at the rate being paid to him immediately prior to such
termination, but in no event more than the maximum amount payable without the
imposition of any excise or golden parachute tax under Section 280G of the
Internal Revenue Code. Amounts paid to Xx. Xxxxxx pursuant to this section or
section 8(a), if they occur under circumstances in which Xx. Xxxxxx would
otherwise be entitled to receive a payment under any employee severance
compensation plan, shall be in lieu of and shall supercede any payments under
such plan and shall also supercede any amounts payable under Section 8.
14. NOTICES. Any communication required or permitted to be given under this
Agreement, 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:
If to Xx. Xxxxxx:
Xxxxx X. Xxxxxx.
00 Xxxxxx Xxxxxx
Xxxx 0
Xxxxxxxx, Xxx Xxxx 00000
If to the Bank:
Cortland Savings Bank
Xxx Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Corporate Secretary
With a copy to:
Xxxxxxx & Zelermyer, LLP
00 Xxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxx X. Hack, Esq.
15. 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.
16. 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 who its
enforcement is sought. Any waiver or relinquishment of such right or power 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.
17. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without reference
to conflicts of law principles.
18. 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 between the Bank and Xx. Xxxxxx. No
modifications of this Agreement shall be valid unless made in writing and signed
by the parties hereto.
19. REQUIRED REGULATORY PROVISIONS. The following provisions are included
for the purpose of complying with various laws, rules and regulations applicable
to the Bank. These provisions shall supercede any contrary provision contained
in this Agreement.
(a) Xx. Xxxxxx shall have no right to receive compensation or other
benefits for any period after termination for Cause.
(b) Any payments to Xx. Xxxxxx 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 (the "FDI Act"), 12
U.S.C. Section 1828(k), and any regulations promulgated thereunder.
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(c) If Xx. Xxxxxx is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant to a
notice served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C. Section
1818(e)(3) or 1818(g)(1), the Bank's obligations under this Agreement shall be
suspended as of the date of service of such notice, unless stayed by appropriate
proceedings. If the charges in such notice are dismissed, the Bank, in its
discretion, may (i) pay to Xx. Xxxxxx all or part of the compensation withheld
while the Bank's obligations hereunder were suspended and (ii) reinstate, in
whole or in part, any of the obligations which were suspended.
(d) If Xx. Xxxxxx is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. Section 1818(e)(4) or
(g)(1), all obligations of the Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights and obligations of the Bank
and Xx. Xxxxxx shall not be affected.
(e) If the Bank is in default (within the meaning of section 3(x)(1) of the
FDI Act, 12 U.S.C. Section 1813(x)(1)), all obligations of the Bank under this
Agreement shall terminate as of the date of default, but vested rights and
obligations of the Bank and Xx. Xxxxxx shall not be affected.
(f) All obligations of the Bank hereunder shall be terminated, except to
the extent that a continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the New York Superintendent of Banks or the
Federal Deposit Insurance Corporation ("FDIC"), at the time the FDIC enters into
an agreement to provide assistance to or on behalf of the Bank under the
authority contained in section 13(c) of the FDI Act, 12 U.S.C. Section 1823(c);
(ii) by the Superintendent of Banks if the Superintendent approves a supervisory
merger to resolve problems related to the operation of the Bank or when the Bank
is determined to be in an unsafe or unsound condition. The vested rights and
obligations of the parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
Xx. Xxxxxx has hereto set his hand, all as of the day and year first above
written.
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Xxxxx X. Xxxxxx.
Cortland Savings Bank
By:
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Xxxxxx X. Xxxxxxx, Xx., President
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