RETENTION BONUS AGREEMENT
Exhibit
10.2
This
Agreement is made as of the 2nd
day of January
2008 by and between Xxxxxx National Bank, a national corporation with its
principal office in Oneonta, N.Y. 13820 (the "Bank") and Xxxxx X. Xxxxxxxx, a
resident of Xxxxxxx, Xxx Xxxx 00000 (the
"Employee").
The
Bank
and employee agree that the execution of this agreement by both parties shall
terminate and render void any previous Retention Bonus Agreements that may
have
been in effect on the date hereof.
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RECITALS
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A.
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The
Bank is a wholly owned subsidiary of The Xxxxxx Corporation, a New
York corporation
and
registered bank holding company with its principal office in Oneonta,
N.Y.
13820 (the "Holding Company").
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B.
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The
Bank and the Employee acknowledge the ownership consolidation that
is
occurring in the financial institutions industry, particularly among
community banks, and the Bank and Employee acknowledge that at some
point
it may be appropriate for the Holding Company and/or the Bank to
participate in this industry consolidation.
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C.
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The
Bank recognizes the value of the Employee's services to the Bank
and
desires to insure that the Employee has adequate incentive to continue
in
the employment with the Bank in his/her present position or in a
similar
position with enhanced responsibilities.
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D.
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Given
the current consolidation occurring within the financial institutions
industry, the Employee desires to continue in the employment of the
Bank
with appropriate financial incentives.
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NOW,
THEREFORE, in consideration of the foregoing Recitals and of the promises and
mutual agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the Bank
and Employee agree as follows:
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1
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Definitions. For
purposes of this Agreement, the following terms shall have the meanings
indicated:
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(a)
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"Misconduct":
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(i)
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the
willful and continued failure of the Employee to substantially perform
his/her duties with the Bank (other than any such failure resulting
from
incapacity due to physical or mental illness) after a written demand
for
substantial performance is delivered to the Employee which specifically
identifies the manner in which the Employee has not substantially
performed his/her duties;
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(ii)
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the
willful engaging by the Employee in illegal conduct or gross misconduct
that is materially and demonstrably injurious to the Bank;
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(iii)
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personal
dishonesty or breach of fiduciary duty to the Bank that in either
case was
intended to result in personal profit to the Employee at the expense
of
the Bank;
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(iv)
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willful
violation of any law, rule, or regulation (other than traffic violations,
misdemeanors or similar offenses) or cease-and-desist order, court
order,
judgment or supervisory agreement which violation is materially and
demonstrably injurious to the Bank;
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(v)
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the
Employee directly or indirectly, alone or as a member of a partnership,
or
as an officer, director, member or principal shareholder of any other
entity, engages in or is concerned with any other commercial duties
or
pursuits whatsoever that might conflict with the Bank's business,
or
materially affect the Employee's ability to perform his duties or
create
an appearance of conflict, except as may be approved in writing by
the
President.
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(b)
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"Change
in Control":
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For
purposes of this Agreement, a
change in Control shall be deemed to have occurred (unless Employee shall have
agreed in writing to the contrary) if (i) there shall be consummated (x) any
consolidation or merger of the Holding Company or of Bank in which Holding
Company or Bank is not the continuing or surviving corporation or pursuant
to
which shares of Holding Company's or Bank's Common Stock would be converted
into
cash, securities or other property, other than a merger of the Holding Company
or of Bank in which the holders of the Holding Company's or Bank's Common Stock
immediately prior
to
the
merger have the same proportionate ownership of Common Stock of the surviving
corporation immediately after the merger, or (y) any sale, lease, exchange
or
other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the
Holding Company or of Bank, or (ii) the stockholders of the Holding Company
or
of Bank approved any plan or proposal for the liquidation or dissolution of
the
Holding Company or of Bank, or (iii) any person (as
defined above), other than the Holding Company, shall become the beneficial
owner (as defined above) of 50% or more of Bank's outstanding Common
Stock.
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(c)
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"Coincident
With" shall mean any time within nine months prior to the consummation
of
a Change in Control.
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(d)
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"Current
Annual Salary" for exempt personnel shall mean current gross annual
salary, excluding incentive payments, profit sharing payments and
commissions. "Current Annual Salary" for non-exempt personnel shall
mean
an amount determined by multiplying the current hourly rate times
1950
hours, and excludes incentive payments, profit sharing payments and
commissions.
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2.
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Change
in Control and Retention
Bonus. If a Change in Control is consummated and on the
date of the consummation of the Change in Control, the Employee is
employed by Bank (in a position having the same level of responsibilities
as the position that employee held on the date hereof (or in a similar
position with enhanced responsibilities), Bank or its successor shall
pay
to the Employee in a lump sum, in cash, within five days following
the
date of the Change in Control, a Retention Bonus of 100%
of his/her
Current Annual Salary as defined above in paragraph 1(d).
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2.1
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If
the lump sum payment under this Section 2, either alone or together
with
other payments, which the Employee has the right to receive from
the
Company, would constitute a "parachute payment", as defined in Section
28OG of the Internal Revenue Code of 1986, as amended, (the "Code"),
such
lump sum payment shall be reduced to the largest amount as will result
in
no portion of the lump sum payment under this Section 2 being subject
to
the excise tax imposed by Section 4999 of the Code. The determination
of
any reduction in the lump sum payment under this Section 2, pursuant
to
the foregoing provision, shall be made by the Company in good faith.
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2.2
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The
Bank and employee acknowledges that pursuant to Section 10.4,
“Termination”, of the current Personnel Handbook of the Bank, current or
as amended, Employee may be entitled to receive certain benefits
if the
Employee's services are terminated. Nothing contained herein is
intended to alter these benefits in the event of termination.
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3.
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Termination
by Company not for
Misconduct, Coincident with a Change in Control. If
coincident with a change in control, unless in furtherance of a Business
Plan adopted in good faith, earlier than nine months of a change
in
control, and in the event the Employee's employment is terminated
by
action of the Bank not for Misconduct, Coincident With a Change in
Control, and the Employee at the date of termination held a position
having the same level of responsibilities as the position
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Employee
held on the date hereof (or held a similar position with enhanced
responsibilities), the Bank shall pay the Employee within five days following
the consummation of the Change in Control, the same Retention Bonus in amount
and manner described in Section 2 above. In the event of the
Employee's termination pursuant to this Section 3, the Employee shall not be
subject to the non-compete restriction described in Section 4 below.
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4.
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Termination
of Employment by
Employee/Non-Competition Agreement. In the event the
Employee voluntarily terminates his own employment within six (6)months
of the date of consummation of the Change in Control and subsequent
to
receipt of the Retention Bonus provided for in paragraph 2 above,
the
Employee agrees not to compete, directly or indirectly, with the
Bank or
any successor as an employee, officer, director, independent contractor,
consultant, or shareholder of any financial services company or any
other
entity providing financial services, including but not limited to
lending,
securities, brokerage, trust or insurance products or services within
a
(75)
mile
radius of the main office of the Bank, or such other office of the
Bank at
which such Employee was physically located during the majority of
Employee's work tenure for the Bank, for a period of 90
days
following the date of such termination.
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5.
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Withholding. All
payments made
by the Bank hereunder to the Employee shall be subject to the withholding
of such amounts, if any, relating to tax and other payroll deductions
as
the Bank may reasonably determine should be withheld pursuant to
any
applicable law or regulation.
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6.
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Non-Disclosure. During
the term of his/her employment with the Bank, or at any time thereafter,
the Employee shall not disclose or use (except in the course of his
employment hereunder) any Bank customer information or any confidential
or
proprietary information or data of the Bank or the Holding Company
or any
of their subsidiaries or affiliates, including any such information
with
respect to a sale or merger of the Bank or Holding Company, regardless
of
whether such information or data is embodied in writing or other
physical
form.
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7.
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Successors;
Binding
Agreement. This Agreement shall be binding upon and
inure to the benefit of the Bank and the Employee and their respective
successors, assigns, personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If
the Employee should die while any amount would still be payable to
him
hereunder if he had continued to live, all such amounts shall be
paid in
accordance with the terms of this Agreement to his devisee, legatee
or
other designee, or if there be no such designee, to the Employee's
estate.
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8.
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Modification,
Waiver or
Discharge. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Employee and
authorized officers of the Bank. No waiver by any party hereto
at any time of any breach by the other party hereto of, or compliance
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with,
any condition or provision of this Agreement to be performed by such
other
party
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shall
be deemed a waiver of similar or dissimilar provisions or conditions
at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise,
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express
or implied, with respect to the subject matter hereof have been made
by
either party which are not expressly set forth in this Agreement;
provided, however, that this Agreement shall not supersede or, except
as
expressly set forth herein, in any way limit the rights, duties,
or
obligations that the Employee or the Bank may have under any
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other
written agreement between such parties, under any employee pension
benefit
plan, or employee welfare benefit plan as defined in the Employee
Retirement Income Security Act of 1974 as amended, of the Bank, or
under
any established personnel practice or policy applicable to the Employee.
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9.
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Termination
of
Agreement. Notwithstanding any other provisions of this
Agreement, the rights, duties and obligations of all parties to this
Agreement shall cease, and this Agreement shall terminate on December
31,
2012, provided, however, that this Agreement shall be extended
after said date, up to nine (9) months, from the date of the first
announcement prior to said date of an ownership consolidation which
might
result in a Change in Control provided further that said announced
ownership consolidation is consummated in a Change of Control on
a date
within nine (9) months from the date of said announcement.
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10.
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Governing
Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State
of New York to the extent federal law does not apply.
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11.
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Validity. The
invalidity or unenforceability of any provision of this Agreement
shall
not affect the validity or enforceability of the other provisions
of this
Agreement, which latter provisions shall remain in full force and
effect.
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12.
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Arbitration;
Specific
Performance. Any controversy or claim arising out of, or
relating to, this Agreement or its breach, shall be settled by arbitration
in accordance with the governing rules of the American Arbitration
Association to be held in Oneonta, New York with New York law
applying. Judgment upon the award may be rendered in any court
of competent jurisdiction. The Bank and the Employee recognize
that each party shall have no adequate remedy at law for breach by
the
other of any of the agreements contained herein, and in the event
of any
such breach, the Bank and the Employee hereby agree and consent that
the
other shall be entitled in arbitration to a decree of specific
performance, mandamus, injunction or other appropriate remedy to
enforce
performance of such agreements.
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13.
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Non-Assignability. No
right benefit or interest hereunder shall be subject to anticipation,
alienation, sale, assignment, encumbrance, charge, pledge, hypothecation,
or set-off in respect of any claim, debt or obligation, or to execution,
attachment, levy or similar process, or assignment by operation of
law. Any attempt, voluntary or involuntary, to
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effect
any action specified in the immediately preceding sentence shall,
to the
full extent permitted by law, be null, void and of no effect. Any
of the
foregoing to the contrary notwithstanding, this provision shall not
preclude the Employee from designating one or more beneficiaries
to
receive any amount that may be payable after death, and shall not
preclude
the legal representative of the Employee's estate from transferring
any
right hereunder to the person or persons entitled thereto under Employee's
will or, in the case of intestacy, as applicable, to Employee's estate.
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14.
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Counterparts. This
Agreement may be executed in one or more counterparts, each of which
shall
be deemed an original, but of which together will constitute one
and the
same instrument.
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15.
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Right
to
Attorney. Employee acknowledges that he/she has had the
opportunity to consult with an attorney prior to signing this Agreement
and that nothing contained herein will be construed against the Bank
as
draftsman.
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16.
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Notices. All
notices, requests, demands and other communications provided for
by this
Agreement shall be in writing and shall be sufficiently given if
and when
mailed in the continental United States by Registered or Certified
Mail,
or personally delivered to the party entitled thereto at the address
stated below or to such changed address as the addressee may have
given by
similar notice.
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to
the
Bank:
Chief
Executive Officer
Xxxxxx
National Bank
000
Xxxx Xxxxxx
Xxxxxxx,
XX 00000
to
the Employee:
Xxxxx
X.
Xxxxxxxx
0000
Xxxxxxxx Xxx
Xxxxxxx,
XX 00000
Executed
and effective as of the date first above written.
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XXXXXX
NATIONAL BANK
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By:
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/s/
Xxxxxxx X.
Xxxxxxx
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/s/ Xxxxx X. Xxxxxxxx
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Employee
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