AGREEMENT
AGREEMENT, dated this 1st day of May 1997, between ML Bancorp, Inc. (the
"Corporation") and Xxxxxx X. Xxxxx (the "Executive")
WITHNESSETH
WHEREAS, the Executive is presently an officer of the Corporation and Main
Line Bank (the "Bank") (together, the "Employees").
WHEREAS, the Employers desire to be ensured of the Executive's continued
active participation in the business of the Employers, and the Bank currently
has an agreement with the Executive dated January 6, 1995, which is being
concurrently amended.
WHEREAS, in accordance with Office of Thrift Supervision ("OTS") Regulatory
Bulletin 27a, the Corporation and the Bank desire to enter into separate
agreements with the Executive with respect to his employment by each of the
Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Corporation in the event that his
employment with the Corporation is terminated under specified circumstances.
NOW THEREFORE, In consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows;
1. Definitions. The following words and terms shall have the meanings set
forth below for the purpose of this Agreement.
(a) Average Annual Compensation. The Executives "Average Annual
Compensation" for purposes of this Agreement shall be deemed
to mean the average level of compensation paid to the Executive
by the Employers or any subsidiary thereof during the most recent
five taxable years preceding the Date of Termination, including
Base Salary and bonuses under any employee benefit plans of the
Employers.
(b) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(c) Cause. Termination of the Executive's employment for "Cause"
shall mean termination because of 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.
(d) Change in Control of the Corporation. "Change in Control of the
"Corporation" shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or any
successor thereto, whether or not the Corporation is registered
under the Exchange Act; provided that, without limitation, such a
change in control shall be deemed to have occurred if (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power
of the Corporation's then outstanding securities; or (ii) during
any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the
Corporation cease for any reason to constitute at lease a
majority thereof unless the election, or the nomination for
election by stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
(e) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability
the date specified in the Notice of Termination, and (ii) if the
Executive's employment is terminated for any other reason, the
date on which a Notice of Termination is given or as specified in
such Notice.
-2-
(g) Disability. Termination by the Corporation of the Executive's
employment based on "Disability" shall mean termination because
of any physical or mental impairment which qualifies the
Executive for disability benefits under the applicable long-term
disability plan maintained by the Employers or any subsidiary or,
if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(h) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the
Executive following a Change in Control of the Corporation based
on:
(i) Without the Executive's express written consent, a
reduction by either of the Employers in the Executive's
Base Salary as the same may be increased from time to time
or, except to the extent permitted by Section 3(b) hereof,
a reduction in the package of fringe benefits provided to
the Executive, taken as a whole.
(ii) The principal executive office of either of the Employers
is relocated outside of the Villanova, Pennsylvania area,
or without the Executive's express written consent, either
of the Employers requires the Executive to be based
anywhere other than an area in which the Employers
principal executive office is located, except for required
travel on business of the Employers to an extent
substantially consistent with the Executive's present
business travel obligations;
(iii) Any purported termination of the Executive's employment for
Cause, Disability or Retirement which is not effected
pursuant to a Notice of Termination satisfying the
requirements of paragraph (j) below; or
(iv) The failure by the Corporation to obtain the assumption of
and agreement to perform this Agreement by any successor as
contemplated in Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service
(j) Notice of Termination. Any purported termination of the
Executive's employment by the Corporation for any reason,
including without limitation for Cause, Disability or Retirement,
or
-3-
by the Executive for any reason, including without limitation for
Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a dated notice
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so
indicated, (iii) specifies a Date of Termination, which shall be
not less than thirty (30) nor more than ninety (90) days after
such Notice of Termination is given, except in the case of the
Corporation's termination of Executive's employment for Cause,
which shall be effective immediately, and (iv) is given in the
manner specified in Section 10 hereof.
(k) Retirement. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employers' retirement policies,
including early retirement, generally applicable to their
salaried employees.
2. Term of Employment.
(a) The Corporation hereby employs the Executive as President and
Chief Executive Officer and Executive hereby accepts said
employment and agrees to render such services to the Corporation
on the terms and conditions set forth in this Agreement. The term
of employment under this Agreement shall be for three years,
commencing on the date of this Agreement and, upon approval of
the Board of Directors of the Corporation, shall extend for an
additional year on each annual anniversary of the date of this
Agreement such that at any time the remaining term of this
Agreement shall be from two to three years. Prior to the first
annual anniversary of the date of this Agreement and each annual
anniversary thereafter, the Board of Directors of the Corporation
shall consider and review (with appropriate corporate
documentation thereof, and after taking into account all relevant
factors, including the Executive's performance hereunder)
extension of the term under this Agreement, and the term shall
continue to extend each year if the Board of Directors approves
such extension unless the Executive gives written notice to the
Corporation of the Executive's election not to extend the term,
with such written notice to be given not less than thirty (30)
days prior to any such anniversary date. If the Board of
Directors elects not to extend the
-4-
term, it shall give written notice of such decision to the
Executive not less than thirty (30) days prior to any such
anniversary date. If any party gives timely notice that the term
will not be extended as of any annual anniversary date, then this
Agreement shall terminate at the conclusion of its remaining
term. References herein to the term of this Agreement shall refer
both to the initial term and successive terms.
(b) During the term of this Agreement, the Executive shall perform
such executive services for the Corporation as may be consistent
with his titles and from time to time assigned to him by the
Corporation's Board of Directors.
3. Compensation and Benefits.
(a) The Employers shall compensate and pay Executive for his services
during the term of this Agreement at a minimum base salary of
$330,000 per year ("Base Salary"), which may be increased from
time to time in such amounts as may be determined by the Boards
of Directors of the Employers and may not be decreased without
the Executive's express written consent. In addition to his Base
Salary, the Executive shall be entitled to receive during the
term of this Agreement such bonus payments as may be determined
by the Boards of Directors of the Employers.
(b) During the term of the Agreement, Executive shall be entitled to
participate in and receive the benefits of any pension or other
retirement benefit plan, profit sharing, stock option, employee
stock ownership, or other plans, benefits and privileges given to
employees and executives of the Employers, to the extent
commensurate with his then duties and responsibilities, as fixed
by the Boards of Directors of the Employers. The Corporation
shall not make any changes in such plans, benefits or privileges
which would adversely affect Executive's rights or benefits
thereunder, unless such change occurs pursuant to a program
applicable to all executive officers of the Corporations does not
result in a proportionately greater adverse change in the rights
of or benefits to Executive as compared with any other executive
officer of the Corporation. Nothing paid to Executive under any
plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the salary payable to
Executive pursuant to Section 3(a) hereof,
-5-
(c) During the term of this Agreement, Executive shall be entitled to
paid annual vacation in accordance with the policies as
established from time to time by the Boards of Directors of the
Employers, which shall in no event be less than four weeks per
annum. Executive shall not be entitled to receive any additional
compensation from the Employers for failure to take a vacation,
nor shall Executive be able to accumulate unused vacation time
from one year to the next, except to the extent authorized by the
Boards of Directors of the Employers.
(d) During the term of this Agreement, the Employers shall continue
to provide the Executive with the automobile he presently drives.
The Employers shall be responsible and shall pay for all costs of
Insurance coverage, repairs, maintenance and other incidental
expenses, including license, fuel and oil. The Employers shall
provide the Executive with a replacement automobile of a similar
type as selected by the Executive at approximately the time that
his present automobile reaches (3) years of age and approximately
every three (3) years thereafter, upon the same terms and
conditions.
(e) During the term of this Agreement, the Employers shall pay the
Executive's annual membership dues at one (1) club of his choice.
(f) The Employers shall provide continued medical insurance for the
benefit of the Executive and his spouse until the Executive shall
have attained the age of 66, and such insurance shall be
comparable to which is provided to the Executive as of the date
of this Agreement nothwithstanding anything to the contrary in
this Agreement.
(g) In the event of the Executive's death during the term of this
Agreement, his spouse, estate, legal representative or named
beneficiaries (as directed by the Executive in writing) shall be
paid on a monthly basis the Executive's annual compensation from
the Employer at the rate in effect at the time of the Executive's
death for a period of twenty-four (24) months from the date of
the Executive's death.
(h) The Executive's compensation, benefits and expenses shall be paid
by the Corporation and the Bank in the same proportion as the
time and services actually expended by the Executive on behalf of
each respective Employer.
-6-
4. Expenses. The Employers shall reimburse Executive or otherwise provide
for or pay for all reasonable expenses incurred by Executive in
furtherance of, or in connection with the business of the Employers,
including, but not by way of limitation, automobile expenses described
in Section 3(d) hereof, and traveling expenses, and all reasonable
entertainment expenses (whether incurred at the Executive's residence,
while traveling or otherwise), subject to such reasonable
documentation and other limitations as may be established by the
Boards of Directors of the Employers. If such expenses are paid in the
first instance by Executive, the Employers shall reimburse the
Executive therefor.
5. Termination.
(a) The Corporation shall have the right, at any time upon prior
Notice of Termination, to terminate the Executive's employment
hereunder for any reason, including without limitation
termination for Cause, Disability or Retirement, and Executive
shall have the right, upon prior Notice of Termination, to
terminate his employment hereunder for any reason.
(b) In the event that (i) Executive's employment is terminated by the
Corporation for Cause, Disability or Retirement, or (ii)
Executive terminates his employment hereunder other than for Good
Reason, Executive shall have no right pursuant to this Agreement
to compensation or other benefits for any period after the
applicable Date of Termination, except as provided for in Section
3(f) in the event of termination for Disability or Retirement.
(c) In the event that (i) Executive's employment is terminated by the
Corporation for other than Cause, Disability, Retirement or the
Executive's death or (ii) such employment is terminated by the
Executive (a) due to a material breach of this Agreement by the
Corporation, which breach has not been cured within fifteen (15)
days after a written notice of non-compliance has been given by
the Executive to the Employers, or (b) for Good Reason, then the
Corporation shall
(A) pay to the Executive, in thirty-six (36) equal monthly
installments beginning with the first business day of the
month following the Date of Termination, a cash severance
amount equal to three (3) times that portion of the
Executive's Base Salary paid by the Corporation, and
-7-
(B) maintain and provide for a period ending at the earlier of
(i) the expiration of the remaining term of employment
pursuant hereto prior to the Notice of Termination or (ii)
the date of the Executive's full-time employment by another
employer (provided that the Executive is entitled under the
terms of such employment to benefits substantially similar
to those described in this subparagraph (B)), at no cost to
the Executive, the Executive's continued participation in
all group insurance, life insurance, health and accident,
disability and other employee benefit plans, programs and
arrangements offered by the Corporation in which the
Executive was entitled to participate immediately prior to
the Date of Termination (other than stock option and
restricted stock plans of the Employers), provided that in
the event that the Executive's participation in any plan,
program or arrangement as provided in this subparagraph (B)
is barred, or during such period any such plan, program or
arrangement is discontinued or the benefits thereunder are
materially reduced, the Corporation shall arrange to provide
the Executive with benefits substantially similar to those
which the Executive was entitled to receive under such
plans, programs and arrangements immediately prior to the
Date of Termination.
(d) In the event of the failure by either of the Employers to elect
or to re-elect or to appoint or to re-appoint the Executive to
the offices of President and Chief Executive Officer of the
Employers or a material adverse change made by either of the
Employers in the Executive's functions, duties or
responsibilities as President and Chief Executive Officer of the
Employers without the Executive's express written consent, the
Executive shall be entitled to terminate his employment hereunder
and shall be entitled to the payments and benefits provided for
in Section 5(c)(A) and (B).
-8-
6. Payment of Additional Benefits under Certain Circumstances.
(a) If the payments and benefits pursuant to Section 5 hereof, either
alone or together with other payments and benefits which
Executive has the right to receive from the Employers (including,
without limitation, the payments and benefits which Executive
would have the right to receive from the Bank pursuant to Section
5 of the Agreement between the Bank and Executive dated May 1,
1997 ("Bank Agreement"), before giving effect to any reduction in
such amounts pursuant to Section 6 of the Bank Agreement), would
constitute a "parachute payment" as defined in Section 280G(b)(2)
of the Code (the "Initial Parachute Payment," which includes the
amounts paid pursuant to clause (A) below), then the Corporation
shall pay to the Executive, in thirty-six (36) equal monthly
installments beginning with the first business day of the month
following the Date of Termination, a cash amount equal to the sum
of the following:
(A) the amount by which the payments and benefits that would
have otherwise been paid by the Bank to the Executive
pursuant to Section 5 of the Bank Agreement are reduced by
the provisions of Section 6 of the Bank Agreement;
(B) twenty (20) percent (or such other percentage equal to the
tax rate imposed by Section 4999 of the Code) of the amount
by which the Initial Parachute Payment exceeds the
Executive's "base amount" from the Employers, as defined in
Section 280G(b)(3) of the Code, with the difference between
the Initial Parachute Payment and the Executive's base
amount being hereinafter referred to as the "Initial Excess
Parachute Payment".
(C) such additional amount (tax allowance) as may be necessary
to compensate the Executive for the payment by the Executive
of state and federal income and excise taxes on the payment
provided under clause (B) above and on any payments under
this clause (C). In computing such tax
-9-
allowance, the payment to be made under clause (B) above
shall be multiplied by the "gross up percentage" ("GUP").
The GUP shall be determined as follows:
Tax Rate
GUP = ----------
1-Tax Rate
The Tax Rate for purposes of computing the GUP shall be the
highest marginal federal and state. Income and
employment-related tax rate, including any applicable excise
tax rate, applicable to the Executive in the year in which
the payment under clause (B) above is made.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final
administrative settlement to which the Executive is a party that
the actual excess parachute payment as defined in Section
280G(b)(1) of the Code is different from the Initial Excess
Parachute Payment (such different amount being hereafter referred
to as the "Determinative Excess Parachute Payment"), then the
Corporation's independent tax counsel or accountants shall
determine the amount (the "Adjustment Amount") which either the
Executive must pay to the Corporation or the Corporation must pay
to the Executive in order to put the Executive (or the
Corporation, as the case may be) in the same position the
Executive (or the Corporation, as the case may be) would have
been if the Initial Excess Parachute Payment had been equal to
the Determinative Excess Parachute Payment. In determining the
Adjustment Amount, the independent tax counsel or accountants
shall take into account any and all taxes (including any
penalties and interest) paid by or for the Executive or refunded
to the Executive or for the Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined,
the Corporation shall pay the Adjustment Amount to the Executive
or the Executive shall repay the Adjustment Amount to the
Corporation, as the case may be.
(c) In each calendar year that the Executive receives payments of
benefits under this Section 6, the Executive shall report on his
state and federal income tax returns such information as is
consistent with the determination made by the independent tax
counsel or accountants of the Corporation as described above. The
Corporation shall indemnify and hold the Executive harmless from
-10-
any and all losses, costs and expenses (including without
limitation, reasonable attorneys' fees, interest, fines and
penalties) which the Executive incurs as a result of so reporting
such information. Executive shall promptly notify the Corporation
in writing whenever the Executive receives notice of the
institution of a judicial or administrative proceeding, formal or
informal, in which the federal tax treatment under Section 4999
of the Code of any amount paid or payable under this Section 6 is
being reviewed or is in dispute. The Corporation shall assume
control at its expense over all legal and accounting matters
pertaining to such federal tax treatment (except to the extent
necessary or appropriate for the Executive to resolve any such
proceeding with respect to any matter unrelated to amounts paid
or payable pursuant to this Section 6) and the Executive shall
cooperate fully with the Corporation in any such proceeding. The
Executive shall not enter into any compromise or settlement or
otherwise prejudice any rights the Corporation may have in
connection therewith without the prior consent of the
Corporation.
7. Mitigation, Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor
shall the amount of any such benefits be reduced by any
compensation earned by the Executive as a result of employment by
another employer after the Date of Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the
Executive upon a termination of employment with the Employers
pursuant to employee benefit plans of the Employers or otherwise.
8. Withholding. All payments required to be made by the Corporation
hereunder to the Executive shall be subject to the withholding of such
amounts, if any, relating to tax and other payroll deductions as the
Corporation may reasonably determine should be withheld pursuant to
any applicable law or regulation.
9. Assignability. The Corporation may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any
corporation,
-11-
bank or other entity with or into which the Corporation may hereafter
merge or consolidate or to which the Corporation may transfer all or
substantially all of its assets, if in any such case said corporation,
bank or other entity shall by operation of law or expressly in writing
assume all obligations of the Corporation hereunder as fully as if it
had been originally made a party hereto, but may not otherwise assign
this Agreement or its rights and obligations hereunder. The Executive
may not assign or transfer this Agreement or any rights or obligations
hereunder.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
certified or registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below:
To the Corporation:
Chairman of the Board
ML Bancorp, Inc.
Xxx Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx and Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
To the Bank:
Chairman of the Board
Mail Line Bank
Two Aldwyn Center
Lancaster Avenue and Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
To the Executive:
Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
11. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and such officer or
officers as may be specifically designated by the Board of Directors
of the Corporation to sign on its behalf. No waiver by any party
hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be
performed by such other
-12-
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
12. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
United States where applicable and otherwise by the substantive laws
of the Commonwealth of Pennsylvania.
13. Nature of Obligations. Nothing contained herein shall create or
require the Corporation to create a trust of any kind of fund any
benefits which may be payable hereunder, and to the extent that the
Executive acquires a right to receive benefits from the Corporation
hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.
-13-
14. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and
effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
17. Entire Agreement. This Agreement embodies the entire agreement between
the Corporation and the Executive with respect to the matters agreed
to herein. All prior agreements between the Corporation and the
Executive with respect to the matters agreed to herein are hereby
superseded and shall have no force or effect. Notwithstanding the
foregoing, nothing contained in this Agreement shall affect the
agreement of even date being entered into between the Bank and the
Executive.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Attest: ML BANCORP, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------
Xxxx X. Xxxxxxxx
Chairman of the Board
EXECUTIVE
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
-14-
