1
Exhibit 10.8
AGREEMENT
AMENDED AGREEMENT, dated this 20th day of October 1998 and
retroactively effective to December 9, 1997, between Commonwealth Bancorp, Inc.
(the "Corporation"), a Pennsylvania corporation, and Xxxxxxx X. Xxxxxxx (the
"Executive").
WITNESSETH
WHEREAS, the Executive is presently Chairman of the Board and Chief
Executive Officer of the Corporation and Commonwealth Bank (the "Bank")
(together, the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers, and the Bank
is concurrently entering into a new Agreement with the Executive to supersede
the agreement with the Executive dated December 9, 1997;
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 terms of such
employment, including 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 mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the
meanings set forth below for the purposes of this Agreement:
(a) BASE SALARY. "Base Salary" shall mean the Executive's annual
salary exclusive of any pension or other retirement plan, profit sharing, stock
option, employee stock ownership, or other plans, benefits and privileges given
to employees and executives of the Employers.
(b) CAUSE. Termination by the Corporation 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.
2
2
(c) 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) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under 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 least 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.
(d) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) DATE OF TERMINATION. "Date of Termination" shall mean the
date the Executive's employment is terminated for any reason as specified in
the Notice of Termination.
(f) 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.
(g) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive within one
year following a Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the
failure to elect or to re-elect or to appoint or to
re-appoint the Executive to the offices of Chairman
of the Board and Chief Executive Officer of the
Employers or a material adverse change made by the
Employers in the Executive's functions, duties or
responsibilities as Chairman of the Board and Chief
Executive Officer of the Employers as they existed
immediately prior to a Change in Control of the
Corporation;
(ii) 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;
3
3
(iii) The principal executive office of either of the
Employers is relocated more than 25 miles from the
current principal executive office 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;
(iv) 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
(v) 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.
(h) HIGHEST ANNUAL COMPENSATION. The Executive's "Highest Annual
Compensation" for purposes of this Agreement shall be deemed to mean the
highest level of compensation paid to the Executive by the Employers or any
subsidiary thereof during the most recent three taxable years preceding the
Date of Termination, including Base Salary (as defined in Section 1(a) hereof)
and bonuses paid to the Executive but excluding amounts relating to the vesting
of Management Recognition Plan shares.
(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 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 the 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
the 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.
(l) GENDER NEUTRAL PRONOUN USAGE. The use of the masculine
pronoun shall be deemed to include the feminine pronoun throughout this
Agreement.
4
4
2. TERM OF EMPLOYMENT.
(a) The Corporation hereby employs the Executive as Chairman of
the Board and Chief Executive Officer and the 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 effective 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 effective
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 effective date of this Agreement and each annual anniversary
thereafter, the Board of Directors of the Corporation shall consider and review
(taking into account all relevant factors, including the Executive's
performance hereunder) an extension of the term of 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 Employers 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 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 the Executive for his
services during the term of this Agreement at a minimum Base Salary of $337,833
per year, 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 this Agreement, the 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 the Executive's rights or benefits
thereunder, unless such change occurs pursuant to a program applicable to all
executive officers of the Corporation and does not result in a proportionately
greater adverse change in the rights of or benefits to the Executive as
compared with any other executive officer of the Corporation. Nothing
5
5
paid to the 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
the Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, the 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. The Executive shall not be
entitled to receive any additional compensation from the Employers for failure
to take a vacation, nor shall the 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, in keeping with past
practices, the Employers shall continue to provide the Executive with the use
of an Employer-owned automobile appropriate to his positions with the Employers
and to pay all costs associated with such automobile, including registration,
licensing, insurance and costs of operation.
(e) In the event the Executive's employment is terminated by the
Corporation for any reason other than Cause, the Employers shall provide
continued group insurance (other than disability insurance unless the Executive
was disabled and was receiving disability insurance benefits prior to the Date
of Termination and other than life insurance), and health and accident
insurance substantially identical to the coverage maintained by the Employers
for the Executive immediately prior to his termination. Such coverage shall
cease upon the expiration of the remaining term of this Agreement.
(f) 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.
4. EXPENSES. The Employers shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
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, 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 the 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 the Executive shall have the right, upon prior
Notice of Termination, to terminate his employment hereunder for any reason.
6
6
(b) The Executive's employment and his status as an
officer of the Corporation shall terminate (i) immediately upon being given a
Notice of Termination for Cause, or (ii) on the Date of Termination for any
other reason. A Notice of Termination for other than Cause shall not affect
the Executive's right to compensation to the Date of Termination or for such
other period of time after the Date of Termination as specified in Section
5(c)(i) and (ii) hereof, if applicable.
(c)(i) In the event that the Executive's employment is
terminated by the Corporation for other than Cause, Disability, Retirement or
the Executive's death, or such employment is terminated by the Executive due to
a material breach of this Agreement by the Corporation which has not been cured
within fifteen (15) days after a written notice of non-compliance has been
given by the Executive to the Corporation, and as of the Executive's Date of
Termination no Change in Control of the Corporation has occurred and no written
agreement which contemplates a Change in Control of the Corporation and which
still is in effect has been entered into by the Corporation and/or the
Corporation, then the Corporation shall, subject to the provisions of Section 6
hereof, if applicable:
(A) pay to the Executive, in twenty-four (24)
equal monthly installments beginning with the
first business day of the month following the
Date of Termination, a cash severance amount
equal to two (2) times that portion of the
Executive's Base Salary paid by the
Corporation as of his Date of Termination,
and
(B) maintain and provide for a period ending at
the earlier of (i) the expiration of
twenty-four (24) months from the Executive's
Date 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 (other than disability insurance
unless the Executive was disabled and was
receiving disability insurance benefits prior
to the Date of Termination and other than
life insurance), health and accident
insurance, 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, employee stock ownership and
restricted stock plans of the Employers and
other than defined contribution plans of the
Employers).
(ii) In the event that the Executive's employment is
terminated by the Corporation for other than Cause, Disability, Retirement or
the Executive's death, or such employment is terminated by the Executive due to
a material breach of this Agreement by the Corporation which has not been cured
within fifteen (15) days after a written notice of non-compliance has been
given
7
7
by the Executive to the Corporation or for Good Reason, and prior to the
Executive's Date of Termination there has been a Change in Control of the
Corporation or a written agreement which contemplates a Change in Control of
the Corporation and which still is in effect has been entered into by the
Corporation and/or the Bank, then the Corporation shall, subject to the
provisions of Section 6 hereof, if applicable:
(A) pay to the Executive, within thirty (30) days
following the Date of Termination, a lump sum
cash severance amount equal to three (3)
times that portion of the Executive's Highest
Annual Compensation paid by the Corporation,
and
(B) maintain and provide for a period ending at
the earlier of (i) the expiration of
thirty-six (36) months from the Executive's
Date 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 (other than disability insurance
unless the Executive was disabled and was
receiving disability insurance benefits prior
to the Date of Termination and other than
life insurance), health and accident
insurance, 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, employee stock ownership and
restricted stock plans of the Employers and
other than defined contribution plans of the
Employers).
(d) In the event that (i) the Executive's employment is terminated
by the Corporation for Cause or (ii) the Executive terminates his employment
hereunder for any reason other than Disability, Retirement, death or pursuant
to Section 5(c) hereof, the Executive shall have no right pursuant to this
Agreement to compensation or other benefits for any period after the applicable
Date of Termination.
(e) In the event that the Executive's employment is terminated as
a result of Disability, Retirement or the Executive's death during the term of
this Agreement, the 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(e) hereof.
8
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 the Executive
has the right to receive from the Employers (including, without limitation, the
payments and benefits which the Executive would have the right to receive from
the Bank pursuant to Section 5 of the Agreement between the Bank and the
Executive of even date ("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 Executive, in thirty-six
(36) equal monthly installments beginning with the first business day of the
month following the Date of Termination or in a lump sum within five business
days of the Date of Termination (at the Executives election), 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 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:
GUP = Tax Rate
--------
1- Tax Rate
The Tax Rate for purposed 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
9
9
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 in 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 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. The
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) Unless the Executive's employment is terminated for
Disability, Retirement, death or pursuant to Section 5(c)(ii) hereof, the
Executive shall be required to mitigate the amount of any payments and benefits
hereunder by seeking other employment or otherwise. In the event that the
Executive obtains other employment during the period that the Executive is
receiving payments pursuant to Section 5(c)(i)(A) hereof, the cash amounts to
be paid to the Executive pursuant thereto shall be reduced by any cash
compensation received by the Executive as a result of employment by another
employer after the Date of Termination.
(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, provided, however, that any cash compensation
the Executive receives from sources other than the Employers shall serve to
reduce the cash amount to be paid to the Executive pursuant to Section
5(c)(i)(A) hereof.
10
10
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, 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: Secretary
Commonwealth Bancorp, Inc.
0 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
To the Bank: Secretary
Commonwealth Bank
0 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
To the Executive: Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
11. CONFIDENTIALITY. The Executive acknowledges that by virtue
of his employment hereunder, he will maintain an intimate knowledge of the
activities and affairs of the Employers, including confidential matters. As a
result, the Executive agrees to maintain the confidentiality of all
confidential information relating to the Employers during the term of
employment hereunder and any period that the Executive may be receiving
payments pursuant to this Agreement, provided that nothing in this Section 11
shall be deemed to prevent the Executive from either (a) being employed by any
other corporation, firm or entity upon termination of the Executive's
employment by the Employers as long as the Executive does not violate the
foregoing proscription, or (b) responding to inquiries from regulatory
authorities.
11
11
12. ARBITRATION. The Executive and the Employers agree to submit
to final and binding arbitration pursuant to the rules of the American
Arbitration Association, any and all claims arising from the termination, for
any reason, of the Executive's employment by the Employers including, but not
limited to:
(a) any and all claims for wages and benefits (including without
limitation salary, stock, commissions, royalties, license fees, health and
welfare benefits, severance pay, vacation pay, and bonuses);
(b) any and all claims for wrongful discharge and breach of
contract (whether express or implied), and implied covenants of good faith and
fair dealing;
(c) any and all claims for alleged employment discrimination on
the basis of age, race, color, religion, sex, national origin, veteran status,
disability and/or handicap, in violation of any federal, state or local
statute, ordinance, judicial precedent or executive order, including but not
limited to claims for discrimination under the following statutes: Title VII
of the Civil Rights Act of 1964, 42 U.S.C. Section 2000 et. seq., the Civil
Rights Act of 1866, 42 U.S.C. Section 1981, the Age Discrimination in
Employment Act, as amended, 29 U.S.C. Section 621 et. seq., the Older Workers
Benefit Protection Act, the Rehabilitation Act of 1972, as amended, 29 U.S.C.
Section 701 et. seq., the Americans with Disabilities Act, 42 U.S.C. Section
12101 et. seq., and the Pennsylvania Human Relations Act, 43 P.S. Section 951
et. seq.;
(d) any and all claims under any federal or state statute
relating to employee benefits or pensions;
(e) any and all claims in tort (including but not limited to any
claims for misrepresentation, defamation, interference with contract or
prospective economic advantage, intentional infliction of emotional distress
and negligence); and
(f) any and all claims for attorney's fees and costs.
13. 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 party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
14. 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.
12
12
15. NATURE OF OBLIGATIONS. Nothing contained herein shall create
or require the Corporation to create a trust of any kind to 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.
16. 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.
17. 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.
18. 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.
19. 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, including without
limitation the prior Agreements between the Employers and the Executive dated
January 1, 1997 and December 9, 1997, 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.
13
13
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: COMMONWEALTH BANCORP, INC.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxx, Xx.
------------------------------ ------------------------------
Xxxxxxx X. Xxxx, President Xxxxxx X. Xxxxx, Xx., Director
and Secretary and Member of the
Compensation and Benefits
Committee of the Board of
Directors
Witness: EXECUTIVE
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------ ------------------------------
Xxxxxxx X. Xxxx Xxxxxxx X. Xxxxxxx
14
AMENDED AGREEMENT
AMENDED AGREEMENT, dated this 20th day of October 1998 and
retroactively effective to December 9, 1997, between Commonwealth Bank (the
"Bank"), a federally chartered savings bank, and Xxxxxxx X. Xxxxxxx (the
"Executive").
WITNESSETH
WHEREAS, the Executive is presently Chairman of the Board and Chief
Executive Officer of Commonwealth Bancorp, Inc. (the "Corporation") and the
Bank (together, the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers, and the Bank
desires to have this new Agreement supersede its current agreement with the
Executive dated December 9, 1997;
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 terms of such
employment, including the severance benefits which shall be due the Executive
by the Bank in the event that his employment with the Bank is terminated under
specified circumstances;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the
meanings set forth below for the purposes of this Agreement:
(a) BASE SALARY. "Base Salary" shall mean the Executive's annual
salary exclusive of any pension or other retirement plan, profit sharing, stock
option, employee stock ownership, or other plans, benefits and privileges given
to employees and executives of the Employers.
(b) CAUSE. Termination by the Bank 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.
(c) 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
15
2
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) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under 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
least 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.
(d) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) DATE OF TERMINATION. "Date of Termination" shall mean the date
the Executive's employment is terminated for any reason, as specified in the
Notice of Termination.
(f) DISABILITY. Termination by the Bank 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.
(g) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive within one
year following a Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the
failure to elect or to re- elect or to appoint or to
re-appoint the Executive to the offices of Chairman of
the Board and Chief Executive Officer of the Employers or
a material adverse change made by the Employers in the
Executive's functions, duties or responsibilities as
Chairman of the Board and Chief Executive Officer of the
Employers as they existed immediately prior to a Change
in Control of the Corporation;
(ii) 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;
16
3
(iii) The principal executive office of either of the
Employers is relocated more than 25 miles from the
current principal executive office 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;
(iv) 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
(v) The failure by the Bank to obtain the assumption of and
agreement to perform this Agreement by any successor as
contemplated in Section 9 hereof.
(h) HIGHEST ANNUAL COMPENSATION. The Executive's "Highest Annual
Compensation" for purposes of this Agreement shall be deemed to mean the
highest level of compensation paid to the Executive by the Employers or any
subsidiary thereof during the most recent three taxable years preceding the
Date of Termination, including Base Salary (as defined in Section 1(a) hereof)
and bonuses paid to the Executive but excluding amounts relating to the vesting
of Management Recognition Plan shares.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Bank for any reason, including without limitation
for Cause, Disability or Retirement, or 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 the 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 Bank's termination of the
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.
(l) GENDER NEUTRAL PRONOUN USAGE. The use of the masculine pronoun
shall be deemed to include the feminine pronoun throughout this Agreement.
17
4
2. TERM OF EMPLOYMENT.
(a) The Bank hereby employs the Executive as Chairman of the Board
and Chief Executive Officer and the Executive hereby accepts said employment
and agrees to render such services to the Bank 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 effective date of this Agreement and, upon
approval of the Board of Directors of the Bank, shall extend for an additional
year on each annual anniversary of the effective 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 effective date of
this Agreement and each annual anniversary thereafter, the Board of Directors
of the Bank shall consider and review (taking into account all relevant
factors, including the Executive's performance hereunder) an extension of the
term of 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 Employers 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
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 Bank as may be consistent with his titles and
from time to time assigned to him by the Bank's Board of Directors.
3. COMPENSATION AND BENEFITS.
(a) The Employers shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum Base Salary of $337,833
per year, 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 this Agreement, the 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
Bank shall not make any changes in such plans, benefits or privileges which
would adversely affect the Executive's rights or benefits thereunder, unless
such change occurs pursuant to a program applicable to all executive officers
of the Bank and does not result in a proportionately greater adverse change in
the rights of or benefits to the
18
5
Executive as compared with any other executive officer of the Bank. Nothing
paid to the 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
the Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, the 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. The Executive shall not be entitled
to receive any additional compensation from the Employers for failure to take a
vacation, nor shall the 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, in keeping with past
practices, the Employers shall continue to provide the Executive with the use
of an Employer-owned automobile appropriate to his positions with the Employers
and to pay all costs associated with such automobile, including registration,
licensing, insurance and costs of operation.
(e) In the event the Executive's employment is terminated by the
Bank for any reason other than Cause, the Employers shall provide continued
group insurance (other than disability insurance unless the Executive was
disabled and was receiving disability insurance benefits prior to the Date of
Termination and other than life insurance), and health and accident insurance
substantially identical to the coverage maintained by the Employers for the
Executive immediately prior to his termination. Such coverage shall cease upon
the expiration of the remaining term of this Agreement.
(f) 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.
4. EXPENSES. The Employers shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
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, 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 the Executive, the Employers
shall reimburse the Executive therefor.
5. TERMINATION
(a) The Bank 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 the Executive shall have the right, upon prior Notice of Termination, to
terminate his employment hereunder for any reason.
19
6
(b) The Executive's employment and his status as an officer of the
Bank shall terminate (i) immediately upon being given a Notice of Termination
for Cause, or (ii) on the Date of Termination for any other reason. A Notice of
Termination for other than Cause shall not affect the Executive's right to
compensation to the Date of Termination or for such other period of time after
the Date of Termination as specified in Section 5(c)(i) and (ii) hereof, if
applicable.
(c)(i) In the event that the Executive's employment is terminated by
the Bank for other than Cause, Disability, Retirement or the Executive's death,
or such employment is terminated by the Executive due to a material breach of
this Agreement by the Bank which has not been cured within fifteen (15) days
after a written notice of non-compliance has been given by the Executive to the
Bank, and as of the Executive's Date of Termination no Change in Control of the
Corporation has occurred and no written agreement which contemplates a Change
in Control of the Corporation and which still is in effect has been entered
into by the Corporation and/or the Bank, then the Bank shall, subject to the
provisions of Section 6 hereof, if applicable:
(A) pay to the Executive, in twenty-four (24) equal
monthly installments beginning with the first
business day of the month following the Date of
Termination, a cash severance amount equal to two
(2) times that portion of the Executive's Base
Salary paid by the Bank as of his Date of
Termination, and
(B) maintain and provide for a period ending at the
earlier of (i) the expiration of twenty-four (24)
months from the Executive's Date 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 (other than
disability insurance unless the Executive was
disabled and was receiving disability insurance
benefits prior to the Date of Termination and
other than life insurance), health and accident
insurance, and other employee benefit plans,
programs and arrangements offered by the Bank in
which the Executive was entitled to participate
immediately prior to the Date of Termination
(other than stock option, employee stock ownership
and restricted stock plans of the Employers and
other than defined contribution plans of the
Employers).
(ii) In the event that the Executive's employment is
terminated by the Bank for other than Cause, Disability, Retirement or the
Executive's death, or such employment is terminated by the Executive due to a
material breach of this Agreement by the Bank which has not been cured within
fifteen (15) days after a written notice of non-compliance has been given by
the Executive to the Bank or for Good Reason, and prior to the Executive's Date
of Termination there has been a
20
7
Change in Control of the Corporation or a written agreement which contemplates
a Change in Control of the Corporation and which still is in effect has been
entered into by the Corporation and/or the Bank, then the Bank shall, subject
to the provisions of Section 6 hereof, if applicable:
(A) pay to the Executive, within thirty (30) days
following the Date of Termination, a lump sum cash
severance amount equal to three (3) times that
portion of the Executive's Highest Annual
Compensation paid by the Bank, and
(B) maintain and provide for a period ending at the
earlier of (i) the expiration of thirty-six (36)
months from the Executive's Date 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 (other than
disability insurance unless the Executive was
disabled and was receiving disability insurance
benefits prior to the Date of Termination and
other than life insurance), health and accident
insurance, and other employee benefit plans,
programs and arrangements offered by the Bank in
which the Executive was entitled to participate
immediately prior to the Date of Termination
(other than stock option, employee stock ownership
and restricted stock plans of the Employers and
other than defined contribution plans of the
Employers).
(d) In the event that (i) the Executive's employment is terminated
by the Bank for Cause or (ii) the Executive terminates his employment hereunder
for any reason other than Disability, Retirement, death or pursuant to Section
5(c) hereof, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.
(e) In the event that the Executive's employment is terminated as a
result of Disability, Retirement or the Executive's death during the term of
this Agreement, the 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(e) hereof.
6. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the
payments and benefits pursuant to Section 5 hereof, either alone or together
with other payments and benefits which the Executive has the right to receive
from the Bank, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits payable by the Bank pursuant to Section 5
hereof shall be reduced, in the manner determined by the Executive, by the
amount, if any, which is the minimum necessary to result in no portion of the
payments and benefits payable by the Bank
21
8
under Section 5 being non-deductible to the Bank pursuant to Section 280G of
the Code and subject to the excise tax imposed under Section 4999 of the Code.
The parties hereto agree that the payments and benefits payable pursuant to
this Agreement by the Bank to the Executive upon termination shall be limited
to a maximum of three times the Executive's "base amount" (as defined in
Section 280G(b)(3) of the Code) in accordance with OTS Regulatory Bulletin 27a.
The determination of any reduction in the payments and benefits to be made
pursuant to Section 5 shall be based upon the opinion of independent tax
counsel selected by the Bank's independent public accountants and paid by the
Bank. Such counsel shall be reasonably acceptable to the Bank and the
Executive; shall promptly prepare the foregoing opinion, but in no event later
than thirty (30) days from the Date of Termination; and may use such actuaries
as such counsel deems necessary or advisable for the purpose. Nothing contained
herein shall result in a reduction of any payments or benefits to which the
Executive may be entitled upon termination of employment under any
circumstances other than as specified in this Section 6, or a reduction in the
payments and benefits specified in Section 5 below zero.
7. MITIGATION; EXCLUSIVITY OF BENEFITS.
(a) Unless the Executive's employment is terminated for Disability,
Retirement, death or pursuant to Section 5(c)(ii) hereof, the Executive shall
be required to mitigate the amount of any payments and benefits hereunder by
seeking other employment or otherwise. In the event that the Executive obtains
other employment during the period that the Executive is receiving payments
pursuant to Section 5(c)(i)(A) hereof, the cash amounts to be paid to the
Executive pursuant thereto shall be reduced by any compensation received by the
Executive as a result of employment by another employer after the Date of
Termination.
(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, provided, however, that any salary the Executive
receives from sources other than the Employers shall serve to reduce the cash
amount paid to the Executive pursuant to Section 5(c)(i)(A) hereof.
8. WITHHOLDING. All payments required to be made by the Bank
hereunder to the Executive 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.
9. ASSIGNABILITY. The Bank may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Bank may hereafter merge or
consolidate or to which the Bank 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 Bank
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
22
9
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 Bank: Secretary
Commonwealth Bank
0 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
To the Corporation: Secretary
Commonwealth Bancorp, Inc.
0 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
To the Executive: Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
11. CONFIDENTIALITY. The Executive acknowledges that by virtue of
his employment hereunder, he will maintain an intimate knowledge of the
activities and affairs of the Employers, including confidential matters. As a
result, the Executive agrees to maintain the confidentiality of all
confidential information relating to the Employers during the term of
employment hereunder and any period that the Executive may be receiving
payments pursuant to this Agreement, provided that nothing in this Section 11
shall be deemed to prevent the Executive from either (a) being employed by any
other corporation, firm or entity upon termination of the Executive's
employment by the Employers as long as the Executive does not violate the
foregoing prescription, or (b) responding to inquiries from regulatory
authorities.
12. ARBITRATION. The Executive and the Employers agree to submit
to final and binding arbitration pursuant to the rules of the American
Arbitration Association, any and all claims arising from the termination, for
any reason, of the Executive's employment by the Employers including, but not
limited to:
(a) any and all claims for wages and benefits (including without
limitation salary, stock, commissions, royalties, license fees, health and
welfare benefits, severance pay, vacation pay, and bonuses);
(b) any and all claims for wrongful discharge and breach of
contract (whether express or implied), and implied covenants of good faith and
fair dealing;
23
10
(c) any and all claims for alleged employment discrimination on the
basis of age, race, color, religion, sex, national origin, veteran status,
disability and/or handicap, in violation of any federal, state or local statute,
ordinance, judicial precedent or executive order, including but not limited to
claims for discrimination under the following statutes: Title VII of the Civil
Rights Act of 1964, 42 U.S.C. section 2000 et. seq., the Civil Rights Act of
1866, 42 U.S.C. section 1981, the Age Discrimination in Employment Act, as
amended, 29 U.S.C. section 621 et. seq., the Older Workers Benefit Protection
Act, the Rehabilitation Act of 1972, as amended, 29 U.S.C. section 701 et. seq.,
the Americans with Disabilities Act, 42 U.S.C. section 12101 et. seq., and the
Pennsylvania Human Relations Act, 43 P.S. section 951 et. seq.;
(d) any and all claims under any federal or state statute relating
to employee benefits or pensions;
(e) any and all claims in tort (including but not limited to any
claims for misrepresentation, defamation, interference with contract or
prospective economic advantage, intentional infliction of emotional distress
and negligence); and
(f) any and all claims for attorney's fees and costs.
13. 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 Bank 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 party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
14. 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.
15. NATURE OF OBLIGATIONS. Nothing contained herein shall create or
require the Bank to create a trust of any kind to fund any benefits which may
be payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Bank hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Bank.
16. 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.
17. 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.
24
11
18. 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.
19. REGULATORY ACTIONS. The following provisions shall be
applicable to the parties to the extent that they are required to be included in
employment agreements between a savings bank and its employees pursuant to
Section 563.39(b) of the Regulations Applicable to all Savings Associations, 12
C.F.R. section 563.39(b), or any successor thereto, and shall be controlling in
the event of a conflict with any other provision of this Agreement, including
without limitation Section 5 hereof.
(a) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank's affairs pursuant to
notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit
Insurance Act ("FDIA")(12 U.S.C. sections 1818(e)(3) and 1818(g)(1)), the Bank's
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Bank may, in its discretion: (i) pay the Executive all or part
of the compensation withheld while its obligations under this Agreement were
suspended, and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.
(b) If the Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Bank's affairs by an order
issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C.
section 1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement
shall terminate as of the effective date of the order, but vested rights of the
Executive and the Bank as of the date of termination shall not be affected.
(c) If the Bank is in default, as defined in Section 3(x)(1) of the
FDIA (12 U.S.C. section 1813(x)(1)), all obligations under this Agreement shall
terminate as of the date of default, but vested rights of the Executive and the
Bank as of the date of termination shall not be affected.
(d) All obligations under this Agreement shall be terminated pursuant
to 12 C.F.R. section 563.39(b)(5) (except to the extent that it is determined
that continuation of the Agreement for the continued operation of the Bank is
necessary): (i) by the Director of the OTS, or his/her designee, at the time the
Federal Deposit Insurance Corporation ("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 FDIA (12 U.S.C. section 1823(c)); or (ii) by the Director
of the OTS, or his/her designee, at the time the Director or his/her designee
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director of the OTS to be in an
unsafe or unsound condition, but vested rights of the Executive and the
Employers as of the date of termination shall not be affected.
20. REGULATORY PROHIBITION. Notwithstanding any other provision of
this Agreement to the contrary, any payments made to the Executive pursuant to
this Agreement, or otherwise, are
25
12
subject to and conditioned upon their compliance with Section 18(k) of the FDIA
(12 U.S.C. section 1828(k)) and any regulations promulgated thereunder.
21. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Bank and the Executive with respect to the matters agreed to
herein. All prior agreements between the Bank and the Executive with respect
to the matters agreed to herein, including without limitation the prior
Agreements between the Employers and the Executive dated January 1, 1997 and
December 9, 1997, 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 Corporation and the
Executive.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: COMMONWEALTH BANK
/s/ Xxxxxxx X. Xxxx By: /s/Xxxxxx X. Xxxxx, Xx.
----------------------------------- -----------------------------------
Xxxxxxx X. Xxxx, President and Xxxxxx X. Xxxxx, Xx., Director and
Secretary Member of the Compensation and
Benefits Committee of the Board
of Directors
Witness: EXECUTIVE
/s/ Xxxxxxx X. Xxxx By: /s/Xxxxxxx X. Xxxxxxx
----------------------------------- -----------------------------------
Xxxxxxx X. Xxxx Xxxxxxx X. Xxxxxxx
