EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") made as of this 8th day of
January, 1997, by and between XXXXXXX X. XXXXXXX, an individual
residing at 00 Xxxxxx Xxx Xxxx, Xxxx Xxxxxxx, Xxx Xxxxxx 00000 (the
"Employee") and STATEWIDE SAVINGS BANK, S.L.A., a New Jersey chartered
capital stock savings and loan association with its principal place of
business located at 00 Xxx Xxxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000
("Bank").
WHEREAS, the Bank wishes to hire Employee to serve in the capacity set
forth in this Agreement on the terms and conditions set forth in this
Agreement;
WHEREAS, the Employee agrees to be employed pursuant to the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and covenants
contained herein, and with the intent to be legally bound hereby, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. The Bank hereby agrees to employ the Employee,
and the Employee hereby accepts such employment, upon the terms and
conditions set forth herein. The parties acknowledge that Employee is
accepting this employment at the request of Statewide Financial Corp.,
the sole shareholder of the Bank.
1. POSITION AND DUTIES. The Employee shall be employed as the
President and Chief Operating Officer of the Bank, to perform such
services in that capacity as are usual and customary for comparable
institutions, under the direction and supervision of the Chief
Executive Officer of the Bank.
1. CASH COMPENSATION. The Bank shall pay to the Employee
compensation for his services as follows:
(a) Base Salary. The Employee shall be entitled to
receive, commencing upon the date of this Agreement, an annual base
salary (the "Base Salary") of $155,000, which shall be payable in
installments in accordance with Bank's usual payroll method. Annually
thereafter, on or prior to the anniversary date of this Agreement, the
Board of Directors of the Bank shall review the Employee's
performance, the status of Bank and such other factors as the Board of
Directors or a committee thereof shall deem appropriate, and shall
adjust the Base Salary accordingly.
(b) Discretionary Bonus. Prior to commencement of this
Agreement, the Employee and the Chief Executive Officer of the Bank
shall meet and establish performance criteria for the Employee in
writing. The Employee shall be entitled to receive annually (on or
before the anniversary date of this Agreement) a cash bonus, the
amount to be determined by the Board of Directors or a committee
thereof, in an amount up to 30% of the Base Salary; the actual amount
of the bonus will be based upon the Employee's partial or total
satisfaction of the agreed upon criteria as well as the Bank's overall
performance. The Employee and the Chief Executive Officer of Bank
shall meet annually on or prior to the anniversary date of the
Employment Agreement to review the Employee's performance and to
mutually agree upon new performance criteria for the upcoming year.
1. OTHER BENEFITS.
(a) Supplemental Retirement Plan. Bank shall immediately
establish a supplemental retirement plan (the "SRP") for the benefit
of the Employee in form and amount similar to SRPs provided to other
executive officers of Bank, other than the Chief Executive Officer of
Bank.
(b) Fringe Benefits. The Bank shall buy out Employee's
lease on that certain 1996 Buick Park Avenue currently used by
Employee. During the term of this Agreement, all carrying, gasoline,
repair and maintenance charges for such automobile shall be fully and
promptly paid by the Bank. The Employee shall be entitled to the
exclusive and unlimited use of an automobile of a type and style
commensurate with the Employee's status as President and Chief
Operating Officer of the Bank. In addition, the Employee shall be
entitled to receive hospital, health, disability, medical and life
insurance of a type currently provided to and enjoyed by other senior
officers of the Bank, and shall be entitled to participate in any
other employee benefit or retirement plans offered by the Bank to its
employees generally or to its senior management.
(c) Recognition and Retention Plan. The Employee shall be
entitled to participate in and receive grants under the Statewide
Financial Corp. Recognition and Retention Plan for Executive Officers
and Employees (the "RRP"). Employee shall receive a grant of 23,012
shares of Restricted Stock (as that term is defined in the RRP). Such
grant shall be subject to all of the terms and conditions, including
vesting, contained in the RRP, and Employee shall be bound by all of
the terms of the RRP with regard to the grant of such shares. This
grant of shares may be increased from time to time in the sole
discretion of Statewide Financial Corp.
(d) Stock Option Plan. The Employee shall be entitled to
participate in the Statewide Financial Corp. 1996 Incentive Stock
Option Plan (the "Option Plan"). Pursuant to the Option Plan,
Employee will receive options to purchase 31,700 shares of Statewide
Financial Corp. Common Stock. Such option grant shall be subject to
all of the terms and conditions of the Option Plan, including vesting,
and Employee shall be bound by all of such terms and conditions.
1. TERM. The initial term of this Agreement shall be two
years, commencing upon the date hereof and continuing until January 7,
1999.
1. TERMINATION.
(a) Cause. As used in this Agreement, the term "Cause"
shall mean the Employee's 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 a material breach of any
provision of this Agreement. Employee's death or "disability" (as
that term is defined in the Option Plan) shall not be considered
"Cause" hereunder. Notwithstanding the above, the Employee shall not
be deemed to have been terminated for Cause unless and until there
shall have been delivered to him a copy of a resolution duly adopted
by the affirmative vote of not less than three-fourths of the members
of the Board of Directors of the Bank at a meeting of its Board called
and held for that purpose (after reasonable notice to the Employee and
an opportunity for him, together with counsel, to be heard before such
Board of Directors), finding that in the good faith opinion of the
Board of Directors, the Employee was guilty of conduct justifying
termination for Cause and specifying the particulars thereof in
detail.
(b) Termination With Cause. The Bank shall have the right
to terminate the Employee for Cause, upon written notice to him of
such determination as described above, specifying the alleged Cause.
In the event of such termination, the Employee shall not be entitled
to any further benefits under this Agreement.
(c) Termination Without Cause. If the Bank terminates the
Employee's employment hereunder without Cause prior to the end of the
term of this Agreement, the Employee shall be entitled to receive his
then current Base Salary through the remaining term of this Agreement.
Such payment may be made over the remaining term of this Agreement in
periodic payments in the same manner in which the Employee's salary
was paid through the time of such termination, or by a lump sum
payment of the discounted present value of all Base Salary payments
through the remaining term of this Agreement (calculated using the
interest yield then applicable to a Treasury Note with a maturity
equal to the remaining term). The determination of the method of
payment shall be made mutually by the Bank and the Employee; provided,
however, that in the event the parties cannot agree on the method of
payment, Bank shall be entitled to choose. The Bank shall continue to
provide the Employee with hospital, health, medical and life
insurance, and any other benefits in effect at the time of such
termination through the end of the term of this Agreement. In
addition, the Bank shall provide Employee with outplacement
assistance, to include an office and a secretary at the premises of
the outplacement service provider, for a period of three (3) months
after such termination. The Employee shall have no duty to mitigate
damages in connection with his termination by the Bank without Cause.
However, if the Employee obtains new employment and such new
employment provides for hospital, health, medical and life insurance,
and other benefits, in a manner substantially similar to the benefits
payable by the Bank hereunder, the Bank may permanently terminate the
duplicative benefits it is obligated to provide hereunder.
Notwithstanding anything else above, in the event Employee is
terminated without cause, Employee shall receive his then current Base
Salary as provided for in the first two sentences of this Section.
(d) Suspension and Special Regulatory Rules.
(i) If the Employee is suspended and/or temporarily
prohibited from participating in the conduct of the affairs of the
Bank by a notice served under Section 8(e)(3) or Section 8(g)(1) of
the Federal Deposit Insurance Act ("FDI Act"), the Bank's obligations
under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If all charges in the
notice are dismissed, Bank shall pay Employee all compensation
withheld while Employer's contractual obligations were suspended.
(ii) If the Employee is removed and/or permanently
prohibited from participating in the conduct of the affairs of the
Bank by an order issued under Section 8(e)(4) or Section 8(g)(1) of
the FDI Act, all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order and the Employee shall
not be entitled to receive the payments provided for under Paragraph
(c) above. All vested rights of Employee shall not be affected.
(iii) If Bank is in default, as defined in Section
3(x)(1) of the FDI Act, all obligations of the Bank under this
Agreement shall terminate as of the date of default. All vested
rights of Employee shall not be affected.
(iv) All obligations of the Bank under this Agreement
shall be terminated, except to the extent it is determined that
continuation of this Agreement is necessary for the continued
operation of Bank, (1) by the Director of the Office of Thrift
Supervision ("Director"), or his or her designee, at the time the
Federal Deposit Insurance Corporation enters into an agreement to
provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of the FDI Act, or (2) by the Director, at
the time the Director or his or her designee approves a supervisory
merger to resolve problems related to operation of Bank or when Bank
is determined to be in an unsafe or unsound condition. All vested
rights of Employee shall not be affected.
1. RESIGNATION FOR CAUSE.
During the term of this Agreement, the Employee shall be
entitled to resign from his employment with the Bank, and receive the
payments provided for below, in the event that the Employee is not in
breach of this Agreement and Bank (i) reassigns the Employee to a
position of lesser rank or status than Chief Operating Officer, (ii)
relocates the Employee's principal place of employment by more than
thirty miles from its location on the date hereof, (iii) reduces the
Employee's compensation or other benefits, unless such reduction is
part of an overall salary reduction program applicable to three (3) or
more executive employees of the Bank. Upon the occurrence of any of
these events, the Employee shall have thirty days to provide the Bank
notice of his intention to terminate this Agreement. In the event the
Employee elects to so terminate this Agreement, such termination shall
be treated as a termination without Cause by Bank under Section 6(c)
hereof, and the Employee shall be entitled to receive all payments and
other benefits called for under such Section 6(c).
1. CHANGE IN CONTROL.
(a) Upon the occurrence of a Change in Control (as herein
defined) followed at any time during the term of this Agreement by the
involuntary termination of the Employee's employment other than for
Cause, as defined in Section 6(a) hereof, or, as provided below, upon
the voluntary termination of the Employee within eighteen months of
such Change in Control. Employee shall be entitled to receive a
payment equal to two times his then current Base Salary. At the
election of the Bank, such payment may be made either in a lump sum
payment equal to the discounted present value of such payment
(calculated using the interest rate then applicable to two year
Treasury Notes) or paid monthly in equal installments during the
twenty-four (24) months following such termination. During such
twenty-four (24) month period, the Bank shall continue to provide the
Employee with hospital, health, medical and life insurance, and any
other benefits in effect at the time of such termination. In
addition, the Bank shall provide Employee with outplacement
assistance, to include an office and a secretary at the premises of
the outplacement provider, for a period of three (3) months after such
termination. Upon the occurrence of a Change in Control, the Employee
shall have the right to elect to voluntarily terminate his employment
within eighteen months of such Change in Control following any
demotion, loss of title, office or significant authority, reduction in
his annual compensation or benefits, or relocation of his principal
place of employment by more than thirty miles from its location
immediately prior to the Change in Control.
(b) A "Change in Control" shall mean:
(1) a reorganization, merger, consolidation or sale of all
or substantially all of the assets of Statewide
Financial Corp. (the "Company"), or a similar
transaction in which the Company is not the surviving
entity; or
(2) individuals who constitute the Incumbent Board (as
herein defined) of the Company cease for any reason to
constitute a majority thereof; or
(3) a change in control within the meaning of 12 C.F.R.
574.4; or
(4) (a) an event of a nature that would be required to be
reported in response to Item I of the current report on
Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act"), or results in a change in
control of Bank or the Company within the meaning of
the Home Owners' Loan Act of 1933 and the Rules and
Regulations promulgated by the Office of Thrift
Supervision or its predecessor agency, as in effect on
the date hereof; or
(5) Without limitation, a change in control shall be deemed
to have occurred at such time as (i) any "person" (as
the term is used in Section 13(d) and 14(d) of the
Exchange Act) other than the Company or the trustees of
a Bank sponsored employee stock ownership plan and
trust or any other employee benefit plan of the Bank
established from time to time is or becomes a
"beneficial owner" (as defined in Rule 13-d under the
Exchange Act) directly or indirectly, of securities of
the Company representing 25% or more of the Company's
outstanding securities ordinarily having the right to
vote at the election of directors; or
(6) A proxy statement soliciting proxies from stockholders
of the Company is disseminated by someone other than
the current management of the Company, seeking
stockholder approval of a plan of reorganization,
merger or consolidation of the Company or similar
transaction with one or more corporations as a result
of which the outstanding shares of the class of
securities then subject to the plan or transaction are
exchanged or converted into cash or property or
securities not issued by the Company;
(7) A tender offer is made for 25% or more of the voting
securities of the Company and the shareholders owning
beneficially or of record 25% or more of the
outstanding securities of the Company have tendered or
offered to sell their shares pursuant to such tender
offer and such tendered shares have been accepted by
the tender offeror.
For these purposes, "Incumbent Board" means the Board of
Directors of the Company on the date hereof, provided that any person
becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board, or whose nomination for election by
members or stockholders was approved by the same nominating committee
serving under an Incumbent Board, shall be considered as though he
were a member of the Incumbent Board.
1. COVENANT NOT TO COMPETE.
Employee agrees that during the term of his employment
hereunder and for a period of six (6) months after the termination of
his employment for any reason other than pursuant to Section 8 above,
he will not in any way, directly or indirectly, manage, operate,
control, accept employment or a consulting position with or otherwise
advise or assist or be connected with or own or have any other
interest in or right with respect to (other than through ownership of
not more than five percent (5%) of the outstanding shares of a
corporation whose stock is listed on a national securities exchange or
on the National Association of Securities Dealers Automated Quotation
System) any enterprise which competes with Bank in any line of
business conducted by the Bank or the Company during such employment
or on the date of such termination in the market areas served by the
Bank's branches on the date of Employee's termination. In the event
that this covenant not to compete shall be found by a court of
competent jurisdiction to be invalid or unenforceable as against
public policy, such court shall exercise discretion in reforming such
covenant to the end that Employee shall be subject to a covenant not
to compete that is reasonable under the circumstances and enforceable
by Bank. Employee agrees to be bound by any such modified covenant
not to compete.
1. MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and
interpreted under the substantive law of the State of New Jersey.
(b) Severability. If any provision of this Agreement shall
be held to be invalid, void, or unenforceable, the remaining
provisions hereof shall in no way be affected or impaired, and such
remaining provisions shall remain in full force and effect.
(c) Entire Agreement; Amendment. This Agreement sets forth
the entire understanding of the parties with regarding to the subject
matter contained herein and supersedes any and all prior agreements,
arrangements or understandings relating to the subject matter hereof
and may only be amended by written agreement signed by both parties
hereto or their duly authorized representatives.
(d) Obligations Unconditional. Bank's obligation to pay
Employee his compensation and provide his benefits as described in
this Agreement shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, any set
off, counterclaim, recoupment, defense or other right which Bank may
have against Employee or anyone else.
(e) Continuing Obligations. Sections 6 through 9 of this
Agreement shall continue and survive the termination of Employee's
employment with Bank.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
STATEWIDE SAVINGS BANK, S.L.A.
By:
Xxxxxx X. Xxxxxx, Chairman and
Chief Executive Officer
EMPLOYEE:
XXXXXXX X. XXXXXXX
