Exhibit 99.1
RETENTION BONUS AGREEMENT
This Agreement is made as of the 1st day of October , 2004 by and between
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Xxxxxx National Bank, a national corporation with its principal office in
Oneonta, N.Y. 13820 (the "Bank") and Xxxxxxx X. Xxxxxxx , a resident of
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Westford, New York (the "Employee").
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The Bank and employee agree that the execution of this agreement by both
parties shall terminate and render void any previous Retention Bonus Agreements
that may have been in effect on the date hereof.
RECITALS
A. The Bank is a wholly owned subsidiary of The Xxxxxx Corporation, a New York
corporation and registered bank holding company with its principal office
in Oneonta, N.Y. 13820 (the "Holding Company").
B. The Bank and the Employee acknowledge the ownership consolidation that is
occurring in the financial institutions industry, particularly among
community banks, and the Bank and Employee acknowledge that at some point
it may be appropriate for the Holding Company and/or the Bank to
participate in this industry consolidation.
C. The Bank recognizes the value of the Employee's services to the Bank and
desires to insure that the Employee has adequate incentive to continue in
the employment with the Bank in his/her present position or in a similar
position with enhanced responsibilities.
D. Given the current consolidation occurring within the financial institutions
industry, the Employee desires to continue in the employment of the Bank
with appropriate financial incentives.
NOW, THEREFORE, in consideration of the foregoing Recitals and of the promises
and mutual agreements set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the Bank
and Employee agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall have
the meanings indicated:
(a) "Misconduct":
(i) the willful and continued failure of the Employee to
substantially perform his/her duties with the Bank (other
than any such failure resulting from incapacity due to
physical or mental illness) after a written demand for
substantial performance is delivered to the Employee which
specifically identifies the manner in which the Employee has
not substantially performed his/her duties;
(ii) the willful engaging by the Employee in illegal conduct or
gross misconduct that is materially and demonstrably
injurious to the Bank;
(iii)personal dishonesty or breach of fiduciary duty to the Bank
that in either case was intended to result in personal
profit to the Employee at the expense of the Bank;
(iv) willful violation of any law, rule, or regulation (other
than traffic violations, misdemeanors or similar offenses)
or cease-and-desist order, court order, judgment or
supervisory agreement which violation is materially and
demonstrably injurious to the Bank;
(v) the Employee directly or indirectly, alone or as a member of
a partnership, or as an officer, director, member or
principal shareholder of any other entity, engages in or is
concerned with any other commercial duties or pursuits
whatsoever that might conflict with the Bank's business, or
materially affect the Employee's ability to perform his
duties or create an appearance of conflict, except as may be
approved in writing by the President.
(b) "Change in Control":
For purposes of this Agreement, a change in Control shall be
deemed to have occurred (unless Employee shall have agreed in
writing to the contrary) if (i) there shall be consummated (x)
any consolidation or merger of the Holding Company or of Bank in
which Holding Company or Bank is not the continuing or surviving
corporation or pursuant to which shares of Holding Company's or
Bank's Common Stock would be converted into cash, securities or
other property, other than a merger of the Holding Company or of
Bank in which the holders of the Holding Company's or Bank's
Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock of the surviving
corporation immediately after the merger, or (y) any sale, lease,
exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets
of the Holding Company or of Bank, or (ii) the stockholders of
the Holding Company or of Bank approved any plan or proposal for
the liquidation or dissolution of the Holding Company or of Bank,
or (iii) any person (as defined above), other than the Holding
Company, shall become the beneficial owner (as defined above) of
50% or more of Bank's outstanding Common Stock.
(c) "Coincident With" shall mean any time within nine months prior to
the consummation of a Change in Control.
(d) "Current Annual Salary" for exempt personnel shall mean current
gross annual salary, excluding incentive payments, profit sharing
payments and commissions. "Current Annual Salary" for non-exempt
personnel shall mean an amount determined by multiplying the
current hourly rate times 1950 hours, and excludes incentive
payments, profit sharing payments and commissions.
2. Change in Control and Retention Bonus. If a Change in Control is
consummated and on the date of the consummation of the Change in Control,
the Employee is employed by Bank (in a position having the same level of
responsibilities as the position that employee held on the date hereof (or
in a similar position with enhanced responsibilities), Bank or its
successor shall pay to the Employee in a lump sum, in cash, within five
days following the date of the Change in Control, a Retention Bonus of 150%
of his/her Current Annual Salary as defined above in paragraph 1(d).
2.1 If the lump sum payment under this Section 2, either alone or together with
other payments, which the Employee has the right to receive from the
Company, would constitute a "parachute payment", as defined in Section 28OG
of the Internal Revenue Code of 1986, as amended, (the "Code"), such lump
sum payment shall be reduced to the largest amount as will result in no
portion of the lump sum payment under this Section 2 being subject to the
excise tax imposed by Section 4999 of the Code. The determination of any
reduction in the lump sum payment under this Section 2, pursuant to the
foregoing provision, shall be made by the Company in good faith.
2.2 The Bank and employee acknowledges that pursuant to Section 10.4,
"Termination", of the current Personnel Handbook of the Bank, current or as
amended, Employee may be entitled to receive certain benefits if the
Employee's services are terminated. Nothing contained herein is intended to
alter these benefits in the event of termination.
3. Termination by Company not for Misconduct, Coincident with a Change in
Control. If coincident with a change in control, unless in furtherance of a
Business Plan adopted in good faith, earlier than nine months of a change
in control, and in the event the Employee's employment is terminated by
action of the Bank not for Misconduct, Coincident With a Change in Control,
and the Employee at the date of termination held a position having the same
level of responsibilities as the position Employee held on the date hereof
(or held a similar position with enhanced responsibilities), the Bank shall
pay the Employee within five days following the consummation of the Change
in Control, the same Retention Bonus in amount and manner described in
Section 2 above. In the event of the Employee's termination pursuant to
this Section 3, the Employee shall not be subject to the non-compete
restriction described in Section 4 below.
4. Termination of Employment by Employee/Non-Competition Agreement. In the
event the Employee voluntarily terminates his own employment within six (6)
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months of the date of consummation of the Change in Control and subsequent
to receipt of the Retention Bonus provided for in paragraph 2 above, the
Employee agrees not to compete, directly or indirectly, with the Bank or
any successor as an employee, officer, director, independent contractor,
consultant, or shareholder of any financial services company or any other
entity providing financial services, including but not limited to lending,
securities, brokerage, trust or insurance products or services within a
(75) mile radius of the main office of the Bank, or such other office of
the Bank at which such Employee was physically located during the majority
of Employee's work tenure for the Bank, for a period of 180 days following
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the date of such termination.
5. Withholding. All payments made by the Bank hereunder to the Employee shall
be subject to the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Bank may reasonably determine should be
withheld pursuant to any applicable law or regulation.
6. Employment at Will. Nothing in this Agreement should be construed to
constitute an employment agreement for any length of time of the Employee
by the Bank. At all times, Employee shall remain an "At Will" employee of
the Bank subject to the rights arising under this Agreement.
7. Non-Disclosure. During the term of his/her employment with the Bank, or at
any time thereafter, the Employee shall not disclose or use (except in the
course of his employment hereunder) any Bank customer information or any
confidential or proprietary information or data of the Bank or the Holding
Company or any of their subsidiaries or affiliates, including any such
information with respect to a sale or merger of the Bank or Holding
Company, regardless of whether such information or data is embodied in
writing or other physical form.
8. Successors; Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the Bank and the Employee and their respective
successors, assigns, personal or legal representatives, executors,
administrators, heirs, distributees, devisees and legatees. If the Employee
should die while any amount would still be payable to him hereunder if he
had continued to live, all such amounts shall be paid in accordance with
the terms of this Agreement to his devisee, legatee or other designee, or
if there be no such designee, to the Employee's estate.
9. Modification, Waiver or Discharge. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Employee and authorized
officers of the Bank. No waiver by any party hereto at any time of any
breach by the other party hereto of, or compliance 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. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in
this Agreement; provided, however, that this Agreement shall not supersede
or, except as expressly set forth herein, in any way limit the rights,
duties, or obligations that the Employee or the Bank may have under any
other written agreement between such parties, under any employee pension
benefit plan, or employee welfare benefit plan as defined in the Employee
Retirement Income Security Act of 1974 as amended, of the Bank, or under
any established personnel practice or policy applicable to the Employee.
10. Termination of Agreement. Notwithstanding any other provisions of this
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Agreement, the rights, duties and obligations of all parties to this
Agreement shall cease, and this Agreement shall terminate on September 30,
2009, provided, however, that this Agreement shall be extended after said
date, up to nine (9) months, from the date of the first announcement prior
to said date of an ownership consolidation which might result in a Change
in Control provided further that said announced ownership consolidation is
consummated in a Change of Control on a date within nine (9) months from
the date of said announcement.
11. Governing Law. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of New York to
the extent federal law does not apply.
12. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which latter provisions shall remain in full
force and effect.
13. Arbitration; Specific Performance. Any controversy or claim arising out of,
or relating to, this Agreement or its breach, shall be settled by
arbitration in accordance with the governing rules of the American
Arbitration Association to be held in Oneonta, New York with New York law
applying. Judgment upon the award may be rendered in any court of competent
jurisdiction. The Bank and the Employee recognize that each party shall
have no adequate remedy at law for breach by the other of any of the
agreements contained herein, and in the event of any such breach, the Bank
and the Employee hereby agree and consent that the other shall be entitled
in arbitration to a decree of specific performance, mandamus, injunction or
other appropriate remedy to enforce performance of such agreements.
14. Non-Assignability. No right benefit or interest hereunder shall be subject
to anticipation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, or set-off in respect of any claim, debt or obligation, or
to execution, attachment, levy or similar process, or assignment by
operation of law. Any attempt, voluntary or involuntary, to effect any
action specified in the immediately preceding sentence shall, to the full
extent permitted by law, be null, void and of no effect. Any of the
foregoing to the contrary notwithstanding, this provision shall not
preclude the Employee from designating one or more beneficiaries to receive
any amount that may be payable after death, and shall not preclude the
legal representative of the Employee's estate from transferring any right
hereunder to the person or persons entitled thereto under Employee's will
or, in the case of intestacy, as applicable, to Employee's estate.
15. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but of which together will
constitute one and the same instrument.
16. Right to Attorney. Employee acknowledges that he/she has had the
opportunity to consult with an attorney prior to signing this Agreement and
that nothing contained herein will be construed against the Bank as
draftsman.
17. Notices. All notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be sufficiently given
if and when mailed in the continental United States by Registered or
Certified Mail, or personally delivered to the party entitled thereto at
the address stated below or to such changed address as the addressee may
have given by similar notice.
to the Bank:
Chief Executive Officer
Xxxxxx National Bank
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000
to the Employee:
Xxxxxxx X. Xxxxxxx
000 Xxxxxx Xxxxxxx 00
Xxxxxxxx, Xxx Xxxx 00000
Executed and effective as of the date first above written.
XXXXXX NATIONAL BANK
By : /s/ Xxxxxx X. Xxxxxxx
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/s/ Xxxxxxx X. Xxxxxxx
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Employee
