Exhibit 10.10
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of November 27, 2000 by and among CORNERSTONE BANCORP,
INC., a Connecticut corporation which is a holding company organized under the
provisions of Conn. Gen. Stat. Sec. 36a-181, with a principal place of business
at 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("Holdings"), CORNERSTONE
BANK, a Connecticut state chartered Bank with its principal executive offices at
000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (the "Bank"), (Holdings and Bank
may be referred to together as "Employer") and XXX X. XXXXXXXXX, residing at 0
Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (the "Employee").
WHEREAS, Holdings, Bank and the Employee desire to enter into an employment
agreement on the terms and conditions set forth herein; and
WHEREAS, Employee commenced employment with Holdings and Bank on November
27, 2000 prior to the execution of this Agreement, and
WHEREAS, in consideration of the execution of this Agreement, Employee has
agreed to remain employed by Holdings and Bank.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. (a) The Employee is employed as President and Chief
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Executive Officer of Holdings. As an executive officer of the
Holdings, the Employee shall render executive, policy, and other
management services to Holdings of the type customarily performed by
persons serving in similar executive officer capacities with bank
holding companies engaging in the business of the banking and related
services. The Employee shall also perform such duties as the Board of
Directors of the Holdings (the "Board") may from time to time
reasonably direct. Employee shall also serve as the Vice Chairman of
the Board of Directors of the Bank. Employee shall also serve as
Counsel to the Bank. During the term of this agreement, there shall be
no material increase or decrease in the duties and responsibilities of
the Employee otherwise than as provided herein, unless the parties
otherwise agree in writing. During the term of this Agreement, the
Employee shall not be required to relocate more than 25 miles from
Stamford, Connecticut, in order to perform the services hereunder.
Should the Employee be required to relocate more than 25 miles from
Stamford in order to maintain his position or compensation at least
its present level, then the employee's employment shall be considered
as
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involuntarily terminated without cause for purposes of sections 8 and 9 of
this Agreement unless the Employee provides Holdings with a written waiver
of his rights to consider his employment as involuntarily terminated.
(b) Holdings or the Bank may, at their option, select which
party will fulfill each of the obligations due to the Employee under this
Agreement, but shall be jointly and severally liable to the Employee
hereunder.
2. Compensation. Employer agrees to pay the Employee during the term of this
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Agreement an initial salary at an annual rate equal to $$187,500, with the
salary to be increased as determined by the Board. At least once during
each calendar year during the period in which this Agreement is in effect,
the Board shall consider increasing the employee's salary then in effect;
provided, however, that the Board shall be under no obligation to grant any
such increase. In considering salary increases, the Board shall take into
account increases in the cost of living and shall also consider performance
or merit increases. The salary of the Employee shall not be decreased at
any time during the term of this Agreement from the amount then in effect,
unless the Employee otherwise agrees in writing. Participation in deferred
compensation, discretionary bonus, retirement, and other employee benefit
plans and in fringe benefits shall not reduce the salary then in effect,
payable to the Employee under this Section 2. The salary under this Section
2 shall be payable to the Employee not less frequently than monthly. The
Employee shall not be entitled to receive fees for serving as a director of
Holdings or the Bank or for serving as a member of any committee of the
Board.
3. Discretionary Bonuses. During the term of this Agreement, the Employee
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shall be entitled to participate in such discretionary bonus arrangements
as may be authorized by the Board. No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee's right to
participate in such bonuses when and as authorized by the Board.
4. Participation in Retirement and Employee Benefit Plans; Fringe Benefits;
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Automobile. The Employee shall be entitled to participate in any plan of
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Holdings or the Bank relating to stock options, stock purchases, pension,
thrift, profit sharing, group life insurance,
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supplemental life insurance, medical coverage, disability, education, or
other retirement or employee benefits which Holdings or the Bank has
adopted or may adopt for the benefit of its executive employees. The
Employee shall also be entitled to participate in any other fringe benefits
which are now or may become applicable to Holdings' or the Bank's executive
employees, including the payment of reasonable business related expenses
and expenses for attending annual and periodic meetings of trade
associations, annual country club dues, fees, expenses and assessments, and
any other benefits which are commensurate with the duties and
responsibilities to be performed by the Employee under this Agreement. The
Employee shall also be entitled to the use of an automobile which shall be
provided by Holdings or the Bank and as to which the Bank shall bear all
expenses of operation, including but not limited to repairs, fuel, and
parking charges. At Employee's option, Holdings or the Bank shall assume
Employee's existing automobile lease and all obligations thereunder,
including wear and tear and operating expenses, and shall be responsible
for substitute leases during the term of this Agreement.
5. Term. The term of employment under this Agreement shall be for the period
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commencing on November 27, 200O and ending on the first to occur of(i) the
Employee's death or Disability, (ii) the Employee's voluntary termination
employment, or (iii) the termination of the Employee's employment by
Holdings or the Bank (either for cause or otherwise), all as herein
provided. For the purposes of this Agreement, "Disability" shall mean the
absence of the Employee from the Employee's duties with Holdings or the
Bank on a full-time basis for 180 consecutive business days, as a result of
incapacity owing to mental or physical illness which is determined to be
total and permanent by a physician selected by Employer or its insurers and
acceptable to the Employee or Employee's legal representative.
6. Standards. (a) The Employee shall perform the Employee's duties and
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responsibilities under this Agreement in accordance with such reasonable
standards as may be established from time to time by the Board. The
reasonableness of such standards shall be measured against standards for
executive performance generally prevailing in the banking industry
(b) Performance of duties as an officer, director or
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employee of any affiliate of Holdings or performance of acts to effect
organization of such affiliate shall not be considered to violate any duty
Employee may have to Holdings or the Bank.
7. Voluntary, Absences. Vacations. The Employee shall be entitled, without
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loss of pay, to be absent voluntarily for reasonable periods of time from
the performance of Employee's duties and responsibilities under this
Agreement. All such voluntary absences shall be considered paid vacation
time, unless the Board otherwise approves. The Employee shall be entitled
to an annual paid vacation of at least 5 weeks per year or such longer
period as the Board may approve. The timing of paid vacations shall be
scheduled in a reasonable manner by the Employee. The Employee shall not be
entitled (i) to receive any additional compensation from Holdings or the
Bank on account of failure to take a paid vacation or (ii) to accumulate
unused paid vacation time from one fiscal year to the next.
8. Termination of Employment.
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(a)
(i) The board may terminate the Employee's employment at any time. The
Employee shall have no right to receive compensation or other
benefits for any period after termination for cause or after
voluntary termination by the Employee except as provided in Section
9. The term "termination for cause" shall mean termination by
Holdings or the Bank because of 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
material breach of any provision of this Agreement. In determining
incompetence, the acts or omissions shall be measured against
standards generally prevailing in the banking industry; provided,
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that it shall be Holding's or the Bank's burden to prove the alleged
acts and omissions and the prevailing nature of the standards the
Bank shall have alleged are violated by such acts and/or omissions.
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(i) The parties acknowledge and agree that damages which will result to
Employee for termination by Holdings and/or the Bank without cause
shall be extremely difficult or impossible to establish or prove, and
agree that, unless the termination is voluntary or for cause,
Holdings and/or the Bank shall be obligated, concurrently with such
termination, to make a lump sum cash payment to the Employee as
liquidated damages of an amount equal to the sum of(x) 1 times the
Employee's then current annual salary under Section 2 of this
Agreement, plus (y) 1 times the highest bonus awarded to the Employee
under Section 3 of this Agreement at any time during the 36-month
period ending with the date of termination. In the event Employee has
not completed 36 months of service at such time the dollar amount of
the bonus attributable to this subsection shall be conclusively
presumed to be no less than $50,000. Employee agrees that, except for
such other payments and benefits to which the Employee may be
entitled as expressly provided by the terms of this Agreement, such
liquidated damages shall be in lieu of all other claims which
Employee may make by reason of such termination.
(ii) In addition to the liquidated damages above described that are
payable to the Employee for termination without cause, the following
shall apply (the applicable period being referred to herein as the
"Benefits continuation Period") (x) for 12 months following any
termination without cause and (y) for 36 months following the period
referred to in Section 9(a) (iii) hereof:
(1) the Employee shall continue to participate in, and accrue
benefits under, all retirement, pension, profit-sharing,
employee stock ownership, thrift, and other deferred
compensation plans of Holdings or the Bank as if the termination
of Employment of the Employee had not occurred (with the
Employee being deemed to receive annually for the purposes of
such plans the Employee's then current salary (at the time of
Employee's termination) under Section 2 of this Agreement),
except to the extent that such continued participation and
accrual is expressly prohibited by law, or if such plan
constitutes a "qualified plan" (a "Qualified Plan") under
Section 401 of the Internal Revenue Code of
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1986, as amended (the "Code"), to the extent such continued
participation and accrual is expressly prohibited by the terms of
the Qualified Plan;
(2) the Employee shall be entitled to continue to receive all other
employee benefits and then existing fringe benefits referred to
in Section 4 hereof as if the termination of employment had not
occurred, provided however, that life, health, and disability
coverage will terminate upon the Employee becoming eligible for
comparable benefits in connection with the Employee's full-time
employment by another employer and further provided, that if the
Employee dies during the Benefits Continuation Period and prior
to becoming eligible for comparable benefits in connection with
the Employee's full-time employment by another employer, the
health coverage provided to Employee's spouse and dependents
shall be continued, at Holding's or the Bank's expense,
throughout the period ending with the last day of the calendar
month in which occurs the second anniversary of the Employee's
death;
(3) Holdings or the Bank shall, on the date of the Employee's
termination of employment, establish an irrevocable trust that
meets the guidelines set forth in Rev. Proc. 92-64 published by
the Internal Revenue Service (as the same may be modified or
supplemented from time to time) (the "Trust"), the assets of
which will be held, subject to the claims of judgment creditors
of Holdings or the Bank, solely to fund the benefits that the
Employee is entitled to under this Section 8(a) (iii), and
Holdings or the Bank shall transfer to the Trust an amount
sufficient (x) to fund any benefit accrued by the Employee under
any defined benefit pension plan maintained by Holdings or the
Bank to the extent that such defined benefit pension plan is not
fully funded on a termination basis, as determined under the
rules and regulations published by the Pension Benefit Guaranty
Corporation, at the time of termination of the Employee's
employment; and (y) to fund fully all
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benefits accrued by the Employee under any defined
contribution plan maintained by Holdings or the Bank to the
extent that such benefits are not fully funded at the time
of termination of the Employee's employment;
(4) all insurance or other provisions for indemnification,
defense or hold-harmless of officers or directors of
Holdings or the Bank which are in effect on the date the
notice of termination is sent to the Employee shall continue
for the benefit of the Employee with respect to all of
Employee's acts and omissions while an officer or director
as fully and completely as if such termination had not
occurred, and until the final expiration or running of all
periods of limitation against action which may be applicable
to such acts or omissions;
(5) Holdings or the Bank shall, at its sole expense as incurred,
provide the Employee with outplacement services, the scope
and provider of which shall be selected by either Holdings
or the Bank in its sole, reasonable discretion; and
(6) the Employee may, at the expense of Holdings or the Bank,
hire an accounting firm, law firm and/or financial planning
firm, selected by the Employee, to provide the Employee with
advice with respect to the Employee's benefits under this
Agreement.
(b) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of Holdings' affairs or the Bank's
affairs by a notice served under section 8 (e) or 8 (g) of the Federal
Deposit Insurance Act, or any successor statutes thereto, Holdings' or
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, Holdings or the Bank may in its
discretion (i) pay the Employee all or part of the compensation
withheld while such contractual obligations were suspended, and (ii)
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reinstate in whole or in part any of the obligations which were
suspended.
( c) If the Employee is removed and/or permanently prohibited from
participating in the conduct of Holdings' or the Bank's affairs
by an order issued under section 8 (e) or 8(g) of the Federal
Deposit Insurance Act or any successor statutes thereto, all
obligations of Holdings or the Bank under this Agreement shall
terminate as of the effective date of the order, but vested
rights of the parties shall not be affected.
(d) Notwithstanding any other provision in this Agreement, Holdings
or the Bank may terminate or suspend this Agreement and the
employment of the Employee hereunder, as if such termination were
for cause under Section 8(a) (i), to the extent required by the
laws of the State of Connecticut related to banking, by
applicable federal law relating to deposit insurance or by
regulations or orders issued by the Banking Commission of the
State of Connecticut or the Federal Deposit Insurance
Corporation, or any successor to any of the foregoing, provided
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that it shall be the burden of Holdings or the Bank to prove that
any such action was so required.
(e) In the event the employment of the Employee is terminated by the
Bank without cause under Section 8(a) hereof or the Employee's
employment is terminated voluntarily or involuntarily in
accordance with Section 9 hereof, and the Bank fails to make
timely payment of the amounts then owed to the Employee under
this Agreement, the Employee shall be entitled to reimbursement
for all reasonable costs, including attorneys' fees, incurred by
the Employee in taking action to collect such amounts or
otherwise to enforce this Agreement, plus interest on such
amounts at the rate of one percent above the prime rate (defined
as the base rate on corporate loans at large U.S. money center
commercial banks as published by The Wall Street Journal),
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compounded monthly, for the period from the date of employment
termination until payment is made to the Employee. Such
reimbursement and interest shall be in addition to all rights to
which the Employee is otherwise entitled under this Agreement.
(f) During the one-year period following termination of employment
for any reason, the Employee may not (i) solicit the employment
of any person who was, at the time of such termination or during
the one-year period preceding the Employee's termination, an
employee of the
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bank, or (ii) disclose or use in any manner confidential
information of the Bank.
9. Change in Control.
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(a) If, either (x) during the term of this Agreement, there is a
change in control of Holdings or the Bank, or (y) Holdings
or Bank seeks to terminate this Agreement following
knowledge of a potential change in control, but prior to the
potential change in control being terminated or consummated,
as the case may be, the Employee shall be entitled to the
following:
(i) An adjustment in the Employee's then current
salary to give the Employee cumulative cost of
living increases (based on increases in the
Consumer Price Index -"CPI" - for such period)
for the period from the date of execution of
this Agreement through the date of the change in
control ("CPI Adjusted Salary"), and annual
increases based on the CPI on each anniversary
of the change in control.
(ii) The crediting to the Employee for years of
service with Holdings or the Bank, plus 5
additional years, for purposes of vesting and
calculation of rights and/or benefits under any
401(k) plan, stock option, stock purchase,
pension, thrift, profit sharing, group life
insurance, supplemental life insurance, medical
coverage, disability, education or other
retirement or employee benefit plan of Holdings
or the Bank or of any successor entity.
(iii) 18 months notice of termination of employment
(the "18 month period") during which period the
Employee shall be entitled to receive, without
offset for any reason, (i) payment of the
Employee's CPI Adjusted Salary plus (ii) the
highest bonus received by the Employee during
the period commencing with the 36/th/ month
preceding the change in control and ending with
the date of termination. In the event Employee
has not completed 36 months of service at such
time the dollar amount of the bonus attributable
to this subsection shall be
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conclusively presumed to be no less than $50,000. The Employee
shall be entitled at his option to terminate his employment with
the Bank prior to the expiration of the 18 month period. If the
Employee does terminate his employment prior to the expiration of
the 18 month period, he shall not be entitled to salary for the
portion of the 18 month period he is not employed Holdings or by
the Bank, nor shall he be entitled to that portion of the bonus
which corresponds to the period that the Employee is not employed
by Holdings or the Bank. The portion of the bonus to which the
Employee is not entitled as a result of his termination of his
employment shall be determined by multiplying the bonus by a
fraction, the numerator of which shall be the number of days of
the 18 month period during which the Employee was not employed by
Holdings or the Bank and the denominator of which shall be 548.
Notwithstanding the foregoing, the Employee shall under all
circumstances, to include termination of employment at his
request prior to the expiration of the 18 month period, be
entitled to the amounts described in Section 9(a)(iv) below.
Should the Employee elect to terminate his employment prior to
the expiration of the 18 month period, all benefits, rights, and
entitlements of the Employee which would commence at the
conclusion of the 18 month period shall commence at the date of
termination of employment. The 18 month period or such shorter
period as may occur as a result of voluntary termination in
accordance with the preceding provisions of this subsection shall
be referred to elsewhere in this Agreement as "the period
referred to in Section 9(a)(iii)".
(iv) Following the period referred to in (iii) above, at the
Employee's election given in writing to Holdings or the Bank at
least 30 days prior to the end of such period referred to in
Section 9(a)(iii), either a lump sum cash payment or 36 monthly
periodic payments, upon termination, or commencing upon
termination, as the case may be, in an amount equal to the sum of
(x) 3 times the Employee's CPI Adjusted Salary, plus (y) 3
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times the highest bonus received by the Employee during the
period commencing with the 36/th/ month preceding the change in
control and ending with the date of termination.
(b) A "change in control", for purposes of this Agreement, shall be deemed
to have taken place if any of the following events (the Events) occur:
(i) any person or group of persons with a unity of interest or other
affiliation sufficient for them to act in concert becomes the
beneficial owner of 25 percent or more of the total number of voting
shares of Holdings or the Bank; (ii) any person (other than the
persons named as proxies solicited on behalf of the Board) holds
revocable or irrevocable proxies, as to the election or removal of
directors of Holdings or the Bank, for 25 percent or more of the total
number of voting shares of Holdings or the Bank; (iii) any person has
entered into an agreement or received an option for the acquisition
of, beneficial ownership of 25 percent or more of the total number of
voting shares of the Bank, whether or not the requisite approval for
such acquisition has been received under applicable laws or the
respective regulations issued there-under; or (iv) as the result of,
or in connection with, any cash tender or exchange offer, merger, or
other business combination, sale of assets or contested election, or
any combination of the foregoing transactions, the persons who were
directors of Holdings or the Bank before such transaction shall cease
to constitute at least two-thirds of the Board of Directors of
Holdings or the Bank or any successor corporation. For purposes of
this Section 9(b), a "person" includes an individual, corporation,
partnership, trust, association, joint venture, pool, syndicate,
unincorporated organization, joint-stock company, or similar
organization or group acting in concert. For purposes of this Section
9, a person shall be deemed to be a beneficial owner as that term is
used in Rule 13d-3 under the Securities Exchange Act of 1934. The
parties recognize that Holdings is a holding company organized by the
Bank pursuant to Conn. Gen. Stat. Sec. 36a-181. Notwithstanding all of
the foregoing, a "change in control" shall not include the acquisition
of Holdings' and/or the Bank's voting stock by any other holding
company organized by Holdings and/or the Bank pursuant to Conn. Gen.
Stat. Sec. 36a-181 (Holding Company), unless one or more of the Events
described in the preceding portion of this paragraph occurs prior to
the organization of another Holding Company or as part of a plan
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which involves the organization of another Holding Company.
Furthermore, should the Bank organize another Holding Company, and
should one of the Events described in the preceding portion of this
paragraph occur with respect to the other Holding Company (instead of
the Bank), then a change in control shall be deemed to have taken
place.
(c) A "potential change in control", for the purposes of this Agreement,
shall be deemed to have taken place, if: (i) any person commences a
tender which, if consummated, would result in such person being the
beneficial owner of at least 25% of the voting shares of Holdings or
the Bank; (ii) Holdings or the Bank enters into an agreement the
consummation of which will constitute a change in control; (iii)
proxies are solicited by anyone other than the Board, or (iv) any
other event occurs which is deemed by the Board to be a potential
change in control. Notwithstanding the foregoing, a "potential change
in control" shall not include events which are part of the acquisition
of the Bank's voting stock by a Holding Company organized by the Bank
pursuant to Conn. Gen. Stat. Section 36a-181, unless the Board deems
these events to be a potential change in control.
(d) A potential change in control, for purposes of this Agreement,
shall be deemed to have terminated, if the Board determines in good
faith that a change in control is not likely to occur from such
potential change in control.
(e) In the event that any payment or benefit received by the Employee
under this Section 9 shall constitute an "excess parachute payment"
within the meaning of Section 280G(b) of the Internal Revenue Code of
1986, as amended (the "Code"), the Bank shall pay the Employee such
amount or amounts (collectively, the "indemnification amount") as are
equal to the amount of any income, excise or other tax or taxes
assessed against the Employee as a result of the Employee's receipt of
the "excess parachute payment", whether assessed under Section 4999 of
the Code or under any other federal or state tax laws.
10. No Assignment. This Agreement is personal to each of the parties hereto. No
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party may assign or delegate any rights or obligations hereunder without
first obtaining the written consent of the other party hereto. However, in
the
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event of the death of the Employee all rights to receive payments hereunder
shall become rights of the Employee's estate.
11. Other Contracts. The Employee shall not, except as provided in Section
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9(a)(iii), during the term of this Agreement, have any other paid
employment other than with an affiliate of Holdings or the Bank, except
with the prior approval of the Board.
12. Amendments or Additions: Action by Board. No amendments or additions to
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this Agreement shall be binding unless in writing and signed by all parties
hereto. The prior approval by a two-thirds affirmative vote of the full
Board shall be required in order for the Board to authorize any amendments
or additions to this Agreement, to give any consents or waivers of
provisions of this Agreement, or to take any other action under this
Agreement, including any termination of employment with or without cause
under Section 8(a) hereof.
13. Section Headings. The section headings used in this Agreement are included
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solely for convenience and shall not affect, or be used in connection with,
the interpretation of this Agreement.
14. Severability. The provisions of this Agreement shall be deemed severable
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and the invalidity or unenforceability of any provision shall not affect
the validity or enforceability of the other provisions hereof.
15. Governing Law. This Agreement shall be governed by the laws of the State of
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Connecticut to the extent applicable, and otherwise by the laws of the
United States.
CORNERSTONE BANCORP, INC.
By /s/ Xxxxxx X. Reader Vice Chairman
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Name and Title:
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CORNERSTONE BANK
By /s/ Xxxxx X. Xxxxxxx President
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Name and Title:
/s/ Xxx X. Xxxxxxxxx 1/23/01
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Xxx X. Xxxxxxxxx
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