TERMINATION OF EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of March 31, 2000,
as set forth below, terminates the Employment Agreement dated as of March 19,
1997 but effective as of January 1, 1997 (the "Employment Agreement"), between
JeffBanks, Inc. ("JeffBanks") and Xxxxx X. Xxxxx (the "Executive"), and is
entered into among Xxxxx X. Xxxxx, individually, and Xxxxxx United Bancorp
("Xxxxxx"), for itself and in its capacity as successor by merger to JeffBanks.
WHEREAS, the Executive is entitled to certain benefits under
the Employment Agreement; and
WHEREAS, the parties hereto wish to evidence their agreement
with respect to the matters set forth herein,
NOW, THEREFORE, intending to be legally bound, the parties
agree as follows:
1. Full Payment of Severance Benefits. Subject to the terms
hereof, Executive agrees to accept in complete satisfaction of her Severance
Benefits under the Employment Agreement the amount of $1,200,000, which shall be
paid (subject to normal income tax withholding) to Executive by wire transfer on
the execution of this Agreement.
2. Payment for Life Insurance Obligation and for Bonus Owed.
(a) Xxxxxx and Executive acknowledge and agree that
JeffBanks was obligated under Section 5.c of the Employment Agreement to pay the
cost of certain life insurance premiums during the period of the Executive's
employment, that such premiums were not paid for the period from January 1, 1997
through March 31, 2000, and that the Executive did not waive her right to
receive that benefit. Xxxxxx and Executive further agree that Xxxxxx shall make
a payment to the Executive of the amount of $43,000, which shall be paid
(subject to normal income tax withholding) to Executive by wire transfer on the
execution of this Agreement, and that such payment shall be in full satisfaction
of the obligations of Xxxxxx under Section 5.c of the Employment Agreement.
(b) Xxxxxx acknowledges that it is obligated under
the Employment Agreement to pay, and the Executive hereby agrees to accept in
complete satisfaction of such obligation, a bonus for services rendered through
March 31, 2000 in the amount of $43,725, which shall be paid (subject to normal
income tax withholding) to Executive by wire transfer on the execution of this
Agreement.
3. Termination of Employment Agreement. As of the date hereof,
the Employment Agreement is completely terminated, except as set forth in
Sections 3(a)and 3(b) below:
(a) The parties believe that as a result of this
Agreement, no "Gross-Up Payment" will be due under Section 8 of the Employment
Agreement. Nonetheless, due to the uncertainties of the application of Sections
280G and 4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
Section 8 of the Employment Agreement shall continue in effect and Xxxxxx shall
remain responsible to make the payments due to the Executive under Section 8 of
the Employment Agreement as if all payments and benefits received or to be
received by Executive from Xxxxxx in connection with the termination of
Executive's employment were to be covered by such Section 8. Such payments shall
be made to the Executive, or on the Executive's behalf directly to the Internal
Revenue Service, promptly, and in no event more than 10 days, after the
Executive advises Xxxxxx that the Internal Revenue Service has notified the
Executive that she is subject to an employment, excise or income tax to which
she would not have been subject had Sections 280G or 4999 of the Code not been
part of the Code (provided that if Xxxxxx acknowledges such obligation within
such 10 day period in a notice to the Executive in form and substance reasonably
satisfactory to the Executive and if the Executive is not materially
disadvantaged by the deferral described in this parenthetical clause, Xxxxxx
shall have the right to defer such payment for the period of time in which
Xxxxxx actively challenges (in good faith) before an appropriate court such
determination by the Internal Revenue Service). It is the intention of the
parties (and Xxxxxx agrees that it shall promptly take all steps and promptly
make all payments to the Executive or on the Executive's behalf necessary) to
assure that the Executive's net after tax position (after taking into account
any interest or penalties imposed with respect to such taxes) upon the receipt
of payments in connection with the termination of her employment shall be no
less advantageous to the Executive than would have been obtained had Sections
280G and 4999 of the Code not been applicable with respect to such payments.
Furthermore, Xxxxxx agrees to reimburse the Executive for the reasonable fees
and expenses of the Executive's Tax Counsel in accordance with Section 8(a) of
the Employment Agreement and for the reasonable fees and expenses of the
Executive's attorneys and for court and related costs in any proceedings to
enforce the provisions of this Section 3(a) in which the Executive is successful
on the merits.
(b) The termination of the Employment Agreement
hereunder shall not affect the Executive's rights under the "SERP" established
by Section 5.b of the Employment Agreement, nor the Executive's rights to the
"Welfare Benefits" established by Section 7.d(ii) of the Employment Agreement,
nor the Executive's rights to indemnification established by Section 10 of the
Employment Agreement.
4. Termination of Stock Options. The parties acknowledge and
agree that all options to acquire stock of JeffBanks or Xxxxxx previously
granted to the Executive expire automatically upon the execution and delivery of
this Agreement and that Executive shall have no further rights thereunder.
5. Binding Nature; Successors. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their successors
and assigns, including without limitation the estate of the Executive in the
event of the Executive's death; provided, however, that in no event shall Xxxxxx
assign its obligations hereunder without the express written consent of the
Executive. Xxxxxx will require any subsequent successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Xxxxxx to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that Xxxxxx would be required to perform it if no such succession had taken
place.
6. Jurisdiction; Service. The federal and state courts located
within the State of New Jersey shall have exclusive jurisdiction with respect to
any legal proceeding brought to enforce any aspect of this Agreement. Service of
process may be effected by regular mail to the corporate headquarters of Xxxxxx
and to the last known residence address of the Executive.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
XXXXXX UNITED BANCORP
By: ____________________________
Name:
Title:
_____________________________
Xxxxx X. Xxxxx, Individually
