Exhibit 10.8
RETENTION BONUS AGREEMENT
This Agreement is made as of the 1st day of September, 1999 by and between
Xxxxxx National Bank, a national corporation with its principal office in
Oneonta, N.Y. 13820 (the "Bank") and Xxxxxxx X. Xxxxxxx , a resident of
Westford, NY (the "Employee").
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 which 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;
(vi) 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 such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), other than
Xxxxx X. Xxxxxx, his spouse or his children, or a trust for any of them,
shall become the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of 25% or more of the Holding Company's outstanding
Common Stock or (iv) 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, or (v) during any period of two
consecutive years, individuals who at the beginning of such period
constitute the entire Board of Directors of Holding Company shall cease for
any reason to constitute a majority thereof unless the election, or the
nomination for election by the Holding Company's 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.
(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 $
200% of their 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 Employee acknowledges that pursuant to Section 9.4, Termination of the
current Personnel Handbook of the Bank, current or as amended,
Employee may receive certain benefits if the Employee's services were
terminated. In consideration of the promises and mutual agreements
contained herein, the Employee and the Bank agree that the total of
payments to be received by Employee under the terms of Section 9.4,
Termination, of the Personnel Handbook, as it may be amended from time
to time, and under the terms of this Agreement, may not exceed the
amount described above, as modified if required by section 2. 1. Cash
payments described in Section 2 of this Agreement are not intended to
include the amounts the Bank may be obligated to pay for health
insurance coverage under the terms of Section 9.4 of the Personnel
Handbook.
3. Termination by Company not for Misconduct, Coincident with a Change in
Control. 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 6 (six)
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
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. Pooling of Interests Treatment In the event anything in this Agreement will
prevent, or have the effect of preventing the use of the pooling of
interests accounting method by an acquirer in a Change in Control and the
use of the pooling of interests accounting method is a condition precedent
to the consummation of such Change in Control by the acquirer, then this
Agreement shall be deemed valid only to the extent that the pooling of
interests accounting method can be used; provided however, that any
determination that this Agreement would prevent, or have the effect of
preventing, the use of the pooling of interests accounting method shall be
supported by an opinion letter from the acquirer's independent accounting
firm or from the Securities and Exchange Commission. In the event that the
Employee's benefit under this Agreement is reduced by operation of this
Section 8, the employee, at his sole option, shall have the option of
accepting the reduced benefit under this Agreement or the termination
benefit he would have been entitled to under Section 9.4 of the Personnel
Handbook in effect at that time, if terminated by the acquirer.
9. 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.
10. 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.
11. Termination of Agreement. Notwithstanding any other provisions of this
Agreement, the rights, duties and obligations of all parties to this
Agreement shall cease, and this Agreement shall terminate on September 30,
2004, 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. 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
Xxxxxxxxx, XX 00000
Executed and effective as of the date first above written.
XXXXXX NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Employee
