PRUDENTIAL SAVINGS BANK AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.1
PRUDENTIAL
SAVINGS BANK
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) between Prudential
Savings Bank, a Pennsylvania-chartered, stock-form savings bank (the “Bank” or
the “Employer”), and Xxxxxx X. Xxxxx (the “Executive”), is hereby amended and
restated effective as of November 19, 2008.
WHEREAS, the
Executive is presently employed as the President and Chief Executive Officer of
the Bank pursuant to an employment agreement between the Bank and the Executive
entered into as of March 29, 2005 (the “Prior Agreement”);
WHEREAS, the
Bank desires to amend and restate the Prior Agreement in order to comply with
Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”);
WHEREAS, the
Employer desires to be ensured of the Executive's continued active participation
in the business of the Employer; and
WHEREAS, the
Executive is willing to serve the Bank on the terms and conditions hereinafter
set forth.
NOW
THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
1.
Definitions. The
following words and terms shall have the meanings set forth below for the
purposes of this Agreement:
(a) Average Annual
Compensation. The Executive’s “Average Annual Compensation”
for purposes of this Agreement shall be deemed to mean the average amount of
Base Salary and cash bonus received by the Executive from the Employer or any
subsidiary thereof (excluding any deferred amounts) during the most recent five
calendar years immediately preceding the Date of Termination (or such shorter
period as the Executive was employed).
(b) Base
Salary. “Base Salary” shall have the meaning set forth in
Section 3(a) hereof.
(c) Cause.
Termination of the Executive’s employment for “Cause” shall mean termination
because of 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, willful conduct
which is materially detrimental (monetarily or otherwise) to the Employer or
material breach of any provision of this Agreement.
(d) Change in
Control. “Change in Control” shall mean a change in the
ownership of the Corporation or the Bank, a change in the effective control of
the Corporation or the Bank or a change in the ownership of a substantial
portion of the assets of the Corporation or the Bank, in each case as provided
under Section 409A of the Code and the regulations thereunder, provided,
however, that neither any second-step conversion and reorganization in which the
MHC ceases to exist nor any increase in the ownership of the Corporation by the
MHC shall be deemed to constitute a Change in Control.
(e) Code. “Code”
shall mean the Internal Revenue Code of 1986, as amended.
(f) Corporation. “Corporation”
shall mean Prudential Bancorp, Inc. of Pennsylvania, the “mid-tier” holding
company for the Bank, or any successor thereto.
(g) Date of
Termination. “Date of Termination” shall mean (i) if the
Executive’s employment is terminated for Cause, the date on which the Notice of
Termination is given, and (ii) if the Executive’s employment is terminated for
any other reason, the date specified in such Notice of
Termination.
(h) Disability.
“Disability” shall mean the Executive (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months, or (ii) is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering employees of the Bank.
(i) Good
Reason. “Good Reason” means the occurrence of any of the
following events:
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(i) any
material breach of this Agreement by the Employer, including without
limitation any of the following: (A) a material diminution in the
Executive’s base compensation, (B) a material diminution in the
Executive’s authority, duties or responsibilities, or (C) any requirement
that the Executive report to a corporate officer or employee of the
Employer instead of reporting directly to the Board of Directors of the
Employer, or
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(ii) any
material change in the geographic location at which the Executive must
perform his services under this
Agreement;
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provided,
however, that prior to any termination of employment for Good Reason, the
Executive must first provide written notice to the Employer within ninety (90)
days of the initial existence of the condition, describing the existence of such
condition, and the Employer shall thereafter have the right to remedy the
condition within thirty (30) days of the date the Employer received the written
notice from the Executive. If the Employer remedies the condition
within such thirty (30) day cure period, then no Good Reason shall be deemed to
exist with respect to such condition. If the Employer does not remedy
the condition within such thirty (30) day cure period, then the Executive may
deliver a Notice of Termination for Good Reason at any time within sixty (60)
days following the expiration of such cure period.
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(j) MHC. “MHC”
shall mean Prudential Mutual Holding Company, the parent mutual holding company
for the Corporation and the Bank.
(k) Notice of
Termination. Any purported termination of the Executive’s
employment by the Employer for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by a written “Notice
of Termination” to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated, (iii) specifies a Date of Termination, which shall be not less than
thirty (30) nor more than ninety (90) days after such Notice of Termination is
given, except in the case of the Employer’s termination of the Executive’s
employment for Cause, which shall be effective immediately; and (iv) is given in
the manner specified in Section 10 hereof.
(l) Retirement. “Retirement”
shall mean voluntary termination by the Executive in accordance with the
Employer’s retirement policies, including early retirement, generally applicable
to the Employer’s salaried employees.
2. Term
of Employment.
(a) The
Employer hereby employs the Executive as President and Chief Executive Officer,
and the Executive hereby accepts said employment and agrees to render such
services to the Employer on the terms and conditions set forth in this
Agreement. Subject to the terms hereof, this Agreement shall terminate three (3)
years after December 31, 2008. Beginning on December 31, 2009 and on
each December 31st
thereafter, the term of this Agreement shall be extended for a period of one
additional year, provided that the Employer has not given notice to the
Executive in writing at least 30 days prior to such day that the term of this
Agreement shall not be extended further and/or the Executive has not given
notice to the Employer of his election not to extend the term at least thirty
(30) days prior to any such December 31st. If
any party gives timely notice that the term will not be extended as of any
December 31st, then
this Agreement shall terminate at the conclusion of its remaining
term. References herein to the term of this Agreement shall refer
both to the initial term and successive terms.
(b) During
the term of this Agreement, the Executive shall perform such executive services
for the Employer as is consistent with his title of President and Chief
Executive Officer and from time to time assigned to him by the Employer’s Board
of Directors.
3.
Compensation and Benefits.
(a) The
Employer shall compensate and pay the Executive for his services during the term
of this Agreement at a minimum base salary of $270,300 per year (“Base Salary”),
which may be increased from time to time in such amounts as may be determined by
the Board of Directors of the Employer and may not be decreased without the
Executive’s express written consent. In addition to his Base Salary,
the Executive shall be entitled to receive during the term of this Agreement
such bonus payments as may be determined by the Board of Directors of the
Employer.
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(b) During
the term of this Agreement, the Executive shall be entitled to participate in
and receive the benefits of any pension or other retirement benefit plan, profit
sharing, stock option, restricted stock, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employer, to the extent commensurate with his then duties and responsibilities,
as fixed by the Board of Directors of the Employer. The Employer
shall not make any changes in such plans, benefits or privileges which would
adversely affect the Executive’s rights or benefits thereunder, unless such
change occurs pursuant to a program applicable to all executive officers of the
Employer and does not result in a proportionately greater adverse change in the
rights of or benefits to the Executive as compared with any other executive
officer of the Employer. Nothing paid to the Executive under any plan
or arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the salary payable to the Executive pursuant to Section
3(a) hereof.
(c) During
the term of this Agreement, the Executive shall be entitled to paid annual
vacation in accordance with the policies as established from time to time by the
Board of Directors of the Employer. The Executive shall not be
entitled to receive any additional compensation from the Employer for failure to
take a vacation, nor shall the Executive be able to accumulate unused vacation
time from one year to the next, except to the extent authorized by the Board of
Directors of the Employer.
4. Expenses. The
Employer shall reimburse the Executive or otherwise provide for or pay for all
reasonable expenses incurred by the Executive in furtherance of or in connection
with the business of the Employer, including, but not by way of limitation,
automobile and traveling expenses, subject to such reasonable documentation and
other limitations as may be established by the Board of Directors of the
Employer. If such expenses are paid in the first instance by the
Executive, the Employer shall reimburse the Executive therefor. Such
reimbursement shall be made promptly by the Bank and, in any event, no later
than March 15th of the
year immediately following the year in which such expenses were
incurred.
5.
Termination.
(a) The
Employer shall have the right, at any time upon prior Notice of Termination, to
terminate the Executive’s employment hereunder for any reason, including without
limitation termination for Cause, Disability or Retirement, and the Executive
shall have the right, upon prior Notice of Termination, to terminate his
employment hereunder for any reason.
(b) In
the event that (i) the Executive’s employment is terminated by the Employer for
Cause, or (ii) the Executive terminates his employment hereunder other than
for Good Reason, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.
(c) In
the event that the Executive’s employment is terminated as a result of
Disability, Retirement or the Executive’s death during the term of this
Agreement, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.
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(d) In
the event that prior to a Change in Control (i) the Executive’s employment is
terminated by the Employer for other than Cause, Disability, Retirement or the
Executive’s death or (ii) such employment is terminated by the Executive for
Good Reason, then the Employer shall:
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(A) pay to the
Executive, in a lump sum within five (5) business days following the Date
of Termination, a cash severance amount equal to two (2) times the
Executive’s Average Annual
Compensation;
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(B) maintain
and provide for a period ending at the earlier of (i) two (2) years subsequent
to the Date of Termination or (ii) the date of the Executive’s full-time
employment by another employer (provided that the Executive is entitled under
the terms of such employment to benefits substantially similar to those
described in this subparagraph (B)), at no cost to the Executive, the
Executive’s continued participation in all group insurance, life insurance,
health and accident insurance, and disability insurance offered by the Employer
in which the Executive was participating immediately prior to the Date of
Termination; provided that any insurance premiums payable by the Employer
or any successors pursuant to this Section 5(d)(B) shall be payable at such
times and in such amounts (except that the Employer shall also pay any employee
portion of the premiums) as if the Executive was still an employee of the
Employer, subject to any increases in such amounts imposed by the insurance
company or COBRA, and the amount of insurance premiums required to be paid by
the Employer in any taxable year shall not affect the amount of insurance
premiums required to be paid by the Employer in any other taxable year; and
provided further that if the Executive’s participation in any group insurance
plan is barred, the Employer shall either arrange to provide the Executive with
insurance benefits substantially similar to those which the Executive was
entitled to receive under such group insurance plan or, if such coverage cannot
be obtained, pay a lump sum cash equivalency amount within thirty (30) days
following the Date of Termination based on the annualized rate of premiums being
paid by the Employer as of the Date of Termination; and
(C) pay to the
Executive, in a lump sum within five (5) business days following the Date of
Termination, a cash amount equal to the projected cost to the Employer of
providing benefits to the Executive for a period of twenty-four (24) months
pursuant to any other employee benefit plans, programs or arrangements offered
by the Employer in which the Executive was entitled to participate immediately
prior to the Date of Termination (other than stock option plans, restricted
stock plans or retirement plans of the Employer or the Corporation), with the
projected cost to the Employer to be based on the costs incurred for the
calendar year immediately preceding the year in which the Date of Termination
occurs, and with any automobile-related costs to exclude any depreciation on
Bank-owned automobiles.
(e) In the
event that concurrently with or subsequent to a Change in Control (i) the
Executive’s employment is terminated by the Bank for other than Cause,
Disability, Retirement or the Executive’s death or (ii) by the Executive for Good
Reason, then the Employer shall, subject to the provisions of Section 6 hereof,
if applicable:
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(A) pay to the
Executive, in a single lump sum within five (5) business days following
the Date of Termination, a cash severance amount equal to three (3) times
the Executive’s Average Annual
Compensation;
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(B) maintain
and provide for a period ending at the earlier of (i) three (3) years subsequent
to the Date of Termination or (ii) the date of the Executive’s full-time
employment by another employer (provided that the Executive is entitled under
the terms of such employment to benefits substantially similar to those
described in this subparagraph (B)), at no cost to the Executive, the
Executive’s continued participation in all group insurance, life insurance,
health and accident insurance, and disability insurance offered by the Employer
in which the Executive was participating immediately prior to the Date of
Termination; provided that any insurance premiums payable by the Employer
or any successors pursuant to this Section 5(e)(B) shall be payable at such
times and in such amounts (except that the Employer shall also pay any employee
portion of the premiums) as if the Executive was still an employee of the
Employer, subject to any increases in such amounts imposed by the insurance
company or COBRA, and the amount of insurance premiums required to be paid by
the Employer in any taxable year shall not affect the amount of insurance
premiums required to be paid by the Employer in any other taxable year; and
provided further that if the Executive’s participation in any group insurance
plan is barred, the Employer shall either arrange to provide the Executive with
insurance benefits substantially similar to those which the Executive was
entitled to receive under such group insurance plan or, if such coverage cannot
be obtained, pay a lump sum cash equivalency amount within thirty (30) days
following the Date of Termination based on the annualized rate of premiums being
paid by the Employer as of the Date of Termination; and
(C) pay to the
Executive, in a lump sum within five (5) business days following the Date of
Termination, a cash amount equal to the projected cost to the Employer of
providing benefits to the Executive for a period of thirty-six (36) months
pursuant to any other employee benefit plans, programs or arrangements offered
by the Employer in which the Executive was entitled to participate immediately
prior to the Date of Termination (other than stock option plans, restricted
stock plans or retirement plans of the Employer or the Corporation), with the
projected cost to the Employer to be based on the costs incurred for the
calendar year immediately preceding the year in which the Date of Termination
occurs, and with any automobile-related costs to exclude any depreciation on
Bank-owned automobiles.
6. Limitation of
Benefits under Certain Circumstances. If the payments and
benefits pursuant to Section 5 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employer and the Corporation, would constitute a “parachute payment” under
Section 280G of the Code, then the payments and benefits payable by the Employer
pursuant to Section 5 hereof shall be reduced by the minimum amount necessary to
result in no portion of the payments and benefits payable by the Employer under
Section 5 being non-deductible to the Employer pursuant to Section 280G of the
Code and subject to the excise tax imposed under Section 4999 of the
Code. If the payments and benefits under Section 5 are required to be
reduced, the cash severance shall be reduced first, followed by a reduction in
the fringe benefits. The determination of any reduction in the
payments and benefits to be made pursuant to Section 5 shall be based upon the
opinion of independent tax counsel selected by the Employer and paid by the
Employer. Such counsel shall promptly prepare the foregoing opinion,
but in no event later than thirty (30) days from the Date of Termination, and
may use such actuaries as such counsel deems necessary or advisable for the
purpose. Nothing contained in this Section 6 shall result in a
reduction of any payments or benefits to which the Executive may be entitled
upon termination of employment under any circumstances other than as specified
in this Section 6, or a reduction in the payments and benefits specified in
Section 5 below zero.
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7.
Mitigation; Exclusivity of Benefits.
(a) The
Executive shall not be required to mitigate the amount of any benefits hereunder
by seeking other employment or otherwise, nor shall the amount of any such
benefits be reduced by any compensation earned by the Executive as a result of
employment by another employer after the Date of Termination or otherwise,
except as set forth in Sections 5(d)(B)(ii) and 5(e)(B)(ii)
above.
(b) The
specific arrangements referred to herein are not intended to exclude any other
benefits which may be available to the Executive upon a termination of
employment with the Employer pursuant to employee benefit plans of the Employer
or otherwise.
8.
Withholding. All
payments required to be made by the Employer hereunder to the Executive shall be
subject to the withholding of such amounts, if any, relating to tax and other
payroll deductions as the Employer may reasonably determine should be withheld
pursuant to any applicable law or regulation.
9.
Assignability. The
Employer may assign this Agreement and its rights and obligations hereunder in
whole, but not in part, to any corporation, bank or other entity with or into
which the Employer may hereafter merge or consolidate or to which the Employer
may transfer all or substantially all of its assets, if in any such case said
corporation, bank or other entity shall by operation of law or expressly in
writing assume all obligations of the Employer hereunder as fully as if it had
been originally made a party hereto, but may not otherwise assign this Agreement
or its rights and obligations hereunder. The Executive may not assign
or transfer this Agreement or any rights or obligations
hereunder.
10. Notice. For
the purposes of this Agreement, notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when delivered or mailed by certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set forth
below:
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To
the Employer:
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Board
of Directors
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| Prudential Savings Bank | |
| 0000 Xxxxxx Xxxxxx | |
| Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 |
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To the
Executive: Xxxxxx X.
Xxxxx
At the
address last appearing on the
personnel records of the Employer
11. Amendment;
Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employer to sign on its
behalf. No waiver by any party hereto at any time of any breach by
any 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. In addition, notwithstanding anything in this
Agreement to the contrary, the Employer may amend in good faith any terms of
this Agreement, including retroactively, in order to comply with Section 409A of
the Code.
12. Governing
Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.
13. Nature of
Obligations. Nothing contained herein shall create or require
the Employer to create a trust of any kind to fund any benefits which may be
payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Employer hereunder, such right shall be no greater
than the right of any unsecured general creditor of the
Employer.
14. Headings. The
section headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
15. Validity. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provisions of this Agreement,
which shall remain in full force and effect.
16. Changes in Statutes
or Regulations. If any statutory or regulatory provision referenced
herein is subsequently changed or re-numbered, or is replaced by a separate
provision, then the references in this Agreement to such statutory or regulatory
provision shall be deemed to be a reference to such section as amended,
re-numbered or replaced.
17. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.
18. Regulatory
Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C. §1828(k)) and the regulations
promulgated thereunder, including 12 C.F.R. Part 359. In the event of
the Executive’s termination of employment with the Bank for Cause, all
employment relationships and managerial duties with the Bank shall immediately
cease regardless of whether the Executive is in the employ of the Corporation
following such termination. Furthermore, following such termination
for Cause, the Executive will not, directly or indirectly, influence or
participate in the affairs or the operations of the Bank.
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19. Payment of Costs and
Legal Fees and Reinstatement of Benefits. In the event any
dispute or controversy arising under or in connection with the Executive’s
termination is resolved in favor of the Executive, whether by judgment,
arbitration or settlement, the Executive shall be entitled to the payment of (a)
all legal fees incurred by the Executive in resolving such dispute or
controversy, and (b) any back-pay, including Base Salary, bonuses and any other
cash compensation, fringe benefits and any compensation and benefits due to the
Executive under this Agreement.
20. Entire
Agreement. This Agreement embodies the entire agreement
between the Employer and the Executive with respect to the matters agreed to
herein. All prior agreements between the Employer and the Executive
with respect to the matters agreed to herein are hereby superseded and shall
have no force or effect, including but not limited to the Prior
Agreement.
[signature
page follows]
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IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first
written above.
| ATTEST: | PRUDENTIAL SAVINGS BANK | ||
| By: /s/ Xxxxxx Xxxxxx | By: /s/ Xxxxxx X. Xxxxxx, Xx. | ||
| Name: Xxxxxx Xxxxxx | Xxxxxx X. Xxxxxx, Xx. | ||
| Title: Vice President/Secretary | Chairman of the Board | ||
| EXECUTIVE | |||
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By: /s/
Xxxxxx X. Xxxxx
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| Xxxxxx X. Xxxxx | |||
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