QUAINT OAK BANK AMENDED AND RESTATED EMPLOYMENT AGREEMENT FOR ROBERT T. STRONG
EXHIBIT
10.1
QUAINT
OAK BANK
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
FOR
XXXXXX X. XXXXXX
THIS AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) between Quaint Oak Bank,
a Pennsylvania-chartered stock savings bank formerly known as Quaint Oak Savings
Bank with principal offices at 000 Xxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxx
00000 (the “Bank”), and Xxxxxx X. Xxxxxx (the “Executive”), is hereby amended
and restated effective as of December 10, 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 November 12, 2003, as amended on March 19, 2007 (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
Bank desires to be ensured of the Executive’s continued active participation in
the business of the Bank; and
WHEREAS, the
Executive is willing to serve the Bank on the terms and conditions hereinafter
set forth.
NOW
THEREFORE, in consideration of the mutual promises and agreements set
forth herein, 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
compensation paid to the Executive by the Bank and any parent or subsidiary
thereof during the most recent three calendar years immediately preceding the
year in which the Date of Termination occurs and included in the Executive’s
gross income for tax purposes.
(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, conviction of a felony, 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 which in the reasonable judgment of the Board of
Directors of the Bank will probably cause substantial economic damages to the
Bank, willful or intentional breach or neglect by the Executive of his duties,
or a material breach of any provision of this
Agreement. For purposes of this
Agreement, no act or failure to act on the Executive’s part shall be considered
“willful” unless done, or omitted to be done, by him not
in good faith and without reasonable belief that this action or omission was in
the best interest of the Bank; provided that any act or omission to act on the
Executive’s behalf in reliance upon an opinion of counsel to the Bank or counsel
to the Executive shall not be deemed to be willful. The terms “incompetence” and
“misconduct” shall be defined with reference to standards generally prevailing
in the banking industry. In determining incompetence and misconduct, the Bank
shall have the burden of proof with regard to the acts or omissions of the
Executive and the standards prevailing in the banking
industry.
(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.
(e) Code. “Code”
shall mean the Internal Revenue Code of 1986, as amended.
(f) Corporation. “Corporation”
shall mean Quaint Oak Bancorp, Inc., the holding company for the
Bank.
(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. In the event of any dispute between
the Executive and the Bank as to the Executive’s Disability, the matter shall be
decided by a majority vote of a panel of physicians, one of whom shall be
selected by the Executive, one of whom shall be selected by the Bank, and one of
whom shall be selected by the other two physicians. The physicians’
fees and any other costs associated with the resolution of said dispute shall be
borne by the Bank.
(i) Good
Reason. “Good Reason” means the occurrence of any of the
following events:
(i) any
material breach of this Agreement by the Bank, 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 Bank instead of reporting directly to the
Board of Directors of the Bank, or
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(ii) any
material change in the geographic location at which the Executive must perform
his services under this Agreement;
provided,
however, that prior to any termination of employment for Good Reason, the
Executive must first provide written notice to the Bank within ninety (90) days
of the initial existence of the condition, describing the existence of such
condition, and the Bank shall thereafter have the right to remedy the condition
within thirty (30) days of the date the Bank received the written notice from
the Executive. If the Bank 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 Bank 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.
(j) Notice of
Termination. Any purported termination of the Executive’s
employment by the Bank for any reason, including without limitation for Cause or
Disability, 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 Bank’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.
(k) Regulatory
Agency. “Regulatory Agency” means any governmental agency
having regulatory or supervisory jurisdiction over the Bank at the time of
reference.
2. Term
of Employment.
(a) The
Bank 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 Bank 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 Bank has not given notice to the Executive in
writing at least 30 days, and not more than 90 days, prior to such December 31st
that the term of this Agreement shall not be extended further and/or the
Executive has not given notice to the Bank of his election not to extend the
term at least 30 days, and not more than 90 days, prior to any such December
31st; provided, further, however, that as of December 31, 2016, the remaining
term of this Agreement, provided it is still in effect as of such date, shall be
one year and, beginning on December 31, 2017 and each December 31st thereafter,
the term of this Agreement shall be extended for one additional year, provided
that neither party to the Agreement has given notice to the other party in
writing at least 30 days, and not more than 90 days, prior to any such December
31st that the term of this Agreement shall not be extended
further. If any party gives timely notice that the term will not be
extended as of any such 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.
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(b) During
the term of this Agreement, the Executive shall perform such executive services
for the Bank as is consistent with his title of President and Chief Executive
Officer and from time to time assigned to him by the Bank’s Board of
Directors.
3. Compensation
and Benefits.
(a) The
Bank shall compensate and pay the Executive for his services during the term of
this Agreement at a minimum base salary of $220,000 per year (“Base Salary”)
payable in bi-weekly installments, which may be increased from time to time in
such amounts as may be determined by the Board of Directors of the
Bank. 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
authorized and declared by the Board of Directors of the Bank in its sole
discretion.
(b) During
the term of this Agreement, the Executive shall be entitled to participate in
any benefit plan as the Bank may adopt for the benefit of its
employees. The Bank shall not make any changes in such benefit plans
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 Bank 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 Bank. 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 of four weeks per year and paid sick leave of 10 days per year, or such
longer periods as approved from time to time by the Board of Directors of the
Bank. The timing of paid vacations shall be scheduled in a reasonable
manner by the Executive. The Executive shall not be entitled to
receive any additional compensation from the Bank 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 Bank.
4. Expenses. The
Bank 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 Bank, including, but not by way of limitation,
traveling expenses for attending annual and periodic meetings of trade
associations, subject to such reasonable documentation and other limitations as
may be established by the Board of Directors of the Bank. If such
expenses are paid in the first instance by the Executive, the Bank 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
Bank 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 or Disability, and the Executive shall have the
right, upon prior Notice of Termination, to terminate his employment hereunder
for any reason.
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(b) In
the event that (i) the Executive’s employment is terminated by the Bank 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 during the term of this Agreement, then the Bank shall pay to the
Executive the following: (i) in a lump sum within thirty (30) days following the
Date of Termination, a cash severance amount equal to one times the Executive’s
then current Base Salary, plus (ii) in a lump sum payable at the time annual
bonuses are normally paid, the pro rata portion of any annual bonus that the
Executive would have anticipated earning for the year in which the Date of
Termination occurs if he had remained in the employ of the Bank for the full
calendar year, based upon the portion of the calendar year that the Executive
was able to perform his duties prior to his termination due to Disability,
provided that the pro rata bonus shall be paid no later than March 15th of the
year immediately following the year in which the Date of Termination
occurs.
(d) In
the event that the Executive’s employment is terminated as a result of the
Executive’s death during the term of this Agreement, then the Bank shall pay to
the Executive’s spouse or, if none, to his estate or legal representative, the
following: (i) in a lump sum within thirty (30) days following the Date of
Termination, a cash severance amount equal to one times the Executive’s then
current Base Salary, plus (ii) in a lump sum payable at the time annual bonuses
are normally paid, the pro rata portion of any bonus that the Executive would
have anticipated earning for the year in which the Date of Termination occurs if
he had remained in the employ of the Bank for the full calendar year, based upon
the portion of the calendar year that Executive was able to perform his duties
prior to his death, provided that the pro rata bonus shall be paid no later than
March 15th of the
year immediately following the year in which the Date of Termination
occurs.
(e) In
the event that prior to a Change in Control the Executive’s employment is
terminated either (i) by the Bank for other than Cause, Disability or the
Executive’s death or (ii) by the Executive for Good Reason, then the Bank shall
pay to the Executive, in a lump sum within thirty (30) days following the Date
of Termination, a cash severance amount equal to three (3) times the Executive’s
then current Base Salary.
(f) In
the event that concurrently with or subsequent to a Change in Control the
Executive’s employment is terminated either (i) by the Bank for other than
Cause, Disability or the Executive’s death or (ii) by the Executive for Good
Reason, then the Bank shall pay to the Executive, in a lump sum within five (5)
business days following the Date of Termination, a cash severance amount equal
to 2.99 times the Executive’s Average Annual Compensation, subject to the
provisions of Section 6 hereof, if applicable.
6. Limitation of
Benefits under Certain Circumstances. If any payment pursuant
to Section 5 hereof, either alone or together with other payments and benefits
which the Executive has the right to receive from the Bank and the Corporation,
would constitute a “parachute payment” under Section 280G of the Code, then the
payment payable by the Bank pursuant to Section 5 hereof shall be reduced by the
minimum amount necessary to result in no portion of the payment payable by the
Bank under Section 5 being non-deductible to the Bank pursuant to Section 280G
of the Code and subject to the excise tax imposed under Section 4999 of the
Code. The determination of any reduction in the payments to be made
pursuant to Section 5 shall be based upon the opinion of independent tax counsel
selected by the Bank and paid by the Bank. 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 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.
(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 Bank pursuant to employee benefit plans of the Bank or
otherwise.
8. Withholding. All
payments required to be made by the Bank hereunder to the Executive 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.
9. Assignability. The
Bank 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 Bank may hereafter merge or consolidate or to which the Bank 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 Bank 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:
|
To the Bank:
|
Board
of Directors
|
Quaint
Oak Bank
000
Xxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
To the
Executive: Xxxxxx X.
Xxxxxx
At the
address last appearing on the
personnel records of the Bank
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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 Bank 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 Bank 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 Bank 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 Bank hereunder, such right shall be no greater than the right
of any unsecured general creditor of the Bank.
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
Prohibitions and Actions.
(a) 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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(b) If
the Bank is in default, as defined to mean an adjudication or other official
determination of a court of competent jurisdiction or other public authority
pursuant to which a conservator, receiver or other legal custodian is appointed
for the Bank for the purpose of liquidation, all obligations under this
Agreement shall terminate as of such date as a competent governmental authority
may lawfully terminate this Agreement, but rights of the Executive to
compensation earned prior to such termination shall not be
affected.
(c) If
the Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs pursuant to notice served by
any Regulatory Agency, then 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, the Bank shall (i) pay the Executive
all the compensation withheld while contract obligations were suspended, and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(d) If
the Executive is removed from office and/or permanently prohibited from
participating in the conduct of the Bank’s affairs by an order issued by any
Regulatory Agency, all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, but rights of the Executive to
compensation earned as of the Date of Termination shall not be
affected.
(e) All
obligations under this Agreement are subject to termination by any Regulatory
Agency in accordance with any applicable provisions of law or regulations
granting such authority, but rights of the Executive to compensation earned as
of the date of termination of the Agreement shall not be
affected.
19. Entire
Agreement. This Agreement embodies the entire agreement
between the Bank and the Executive with respect to the matters agreed to
herein. All prior agreements between the Bank 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 | QUAINT OAK BANK | |||
| By: | /s/ Xxxxx X. Xxxxxx |
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By:
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/s/ Xxxxxx X. Xxxxxxxx
|
| Xxxxx X. Xxxxxx |
Xxxxxx
X. Xxxxxxxx
|
|||
| Corporate Secretary |
Chairman
of the Board
|
|||
|
EXECUTIVE
|
|||
|
|
By:
|
/s/ Xxxxxx X. Xxxxxx
|
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| Xxxxxx X. Xxxxxx | |||
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