EXHIBIT 10.2
EMPLOYMENT AGREEMENT
PRIME BANCORP, INC.
PRIME BANK, A SAVINGS BANK
AND
XXXXXX X. XXXXXXX, XX.
THIS AGREEMENT made as of September 25, 1996 is by and among PRIME
BANCORP, INC., a Delaware corporation ("Holding Company"), PRIME BANK, A SAVINGS
BANK, chartered under Pennsylvania law, with its main office located at 6425
Rising Sun Avenue, Philadelphia, Philadelphia County, Commonwealth of
Pennsylvania ("Prime Bank") and XXXXXX X. XXXXXXX, XX. ("Executive"). As used in
this agreement the term "Company" shall refer both individually and collectively
to Prime Bank and the Holding Company.
Background
A. Company and Executive wish to enter into an employment agreement, to
supersede Executive's existing employment agreement, pursuant to which Company
wishes to secure the services of Executive as Executive Vice President for a
period of not less than two (2) years.
B. Executive is willing to enter into this Employment Agreement (this
"Agreement") for such period upon the terms and conditions herein set forth.
C. The Company's Board of Directors has approved this Agreement.
NOW THEREFORE, in consideration of the mutual promises and agreement
set forth herein, the parties agree as follows:
1. Employment.
1.1 Company shall employ Executive, and Executive shall serve, as
Executive Vice President of Prime Bank and/or Executive Vice President of
Holding Company during the "Term" defined in Section 2 of this Agreement.
Executive agrees to serve, as requested, as a member of a committee or
committees of the Board of Directors.
1.2 If at any time during the Term the Board of Directors shall fail
to reelect Executive as Executive Vice President of Company or shall remove him
from such office without cause, or if at any time during the Term Executive
shall fail to be vested by Employer with the powers and authority above,
Executive shall have the right, by written notice to
Company satisfying the requirements of Section 6.7(c), to terminate his services
hereunder, and Executive shall have no further obligation under this Agreement.
Termination of Executive's services under this Section l shall be treated as a
termination of employment by Company other than for cause and shall be governed
by the provisions of Section 6.7(e) of this Agreement.
2. Term of Employment. The initial term of employment hereunder shall
be for a period commencing on the date of this Agreement and ending on December
3l, 1998. This Agreement shall be extended automatically for one additional year
on December 31 each year, unless either Company or Executive gives contrary
written notice to the other not less than 30 days nor more than 90 days in
advance of any date on which this Agreement would otherwise be extended.
References in this Agreement to the "Term" shall refer both to such initial term
and such successive one (1) year terms. The Term of this Agreement may be
changed by mutual written consent of Company and Executive.
3. Compensation. Company shall pay or cause to be paid to Executive
during the term of employment a base salary of not less than One Hundred Fifty
Thousand Dollars ($150,000.00) per annum, payable in biweekly installments
during each year of the Term. It is understood that Company may, in the
discretion of its Board of Directors, increase such base salary in light of
Executive's job duties and performance and such other factors as adjustment in
cost of living. In addition, Executive shall be entitled to participate in an
executive compensation plan based on performance standards determined by the
Board of Directors or a Committee thereof.
4. Employee Benefit Plans; Fringe Benefits.
4.1 In the event that the Executive terminates his employment for
"good reason," as defined in Section 6.7(a) of this Agreement, or in the event
of any "change in control" of the Company, as defined in Section 6.7(b) of this
Agreement, whether or not Executive terminates his employment, Executive shall
be entitled to exercise his option to purchase said option shares during a
period of 90 days following his termination of employment.
4.2 During the Term, executive shall be entitled to participate in
stock options, stock appreciation, stock purchases, pension, thrift, medical
coverage, education or other retirement or employee benefits, including without
limitation the Company's Employee Retirement Savings Plan and Incentive Stock
Option Plan, and any other plans that Company may adopt for the benefit of its
executive employees.
4.3 During the Term, the Company shall provide Executive with the
use of a new automobile, every two (2) years, which shall be generally in the
range of a $25,000 car.
5. Vacations. Executive shall be entitled to an annual paid vacation of
five (5) weeks per year or such longer period as the Board of Directors of
Company may
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approve. The timing of paid vacations shall be scheduled in a reasonable manner
by Executive. Executive shall not be entitled to receive any additional
compensation from Company on account of his failure to take a paid vacation.
Executive shall also not be entitled to accumulate unused paid vacation time
from one calendar year to the next, except with the approval of the Board of
Directors of Company.
6. Termination of Employment.
6.1 Company shall have the right, at any time upon prior written
Notice of Termination satisfying the requirements of Section 6.7(c) hereunder,
to terminate Executive's employment hereunder, including termination for cause.
For the purpose of this Agreement, termination for "cause" shall mean
termination for personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, conviction of a felony, or willful
violation of any law, rule or regulation or final cease-and-desist order which
in the reasonable judgment of the Board of Directors of the Company will
probably cause substantial economic damages to the Company, willful or
intentional breach or neglect by Executive of his duties, or material breach of
any material provision of this Agreement. For purposes of this paragraph, no act
or failure to act on 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 Company; provided that
any act or omission to act on Executive's behalf in reliance upon an opinion of
counsel to the Company 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, Company shall have the burden of proof
with regard to the acts or omission of Executive and the standards prevailing in
the banking industry.
6.2 In the event employment is terminated for cause pursuant to
section 6.1 hereof, Executive shall have no right to compensation or other
benefits for any period after such date of termination. If Executive is
terminated by Bank or Holding Company other than for cause pursuant to Section
6.1 hereof, Employee's right to compensation and other benefits under this
Agreement shall be as set forth in Section 6.7(e) hereof.
6.3 Executive shall have the right, upon prior written Notice of
Termination of not less than thirty (30) days satisfying the requirements of
Section 6.7(c) hereof, to terminate his employment hereunder, but in such event
Executive shall have no right after the date of termination to compensation or
other benefits as provided in this Agreement, unless such termination is for
"good reason", as defined pursuant to Section 6.7(a) hereof. If Executive
provides a Notice of Termination for "good reason", as defined pursuant to
Section 6.7(a) hereof, the date of termination shall be the date on which a
Notice of Termination is given.
6.4 If Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of Company's affairs pursuant to
notice served by any
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Regulatory Agency, Company'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, Company shall: (i) pay 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.
6.5 If Executive is removed from office and/or permanently
prohibited from participating in the conduct of Company's affairs by an order
issued by any Regulatory Agency, all obligations of Company 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.
6.6 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 shall not be affected.
6.7(a) Executive may terminate his employment hereunder for "good
reason". For purposes of this Agreement, "good reason" shall mean (A) a failure
by Company to comply with any material provision of this Agreement, which
failure has not been cured within ten (l0) days after a notice of such
noncompliance has been given by Executive to Company; (B) subsequent to a
"change in control" of Company (as defined in Section 6.7(b) of this Agreement)
and without Executive's express written consent, any of the following shall
occur; (i) the assignment to Executive of any duties substantially inconsistent
with Executive's positions, duties, responsibilities, titles or offices as in
effect immediately prior to a change in control of Company, (ii) any removal of
Executive from, or any failure to re-elect Executive to, any of such positions,
except in connection with a termination of employment for cause, disability,
death, retirement or pursuant to Sections 6.1 or 6.5 hereof, (iii) a reduction
by Company in Executive's annual salary as in effect immediately prior to a
change in control or as the same may be increased from time to time, or (iv) the
failure of Company to continue in effect any bonus, benefit or compensation
plan, life insurance plan, health and accident plan or disability plan in which
Executive is participating at the time of a change in control of Company, or the
taking of any action by Company which would adversely affect Executive's
benefits under any of such plans; or (C) any purported termination of
Executive's employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph 6.7(c) hereof (and for purposes of this
Agreement no such purported termination shall be effective).
(b) For purposes of this Agreement, a "change in control" of
Company shall mean a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"), provided that,
without limitation, such a change in control shall be deemed to have occurred if
(A) any "persons" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act in effect on the date first written above), other than Company or
any "person" who on the date hereof is a director or
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officer of Company, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of Company
representing 25% or more of the combined voting power of Company's then
outstanding securities, or (B) during any period of two consecutive years during
the term of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at least a
majority thereof, unless the election of each director who was not a director at
the beginning of such period has been approved in advance by directors
representing at least two-thirds of the directors then in office who were
directors at the beginning of the period. Notwithstanding the foregoing, a
business combination with First Sterling Bank or First Sterling Bancorp, Inc.
shall not be deemed a "change in control" for purposes of this Agreement.
(c) Any termination of Executive's employment by Company or by
Executive shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a dated notice which shall (A) indicate the specific termination provision
of this Agreement relied upon; (B) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated; (C) specify 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 Company's termination
of executive's employment for cause pursuant to Section 6.1 hereof, in which
case the Notice of Termination may specify a date of termination as early as the
date such Notice of Termination is given; and (D) be given in the manner
specified in Section 12 hereof.
(d) If Executive shall terminate his Employment for good reason
pursuant to subpart (B) of Section 6.7(a) hereof, then in lieu of any further
salary payments to Executive for periods subsequent to the date of termination,
Company shall pay as severance to Executive an amount equal to (A) the average
aggregate annual compensation paid to the Executive and includible in the
Executive's gross income for federal income tax purposes during the three
calendar years preceding the taxable year in which the date of termination
occurs (or such lesser amount of time if the Executive has not been employed by
Company for three years at the time of termination) by Company and any of its
subsidiaries subject to United States income tax, multiplied by (B) 2.00, such
payment to be made in a lump sum on or before the fifth day following the date
of termination; provided, however, that if the lump sum severance payment under
this Section 6.7(d), either along or together with other payments which the
Executive has the right to receive from the Company, would constitute a
"parachute payment" (as defined in Section 280G of the Internal Revenue Code of
1986, as amended [the "Code]), such lump sum severance payment shall be reduced
to the largest amount as will result in no portion of the lump sum severance
payment under this Section 6.7(d) being subject to the excise tax imposed by
Section 4999 of the Code. The determination of any reduction in the lump sum
severance payment under this Section 6.7(d) pursuant to the foregoing provision
shall be made by independent counsel to Company in consultation with the
independent certified public accountants of Company.
(e) If Executive shall terminate his employment for good reason
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as defined in subpart (A) or (C) of Section 6.7(a) hereof, or if Executive is
terminated by Company for other than cause, then in lieu of any further salary
payments to Executive for periods subsequent to the date of termination, Company
shall pay as severance to Executive an amount equal to the product of (A)
Executive's total annual compensation paid pursuant to Section 3 hereof, in
effect as of the date of termination (but not less than the total annual
compensation paid pursuant to Section 3 for the year prior to the year of
termination) multiplied by (B) the greater of the number of years (including
partial years) remaining in the term of employment hereunder or the number 2.00,
such payment to be made in substantially equal biweekly installments on the
normal pay date commencing with month in which the date of termination occurs
and continuing for the number of consecutive biweekly payment dates (including
the first such date aforesaid) equal to the product obtained by multiplying the
number of years (including partial years) applicable under (B) above by 26.
(f) Executive shall not be required to mitigate the amount of any
payment provided for in paragraph (d) or (e) of this Section 6.7 by seeking
other employment or otherwise. No amounts received by Executive in subsequent
employment shall reduce the amount of any payment provided for in paragraph (d)
or (e) of this Section 6.7.
6.8 If Company 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 Company for the purpose of liquidation, all
obligations under this Agreement shall terminate as of the date of default, but
rights of the Executive to compensation earned as of the date of termination
shall not be affected.
6.9 As used in this Section 6, "Regulatory Agency" means a
governmental agency having regulatory or supervisory jurisdiction over Company.
7. Death and Disability.
7.1 Upon the death of Executive during the term hereof, all
compensation payments hereunder shall continue for a period of six (6) weeks
after the end of the week in which Executive's death shall occur, at which point
such payments shall cease and Company shall have no further obligations or
liabilities hereunder to Executive's estate or legal representative or
otherwise, except that Company shall pay to Executive's estate or legal
representation, based upon the portion of the calendar year that Executive was
employed by Company prior to his death, the prorated portion of any incentive
compensation Executive would have earned if he had remained in the employ of
Company for the full calendar year (payable at such time that Executive would
have received such incentive compensation).
7.2 If Executive becomes unable to perform his duties hereunder due
to partial or total disability or incapacity resulting from a mental or physical
illness, injury or any similar cause, Company will continue the payment of
Executive's compensation at his
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then current rate for a period of six (6) weeks following the date Executive is
first unable to perform his duties due to such disability or incapacity.
Thereafter, Company shall have no obligation for base salary or other
compensation payments to Executive during the continuance of such disability or
incapacity, except that Company shall pay to Executive, based upon the portion
of the calendar year that Executive was able to perform his duties prior to the
disability, the pro rata portion of any incentive compensation that Executive
would have earned if he had remained in the employ of Company for the full
calendar year (payable at such time that Executive would have received such
Incentive Compensation). In the event of any dispute between the Executive and
the Company as to the Executive's entitlement to the continuation of
compensation pursuant to this Section, the matter shall be resolved 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 Company, 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
Company.
8. Payment Obligations Absolute. Company's obligation to pay Executive
the compensation and other benefits provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any set-off counter claim, recoupment, defense or other right which
Company may have against Executive. All amounts payable by Company hereunder
shall be paid without notice or demand.
9. Continuing Obligations. Executive shall retain in confidence any
confidential information known to him concerning Company and its business so
long as such information is not publicly disclosed.
10. Reimbursement of Legal Fees. The Company shall pay all reasonable
costs, including attorneys' fees incurred by Executive if Executive is
successful (a) in seeking to obtain any amount or benefit granted pursuant to
this Agreement which the Executive in good faith shall believe the Company has
not paid or provided, or shall not be intending to pay or provide when due, or
(b) in seeking to enforce any obligation which the Executive in good faith shall
believe the Company has to the Executive under the Agreement. Such reasonable
cost and fees shall be paid by the Company whether or not the Executive shall
have commenced litigation or any other similar proceedings.
ll. Amendments. No amendments to this Agreement shall be binding unless
in writing and signed by both parties.
12. Notices. All notices under this Agreement shall be in writing and
shall be deemed effective (i) when delivered in person or by facsimile,
telecopier, telegraph or other electronic means capable of being embodied in
written form (in Company's case, to its Chief Executive Officer) or
(ii) forty-eight (48) hours after deposit thereof in the U. S. mails by
certified or registered mail, return receipt requested, postage prepaid,
addressed, in the case of Executive, to his last known address as carried on the
personnel records of Company and, in the case of Company, to the corporate
headquarters, attention of the Chief Executive
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Officer, or to such other address as the party to be notified may specify by
notice to the other party.
13. Entire Agreement; Termination of Prior Agreement. This is the
entire agreement of the parties with respect to its subject matter. There are no
other oral understandings or agreements between the parties with respect to the
subject matter of this Agreement. Executive's prior employment agreement is
hereby terminated.
14. Assigns and Successors. The rights and obligations of Company under
this Agreement shall inure to the benefit of and shall be binding upon the
respective personal representatives, heir, successors and assigns of Company and
Executive.
15. Construction. This Agreement shall be construed under the laws of
the Commonwealth of Pennsylvania, as they may be preempted by federal laws and
regulations. Section headings are for convenience only and shall not be
considered a part of the terms and provisions of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the due execution of
this Agreement as of the date first set forth above.
Attest: PRIME BANCORP, INC.
________________________ By:________________________
President
Attest: PRIME BANK, A SAVINGS BANK
_________________________ By: _______________________
Assistant Secretary
________________________ By:________________________
Witness Xxxxxx X. Xxxxxxx, Xx.
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