EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of September 14, 1999 among XXXXXX UNITED
BANCORP, a New Jersey Corporation (the "Company"), XXXXXX UNITED BANK, a New
Jersey chartered commercial bank (the "Bank") and XXXXXXX X. XXXXXXX (the
"Officer").
A. The Officer is currently Chairman of the Board, President and Chief
Executive Officer, and a director, of the Company and of the Bank.
B. The Company and Dime Bancorp, Inc. ("Bancorp") are concurrently
herewith entering into an Agreement and Plan of Merger dated as of the date
hereof (the "Merger Agreement"), which contemplates the merger or business
combination of the Company and Bancorp (the "Holding Company Combination") at
the Effective Time (as defined in the Merger Agreement) as well as the merger or
business combination of the Bank and The Dime Savings Bank of New York, FSB (the
"Bank Combination").
C. The Company and the Bank are desirous of employing the Officer prior to
the Holding Company Combination and, pursuant to the Merger Agreement, of
providing for the continued employment of the Officer by the Surviving
Corporation (as defined in the Merger Agreement) and of the entity resulting
from the Bank Combination (the "Surviving Bank") on and subsequent to the
Effective Time and upon the terms and conditions set forth in this Agreement.
D. The Officer is desirous of being so employed upon the terms and
conditions set forth in this Agreement.
Therefore, the Company, the Bank and the Officer, intending to be legally
bound, agree as follows:
1. Employment. Subject to the terms and conditions of this Agreement, the
Company hereby employs the Officer, and the Officer hereby accepts such
employment. In addition, subject to the terms and conditions of this Agreement,
the Bank hereby employs the Officer and the Officer hereby accepts such
employment. Except as otherwise limited by Sections 9(c) and 11 hereof, the
Company and the Bank shall be jointly and severally liable for all of the
Company's and the Bank's obligations hereunder.
2. Term of Employment. (a) The term of the Officer's employment under this
Agreement shall be deemed to have commenced on the date of this Agreement and
shall continue until December 31, 2004 (the "Term"). The expiration of the Term
of this Agreement shall not be deemed to be a termination of the Officer's
employment by the Company.
(b) The Officer's employment may be terminated during the Term of
this Agreement by the Company or the Officer in the manner specified in this
Agreement. Any such
termination of employment shall result in a termination of this Agreement on the
Effective Date of Termination (as defined in Section 14); provided that,
notwithstanding anything to the contrary in the foregoing, any right of the
Officer to any payments or benefits as a result of a termination of the
Officer's employment or to enforce such rights (in each case as provided in this
Agreement) shall survive the termination of this Agreement.
3. Offices. (a)(i) During the Term and until the Effective Time, the
Officer shall serve as Chairman of the Board and Chief Executive Officer of the
Company, and (ii) during the Term and until the Bank Combination is effected,
the Officer shall serve as Chairman of the Board and Chief Executive Officer of
the Bank.
(b)(i) During the portion of the Term that commences at the
Effective Time and until the Officer becomes Chairman of the Board and Chief
Executive Officer of the Company in accordance with Section 3(c) below (the
"Initial Post-Merger Period"), the Officer shall serve as President and Chief
Operating Officer of the Surviving Corporation, and (ii) during the portion of
the Term that commences on the date the Bank Combination is effected and until
the Officer becomes Chairman of the Board and Chief Executive Officer of the
Bank in accordance with Section 3(c) below, the Officer shall serve as President
and Chief Operating Officer of the Surviving Bank. Upon and following the
respective effective times of the Holding Company Combination and the Bank
Combination, all references in this Agreement to the "Company" and the "Bank"
shall be deemed to refer to the Surviving Corporation and the Surviving Bank,
respectively.
(c) The Officer shall become Chairman of the Board and Chief
Executive Officer of each of the Company and the Bank in accordance with the
procedures specified in the Merger Agreement, with service in such positions to
commence on December 31, 2002 (or on such earlier date after the Effective Time
on which Xxxxxxxx X. Xxxx (the "Present CEO") shall cease to be the Chairman of
the Board and Chief Executive Officer of the Company and the Bank, at which time
the provisions of the first sentence of paragraph (3)(b) shall cease to apply),
unless a Special Majority (as defined in the Merger Agreement) of the Board of
Directors shall decide to the contrary. The portion of the Term beginning with
the Officer becoming Chairman of the Board and Chief Executive Officer of each
of the Company and the Bank in accordance with the provisions of this Section
3(c) is referred to hereafter as the "Remaining Post-Merger Period" (the Initial
Post-Merger Period and the Remaining Post-Merger Period are together referred to
hereafter as the "Post-Merger Period").
(d) At all times during the Term, the Officer shall serve as a
director of each of the Company (subject to election by the stockholders of the
Company) and the Bank and a member of the Executive Committee of the Board of
Directors of each of the Company and the Bank.
(e) In addition, during the Term the Officer shall serve, for the
period for which he may from time to time be elected, as an officer or director
of any Affiliate of the Company.
4. Duties. The Officer shall perform such duties as reasonably and
customarily pertain to the offices set forth in Section 3 and such other duties
as are set forth in the Bylaws of the Company and the Bank or as may be agreed
to from time to time by the Officer. During the
2
Term (except for periods of illness and vacation), substantially all of the
Officer's business time, attention, skill and efforts shall be devoted to the
performance of the Officer's duties under this Agreement. Notwithstanding the
foregoing, the Officer may (a) continue to serve on the boards of directors of,
and hold any other offices or positions in, companies or organizations
previously approved by the Board of Directors of the Company and (b) with the
approval of the Board of Directors of the Company, from time to time serve on
the board of directors of, and hold any other offices or positions in, companies
or organizations engaged in activities that present no conflict of interest with
the Company or the Bank and that will not materially and adversely affect the
performance of his obligations under this Agreement.
5. Compensation; Certain Benefits; Reimbursement. (a) The annual salary of
the Officer during the Term for all services performed for the Company and the
Bank shall be (i) until the Effective Time, the Officer's annual salary as of
the date hereof; (ii) during the Initial Post-Merger Period, the greater of (x)
$750,000 and (y) during any period for which the salary of the Present CEO
exceeds $937,500, 80% of such Present CEO's salary as then in effect and (iii)
during the Remaining Post-Merger Period, $1,000,000. The Board of Directors of
the Company (or a duly authorized committee of the Board) may increase the
Officer's annual salary from time to time following the Effective Time, and
prior to the Effective Time may provide the Officer with a normal increase in
annual salary, and may continue all existing bonus, incentive and employee
benefit arrangements, including, without limitation, the making of normal stock
option and restricted stock plan grants, on a basis consistent with past
practice. In no event shall the Officer's annual salary be decreased below his
annual salary specified in the first sentence of this Section 5(a) plus all
subsequent increases in his annual salary. As used in this Agreement, "annual
salary" shall mean, at any time, the annual rate of salary then payable to the
Officer pursuant to this Section 5(a) (before deduction of any amounts deferred
under any deferred compensation plan of the Company or the Bank, any voluntary
contributions to a 401(k) plan of the Company or the Bank, or any other
deductions from income) and shall be exclusive of bonuses, incentive
compensation or other compensation or benefits paid to or accrued for the
Officer other than pursuant to this Section 5(a). Amounts payable to the Officer
under this Section 5(a) shall, subject to the provisions of Section 5(e), be
payable in installments (pro rata with respect to the period during a year to
which it relates) in accordance with the prevailing general payroll practice of
the Company as it may exist from time to time.
(b) During the Post-Merger Period the Company shall (i) at the
Company's expense, provide the Officer with the exclusive use of a Company-owned
or Company-leased automobile (at any time not to be more than three years old)
and, if the principal executive offices of the Company where the Officer is
required to provide the services hereunder are located in New York, to employ
for the use of the Officer a driver for such automobile, (ii) reimburse the
Officer for the annual (or less frequent) membership fees for two country,
social, business, luncheon or fitness clubs and (iii) reimburse the Officer for
tax planning and financial consulting services to be provided by Clarfeld &
Company, P.C. (or other provider agreed to by the Company and the Officer) in an
amount not to exceed $12,000 per annum.
(c) The Officer shall not have or acquire by virtue of this
Agreement any rights to participate in, or receive benefits with respect to, any
compensation or benefit plan or program of the Company or the Bank, except (i)
that during the Post-Merger Period and while employed by the Company, the
Officer shall (subject to the approval of the Compensation Committee or other
3
appropriate committee of the Board of Directors) participate in the Company's
Senior Officer Incentive Plan, as in effect from time to time, with a target
bonus (the "Target Bonus") of at least 100% of the Officer's then effective
annual salary (or such higher target bonus amount as the Board of Directors of
the Company may establish from time to time), (ii) during the Initial
Post-Merger Period and while employed by the Company, the Officer shall (at the
discretion of the Compensation Committee and the Board of Directors or other
appropriate committee of the Board of Directors) receive annual stock incentive
awards at the same time as and equal to 80% of the base annual stock incentive
award of the Present CEO for such year, and during the Remaining Post-Merger
Period and while employed by the Company, the Officer shall receive annual stock
incentive awards (at the discretion of the Compensation Committee and the Board
of Directors or other appropriate committee of the Board of Directors) on a
basis commensurate with the awards for which the Present CEO was eligible during
the Initial Post-Merger Period; (iii) that while employed by the Company, the
Officer may participate in plans or programs of the Company and the Bank to the
extent provided in such plans and programs and on the same basis as if the
Officer's employment were not subject to the terms and conditions of this
Agreement; provided that, during the Initial Post-Merger Period, the Officer
shall, subject to the terms thereof, be eligible to participate in all plans and
programs in which the Present CEO is eligible to participate and shall be
considered for any awards that may be made thereunder at the same time as the
Present CEO, or (iv) as otherwise specifically provided in this Agreement,
including without limitation Section 7 hereof. For purposes of this Section
5(c), it is the intention of the parties that the Officer's bonus opportunity
and all other grant opportunities under this Agreement shall at all times during
the Initial Post-Merger Period be: (i) at least 80% (in dollar value) of the
Present CEO's bonus and other grant opportunities; (ii) awarded on the same
terms and conditions as awards to the Present CEO regarding exercise price, pre-
and post-termination exercise rights, vesting and term, and (iii) to the extent
the Officer's opportunities are based on corporate-wide performance goals,
subject to the same corporate-wide performance goals as apply to the
opportunities provided to the Present CEO.
(d) The Officer is authorized to incur reasonable expenses for
promoting the businesses of the Company and its Affiliates, including expenses
for travel, entertainment and similar items. The Company shall pay, or reimburse
the Officer for, all such expenses upon presentation by the Officer from time to
time of an itemized account (in reasonable detail) of such expenditures.
(e) Notwithstanding anything to the contrary in the foregoing
provisions, following the Effective Time the payment (but not the grant or
award) of any amounts that would otherwise be payable to the Officer but which
would be in excess of the amount which the Company or the Bank could deduct for
federal income tax purposes if then paid on account of the operation of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), shall be
deferred to the extent such deferral is required pursuant to a policy adopted by
the Compensation Committee of the Company or the Bank and, to the extent so
deferred, shall be payable pursuant to the relevant terms of the Company's
Voluntary Deferred Compensation Plan; provided, however, that, if a Change in
Control (as defined in Section 12(a)) has occurred, deferral of amounts payable
hereunder to the Officer on or after the date of such Change in Control will
only be required if and to the extent such policy in effect immediately prior to
the Change in Control (without taking into consideration any changes therein
made in contemplation of the occurrence of the Change in Control) requires or
would have required such deferral.
4
(f) The Company and the Bank may from time to time enter into
arrangements for the sharing of costs and provision of benefits to the Officer
hereunder; provided, that each of the Company and the Bank shall remain jointly
and severally liable for fulfillment of all obligations hereunder; provided,
further, that any compensation, benefits, reimbursements or other payments made
to the Officer, whether paid by the Company or the Bank (or any other Affiliate
of the Company) shall be deemed made and received in satisfaction of the
Company's and the Bank's obligations hereunder, regardless of whether an
obligation is herein stated to be an obligation of the Company only or of the
Bank only; and provided further, that where any notice is required or permitted,
to be given or action taken by the Company or the Bank, such condition shall be
deemed fulfilled if such notice is given or action taken by either of the
Company or the Bank.
(g) Immediately following the Effective Time, subject to the
discretion and approval of the Compensation Committee, the Board of Directors or
other appropriate Committee of the Board of Directors, the Company shall grant
to the Officer options to purchase 120,000 shares of the Company's common stock
at the market price thereof on such date; provided, that such options shall vest
in accordance with the following schedule: (i) one-third on the date on which
the Officer becomes Chairman of the Board and Chief Executive Officer of the
Company; (ii) one-third on the first anniversary of the date described in clause
(i) (provided the Officer continues to hold such offices on such anniversary
date); and (iii) one-third on December 31, 2004 (provided the Officer continues
to hold such offices on such anniversary date). Such options shall be granted
subject to the terms and conditions (including accelerated vesting) of the
Company's stock incentive plan under which they are issued, and such other terms
as are set by the granting committee in accordance with such Plan.
(h) Immediately following the Effective Time, subject to the
discretion and approval of the Compensation Committee, the Board of Directors or
other appropriate Committee of the Board of Directors, the Company shall offer
to sell to the Officer 100,000 shares of common stock of the Company subject to
vesting restrictions ("Restricted Stock") at a price equal to the par value of
such shares, with the grant of such shares to vest, and the restrictions on such
stock (if so purchased) to lapse in accordance with the following schedule: (i)
one-third on the first anniversary of the date of grant (provided the Officer
continues to be employed hereunder on such date); (ii) one-third on the second
anniversary of the date of grant (provided the Officer continues to be employed
hereunder on such date); and (iii) one-third on the third anniversary of the
date of grant (provided the Officer continues to be employed hereunder on such
date). The Restricted Stock shall be granted subject to the terms and conditions
(including accelerated vesting) of the Company's stock incentive plan under
which it is issued, and such other terms as are set by the granting committee in
accordance with such plan.
6. Disability. (a) The Company may terminate the Officer's employment
under this Agreement for "permanent disability" if (i) the Officer shall become
physically or mentally disabled or incapacitated to the extent that the Officer
has been absent from the Officer's duties with the Company on account of such
disabilities or incapacitation, as determined in a manner consistent with the
policy which applies generally to employees of the Company, on a full-time basis
for a period of six consecutive months, and (ii) within 30 days after written
notice of
5
proposed termination for permanent disability is given by the Company to the
Officer, the Officer shall not have returned to full-time performance of the
Officer's duties.
(b) In the event of termination for "permanent disability" following
the Effective Time, the Company shall provide the Officer with a benefit equal
to (i) his annual salary (as in effect immediately prior to the occurrence of
such disability) for a period commencing on the Effective Date of Termination
and ending on the day immediately prior to the first anniversary thereof and
(ii) 75% of his annual salary (as in effect immediately prior to the occurrence
of such disability) from the date of the first anniversary of the Effective Date
of Termination and continuing through the duration of his disability (but in no
event beyond the Officer's attainment of age 65). Notwithstanding the first
sentence of this Section 6(b), any such payment shall terminate upon the
earliest to occur of (A) the date the Officer returns to full-time employment
with the Company, (B) the date of the Officer's full time employment by another
employer (including full-time service as a sole proprietor or owner of an
unincorporated business), or (C) the date of the Officer's death. In the event
of termination for "permanent disability," the Company also shall continue to
provide until the Officer's death or, if earlier, the first to occur of (aa) the
date the Officer returns to full-time employment with the Company, (bb) the date
of the Officer's full-time employment by another employer, or (cc) the date of
the Officer's attainment of age 65, all life, medical and dental insurance
coverage as is maintained by the Company for full-time employees, provided that
the Officer shall continue to pay all amounts in respect of such coverage that
other employees receiving the same level of coverage are required to pay. In the
event of termination for "permanent disability" following the Effective Time,
the Company shall also provide the Officer with the benefits set forth in
Section 12(d)(ii) hereof (notwithstanding that no Change in Control shall have
occurred).
(c) There shall be no reduction in the compensation payable to the
Officer or the Officer's other rights under this Agreement during any period
when the Officer is incapable of performing some or all of the Officer's duties
by reason of temporary or partial disability.
(d) The obligations of the Company to provide the benefits described
in Section 6(b) may be satisfied, in whole or in part, by payments under
disability insurance policies covering the Officer and obtained and maintained
in force (with respect to the benefit described in the first sentence of Section
6(b) solely at the Company's expense) by the Company. In connection therewith,
the Company may require the Officer to elect the maximum disability insurance
coverage available under the Bank's or the Company's group disability policy,
provided that the Company shall pay on the Officer's behalf all amounts required
to be paid by the Officer as a result of such election. The Officer shall
cooperate with the Company in all reasonable ways to obtain any such disability
or key person insurance coverage.
7. Supplemental Executive Retirement Benefits. (a) During the Post-Merger
Period, the Officer shall participate in the Supplemental Executive Retirement
Plan of the Company (the "SERP") and shall have a "Pension Goal" under such plan
of not less than 50%. The Company acknowledges that in light of the Officer's
years of service with the Company, he will following the Effective Time be fully
vested in the Surviving Corporation's SERP. For purposes of calculating benefits
payable to the Officer under the SERP, any benefit plans, programs or
arrangements of the Company or any predecessor or Affiliate of the Company that
are in effect prior to the Effective Time shall be treated under the SERP in the
same manner as
6
plans of the Surviving Corporation, but no amount of gross up tax payments made
pursuant to Section 12(g) hereof or otherwise shall be considered "Compensation"
thereunder.
(b) Notwithstanding anything in paragraph (a) of this Section 7 to
the contrary, if the Officer's employment hereunder is terminated by the Company
for any reason (other than a termination by the Company for "cause"), or the
Officer terminates his employment hereunder at any time after a Material Change
has occurred (determined without regard to whether or not a Change in Control
has occurred), at any time during the Term following the Effective Time, then
the Company shall pay to the Officer, for each calendar year or portion thereof
during the Officer's remaining life following the later of the Effective Date of
Termination or the date the Officer attains age 55, an amount equal to the
difference, if any, between (i) $741,000 (prorated for any applicable periods of
less than one year) less (ii) the sum of (A) all benefits payable to the Officer
under the SERP with respect to such year or period, presuming an effective
election to commence SERP benefits at the same time as benefits under this
paragraph (b) had been made (whether or not such SERP benefits are actually
being paid on such date), plus (B) the amount of any benefits which the Officer
is entitled to receive for such year or period under any defined benefit plan
qualified under Section 401(a) of the Code sponsored by the Company, any
Affiliate (as defined in Section 12(a)) or any predecessor or successor to any
of them (the "Retirement Plans") plus (C) the amount of any benefits which the
Officer is entitled to receive for such year or period under any defined benefit
excess benefit or benefit restoration plan of the Company, any Affiliate or any
predecessor or successor to any of them, plus (D) the amount of any benefits
which the Officer is entitled to receive for such year or period under any other
plan, agreement or arrangement maintained by the Company, any Affiliate or any
predecessor or successor to any of them that determines benefit amounts with
relation to one or more Retirement Plans, plus (E) the amount of any benefits
which the Officer is then entitled to receive for such year (or, if the amount
specified in clause (i) is to be prorated for a specified period, for the same
period) under Section 6 of this Agreement. In determining the amount so payable,
any benefits described in clause (ii) of the preceding sentence (other than
subclause (E) thereof) that are not payable in the form of a single life annuity
commencing at the same time as benefits hereunder shall, solely for purposes of
the preceding sentence, be converted, on an actuarial equivalent basis, to a
single life annuity form of payment commencing on the same date as the benefits
pursuant to this paragraph (b) with actuarial equivalence to be determined based
on the factors used to determine actuarial equivalence under the SERP. The
amount so determined to be payable pursuant to this paragraph (b) shall be paid
on the same basis as payments under the SERP (including actuarial reductions
with respect to alternative forms of benefit thereunder, and the SERP's
provisions regarding preretirement survivor benefits), and the Officer shall
have the same election rights with respect thereto, regardless of whether or not
any amounts are then being paid under the SERP.
8. Death. In the event of the Officer's death during the Term, this
Agreement and all of the Company's obligations under this Agreement shall
terminate (except as otherwise provided in this Section 8, Section 12(f) or with
respect to the obligations of the Company under Section 7). In the event of the
Officer's death during the Term, the Company or the Bank shall, during the
remainder of the life of the Officer's surviving spouse, continue to provide
such spouse the same level of medical and dental insurance as is maintained from
time to time by the Company or the Bank for spouses of full-time employees (or,
as appropriate, retirees) of the Company or the Bank or, in lieu of providing
any such coverage, the Company or the Bank may
7
pay such spouse the cash equivalent of the cost of such coverage), provided that
such surviving spouse shall continue to pay any amounts in respect of such
coverage that is otherwise required to be paid by employees (or, as appropriate,
retirees) for such coverage and provided, further, that any such medical
coverage may be modified so that Medicare (or other governmental) coverage is
primary, with coverage provided by the Company or the Bank supplementary, to the
extent permitted by law. In the event of the Officer's death during the Term,
the Company shall provide the Officer's beneficiaries with the benefits set
forth in Section 12(d)(ii) hereof (notwithstanding that no Change in Control
shall have occurred).
9. Termination by the Company. (a)(i) The Company may terminate the
Officer's employment under this Agreement at any time by giving the Officer
written notice of such termination, provided that, except where termination is
for "cause" (as defined in Section 9(b)), such notice shall be provided at least
30 days prior to the Effective Date of Termination. In the event of a
termination by the Company of the Officer's employment, other than a termination
for "cause" (as defined in Section 9(b)), then except as otherwise provided in
this Section 9 and in Sections 2(b), 7 and 12 hereof, all of the Company's
obligations under this Agreement shall terminate, except that the Officer shall
remain entitled to any compensation or benefits earned prior to the Effective
Date of Termination and shall not be precluded from receiving a bonus as
provided in Section 5(c) hereof as a result of his termination of employment
prior to the payment date for such bonus and except that the Company shall
(subject to the provisions of Section 9(c)): (A) pay to the Officer, as a
severance payment for services previously rendered to the Company and the Bank,
a lump sum equal to the sum of (1) the Officer's annual salary (as defined in
Section 5(a)) at the Effective Date of Termination plus (2) the amount of the
target bonus which the officer is eligible to earn for the year in which the
Effective Date of Termination occurs and (B) provide the Officer with the
benefits set forth in Section 12(d)(ii) hereof (notwithstanding that no Change
in Control shall have occurred) and (C) maintain, until the later to occur of
(1) the 18-month anniversary of the Effective Date of Termination and (2) the
end of the Term, all life, medical and dental insurance coverage as is
maintained by the Company or the Bank for full-time employees (or, in lieu of
providing any such coverage, the Company or the Bank may pay the Officer the
cash equivalent of the cost of such coverage), provided that the Officer shall
continue to pay all amounts in respect of such coverage that other employees
receiving the same level of coverage are required to pay. If the Effective Date
of Termination by the Company of the Officer's employment occurs at any time
following a Change in Control, the provisions of Section 12 shall apply in lieu
of the provisions of the immediately preceding sentence of this Section 9(a).
The lump sum payment referred to in section 9(a)(i)(A) shall be made to the
Officer as soon as practicable after the Effective Date of Termination, but in
no event later than 90 days thereafter.
(ii) If the Merger Agreement is terminated and the Merger (as
defined therein) abandoned, then this Agreement shall be void ab initio,
neither party shall have any further rights or obligations hereunder, and,
all prior agreements between the Officer and the Company and/or the Bank
shall remain and continue in full force and effect in accordance with
their terms, as if this Agreement had not been adopted.
(b) The Officer shall have no right to receive compensation or other
benefits under this Agreement for any period after the Effective Date of
Termination if the Officer's employment is terminated for "cause." As used in
this Agreement, "termination for cause" shall
8
mean a termination for "cause" by either the Company or the Bank and "cause"
shall mean (i) willful and continued failure by the Officer to materially
perform his duties under this Agreement after at least one warning in writing
from the Company's Board of Directors identifying specifically any such material
failure and offering a reasonable opportunity to cure such failure (provided,
that failure to achieve performance goals shall in no event be grounds for
termination for "cause" hereunder); (ii) the willful engaging by the Officer in
material misconduct which causes material injury to the Company or the Bank as
specified in a written notice to the Officer from the Board of Directors of the
Company; (iii) material breach of fiduciary duty involving personal profit; or
(iv) conviction of a crime (other than a traffic violation), habitual
drunkenness, drug abuse, or excessive absenteeism other than for illness, after
a warning (with respect to drunkenness or absenteeism only) in writing from the
Board of Directors of the Company to refrain from such behavior. No act or
failure to act on the part of the Officer shall be considered willful unless
done, or omitted to be done, by the Officer not in good faith and without
reasonable belief that the action or omission was in the best interest of the
Company. Any termination of the Officer for "cause" shall be based upon a
finding of a Special Majority of the Board of Directors, with notice thereof
given to the Officer in accordance with Section 9(d).
(c) Notwithstanding any other provision of this Section 9 or of
Section 12, if at the Effective Date of Termination any statute, regulation,
order, agreement, or regulatory interpretation thereof that is valid and binding
upon the Company or the Bank (excluding Sections 280G and 4999 of the Code and
regulations promulgated thereunder) (a "Regulatory Restriction") shall restrict,
prohibit or limit the amount of any payment or the provision of any benefit that
the Company or the Bank would otherwise be liable for under this Section 9 or
under Section 12, then the amount that the Company or the Bank shall pay to the
Officer hereunder shall not exceed the maximum amount permissible under such
Regulatory Restriction; provided that, if such Regulatory Restriction shall
subsequently be rescinded, superseded, amended or otherwise determined not to
restrict, limit or prohibit payment by the Company or the Bank of amounts
otherwise due the Officer hereunder, then the Company or the Bank shall promptly
thereafter pay to such Officer any amounts (or the value of any benefit)
previously withheld from such Officer as a result of such Regulatory
Restriction, and provided further that, if any Regulatory Restriction restricts,
prohibits or limits one of the Company or the Bank to a lesser extent than it
restricts, prohibits or limits the other of the two, then the entity least
restricted shall be obligated hereunder to perform any of the obligations of the
other hereunder to the fullest extent permitted by the Regulatory Restriction.
(d) If subsequent to the Effective Time, the Officer's employment is
proposed to be terminated by the Company (whether or not for "cause" (as defined
in Section 9(b)), the Company shall deliver to the Officer a Notice of
Termination (as defined in Section 14) accompanied by a copy of a resolution
duly adopted by the affirmative vote of not less than a Special Majority of the
entire Board of Directors of the Company at a meeting called and held for that
purpose (after reasonable notice to the Officer and an opportunity for him,
together with counsel, to be heard before the Board of Directors), and if such
termination is for cause it shall include a finding that in the good faith
opinion of a Special Majority of the Board of Directors the Officer's conduct
constituted cause for termination and specifying the particulars thereof in
reasonable detail.
9
10. Voluntary Termination by the Officer. (a) The Officer shall have the
right to terminate the Officer's employment under this Agreement at any time
following the Effective Time, whether for Material Change or any other reason,
upon at least 60 but not more than 90 days' prior written notice to the Company
(an "Officer's Termination Notice"). If this Agreement is terminated pursuant to
the immediately preceding sentence, then except as otherwise provided in
Sections 2(b), 7, 10(b) and 12 hereof, all of the Company's obligations under
this Agreement shall terminate, except that the Officer shall remain entitled to
any compensation or benefits earned prior to the Effective Date of Termination.
(b) If the Officer shall terminate his employment pursuant to
Section 10(a) at any time when a Material Change (determined without regard to
whether a Change in Control has occurred) has occurred, then in addition to the
benefits provided in Section 10(a), the Officer shall also be entitled to the
benefits provided in Sections 7 and 9(a)(i) hereof; provided that, if such
termination occurs after a Change in Control has occurred, then the Officer
shall be entitled to the benefits of Section 12 in lieu of the provisions of
Section 9(a)(i). For purposes of this Section 10, the term "Material Change"
shall have the same meaning as set forth in Section 12(c)(ii) hereof, except
that in determining whether a Material Change has occurred, (i) the fact that no
Change in Control shall have occurred shall be disregarded, (ii) the failure to
provide compensation or benefits required to be provided under this Agreement
shall be treated as a material breach of this Agreement, and (iii) whether there
has been a Material Change in the Officer's functions, duties or
responsibilities, as provided in clause (C) of such Section, shall be made by
reference to the functions, duties and responsibilities required to be provided
under Section 4 hereof.
11. Additional Termination and Suspension Provisions. There are hereby
included by reference any provisions that are required by applicable law or
regulation binding on the Company or the Bank to be included in an employment
agreement entered into by the Company or the Bank. If any such provision is a
Regulatory Restriction that restricts, prohibits or limits one of the Company or
the Bank to a lesser extent than it restricts, prohibits or limits the other of
the two, then the entity least restricted shall be obligated hereunder to
perform any of the obligations of the other hereunder to the fullest extent
permitted by the Regulatory Restriction.
12. Change in Control. The provisions of this Section 12 shall only be
applicable during the Post-Merger Period; provided, that neither the Holding
Company Combination nor the Bank Combination (nor any other event or transaction
contemplated by or reasonably necessary to effectuate the purposes of the Merger
Agreement or between or among the Company, the Holding Company and their
respective Affiliates) shall be deemed to constitute a Change in Control for any
purpose of this Agreement. 1. As used in this Agreement, a "Change in Control"
shall be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities; or
10
(II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the
Company: individuals who, immediately following the Effective Time,
constitute the Board of Directors of the Company and any new director
(other than a director whose initial assumption of office is in connection
with the settlement of an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board of
Directors of the Company or nomination for election by the Company's
stockholders was approved or recommended by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors
immediately following the Effective Time or whose appointment, election or
nomination for election was previously so approved or recommended; or
(III) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any Parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least 65% of the combined voting power of the securities of
the Company, such surviving entity or any Parent thereof outstanding
immediately after such merger or consolidation or (ii) a merger or
consolidation effected solely to implement a recapitalization of the
Company or the Bank (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company or the Bank (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its
Affiliates) representing 35% or more of the combined voting power of the
Company's or the Bank's then outstanding securities; or
(IV) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the Company
or any of its subsidiaries of any assets which individually or as part of
a series of related transactions constitute all or substantially all of
the Company's consolidated assets (provided that, for these purposes, a
sale of all or substantially all of the voting securities of the Bank or a
Parent of the Bank shall be deemed to constitute a sale of substantially
all of the Company's consolidated assets), other than any such sale or
disposition to an entity at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the voting
securities of the Company immediately prior to such sale or disposition;
or
(V) the execution of a binding agreement that if consummated would
result in a Change in Control of a type specified in clause (I) or (III)
of this Section 12(a) (an "Acquisition Agreement") or of a binding
agreement for the sale or disposition of assets that, if consummated,
would result in a Change in Control of a type specified in clause (IV) of
this Section 12(a) (an "Asset Sale Agreement") or the adoption by the
Board of Directors of the Company or the Bank of a plan of complete
liquidation or dissolution of
11
the Company or the Bank that, if consummated, would result in a Change in
Control of a type specified in clause (IV) of this Section 12(a) (a "Plan
of Liquidation"), provided however, that a Change in Control of the type
specified in this clause (V) shall not be deemed to exist or have occurred
as a result of the execution of such Acquisition Agreement or Asset Sale
Agreement, or the adoption of such a Plan of Liquidation, from and after
the Abandonment Date if the Effective Date of Termination of the Officer's
employment has not occurred on or prior to the Abandonment Date. As used
in this Section, the term "Abandonment Date" shall mean the date on which
(A) an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation
is terminated (pursuant to its terms or otherwise) without having been
consummated, (B) the parties to an Acquisition Agreement or Asset Sale
Agreement abandon the transactions contemplated thereby, (C) the Bank or
the Company abandons a Plan of Liquidation or (D) a court or regulatory
body having competent jurisdiction enjoins or issues a cease and desist or
stop order with respect to or otherwise prevents the consummation of, or a
regulatory body notifies the Bank or the Company that it will not approve,
an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation or
the transactions contemplated thereby and such injunction, order or notice
has become final and not subject to appeal.
As used in connection with the foregoing definition of Change in Control,
"Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under
Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least 80% of the voting
power of the outstanding voting securities of the Company or of an entity that
survives any merger or consolidation of the Company or any direct or indirect
subsidiary of the Company; and "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (a) the Company or any of its
subsidiaries, (a) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (a) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (a) a corporation or entity owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(b) If the Company shall relocate its principal executive offices
after a Change in Control, and if the Officer is required, as a result, to
change the Officer's principal residence, the Company shall (i) promptly pay (or
reimburse the Officer for) all reasonable moving expenses incurred by the
Officer as a result of such change in the Officer's principal residence, and
(ii) indemnify the Officer against, and reimburse the Officer for, any loss
incurred as the result of the sale of the Officer's principal residence (which
loss shall be computed for the purpose of this Agreement as the difference
between the actual sales price (net of closing costs and brokerage fees) of such
residence and the fair market value of such residence (computed as of the time
the Company relocates its principal executive offices) as determined by an
independent real estate appraiser designated and paid by the Company and
acceptable to the Officer), provided that such sale of the Officer's principal
residence occurs within six months after the Company relocates its principal
executive offices.
12
(c)(i) If a Change in Control shall occur, the Officer shall be
entitled to the compensation and benefits provided in paragraphs (d), (e),
(f) and (g) of this Section 12 upon the subsequent termination by the
Company of the Officer's employment at any time during the remaining Term
in effect at the time of the Change in Control, other than a termination
for cause (as defined in Section 9(b)), provided that the rights to any
such compensation and benefits shall be subject to the limitations and
provisions set forth in Section 9(c).
(ii) If a Change in Control shall occur, and thereafter the Board of
Directors of the Company or the Bank or, if the Company or the Bank is not
the surviving entity in the transaction giving rise to such Change in
Control, the Board of Directors of the ultimate parent entity surviving
such Change in Control, either (A) fails to elect or re-elect or appoint
or reappoint the Officer to the offices or positions specified in Section
3 with the Company and the Bank or, if the Company or the Bank is not the
surviving ultimate parent entity in the transaction giving rise to such
Change in Control, with the ultimate parent entity surviving such Change
in Control, (B) materially breaches this Agreement, (C) makes a material
change in the Officer's functions, duties or responsibilities, which
change would cause the Officer's position with the Company or the Bank or,
if the Company or the Bank is not the surviving entity in the transaction
giving rise to such Change in Control, with the entity surviving such
Change in Control to become one of lesser responsibility, importance or
scope from that in effect immediately prior to the time of the Change in
Control, (D) requires that the Officer's services be rendered primarily at
a location or locations outside of the New York metropolitan area or (E)
during the Initial Post-Merger Period, adopts a resolution approved by at
least a simple majority of the Board of Directors providing that the
Officer shall not become Chairman of the Board and Chief Executive Officer
of the Company and the Bank (an event specified in clause (A), (B), (C),
(D) or (E) is hereafter referred to as a "Material Change"), the Officer
shall be entitled to the compensation and benefits provided in paragraphs
(d), (e), (f) and (g) of this Section 12 (subject to the limitations and
provisions set forth in Section 9(c)) upon the subsequent termination of
the Officer's employment, at any time during the remaining Term in effect
at the time of the Change in Control, by the Officer. Any good faith
determination by the Officer that a Material Change has taken place shall
be presumed to be correct and therefore shall be controlling for all
purposes of this Agreement, unless, within 30 days after receipt of the
Officer's Termination Notice a Special Majority of the Board of Directors
of the Company shall determine that no such Material Change has occurred,
in which event no such presumption shall be made, and the determination of
whether a Material Change has occurred shall be resolved in accordance
with Section 22 hereof.
(iii) If the Officer's employment is terminated by the Officer
during the remaining Term in effect at the time of the Change in Control
and no Material Change shall have occurred, then the provisions of Section
10 shall apply in lieu of the provisions of paragraphs (d), (e) and (f) of
this Section 12.
(iv) Only for purposes of determining whether there has been a
termination of the Officer's employment during the remaining Term in
effect at the time of a Change in Control (as specified in paragraphs
(c)(i) or (c)(ii) of this Section 12) so as to entitle the
13
Officer to the compensation and benefits provided in paragraphs (d), (e),
(f) and (g) of this Section 12, a termination of the Officer's employment
following a Change in Control shall be deemed to have occurred on such
date during the remaining Term that (A) Notice of Termination (as defined
in Section 14(b)) is given by the Company to the Officer (regardless of
the Effective Date of Termination specified therein), or (B) an Officer's
Termination Notice (as defined in Section 10) is given by the Officer to
the Company (regardless of the Effective Date of Termination specified
therein). Notwithstanding the immediately preceding sentence, the Officer
shall continue to be employed by the Company and the Bank pursuant to this
Agreement until the Effective Date of Termination specified in the Notice
of Termination or Officer's Termination Notice, as the case may be.
(d)(i) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 12(c)(i) or
(c)(ii), the Bank shall pay to the Officer, as a severance payment for
services previously rendered to the Bank, a lump sum equal to three times
the Officer's Deemed Annual Compensation, as in effect immediately prior
to the Effective Date of Termination (without regard to any decrease in
the Officer's Deemed Annual Compensation made after the Change in
Control). As used in this Section 12(d)(i), the term "Deemed Annual
Compensation" shall mean, at any time, an amount equal to the sum of (A)
the Officer's annual salary (as defined in Section 5(a)) at such time,
plus (B) the higher of (y) the amount of the target bonus which the
Officer is eligible to earn for the year which includes the day
immediately prior to the Change in Control, or (z) the amount of the
average bonus or other cash incentive earned by the Officer with respect
to the two most recently completed fiscal years.
(ii) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 12(c)(i) or
(c)(ii), to the extent not otherwise limited pursuant to Section 9(c), (x)
each option granted after the date hereof under a stock incentive or stock
option plan of the Company and held by the Officer shall (to the extent
permitted by the plan under which such option was granted),
notwithstanding anything to the contrary in the grant letter related to
such option and regardless of the actual Effective Date of Termination,
immediately vest and remain exercisable for the term specified in such
grant letter as if there had been no termination of the Officer's
employment and the Officer remained in the employment of the Company for
the entire term of such option and (y) each share of Restricted Stock
granted pursuant to Section 5(h) shall (to the extent permitted by the
plan under which such Restricted Stock was granted), notwithstanding
anything to the contrary in the grant letter related to such Restricted
Stock and regardless of the actual Effective Date of Termination, vest and
the restrictions thereon shall lapse at such time as they would have
otherwise vested, and the restrictions thereon would have otherwise
lapsed, as if there had been no termination of the Officer's employment
and the Officer remained in the employment of the Company through the
period required for the vesting of and lapsing of the restrictions on such
stock.
(e) Any payment pursuant to Section 12(d)(i) shall be made to the
Officer within 30 days after the Effective Date of Termination.
14
(f) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 12(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 9(c), the Company or the
Bank shall, for the remainder of the Officer's life, and for the remainder of
the life of the Officer's spouse (to whom the Officer was married as of the
Effective Date of Termination), continue to provide to the Officer and such
spouse the same level of disability, medical and dental insurance coverage as is
maintained from time to time by the Company or the Bank for full-time employees
and their spouses, provided that (x) the Officer (and, after the Officer's
death, the Officer's surviving spouse) shall continue to pay all amounts in
respect of such coverage that the other employees, retirees, or surviving
spouses, as applicable, receiving the same levels of coverage are required to
pay, (y) any medical coverage may be modified so that Medicare (or other
governmental coverage) is primary, with coverage provided by the Company or the
Bank supplementary, to the extent permitted by law, and (z) in lieu of providing
any benefit hereunder, the Company or the Bank may pay the Officer (and after
the Officer's death, the Officer's surviving spouse) the cash equivalent of the
cost of such coverage.
(g)(i) If, on account of events described in Sections 12(c)(i) or
12(c)(ii) following a Change in Control, any payment or other benefit paid
or to be paid or any property transferred or to be transferred with
respect to one or more calendar years by or on behalf of the Company (or
any affiliate of the Company) to the Officer pursuant to this Agreement or
pursuant to the terms of any other plan, arrangement or agreement of the
Company (or any of its subsidiaries) (collectively, a "Severance Payment")
shall constitute an "excess parachute payment" within the meaning of
Section 280G(b) of the Code subject to the tax imposed by Section 4999 of
the Code (the "Excise Tax"), then the Company shall pay to the Officer an
additional amount (the "Gross Up Payment") such that the amount paid or
transferred to the Officer, after deduction of any Excise Tax on the
Severance Payment, and any federal, state and local income tax, employment
tax and Excise Tax upon the Gross Up Payment, shall be equal to the
Severance Payment. In addition, if, absent a Change in Control or in other
circumstances following a Change in Control, notwithstanding the
reductions mandated by Section 9(c), the benefits described in Section 7
and any other benefits payable in connection with the Holding Company
Combination (the "Section 7 Benefits") shall constitute "excess parachute
payments" within the meaning of Section 280G(b) of the Code subject to the
Excise Tax, then the Company shall pay to the Officer one or more Gross Up
Payments such that the amount of such Gross Up Payments, when combined
with such Section 7 Benefits, after deduction of any Excise Tax on the
Section 7 Benefits, and any federal, state and local income tax,
employment tax and Excise Tax upon the Gross Up Payments, shall be equal
to such Section 7 Benefits.
(ii) For purposes of determining under Section 12(g)(i) whether any
portion of a Severance Payment or Section 7 Benefit will be subject to the
Excise Tax and the amount of such Excise Tax, (A) the Severance Payment or
Section 7 Benefit and payments provided for in Section 12(g)(i) shall be
treated as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the meaning of
Section 280(G)(b)(1) of the Code shall be treated as subject to the Excise
Tax, unless and to the extent that tax counsel selected by the Company's
independent auditors and acceptable to the Officer is of the opinion that
the Severance
15
Payment or Section 7 Benefit (in whole or in part) does not constitute a
"parachute payment" or such "excess parachute payment" (in whole or in
part) represents reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the
allocable base amount within the meaning of Section 280G(b)(3) of the
Code, or the Severance Payment or Section 7 Benefit is otherwise not
subject to the Excise Tax, (B) the amount of the Severance Payment or
Section 7 Benefit that is treated as subject to the Excise Tax shall be
equal to the lesser of (X) the total amount of the Severance Payment or
Section 7 Benefit, as applicable, and (Y) the amount of "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code (after
applying clause (A) above), (C) any Gross Up Payment pursuant to Section
12(g)(i) shall be treated as subject to the Excise Tax in its entirety and
(D) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
(iii) If in circumstances described in Section 12(g)(i), by reason
of the filing by the Officer of an amended tax return, an audit by the
Internal Revenue Service or other taxing authority, or a final
determination by a court of competent jurisdiction, it is determined that
"excess parachute payments" exceeding those previously reported in his tax
returns were received by the Officer and as a result an additional Excise
Tax (the "Additional Excise Tax") shall become due, the Company shall pay
the Officer an additional amount (the "Subsequent Gross Up Payment") such
that the amount paid or transferred to the Officer, after deduction of (A)
any Additional Excise Tax and (B) on an after tax basis, any interest,
additions and penalties with respect to the Additional Excise Tax and (C)
any federal, state and local income tax, employment tax and Excise Tax
upon the Subsequent Gross Up Payment and (D) the payments provided for in
Section 12(g)(i), shall be equal to the Severance Payment or Section 7
Benefits, as appropriate.
(iv) Any Gross Up Payment required hereunder shall be made at least
ten days prior to the due date (without regard to extensions) of the
Officer's federal income tax return for the year with respect to which the
"excess parachute payment" is deemed made under the Code. Any Subsequent
Gross Up Payment required hereunder shall be made to the Officer within 30
days after the amount thereof is determined. Notwithstanding the two
immediately preceding sentences, the Company shall pay any federal, state
and local tax or taxes and employment taxes required to be withheld from
the Officer's wages (within the meaning of Section 3121 and 3402 of the
Code) with respect to the "excess parachute payment" and any such tax or
taxes paid by the Company to the Internal Revenue Service or state or
local taxing authority shall constitute payment to the Officer.
(v) If the Excise Tax is finally determined (whether by the filing
of an amended tax return by the Officer, by audit of the Internal Revenue
Service or other taxing authority, or by a final determination of a court
of competent jurisdiction) to be less than the amount paid to or on behalf
of the Officer under the provisions of Sections 12(g)(i)-(iv) and the
overpayment is refunded to the Officer, the Officer shall repay to the
Company, promptly following the receipt of the refund, the portion of the
Gross Up Payment (and/or Subsequent Gross Up Payment) attributable to such
reduction of the
16
Excise Tax (plus the portion attributable to federal, state and local
income tax and employment taxes imposed on the portion being repaid by the
Officer but only to the extent that the repayment may result in a tax
benefit to the Officer under Section 1341 of the Code and similar
provisions of applicable state and local law).
(vi) The provisions of this Section 12(g) shall inure to the benefit
of the Officer during the Term of this Agreement regardless of whether or
not his employment is terminated, and if the Officer's employment is
terminated, the rights and obligations of the Officer and the Company
under this Section 12(g) shall survive the termination of this Agreement.
13. Post-Termination Obligations of the Officer. (a) In addition to any
related requirements that may apply pursuant to the terms of the Consulting
Agreement, upon any termination of the Officer's employment during the Term of
this Agreement or upon termination of the Officer's employment after the
expiration of the Term of this Agreement or upon retirement, the Officer agrees
(i) not to make any disclosure in violation of Section 13(b), (ii) to return to
the Company and the Bank all material documents relating to the business of the
Company and the Bank that are in the Officer's possession or under the Officer's
control, and (iii) except if the termination or retirement occurs after a Change
in Control, not to solicit (directly or indirectly), for one year following the
Effective Date of Termination (or date of termination after the expiration of
the Term) or retirement, the employment of any person who is an employee of the
Company or the Bank on the Effective Date of Termination (or date of termination
after the expiration of the Term) or retirement or who, within six months prior
to the Effective Date of Termination (or date of termination after the
expiration of the Term) or retirement, was an employee of the Company, unless
the Officer receives written permission from the Company to engage in the
activities proscribed by this Section 13(a) or by Section 13(b) or to be
relieved of any obligation under Section 13(a)(ii).
(b) The Officer recognizes and acknowledges that the confidential
business activities and plans for business activities of the Company and its
Affiliates, as they may exist from time to time, are valuable, special and
unique assets of the Company. The Officer shall not, during or at any time after
the Officer's employment, disclose any knowledge of the past, present or planned
business activities of the Company or its Affiliates that are of a confidential
nature (collectively, the "Company's Confidential Activities") to any person,
firm, corporation, company, thrift institution or other entity for any reason or
purposes whatsoever. Notwithstanding anything in this Section 13(b) to the
contrary, the Officer (i) may disclose any knowledge of banking, financial
and/or economic principles, concepts or ideas that are not derived from the
Company's Confidential Activities, and (ii) shall not be precluded from
disclosures respecting the Company's Confidential Activities that are (A) made
pursuant to compulsory legal process or when required by an appropriate
governmental agency; (B) public knowledge or become public without the Officer's
breach of this Section 13(b); (C) already known to the party to whom the Officer
makes such disclosures; or (D) approved by the Company for disclosure.
(c) The parties, recognizing that irreparable injury will result to
the Company, its business and property in the event of the Officer's breach or
threatened breach of Section 13(a) or (b), agree that in the event of such
breach or threatened breach by the Officer,
17
the Company will be entitled, in addition to any other remedies and damages that
may be available, to seek and obtain an injunction to restrain the violation of
Section 13(a) or (b) by the Officer.
14. Notices. (a) All notices under this Agreement shall be in writing and
shall be delivered personally, sent by registered or certified mail, return
receipt requested or sent by recognized next-day courier service, (a) to the
Company, at Xxxxxx United Bancorp, 0000 XxxXxxxxx Xxxxxxxxx, Xxxxxx, Xxx Xxxxxx
00000 (attention: General Counsel), (b) to the Bank at Xxxxxx United Bank, 0000
XxxXxxxxx Xxxxxxxxx, Xxxxxx, Xxx Xxxxxx 00000 (attention: General Counsel) and
(C) to the Officer, at his address as it appears on the books and records of the
Company or to such other address as either party may hereafter designate in
writing in the manner provided in this Section 14. All notices under this
Agreement shall be deemed given (i) upon receipt if delivered personally, (ii)
on the third business day after deposit in a facility of the U.S. Postal Service
with postage prepaid, if delivered by registered or certified mail, or (iii) on
the first business day following the date of dispatch if delivered by a
recognized next-day courier service.
(b) Any purported termination of the Officer's employment with the
Company and the Bank pursuant to Sections 6 or 9 shall be communicated to the
Officer by means of a written notice (a "Notice of Termination"). The Notice of
Termination shall (i) indicate a specific termination provision relied upon,
(ii) set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Officer's employment under the provision
so indicated, and (iii) specify the Effective Date of Termination; provided,
however, that no such Notice of Termination shall specify an Effective Date of
Termination that is prior to the date on which any such Notice of Termination is
given.
(c) As used in this Agreement, the term "Effective Date of
Termination" shall mean (i) the date on which the Officer's employment with the
Company and the Bank is to terminate, as specified in a Notice of Termination
given by the Company or the Bank, or (ii) the date on which the Officer's
employment with the Company and the Bank is to terminate, as specified in an
Officer's Termination Notice given by the Officer.
15. No Duty to Mitigate. Except as otherwise expressly provided herein, if
the Officer shall continue to receive compensation or benefits or severance pay
pursuant to this Agreement after its termination, (a) the Officer shall have no
duty to mitigate such payments by seeking or obtaining other employment or
otherwise, and (b) in the event the Officer does obtain other employment, such
payments from the Company shall not be reduced by compensation received from
such other employment.
16. Complete Understanding. This Agreement constitutes the complete
understanding between the parties with respect to its subject matter and merges
and supersedes all prior oral and written agreements and understandings and all
contemporaneous oral agreements and understandings, including, without
limitation, that certain agreement (the "Prior Agreement") dated January 1, 1997
between the Officer and the Company (and the Officer by entering into this
Agreement specifically disclaims any right to receive any payments or any other
benefits under that agreement) and any other employment agreement heretofore
executed by the Officer and the Company or any of its predecessors or
Affiliates. Notwithstanding the
18
foregoing, if any Regulatory Restriction shall prevent this Agreement from going
into effect, shall void this Agreement in its entirety, or shall prohibit the
Company and the Bank from carrying out all of the provisions of Sections 7, 9,
10 or 12 hereof, then the Officer shall be entitled to the benefits of Sections
9 and 10 of the Prior Agreement to the extent that such benefits exceed the
benefits, after application of any Regulatory Restriction, available under this
Agreement. This Agreement may not be amended, terminated or rescinded except in
a writing signed by all the parties hereto; provided, that no amendment or other
modification to this Agreement made prior to the Effective Time shall be valid
or binding unless agreed to by all parties hereto and also consented to by
Bancorp; and provided further that any amendment or modification to this
Agreement agreed to on behalf of the Company shall be approved by a Special
Majority of the Board of Directors. Notwithstanding the foregoing or any other
provision in this Agreement to the contrary, any provision in this Agreement
requiring or permitting any action, determination or decision to be taken or
made by a Special Majority of the Board of Directors shall terminate on December
31, 2002, after which any such action, determination or decision may be taken or
made by a simple majority of the Board of Directors.
17. No Waiver. The failure of any party at any time to require performance
by any other party of a provision of this Agreement or to resort to a remedy at
law or in equity or otherwise shall in no way affect the right of such party to
require full performance or to resort to such remedy at any time thereafter nor
shall a waiver by any party of the breach of any provision of this Agreement be
taken or held to be a waiver of any subsequent breach of such provision unless
expressly so stated in writing. No waiver of any of the provisions of this
Agreement shall be effective unless in writing and signed by the party to be
charged.
18. Governing Law. This Agreement shall be governed by the laws of the
State of New York, without regard to conflict of laws principles applied in the
State of New York.
19. Headings. The headings to the Sections of this Agreement are for
convenience of reference only and shall not be given any effect in the
construction or interpretation of this Agreement.
20. Severability. If any provision of this Agreement is held by a court or
other authority having competent jurisdiction to be invalid, void or otherwise
unenforceable, in whole or in part, by reason of any applicable law, statute or
regulation or any interpretation thereof, then (a) the remainder of the
provisions of this Agreement shall remain in full force and effect and in no way
affected, impaired or invalidated and (b) the provision so held to be invalid,
void or otherwise unenforceable shall be deemed modified in amount, duration,
scope or otherwise to the minimum extent necessary so that such provision shall
not be invalid, void or otherwise unenforceable by reason of such law, statute,
regulation or interpretation and such provision, as so modified, shall remain in
full force and effect.
21. Payment of Legal Fees. If any legal action or proceeding is commenced
to enforce or interpret the provisions of this Agreement, or any plan, agreement
or arrangement referenced in this Agreement, or to recover damages for breach
thereof, including without limitation any proceeding commenced under Section 22
hereof, all reasonable legal fees, disbursements and court or arbitration costs
paid or incurred by the Officer arising out of or resulting from such action or
proceeding shall be paid or reimbursed to the Officer by the
19
Company, provided that the action or proceeding is not dismissed or summarily
decided against the Officer.
22. Dispute Resolution. Any dispute or controversy arising under, in
connection with or relating to this Agreement or the transactions contemplated
hereby shall be subject to compulsory mediation in New York City in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. In the event that such
compulsory mediation does not result in a resolution of such dispute or
controversy which is acceptable to both the Company and the Officer, such
dispute or controversy shall be resolved exclusively by arbitration in New York
City in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association then in effect. The parties
hereto agree that the decision of such arbitration shall be final and binding
upon the parties and upon confirmation of the decision resulting from such
arbitration, judgment may be entered on the arbitrators' award in any court
having jurisdiction.
23. Taxes. Any payments due to the Officer pursuant to this Agreement
shall be reduced by all applicable federal, state, city or other taxes required
by law to be withheld with respect to such payments.
24. Limitation on Payments. Any payments made to the Officer pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with, or the non-applicability thereto of, 12 USC ss. 1828(k) and any
regulations promulgated thereunder.
XXXXXX UNITED BANCORP
Dated: September 14, 1999 By: /s/ Xxxxxxx F.X. Xxxxx
---------------------------
Xxxxxxx F.X. Xxxxx
Chairman, Compensation
Committee
XXXXXX UNITED BANK
Dated: September 14, 1999 By: /s/ Xxxxxxx F.X. Xxxxx
---------------------------
Xxxxxxx F.X. Xxxxx
Chairman, Compensation
Committee
Dated: September 14, 1999 /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx
20
