EMPLOYMENT AGREEMENT
Exhibit 10.4
THIS AGREEMENT (this “Agreement”) is entered into and effective this 14th day of
January, 2008 (the “Effective Date”), by and between Madison Square Federal Savings
Bank (the “Bank”) and Xxxxxxx X. Xxxxx (the “Employee”). The Bank and the Employee are each
sometimes referred to herein as a “Party” and are collectively sometimes referred to herein as the
“Parties”.
WHEREAS, the Bank desires to employ the Employee as its President and Chief Executive Officer,
and the Employee wishes to accept such employment;
WHEREAS, the Parties wish to define each of their respective rights and obligations with
respect to the Employee’s employment with the Bank by executing this Agreement; and
WHEREAS, the Board of Directors (the “Board”) of the Bank believes it is in the best interests
of the Bank to enter into this Agreement with the Employee to assure continuity of management of
the Bank and to reinforce and encourage the continued attention and dedication of the Employee to
his assigned duties.
NOW, THEREFORE, it is AGREED as follows:
1. Defined Terms. When used anywhere in this Agreement, the following terms shall
have the meaning set forth herein.
(a) “Affiliate” means any “parent corporation” and any “subsidiary corporation” of the Bank,
as such terms are defined in Section 424 of the Code.
(b) “Bank” has the meaning given such term in the opening paragraph of this Agreement.
(c) “Business Relation” has the meaning given such term in Section 7(c) hereof.
(d) “Cause” means, in the good faith determination of the Board, the Employee’s personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement.
(e) “Change in Control” means any one of the following events:
(i) The consummation of a transaction in which any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) becomes, within the 12-month period ending on the date of such
person’s most recent acquisition, a “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities representing more
than 25% of the voting power of the then outstanding securities of
the Bank; provided that a Change of
Control shall not be deemed to occur as a result of a transaction in which the Bank becomes a
subsidiary of another corporation and in which the stockholders of the Bank, immediately prior to
the transaction, will beneficially own, immediately after the transaction, securities entitling
such stockholders to more than 50% of all votes to which all stockholders of the other corporation
would be entitled in the election of directors (without consideration of the rights of any class of
stock to elect directors by a separate class vote); and provided further that ownership or control
of the Bank’s voting securities, individually or collectively, by any Affiliate that is a bank or
any benefit plan sponsored by the Bank or any Affiliate shall not constitute a Change of Control;
(ii) The consummation of (1) a merger, consolidation, or similar extraordinary event involving
the Bank and another entity (including the acquisition of control of the Bank under 12 C.F.R. Part
574) where the stockholders of the Bank, immediately prior to the merger, consolidation or similar
extraordinary event, will not beneficially own, immediately after the merger, consolidation or
similar extraordinary event, securities entitling such stockholders to more than 50% of all votes
to which all stockholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect directors by a
separate class vote), or (2) a sale or other disposition of all or substantially all of the assets
of the Bank; or
(iii) During any 24-month period, individuals who at the beginning of any such period
constitute the Board cease for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Bank’s stockholders, of each director of the Bank
first elected during such period was approved by a vote of at least two-thirds of the directors of
the Bank then still in office who were directors of the Bank at the beginning of any such period.
For purposes of this paragraph (d), the term “stockholder of the Bank” shall contemplate
member of the Bank so long as the Bank is a mutual savings association.
(f) “COBRA” means the federal Consolidated Omnibus Budget Reconciliation Act.
(g) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the
Treasury Regulations thereunder, as interpreted through applicable rulings in effect from time to
time.
(h) “Code § 280G Maximum” means the product of 2.99 and the Employee’s “base amount” as
defined in Section 280G(b)(3) of the Code.
(i) “Confidential Information” has the meaning given such term in paragraph (b) of Section 13
hereof.
(j) “Disability” means a physical or mental infirmity which impairs the Employee’s ability to
substantially perform his duties under this Agreement and which results in the Employee becoming
eligible for long-term disability benefits under the Bank’s long-term disability
2
plan or, if the
Bank has no such plan in effect, which impairs the Employee’s ability, in the Board’s sole
discretion, to substantially perform his duties under this Agreement for a period of 180
consecutive days.
(k) “Effective Date” has the meaning given such term in the opening paragraph of this
Agreement.
(l) “Employee” has the meaning given such term in the opening paragraph of this Agreement.
(m) “Existing Relation” has the meaning given such term in paragraph (b) of Section 7 hereof.
(n) “Expiration Date” has the meaning given such term in paragraph (d) of Section 9 hereof.
(o) “FDIA” means the Federal Deposit Insurance Act.
(p) “FDIC” means the Federal Deposit Insurance Corporation.
(q) “Good Reason” means, without the specific written consent of the Employee, any of the
following events that is not cured by the Bank within 30 days after it receives written notice
thereof from the Employee:
(i) The assignment by the Bank to the Employee of duties and responsibilities materially
different from those normally associated with his position, or a material diminution or reduction
by the Bank in the Employee’s responsibilities or authority (including reporting responsibilities)
in connection with his employment with the Bank;
(ii) A 10% or greater reduction by the Bank in the Employee’s base salary from the base salary
set forth in this Agreement, as the same may be increased from time to time;
(iii) The failure by the Bank or any successor to continue in effect any employee benefit plan
or program of the Bank (excluding any fringe benefit and any equity compensation plan) in which the
Employee is entitled to participate under this Agreement (or plans providing the Employee with at
least substantially similar benefits in the aggregate) other than as a result of the normal
expiration of any such plan in accordance with its terms as in effect from time to time; or the
taking of any action, or the failure to act, by the Bank or any successor which would adversely
affect the Employee’s continued participation in any of such plans or which would materially reduce
his benefits under any of such plans;
(iv) The Bank’s requiring the Employee to move his personal residence, or perform his
principal executive functions, more than 30 miles from his primary office as of the later of the
Effective Date and the most recent voluntary relocation by the Employee; or
3
(v) The failure of the Employee to be reelected to the Board after his initial election to the
Board.
(r) “Intellection Property” has the meaning given such term in Section 14 hereof.
(s) “Parties” and “Party” have the meanings given such terms in the opening paragraph of this
Agreement.
(t) “Payment Date” means each date on which a payment or benefit contemplated under this
Agreement is scheduled to be paid or made available and, additionally in the case of paragraph (h)
of Section 9 hereof, each date on which a waiver of any payment is granted to the Employee.
(u) “Person” has the meaning given such term in paragraph (a) of Section 7 hereof.
(v) “Protected Period” shall mean the period that begins on the date of a Change in Control
and ends on the earlier of the first anniversary of the date of such Change in Control or the
expiration date of this Agreement.
(w) “Term” has the meaning given such term in Section 6 hereof.
2. Employment. The Employee is employed as the President and Chief Executive Officer
of the Bank and shall perform those duties assigned to him by the Board. During the Term of this
Agreement, the Employee shall devote his full time employment and best efforts to serving as an
employee of the Bank; provided, however, that during the Term the Employee may engage in any
activity unrelated to his employment hereunder so long as such activity does not interfere with the
performance of his duties hereunder, including, without limitation, the performance of his
covenants contained in Section 7, Section 13 and Section 14 hereof. The Employee agrees to
faithfully and competently perform all of the duties assigned to him, to abide by all policies and
procedures adopted by the Bank from time to time, and to report to such Bank representatives as
directed.
3. Base Salary. Beginning on the date hereof, the Bank shall pay the Employee, and
the Employee hereby agrees to accept, as annual base salary for all services rendered hereunder, a
base salary of One Hundred Fifty Thousand Dollars ($150,000) per annum, which shall
be paid in accordance with the Bank’s normal payroll practices for its salaried employees from time
to time in effect. Such rate of salary may be increased, but not decreased, and any rate of salary
so increased may be further increased, but not decreased, from time to time by such amount as the
Bank’s Board of Directors may determine.
4. Discretionary Bonuses. The Employee may receive such additional compensation, as
bonuses, as the Board may from time to time determine to grant.
4
5. Benefits. In addition to the compensation described in Section 3 and Section 4
hereof:
(a) The Employee shall be permitted to participate in all employee benefit programs
implemented by the Bank for the benefit of any of its full-time employees, including, without
limitation, retirement plans, disability insurance, group and other life insurance, sickness, and
accident and health insurance programs, provided that the Employee qualifies or is otherwise
eligible to participate in such programs under their terms, rules and regulations. Notwithstanding
the foregoing sentence, the Bank does not guarantee the adoption of any particular employee benefit
plan or program, or, subject to the Employee’s right to terminate his employment hereunder for Good
Reason, the continuance of any plan or program, during the Term.
(b) The Employee shall be eligible to participate in any fringe benefits which are or may
become available to the Bank’s senior management employees.
(c) The Bank shall provide the Employee with the use of a Bank vehicle for business purposes.
Periodic replacement of such vehicle during the Term shall be at the sole discretion of Bank,
without any obligation to transfer title to the vehicle upon replacement. The Employee shall
account for all non-business use of such vehicle and report such use to the Bank. The Employee
acknowledges that such non-business use may constitute income to the Employee for purposes of
federal, state, local and/or other tax laws.
(d) The Employee shall be entitled to vacation, leave of absence, and leave for illness or
temporary disability in accordance with the policies of the Bank from time to time in effect.
(e) The Employee shall be entitled to reimbursement for properly documented and appropriate
business expenses incurred by the Employee upon terms established by the Bank.
6. Term of Agreement. The term of this Agreement shall be three (3) years, commencing
on the Effective Date and terminating on January 14, 2011 (the “Term”); provided,
however, that on or before each anniversary date of the Effective Date, the Bank’s Board of
Directors shall determine in a duly adopted resolution whether the then-current Term shall be
extended by an additional one-year period, which determination shall be based upon whether the
performance of the Employee has satisfied the Board’s requirements and standards and the needs of
the Bank. Only those members of the Board of Directors who have no personal interest in this
Employment Agreement shall discuss and vote on the review and approval of such an extension.
Notwithstanding the foregoing, however, this Agreement is subject to termination prior to the
expiration of the Term in accordance with Section 9 or Section 10 hereof.
7. Loyalty and Non-Solicitation.
(a) Loyalty to the Bank. During the Employee’s employment with the Bank, the Employee
shall not, directly or indirectly, as owner, partner, director, officer, employee, agent,
5
consultant, advisor, contractor or otherwise, whether for consideration or without consideration,
for the benefit of any person, entity or group (a “Person”) other than for the Bank, compete with
or otherwise engage in the sale of any products or the performance of any services which are
comparable to, or which are intended to substitute for, the products or services offered by the
Bank. Nothing in this paragraph (a) shall be deemed to prevent or limit the Employee’s right to
invest in the securities of any business dissimilar from that of the Bank, or, solely as a passive
or minority investor, in any business.
(b) Restrictive Covenants. During the Employee’s employment with the Bank and for 12
months after the Employee ceases to be employed with the Bank, the Employee shall not, directly or
indirectly, as owner, partner, director, officer, employee, agent, consultant, advisor, contractor
or otherwise, whether for consideration or without consideration, for the benefit of Person other
than for the Bank, take any of the following actions: (i) solicit any Business Relation (as
hereinafter defined) to purchase, or sell or otherwise provide to any Business Relation, any
products or services which are comparable to, or which are intended to substitute for, products or
services offered by the Bank during the Employee’s employment with the Bank; (ii) employ, engage or
solicit for employment or for engagement as an independent contractor or consultant, any person who
was employed by or any Person who was engaged as an independent contractor by the Bank during the
preceding 18 months; or (iii) encourage any Person to reduce its business with the Bank or to
reduce its employment with or provision of services to the Bank; provided that an advertisement in
a newspaper or other publication of general circulation that is not targeted at a specific person
shall not constitute a solicitation for purposes of this paragraph (b); and provided further that
nothing in this paragraph (b) shall prohibit the Employee, after the termination of his employment
with the Bank, from soliciting any Business Relation (A) who neither was a customer of the Bank nor
had been solicited, independent of the Employee, to become a customer of the Bank prior to the
Effective Date and (B) with whom the Employee had a relationship prior to the Effective Date (an
“Existing Relation”), so long as the Employee provides the Bank, within 10 days after the Effective
Date, with a list that identifies each Existing Relation and describes the relationship.
(c) Business Relation Defined. For purposes of this Agreement, the term “Business
Relation” means any Person who, at any time during the Employee’s employment with the Bank, was a
Person (i) that is or was a customer of the Bank, (ii) that had entered into any contract or other
arrangement with the Bank for the provision of services or the sale of products, (iii) to whom the
Bank had furnished or planned to furnish a proposal for the performance of services or the sale of
products, or (iv) with whom the Bank entered or agreed to enter into any other business
relationship such as a joint venture, collaborative agreement, joint development agreement, teaming
arrangement or agreement, or similar arrangement or understanding for the provision of services or
sale of products.
(d) Acknowledgement. The Employee hereby acknowledges and agrees that the
restrictions contained in this Section 7 regarding geographical scope, length of term and types of
activities restricted, are reasonable and will not create a hardship to or burden for him; and
that the Employee has no intention of competing with the Bank within such limitations.
6
8. No Disparaging Statements. During the Employee’s employment with the Bank and for
12 months after the Employee ceases to be employed with the Bank, except as may be required by law,
(a) the Employee will not make any statements or comments of a disparaging nature to third parties
regarding the Bank or its officers, directors, personnel or products and (b) the Bank will not make
any statements or comments of a disparaging nature to third parties regarding the Employee.
9. Termination of Employment Prior to Expiration of Term. Subject to Section 10
hereof, the Employee’s employment hereunder may be terminated prior to the expiration of the then
current Term as provided in this Section 9.
(a) Termination Upon Employee’s Death. The Employee’s employment under this Agreement
shall terminate upon his death during the Term, in which event the Employee’s estate shall be
entitled to receive all unpaid base salary, bonus amounts and benefits that have accrued through
the date of death.
(b) Termination Upon Employee’s Disability. The Bank may terminate the Employee’s
employment under this Agreement after having established his Disability, in which event the
Employee shall be entitled to the compensation and benefits provided for under this Agreement for
the period that starts on the date the Employee is first unable to perform his services hereunder
(as determined by the Bank) due to the physical or mental infirmity that is the basis for the
Disability and ends on the date on which the Employee’s employment is terminated due to such
Disability; provided that the foregoing compensation and benefits shall be reduced dollar for
dollar by any benefits paid to the Employee in respect of such period pursuant to any disability
plan of the Bank. During any period that the Employee receives benefits pursuant to this paragraph
(b), and to the extent that the Employee shall be physically and mentally able to do so, (i) he
shall furnish such information, assistance and documents so as to assist in the continued ongoing
business of the Bank, (ii) he shall make himself available to the Bank to undertake reasonable
assignments consistent with his prior position and his physical and mental health, and (iii) the
Bank shall pay all reasonable expenses incident to the performance of such assistance and
assignments.
(c) Termination by Bank for Cause. The Board may, by written notice to the Employee,
immediately terminate the Employee’s employment under this Agreement at any time for Cause, in
which case the Employee shall be entitled to receive only the unpaid base salary, bonus amounts,
and benefits that have accrued through the date of termination. The Bank shall deliver to the
Employee a copy of the resolution duly adopted by the Board (after reasonable notice to the
Employee and an opportunity for the Employee, together with the Employee’s counsel, to be heard
before the Board, such meeting and the opportunity to be heard to be held prior to, or as soon as
reasonably practicable following, termination, but in no event later than 60 days following such
termination), finding that the Employee was guilty of conduct constituting Cause. The notice
provided to Employee pursuant hereto shall specify in detail the particulars of the conduct
constituting Cause. If the Board thereafter determines that such conduct did not constitute Cause
and the Employee’s employment hereunder is reinstated, then the Employee shall be entitled to
receive back pay for the period following termination and continuing through reinstatement. If the
Employee’s employment is not reinstated as contemplated by the preceding sentence, then the
7
termination of employment shall be deemed to have occurred pursuant to Section 9(d) hereof and the
Employee shall be entitled to the compensation and benefits provided therein.
(d) Termination by Bank Without Cause. The Board may, by written notice to the
Employee, immediately terminate the Employee’s employment under this Agreement at any time and for
any reason other than his Disability or for Cause, in which event the Employee shall be entitled to
receive the following compensation and benefits (unless such termination occurs during the
Protected Period, in which event the compensation and benefits provided for in Section 10 hereof
shall apply):
(i) all unpaid base salary, bonus amounts, and benefits that have accrued through the date of
termination of employee; and
(ii) provided that the Employee has complied in all respects, from the Effective Date through
and including each Payment Date, with his obligations hereunder: (A) the continuation of salary,
at the rate provided pursuant to Section 3 hereof (as adjusted to date), from the date of
termination of employment through the expiration date of the Term (the “Expiration Date”), plus, in
the event such termination occurs after the second anniversary of the Effective Date, said salary
for an additional 12-month period; and (B) continued participation through the Expiration Date in
the life insurance programs in which the Employee would have been eligible to participate through
the Expiration Date based upon the benefit levels substantially equal to those that the Bank
provided for the Employee at the date of termination of employment to the extent the Employee
continues to qualify for participation therein after such termination; provided that in the event
the Employment does not continue to qualify for participation in any such program, the Bank shall
reimburse the Employee for the cost to the Employee of obtaining substantially similar benefits on
his own.
Severance payments due pursuant to item (ii)(A) of this paragraph (d) shall be paid in
accordance with the Bank’s normal payroll practices for its salaried employees from time to time in
effect and shall terminate at such time as the Employee obtains employment with another financial
institution comparable in nature to his employment at the Bank at the time of termination.
(e) Termination by Employee for Good Reason. The Employee shall have the right, at
any time within 60 days after an event that constitutes Good Reason, to terminate the Employee’s
employment under this Agreement, in which case the Employee shall be entitled to receive the
compensation and benefits payable under, and in accordance with, paragraph (d) of this Section 9
(unless such termination occurs during the Protected Period, in which event Section 10 hereof shall
apply).
(f) Termination or Suspension Under Federal Law.
(i) If the Employee is removed and/or permanently prohibited from participating in the conduct
of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1)
8
of FDIA (12 U.S.C.
1818(e)(4) or (g)(1)), all obligations of the Bank under this Agreement shall terminate, as of the
effective date of the order, but vested rights of the Parties shall not be affected.
(ii) If the Bank is in default (as defined in Section 3(x)(1) of FDIA), all obligations under
this Agreement shall terminate as of the date of default; however, this paragraph (f)(ii) shall not
affect the vested rights of the parties.
(iii) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3) or
(g)(1)) suspends and/or temporarily prohibits the Employee from participating in the conduct of the
Bank’s affairs, the Bank’s obligations under this Agreement shall be suspended as of the date of
such service, unless stayed by appropriate proceedings. if the charges in the notice are
dismissed, the Bank may in its discretion (i) pay the Employee all or part of the compensation
withheld while its contract obligations were suspended, and (ii) reinstate (in whole or in part)
any of its obligations which were suspended.
(iv) All obligations under this Agreement shall terminate, except to the extent determined
that continuation of this Agreement is necessary for the continued operation of the Bank by (i) the
Director of the Office of Thrift Supervision, or his designee, at the time that the FDIC or the
Resolution Trust Corporation enters into an agreement to provide assistance to or on behalf of the
Bank under the authority contained in Section 13(c) of FDIA; or (ii) by the Director of the Office
of Thrift Supervision, or his designee, at the time the Director of the Office of Thrift
Supervision, or his designee approves a supervisory merger to resolve problems related to operation
of the Bank or when the Bank is determined by the Director of the Office of Thrift Supervision to
be in an unsafe or unsound condition. Such action shall not affect any vested rights of the
parties.
(g) Voluntary Termination by Employee. The Employee may voluntarily terminate
employment with the Bank during the Term for any reason other than Good Reason, upon at least 90
days’ prior written notice to the Board. Upon such termination, the Employee shall be entitled to
receive only the unpaid base salary, bonus amounts and benefits that have accrued through the date
of termination. Notwithstanding the foregoing, the Board shall have the option upon receipt of the
Employee’s written notice delivered pursuant to this paragraph (g) to pay the Employee 90 days’
base salary, plus any accrued but unpaid bonus amounts and any other unpaid benefits that have
accrued or would accrue through the 90-day notice period, in lieu of Employee working during such
notice period.
(h) Post-Termination Health Insurance. Except in the cases of (i) a termination of
the Employee’s employment by the Bank for Cause, (ii) a termination of the Employee’s employment by
the Employee prior to the expiration of the Term for a reason other than Good Reason, and (iii) and
a termination of the Employee’s employment pursuant to Section 10 hereof, and provided in all cases
that the Employee has complied in all respects, from the Effective Date through and including each
Payment Date, with his obligations hereunder, for each month following the termination of the
Employee’s employment with the Bank that he remains eligible for continuation coverage under
COBRA, the Bank will waive any payments that it would otherwise charge to the Employee for
COBRA family coverage; provided, however, that the Bank shall have no obligations under this
9
paragraph (h) if the Employee becomes employed by or an independent contractor to a party unrelated
to the Bank or its successor which makes health insurance available to the Employee (with or
without charge). The Bank shall have no obligation to pay, or reimburse the Employee for the
payment of, any income or other tax liability owed by the Employee in connection with any payments
made by the Bank pursuant to this paragraph (h).
(i) No Mitigation. The Employee shall not be required to mitigate the amount of any
payment provided for in this Section 9 by seeking other employment or otherwise.
10. Termination in Connection with a Change in Control.
(a) Trigger Events. The Employee shall be entitled to collect the severance benefits
set forth in paragraph (b) of this Section 10 in the event that either (i) the Employee voluntarily
terminates his employment within 60 days following an event that both occurs during the Protected
Period and constitutes Good Reason, or (ii) the Bank or its successor in interest terminates the
Employee’s employment without the Employee’s written consent for any reason other than Cause during
the Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes entitled to collect
severance benefits pursuant to paragraph (a) of this Section 10, then, in addition to all unpaid
base salary, bonus amounts and benefits that have accrued through the date of termination, the Bank
shall pay the Employee an amount equal to the difference between the Code § 280G Maximum and the
sum of any other payments in the nature of compensation to the Employee that are contingent on the
Change in Control. The Employee shall be entitled to determine which and how much of any other
payments shall be reduced, if necessary, to reach the Code § 280G Maximum.
(c) Timing of Payment. The amount payable under this Section 10 shall be paid in one
lump sum within 10 days after the date of the termination of the Employee’s employment.
(d) Exclusive Compensation. The severance benefits provided for in this Section 10
shall be the only compensation and benefits to which the Employee shall be entitled in connection
with the termination following a Change in Control as described in paragraph (a). Without limiting
the foregoing, Section 9 of this Agreement shall not apply to or govern any such termination.
11. Compensation and Benefits Subject to Withholding. The Bank may withhold all
federal, state, local income or other taxes from any compensation or benefit payable under this
Agreement as shall be required pursuant to any law or government regulation or ruling.
12. Other Provisions Relating to Severance Payments.
(a) Compliance with Certain Federal Laws. Notwithstanding any provision of this
Agreement to the contrary, the amount of all compensation and benefits payable to the Employee
under this Agreement in connection with any termination of the Employee’s employment
10
hereunder
shall be reduced to the extent such amount exceeds the limitation on permissible severance benefits
set forth in Section 310 of the Office of Thrift Supervision’s Regulatory Handbook, as amended,
superseded or replaced from time to time. Additionally, any payments made to the Employee pursuant
to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12
U.S.C. Section 1828 (k) and FDIC regulation 12 CFR Part 359, Golden Parachute and Indemnification
Payments.
(b) Full and Final Compensation. The compensation and other benefits made pursuant to
Sections 9 or 10 hereof following the termination of the Employee’s employment with the Bank shall
be considered full compensation in payment for all claims under this Agreement, and the Employee
shall not be entitled to any other compensation or benefits.
(c) Offset. Upon termination of the Employee’s employment with the Bank, the Bank
shall have the right to deduct from the amount due the Employee any amounts which the Employee owes
the Bank.
13. Confidential Information.
(a) Covenant. The Employee acknowledges that his relationship with the Bank shall of
necessity provide him with specialized knowledge concerning the Bank, which, if used for the
benefit of others or disclosed to others, could cause serious harm to the Bank. Accordingly, the
Employee covenants that he shall not at any time, directly or indirectly, use, appropriate or
disclose to others, or permit the use of or appropriation by or disclosure to others of, any
Confidential Information (as hereinafter defined) except as expressly provided herein.
(b) Permitted Use. While engaged as an employee of the Bank, the Employee may use
Confidential Information only for the purpose that is necessary to the carrying out of the
Employee’s duties as set forth herein or assigned to him by the Bank, and the Employee may not make
use of any Confidential Information after he is no longer an employee of the Bank.
(c) Confidential Information Defined. For purposes of this Agreement, the term
“Confidential Information” means all information of the Bank, whether oral, written, computerized,
digitized or otherwise, regarding the Bank or the Bank’s business, including, without limitation,
information regarding the Bank’s customers, referral sources, insurance carriers, sales and
marketing information, costs, prices, earnings, business plans, financial information and
forecasts, contracts, business arrangements, methods of operation, business strategies, prospects,
and Intellectual Property (as hereinafter defined), whether or not such information is deemed
“trade secrets” under applicable law. Confidential Information does not include information that
(i) becomes generally available to the public other than as a result of disclosure by the Employee
in violation of this Agreement, (ii) was available to the public on a non-confidential basis from a
source other than the Bank, (iii) is made available to a third party on a non-confidential basis by
the Bank, (iv) was already known to the Employee at the time of disclosure by the Bank, or (v) is required to be disclosed by legal
process or applicable law.
11
14. Intellectual Property. The Employee agrees that any and all information, reports,
other documents and other works (whether in an electronic format or otherwise) created for or on
behalf of the Bank by the Employee during the Employee’s employment with the Bank, whether or not
developed on Bank premises or equipment or during normal Bank business hours (the “Intellectual
Property”), are and shall remain works made for hire and the sole and exclusive property of the
Bank. To the extent that such Intellectual Property is not considered work made for hire, the
Employee hereby assigns to the Bank (or its nominee) any and all interest that the Employee may now
or in the future have in the Intellectual Property. Upon request by the Bank, the Employee shall
execute and deliver to the Bank any document or instrument that may be necessary to secure or
perfect the Bank’s title to or interest in any Intellectual Property so assigned.
15. Return of Bank Property. The Employee agrees that upon termination of employment
the Employee will: (a) promptly return to the Bank all Confidential Information, all Intellectual
Property, and all other property of the Bank, including but not limited to all correspondence,
manuals, notebooks, lists of customers and suppliers, computer programs, disks and any documents,
materials or property, whether written or stored on computerized medium, and all copies in the
Employee’s possession or control; (b) not take any action to preserve or regain access to such
information through any means, including but not limited to access to the Bank’s facilities or
through a computer or other digital or electronic means; and (c) promptly pay all amounts due,
owing or otherwise payable by the Employee to the Bank.
16. Employee’s Representations and Warranties.
(a) No Prior Agreements. The Employee represents and warrants that he is not a party
to or otherwise subject to or bound by the terms of any contract, agreement or understanding which
in any manner would limit or otherwise affect his ability to perform his obligations hereunder,
including without limitation any contract, agreement or understanding containing terms and
provisions similar in any manner to those contained in Section 7 of this Agreement.
(b) Information of Others. The Employee represents, warrants and covenants that he
will not disclose to the Bank or otherwise use, in the course of his employment with the Bank, any
confidential information or intellectual property which he is restricted from disclosing or using
pursuant to any other agreement or duty to any other person.
17. Bank’s Remedies for Breach. The Employee recognizes that a violation by him of
any provision of this Agreement may cause irreparable injury to the Bank, and there may be no
adequate remedy at law for such violation. Therefore, the Employee agrees that, in addition to any
other remedies available to the Bank, including, without limitation, all damages incurred, the Bank
shall have the right, in the event of the Employee’s breach or threatened breach of any provision
hereof to obtain an injunction and/or temporary restraining order against such breach or threatened
breach or specifically enforce this Agreement. The Bank’s rights and remedies specified in this
Agreement are
in addition to and not in lieu of any rights available under applicable law and regulations,
including, without limitation, those laws and regulations governing trade secrets and other
proprietary information.
12
18. Indemnification. The Bank agrees that, to the fullest extent permitted by
applicable law, its Bylaws shall provide for indemnification of the Employee during the Term of
this Agreement, and that it will at all times maintain adequate director’s and officer’s liability
insurance covering the Employee.
19. Reimbursement for Enforcement Proceedings. In the event that any dispute arises
between the Parties as to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, the prevailing Party shall be reimbursed by the other Party
for all costs and expenses, including reasonable attorneys’ fees, arising from such dispute,
provided that the prevailing Party obtains either a written settlement or a final judgment by a
court of competent jurisdiction substantially in such Party’s favor.
20. Miscellaneous.
(a) Complete Agreement. This Agreement is absolute and unconditional and constitutes
the full, complete, and entire understanding between the Parties with respect to the subject matter
of this Agreement. No other promises, representations, statements, warranties, covenants or
undertakings or other prior or contemporaneous agreements, oral or written, respecting such matters
which are not specifically incorporated herein shall be deemed in any way to exist or to bind any
of the Parties hereto.
(b) Amendment; Waiver. No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by both Parties; provided, however, that the Bank may
amend this Agreement, without the consent of the Employee, as the Bank deems necessary or
appropriate to ensure compliance with any law, rule, regulation or other regulatory pronouncement
applicable to the Agreement, including, without limitation, Section 409A of the Code and any
related regulations or other guidance promulgated with respect to Section 409A of the Code. No
waiver by either Party of any breach by the other Party of any condition or provision contained in
this Agreement to be performed by such other Party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be
in writing and signed by the Party to be charged with the waiver. No delay by either Party in
exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver or relinquishment or any night or power hereunder at any one instance or instances be deemed
a waiver or relinquishment of such right or power at any other time or times.
(c) Severability; Modification. The Parties agree that the provisions and covenants
contained in each of the Sections of this Agreement, and within the Sections themselves, including,
in particular, Section 7, are intended to be separate and divisible provisions and covenants and
if, for any reason, any one or more of them shall be held to be invalid or unenforceable, in whole
or in part, by a court of competent jurisdiction, then (i) the same shall not be
held to affect the validity of any other provision or covenant contained in this Agreement and
(ii) the same shall be deemed to be modified to the minimum extent necessary for it to be legally
enforceable. The Parties hereby expressly request any court of competent jurisdiction to enforce
any such provision
13
or covenant or to modify any provision thereof so that it shall be enforced by
such court to the fullest extent permitted by applicable law.
(d) Governing Law. Except to the extent preempted by federal law, this Agreement has
been made in and shall be governed by and construed in accordance with the laws of the State of
Maryland, without regard to any conflicts of laws principles which would apply the law of another
jurisdiction. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION ARISING UNDER THIS AGREEMENT.
Any judicial proceeding arising out of or relating to this Agreement (including any declaratory
judgments) shall be filed exclusively in the State and Federal courts located in Maryland, and each
Party hereby consents to, and will submit to, the personal and subject matter jurisdiction of such
courts in any proceeding to enforce any of its obligations under this Agreement and shall not
contend that any such court is an improper or inconvenient venue. The foregoing shall not limit
the right of any Party to obtain execution of judgment in any other jurisdiction.
(e) Binding Effect. The Agreement shall be binding upon and shall inure to the
benefit of the Parties and their successors and assigns and their representatives. This Agreement
may be assigned by the Bank to any third party in connection with any sale of the Bank’s business
or other extraordinary transaction. This Agreement may not be assigned by the Employee.
(f) Headings. Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of this Agreement.
(g) Notices. All notices and communications hereunder shall be in writing and shall be
deemed given if personally delivered, telecopied (with confirmation) or mailed by registered or
certified mail (return receipt requested) to such Party; if intended for the Bank, such notice or
communication shall be addressed to it, to the attention of its President/CEO, at the principal
office of the Bank; if intended for the Employee, such notice or communication shall be addressed
to the Employee at the Employee’s address as shown in the Bank’s records.
(h) Counterparts. This Agreement may be executed in counterparts, each of which when
so executed and delivered shall be an original, but all such counterparts together shall constitute
one and the same instrument.
(i) Survival. The provisions of Sections 1 and 7 through 20, inclusive, of this
Agreement shall survive the termination of this Agreement and the Employee’s employment hereunder.
14
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first
hereinabove written.
| ATTEST: | MADISON SQUARE FEDERAL SAVINGS BANK: |
|||||||
/s/ Xxx Xxxxxxx
|
By: | /s/ Xxxx X. Xxx | ||||||
| Title: Chairman, Compensation Committee | ||||||||
| WITNESS: | EMPLOYEE: | |||||||
/s/ Xxxxxxxxx X. Xxxx
|
/s/ Xxxxxxx X. Xxxxx | |||||||
| Xxxxxxx X. Xxxxx | ||||||||
15
