Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into as of
the 1st day of July, 1999, by and between Goshen Savings Bank, a stock savings
bank organized and operating under the federal laws of the United States and
having its executive office at Xxx Xxxxx Xxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000
(the "Bank"), and Xxxxxxx X. Xxxxxxxx (the "Executive Officer"), residing at 000
Xxxxxx Xxxxx, Xxxx Xxxx, Xxx Xxxx 00000.
Whereas, the Executive Officer currently serves the Bank as Senior Vice
President and Chief Financial Officer; and
Whereas, in order to secure the Executive Officer's continued services, the
Board of Directors of the Bank (the "Board") has approved this Agreement; and
Whereas, the Executive Officer is willing to continue to make his or her
services available to the Bank on the terms and conditions set forth herein; and
Whereas, the Bank recognizes that a third party may at some time in the
future pursue a Change in Control (as defined in section 9 of this Agreement) of
the Bank and that this possibility may result in the departure or distraction of
the Bank's executive officers; and
Whereas, the Bank has determined that appropriate steps should be taken to
encourage the continued attention and dedication of the Bank's executive
officers, including the Executive Officer, to their duties for the Bank without
the distraction that may arise from the possibility of a Change in Control of
the Bank; and
Whereas, the Bank believes that, by assuring certain officers, including
the Executive Officer, of reasonable financial security in the event of a Change
in Control of the Bank, such officers will be in a position to perform their
duties free from financial self interest and in the best interests of the Bank
and its shareholders; and
Whereas, for purposes of securing the Executive Officer's services for the
Bank, the Board of Directors of the Bank ("Board") has authorized the proper
officers of the Bank to enter into an employment agreement with the Executive
Officer on the terms and conditions set forth herein; and
Now, Therefore, in consideration of the mutual covenants set forth below,
the parties agree as follows:
1. Employment. The Bank continues the employment of the Executive Officer
as its Senior Vice President and Chief Financial Officer, and the Executive
Officer accepts such continued employment.
2. Assurance Period.
(a) If, during the period from the date of this Agreement until June 30,
2000, subject to extension by the Board upon review of the Executive Officer's
performance, there occurs a Change in Control, there shall automatically come
into existence an Assurance Period which shall be the period from the date of
such Change in Control through the third anniversary of the Change in Control
(the "Assurance Period"). The Assurance Period shall be part of the term of this
Agreement.
3. Compensation.
(a) In consideration for services rendered by the Executive Officer to the
Bank, the Bank shall pay to the Executive Officer a salary which, except as
otherwise provided in this Agreement, shall be at the discretion of the Board.
Salary shall be paid in accordance with the Bank's customary payroll practices
for other employees.
(b) In no event shall the Executive Officer's annual rate of salary under
this Agreement in effect immediately prior to a Change in Control be reduced
after the Change in Control, nor shall it be reduced prior to the Change in
Control in contemplation thereof.
17
4. Employee Benefits Plans and Programs; Other Compensation. Except as
otherwise provided in this Agreement, the Executive Officer shall be entitled to
participate in and receive benefits under the Bank's pension plan, group life,
health and disability insurance plans, and such other employee benefit plans and
programs, as the Bank may maintain from time to time, on terms no less favorable
than any other employee. Following a Change in Control, all such benefits to the
Executive Officer shall be continued on terms and conditions substantially
identical to, and in no event less favorable than, those in effect prior to the
Change in Control, without regard to any reduction in contemplation of a Change
in Control.
5. Board Memberships and Personal Activities. The Executive Officer may
serve as a member of the board of directors of such business, community and
charitable organizations as he or she may disclose to the Board from time to
time, and he or she may engage in personal business and investment activities
for his or her own account; provided, however, that such service and personal
business and investment activities shall not (a) materially interfere with the
performance of his or her duties under this Agreement, and (b) involve entities
which either compete with the Bank or may reasonably be expected to negatively
impact on the Bank's standing and reputation in the community it serves.
6. Working Facilities and Expenses. The Executive Officer's principal place
of employment shall be at the Bank's executive offices in Orange County, New
York. The Bank shall provide the Executive Officer, at such principal place of
employment, with support services and facilities suitable to his or her position
with the Bank and necessary or appropriate in connection with the performance of
his or her assigned duties under this Agreement. The Bank shall reimburse the
Executive Officer for his or her ordinary and necessary business expenses,
including reasonable travel and entertainment expenses incurred in connection
with the performance of his or her duties under this Agreement, upon
presentation to the Bank of itemized accounts of such expenses in such form as
the Bank may reasonably require.
7. Termination. The Board may terminate the Executive Officer's employment
at any time, with or without cause, and unless such termination occurs after a
Change in Control, the Bank shall have no further obligation under this
Agreement, and the Executive Officer is not entitled to receive continued
benefits and payments after any such termination, other than as follows:
(i) His or her earned but unpaid salary through the date of
termination, payable when due but not later than thirty (30) days after the
termination.
(ii) The benefits, if any, to which the Executive Officer and his or
her family and dependents are entitled as a former Executive
Officer/employee, or family or dependents of a former Executive
Officer/employee, under the employee benefit and compensation plans,
including, without limitation, stock options, restricted stock awards, and
participation in tax-qualified stock bonus plans benefiting the Bank's
Executive Officers and employees, as in effect on the date of termination,
(iii) Payment for all unused vacation days and floating holidays
accrued through the date of termination at his or her highest annual rate
of salary for such year.
8. Death. If the Executive Officer dies during the Employment Period, this
Agreement shall terminate and the Bank shall pay to his or her designated
beneficiary(ies) the amounts and provide the benefits set forth in sections 7(b)
(i), (ii) and (iii).
9. Definition of Change in Control.
For purposes of this Agreement, a Change in Control of the Bank shall mean:
(a) the occurrence of any event upon which any "person" (as such term
is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "1934 Act")), other than (i) GSB Financial Corporation;
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan maintained for the benefit of employees
18
of the Bank; (iii) a corporation owned, directly or indirectly, by the
stockholders of the Bank in substantially the same proportions as their
ownership of stock of the Bank; or (iv) the Executive Officer, or any group
otherwise constituting a person in which the Executive Officer is a member,
becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under
the 1934 Act), directly or indirectly, of securities issued by the Bank
representing twenty-five (25%) or more of the combined voting power of all
of the Bank's then outstanding securities; or
(b) the occurrence of any event upon which the individuals who on the
date this Agreement is made are members of the Board, together with their
successors as described in section 11 below, cease for any reason to
constitute a majority of the members of the Board; or
(c) the shareholders of the Bank approve either:
(i) a merger or consolidation of the Bank with any other
corporation, other than a merger or consolidation following which of
the following conditions are satisfied:
(A) (x) the members of the Board immediately prior to such
merger or consolidation constitute at least a majority of
the members of the governing body of the institution
immediately after such merger or consolidation; and (y) the
shareholders of the Bank immediately prior to such merger or
consolidation own securities of the resulting institution
immediately after such merger or consolidation representing
fifty percent (50%) or more of the combined voting power of
all such securities then outstanding in substantially the
same proportions as their ownership of voting securities of
the Bank before such merger or consolidation; and
(2) the entity which results from such merger or consolidation
expressly agrees in writing to assume and perform the Bank's
obligations under this Agreement; or
(ii) a plan of complete liquidation of the Bank or an agreement
for the sale or disposition by the Bank of all or substantially all of
its assets; or
(d) any event which would be described in sections 9(a), (b) or (c) if
the term "Parent Corporation of the Bank" were substituted for the term
"Bank" therein. Such an event shall be deemed to be a Change in Control
under the relevant provision of sections 9(a), (b) or (c).
It is understood and agreed that more than one Change in Control may occur at
the same or different times during the Employment Period and that the provisions
of this Agreement shall apply with equal force and effect with respect to each
such Change in Control. For the purpose of this section, a successor of a
director shall mean any person who is elected or nominated for election to the
Board by a majority of the directors of the Bank, who are either directors of
the Bank as of the date of this Agreement or who are themselves successors as
defined in this sentence. For the purposes of section 9(c)(i)(A), if there are
two or more mergers or consolidations which are substantially contemporaneous in
time, the consummation of which are separated in time principally for
regulatory, convenience or administrative reasons, then such mergers or
consolidations shall be deemed one transaction for the purpose of the terms
"immediately prior" and "immediately after."
10. Change in Control - Termination and Severance Benefits.
(a) In the event of a Change in Control, the Executive Officer shall have
the right to terminate employment with the Bank at any time during the Assurance
Period upon any of the following occurrences:
(i) if the Executive Officer ceases to serve in a senior officer
position with the Bank or its successor or his or her duties,
responsibilities or title are not commensurate with senior officer status;
19
(ii) the Executive Officer is not afforded the same opportunities for
salary increases, bonuses, promotions, increased work responsibilities,
perquisites and similar other types of benefits afforded to other executive
officers of the successor to the Bank;
(iii) the principal office at which the Executive Officer is required
to work is relocated outside of Orange County; or
(iv) a reduction in the compensation paid to the Executive Officer
below the rate of compensation paid prior to the commencement of the
Assurance Period, or a material reduction in the benefits provided to the
Executive Officer under the Bank's program of employee benefits, compared
with the compensation and benefits that were provided to the Executive
Officer on the day before the Assurance Period commenced excluding the
effect of any reductions in compensation or benefits in contemplation of
any Change in Control, unless (i) mandated by any regulatory authority
having jurisdiction over the Bank or (ii) so reduced with the prior written
consent of the Executive Officer.
(b) If the Bank or any successor to the Bank terminates the Executive
Officer's employment with the Bank or such successor after a Change in Control
without his or her consent, or if the termination is by the Executive Officer
pursuant to section 10(a), the following benefits and amounts shall be paid or
provided to the Executive Officer:
(i) all payments and benefits set forth in section 7(i), (ii) and
(iii);
(ii) continued group life, health and disability insurance benefits as
though the Executive Officer had continued to be employed under this
Agreement through the end of the Assurance Period;
(iii) within thirty days after termination, a lump sum payment equal
to the present value of the total salary and bonuses that the Executive
Officer would have earned if he or she had worked for the Bank until the
end of the Assurance Period at the highest annual rate of salary and the
highest annual bonus paid to the Executive Officer during the two years
prior to the Change in Control; and
(iv) within thirty days after termination, a lump sum payment equal to
the present value of the difference between (a) the amount which the
Executive Officer would have been entitled to receive (for all plans in the
nature of defined benefit plans) or contributed on his or her behalf (for
all plans in the nature of defined contribution, profit sharing, incentive,
bonus or award plans) if employment had not terminated prior to the end of
the Assurance Period and (b) the amount which will be received or
contributed based on the actual termination. This provision shall encompass
pension plans, profit sharing plans, 401(k) plans, ESOPs, bonus plans,
supplemental executive retirement plans, and all other plans providing for
post-termination or salary augmentation payments to the Executive Officer
whether or not tax qualified, which were in effect on the day prior to the
Change in Control, but excluding the effect of any reductions in benefits
in contemplation of the Change in Control.
(c) In calculating payments under section 10(b), the discount rate used for
determining present value shall be 3%, compounded monthly, based upon the
scheduled due dates of the future payments in accordance with the terms of the
plans and customary practice of the Bank. Benefits to which the Executive
Officer would have been entitled had the termination not occurred shall be
determined by including full credit for years of service and attained age
through the end of the Assurance Period as though the termination had not
occurred. If applicable, benefits shall be assumed to be payable in a single
life annuity and actuarial benefits shall be based upon mortality tables under
Section 72 of the Internal Revenue Code of 1986. If any benefits or payments
would have required any payment or contribution by the Executive Officer, it
shall be assumed that the Executive Officer made the highest permissible payment
or contribution.
(d) The Executive Officer shall not be required to mitigate the amount of
any payment provided for in this section 10 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
section 10 be reduced by any compensation earned by the Executive Officer as the
result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive Officer
20
to the Bank or the parent corporation of the Bank, or otherwise except as
specifically provided in this Agreement. The damages incurred by the Executive
Officer due to a termination triggering the benefits described in section 10(b)
are not capable of accurate measurement on the date of this Agreement and the
benefits and payments provided for in this Agreement constitute a reasonable
estimate of all damages that would be sustained consequence due to such
termination, other than damages arising under or out of any stock option,
restricted stock or other non-qualified stock acquisition or investment plan or
program, it being understood and agreed that this Agreement does not determine
the measurement of damages under any such plan or program in respect of any
termination of employment.
11. Successors and Assigns.
(a) The Bank shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Bank to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Bank would be
required to perform it if no such succession had taken place.
(b) This Agreement will inure to the benefit of and be binding upon the
Executive Officer, his or her legal representatives and testate or intestate
distributes, and the Bank, their respective successors and assigns, including
any successor by merger or consolidation or a statutory receiver or any other
person or firm or corporation to which all or substantially all of the
respective assets and business of the Bank may be sold or otherwise transferred.
12. Notices. Any communication required or permitted to be given under this
Agreement, including any notice, direction, designation, consent, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally, or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, or next day mail via Federal Express or United Parcel Service
addressed to such party at the address listed below or at such other address as
one such party may by written notice specify to the other party:
If to the Executive Officer:
Xxxxxxx X. Xxxxxxxx
000 Xxxxxx Xxxxx
Xxxx Xxxx, Xxx Xxxx 00000
If to the Bank:
Goshen Savings Bank
Xxx Xxxxx Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Chairman of the Board of Directors
With a copy to:
Xxxxxxx & Xxxxxxxxx, LLP
00 Xxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxx X. Hack, Esq.
13. Enforcement Costs and Attorneys' Fees. The Bank shall pay to or on
behalf of the Executive Officer all reasonable costs, including reasonable legal
fees, incurred by him or her in connection with or arising out of his or her
consultation with legal counsel or in connection with or arising out of any
action, suit or proceeding in which he or she may be involved, as a result of
his or her efforts, in good faith, to defend or enforce the terms of this
Agreement, provided that the Executive Officer shall have substantially
prevailed on the merits pursuant to a
21
judgment, decree or order of a court of competent jurisdiction or of an
arbitrator in an arbitration proceeding, or in a settlement. Any settlement
agreement which provides for payment of any amounts in settlement of the Bank's
obligations hereunder shall be conclusive evidence of the Executive Officer's
entitlement to payments under this section, and any such payments shall be in
addition to amounts payable pursuant to such settlement agreement, unless such
settlement agreement expressly provides otherwise.
14. Severability. A determination that any provision of this Agreement is
invalid or unenforceable shall not affect the validity or enforceability of any
other provision hereof.
15. Waiver. Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver, and signed by the party against who its
enforcement is sought. Any waiver or relinquishment of such right or power at
any one or more times shall not be deemed a waiver or relinquishment of such
right or power at any other time or times.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
17. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, and in the
absence of controlling New York law, the federal laws of the United States,
without reference to conflicts of law principles.
18. Headings and Construction. The headings of sections in this Agreement
are for convenience of reference only and are not intended to qualify the
meaning of any section. Any reference to a section number shall refer to a
section of this Agreement, unless otherwise stated.
19. Entire Agreement; Modifications. This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and supersedes
in its entirety any and all prior agreements, understandings or representations
relating to the subject matter hereof between the Bank and the Executive
Officer. No modifications of this Agreement shall be valid unless made in
writing and signed by the parties hereto.
20. Required Regulatory Provisions. The following provisions are included
for the purposes of complying with various laws, rules and regulations
applicable to the Bank:
(a) Notwithstanding anything herein contained to the contrary, in no
event shall the aggregate amount of compensation payable to the Executive
Officer under section 10(b) hereof (exclusive of amounts described in
section 10(b)(i)) exceed three times the Executive Officer's average annual
total compensation for the last five consecutive calendar years to end
prior to his or her termination of employment with the Bank (or for his or
her entire period of employment with the Bank if less than five calendar
years).
(b) Notwithstanding anything contained herein to the contrary, the
Executive Officer shall have no right to receive compensation or other
benefits for any period after termination for cause. "Termination for
Cause" shall include termination of the Executive Officer due to any of the
following: (i) personal dishonesty, (ii) incompetence or intentional
failure to perform regular duties, (iii) willful misconduct or willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease and desist order, (iv) breach of fiduciary
duty involving personal profit or (v) material breach of any provision of
this Agreement.
(c) Notwithstanding anything herein contained to the contrary, any
payments to the Executive Officer by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with section 18(k) of the Federal Deposit Insurance Act (the
"FDI Act"), 12 U.S.C. Section 1828(k), and any regulations promulgated
thereunder.
22
(d) Notwithstanding anything herein contained to the contrary, if the
Executive Officer is suspended from office and/or temporarily prohibited
from participating in the conduct of the affairs of the Bank pursuant to a
notice served under section 8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C.
Section 1818(e)(3) or 1818(g)(1), the Bank's obligations under this
Agreement shall be suspended as of the date of service of such notice,
unless stayed by appropriate proceedings. If the charges in such notice are
dismissed, the Bank, in its discretion, may (i) pay to the Executive
Officer all or part of the compensation withheld while the Bank's
obligations hereunder were suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
(e) Notwithstanding anything herein contained to the contrary, if the
Executive Officer 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) of the FDI Act, 12 U.S.C. Section 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 and obligations of
the Bank and the Executive Officer shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, if the
Bank is in default (within the meaning of section 3(x)(1) of the FDI Act,
12 U.S.C. Section 1813(x)(1)), all obligations of the Bank under this
Agreement shall terminate as of the date of default, but vested rights and
obligations of the Bank and the Executive Officer shall not be affected.
(g) Notwithstanding anything herein contained to the contrary, all
obligations of the Bank hereunder shall be terminated, except to the extent
that a continuation of this Agreement is necessary for the continued
operation of the Bank: (i) by the Director of the Office of Thrift
Supervision ("OTS") or his designee or the Federal Deposit Insurance
Corporation ("FDIC"), at the time the FDIC enters into an agreement to
provide assistance to or on behalf of the Bank under the authority
contained in section 13(c) of the FDI Act, 12 U.S.C. Section 1823(c); (ii)
by the Director of the OTS or his or her designee at the time such Director
or designee approves a supervisory merger to resolve problems related to
the operation of the Bank or when the Bank is determined by such Director
to be in an unsafe or unsound condition. The vested rights and obligations
of the parties shall not be affected.
If and to the extent that any of the provisions of this section 20 are not
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment of this Agreement.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
the Executive Officer has hereto set his or her hand, all as of the day and year
first above written.
---------------------------------------
Xxxxxxx X. Xxxxxxxx, Executive Officer
GOSHEN SAVINGS BANK
By
----------------------------------
Xxxxxx X. Xxxxxxx, President
23
