EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into this 1st day of January, 2007,
("Effective Date") by and between Gloucester County Federal Savings Bank,
Xxxxxx, New Jersey (the "Bank") and Xxxxxx X. Xxxxxx (the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by the Bank as the
President and Chief Executive Officer and is experienced in all phases of the
business of the Bank; and
WHEREAS, the Bank desires to be ensured of the Executive's continued
active participation in the business of the Bank; and
WHEREAS, in order to give the Executive reasonable assurances that the
Board of Directors wishes to retain the services of the Executive for the
foreseeable future and in consideration of the Executive's agreeing to remain in
the employ of the Bank, the parties desire to specify the continuing employment
relationship between the Bank and the Executive;
NOW THEREFORE, in consideration of the covenants and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Employment. The Bank hereby employs the Executive in the capacity of
President and Chief Executive Officer. The Executive hereby accepts said
employment and agrees to render such administrative and management services to
the Bank and Gateway Community Financial Corp., its parent holding company and
any successor thereto ("Parent"), as are currently rendered and as are
customarily performed by persons situated in a similar executive capacity. The
Executive shall promote the business of the Bank and Parent. The Executive's
other duties shall be such as the Board of Directors for the Bank (the "Board of
Directors" or "Board") may from time to time reasonably direct, including normal
duties as an officer of the Bank. The Executive's employment shall be for no
definite period of time, and the Executive or the Bank may terminate such
employment relationship at any time for any reason or no reason. The employment
at-will relationship remains in full force and effect regardless of any
statements to the contrary made by company personnel or set forth in any
documents other than those explicitly made to the contrary and signed by an
authorized representative of the Board.
2. Term of Agreement. The term of this Agreement shall be for the
period commencing on the Effective Date and ending thirty-six (36) months
thereafter ("Term"). Additionally, on, or before, each annual anniversary date
from the Effective Date, the Term of this Agreement shall be extended for up to
an additional one year period beyond the then effective expiration date upon a
determination and resolution of the Board of
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Directors that the performance of the Executive has met the requirements and
standards of the Board, and that the Term of such Agreement shall be extended.
If a determination is made by the Board to not renew such Term at the time of
such renewal interval, the Board shall furnish the Executive of written notice
of such determination not to renew the Term and the reason for such action or
failure to take such action by the Board within 10 calendar days of such Board
action. References herein to the Term of this Agreement shall refer both to the
initial term and successive terms.
3. Compensation, Benefits and Expenses.
(a) Base Salary. The Bank shall compensate and pay the Executive
during the Term of this Agreement a minimum base salary at the rate of
$225,000.00 per annum ("Base Salary"), payable in cash not less frequently than
monthly; provided, that the rate of such salary shall be reviewed by the Board
of Directors not less often than annually, and the Executive shall be entitled
to receive increases at such percentages or in such amounts as determined by the
Board of Directors. The base salary may not be decreased without the Executive's
express written consent.
(b) Discretionary Bonus. The Executive shall be entitled to
participate in an equitable manner with all other senior management employees of
the Bank in discretionary bonuses that may be authorized and declared by the
Board of Directors to its senior management executives from time to time. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Executive's right to participate in such discretionary bonuses when and
as declared by the Board.
(c) Participation in Benefit and Retirement Plans. The Executive
shall be entitled to participate in and receive the benefits of any plan of the
Bank which may be or may become applicable to senior management relating to
pension or other retirement benefit plans, profit-sharing, stock options or
incentive plans, or other plans, benefits and privileges given to employees and
executives of the Bank, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Bank. Upon
retirement from full-time employment, the Bank may enter into any type of
agreement for continuing non-qualified or qualified retirement payments or
compensation for any part-time employment or services rendered.
(d) Participation in Medical Plans and Insurance Policies. The
Executive shall be entitled to participate in and receive the benefits of any
plan or policy of the Bank which may be or may become applicable to senior
management relating to life insurance, short and long term disability, medical,
dental, eye-care, prescription drugs or medical reimbursement plans, with the
cost of such premiums paid by the Bank. Additionally, Executive's dependent
family shall be eligible to participate in medical and dental insurance plans
sponsored by the Bank or Parent
(e) Vacations and Sick Leave. The Executive shall be entitled to
paid annual vacation leave in accordance with the policies as established from
time to time by the
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Board of Directors, which shall in no event be less than five weeks per annum.
The Executive shall also be entitled to an annual sick leave benefit as
established by the Board for senior management employees of the Bank. The
Executive shall not be entitled to receive any additional compensation from the
Bank for failure to take a vacation or sick leave.
(f) Expenses. The Bank shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of, or in connection with the business of the Bank, including, but
not by way of limitation, automobile and traveling expenses, and all reasonable
entertainment expenses, subject to such reasonable documentation and other
limitations as may be established by the Board of Directors of the Bank. If such
expenses are paid in the first instance by the Executive, the Bank shall
reimburse the Executive therefor.
(g) Changes in Benefits. The Bank shall not make any changes in
such plans, benefits or privileges previously described in Section 3(c), (d) and
(e) which would adversely affect the Executive's rights or benefits thereunder,
unless such change occurs pursuant to a program applicable to all executive
officers of the Bank and does not result in a proportionately greater adverse
change in the rights of, or benefits to, the Executive as compared with any
other executive officer of the Bank. Nothing paid to Executive under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of the salary payable to Executive pursuant to Section 3(a)
hereof.
(h) Post-Retirement Medical Coverage. Upon the termination of
employment with the Bank at any time on or after attainment of age 60, the
Executive shall be eligible to maintain participation in the group medical
insurance plan sponsored by the Bank from time to time for the benefit of the
Executive and Executive's dependent family at the Bank's expense, until such
time that the Executive and Executive's spouse shall be eligible for coverage
under the Federal Medicare System, or any successor program. The provisions of
this Section shall survive the termination of this Agreement.
4. Loyalty.
(a) The Executive shall devote his full time and attention to the
performance of his employment under this Agreement. During the term of the
Executive's employment under this Agreement, the Executive shall not engage in
any business or activity contrary to the business affairs or interests of the
Bank or Parent.
(b) Nothing contained in this Section 4 shall be deemed to
prevent or limit the right of Executive to invest in the capital stock or other
securities of any business dissimilar from that of the Bank or Parent, or,
solely as a passive or minority investor, in any business.
5. Standards. During the term of this Agreement, the Executive shall
perform his duties in accordance with such reasonable standards expected of
executives with
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comparable positions in comparable organizations and as may be established from
time to time by the Board of Directors.
6. Termination and Termination Pay. The Executive's employment under
this Agreement shall be terminated upon any of the following occurrences:
(a) The death of the Executive during the term of this Agreement,
in which event the Executive's estate shall be entitled to receive the
compensation due the Executive through the last day of the calendar month in
which Executive's death shall have occurred.
(b) The Bank's Board of Directors may terminate the Executive's
employment at any time, but any termination by the Bank's Board of Directors
other than termination for Cause shall not prejudice the Executive's right to
compensation or benefits under the Agreement. The Executive shall have no right
to receive compensation or other benefits for any period after termination for
Cause. Termination for "Cause" shall include termination because of the
Executive'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 the Agreement. The Bank's Board of Directors may
within its sole discretion, acting in good faith, terminate the Executive for
Cause and shall notify such Executive accordingly; provided that any such
determination shall not be effective unless it is adopted by an affirmative vote
of not less than a majority of the members of the full Board of Directors at a
meeting of the Board called and held for such purpose (after reasonable written
notice has been delivered to the Executive of such meeting, the purpose of such
meeting and the preliminary basis for such Cause termination.
(c) Except as provided pursuant to Section 9 hereof, in the event
Executive's employment under this Agreement is terminated by the Bank without
Cause, the Bank shall be obligated to continue to pay the Executive the salary
provided pursuant to Section 3(a) herein, for a period of thirty-six (36) months
and the cost of Executive obtaining all health, life, disability, and other
benefits which the Executive would be eligible to participate in through such
date based upon the benefit levels substantially equal to those being provided
Executive at the date of termination of employment. The provisions of this
Section 6(c) shall survive the expiration of this Agreement.
(d) The voluntary termination by the Executive during the term of
this Agreement with the delivery of no less than 60 days written notice to the
Board of Directors, other than pursuant to Section 9(b), in which case the
Executive shall be entitled to receive only the compensation, vested rights, and
all employee benefits up to the date of such termination.
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7. Regulatory Exclusions.
(a) If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(1)), the Bank's obligations under the Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Bank may in its discretion (i) pay
the Executive 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.
(b) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement
shall terminate as of the effective date of the order, but the vested rights of
the contracting parties shall not be affected.
(c) If the Bank is in default (as defined in Section 3(x)(1) of Federal
Deposit Insurance Act) all obligations under this Agreement shall terminate as
of the date of default, but this paragraph shall not affect any vested rights of
the contracting parties.
(d) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank: (i) by the Director of the Office of Thrift
Supervision ("Director of OTS"), or his or her designee, at the time that the
Federal Deposit Insurance Corporation ("FDIC") enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of Federal Deposit Insurance Act; or (ii) by the Director of the
OTS, or his or her designee, at the time that the Director of the OTS, or his or
her 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 OTS
to be in an unsafe or unsound condition. Any rights of the parties that have
already vested, however, shall not be affected by such action.
(e) Notwithstanding anything herein to the contrary, any payments made
to the Executive pursuant to the Agreement, or otherwise, shall be subject to
and conditioned upon compliance with 12 USC '1828(k) and FDIC Regulation 12 CFR
Part 359, Golden Parachute Indemnification Payments promulgated thereunder.
8. Disability. If the Executive shall become disabled or incapacitated
to the extent that he is unable to perform his duties hereunder, by reason of
medically determinable physical or mental impairment, as determined by a doctor
engaged by the Board of Directors, Executive shall nevertheless continue to
receive the compensation and benefits provided under the terms of this Agreement
as follows: 100% of such compensation and benefits for a period of 12 months,
but not exceeding the remaining term of the Agreement, and 65% thereafter for
the remainder of the term of the Agreement.
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Such benefits noted herein shall be reduced by any benefits otherwise provided
to the Executive during such period under the provisions of disability insurance
coverage in effect for Bank employees. Thereafter, Executive shall be eligible
to receive benefits provided by the Bank under the provisions of disability
insurance coverage in effect for Bank employees. Upon returning to active
full-time employment, the Executive's full compensation as set forth in this
Agreement shall be reinstated as of the date of commencement of such activities.
In the event that the Executive returns to active employment on other than a
full-time basis, then his compensation (as set forth in Section 3(a) of this
Agreement) shall be reduced in proportion to the time spent in said employment,
or as shall otherwise be agreed to by the parties.
9. Change in Control Severance Protection.
(a) Notwithstanding any provision herein to the contrary, in the
event of the involuntary termination of Executive's employment during the term
of this Agreement following any Change in Control of the Bank or Parent, or
within 24 months thereafter of such Change in Control, absent Cause, Executive
shall be paid an amount equal to the product of 2.999 times the Executive's
"base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code") and regulations promulgated thereunder. Said sum
shall be paid in one (1) lump sum not later than the date of such termination of
service, and such payments shall be in lieu of any other future payments which
the Executive would be otherwise entitled to receive under Section 6 of this
Agreement. Additionally, the Executive and his or her dependents shall remain
eligible to participate in the medical and dental insurance programs offered by
the Bank to its employees for a period of not less than through the remaining
term of the Agreement; provided that the Executive shall be responsible for
payment of such monthly premium expenses, except to the extent that such
benefits are otherwise provided in accordance with Section 3(h), herein.
Notwithstanding the forgoing, all sums payable hereunder shall be reduced in
such manner and to such extent so that no such payments made hereunder when
aggregated with all other payments to be made to the Executive by the Bank or
the Parent shall be deemed an "excess parachute payment" in accordance with
Section 280G of the Code and be subject to the excise tax provided at Section
4999(a) of the Code. The term "Change in Control" shall refer to: (i) the sale
of all, or substantially all, of the assets of the Bank or the Parent; (ii) the
merger or recapitalization of the Bank or the Parent whereby the Bank or the
Parent is not the surviving entity; (iii) a change in control of the Bank or the
Parent, as otherwise defined or determined by the Office of Thrift Supervision
or regulations promulgated by it; or (iv) the acquisition, directly or
indirectly, of the beneficial ownership (within the meaning of that term as it
is used in Section 13(d) of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder) of twenty-five percent (25%) or more of
the outstanding voting securities of the Bank or the Parent by any person,
trust, entity or group. The term "person" means an individual other than the
Executive, or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein. The reorganization of the Bank
from its mutual holding company form to a parent holding company form whereby
such parent company shall own 100% of
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the stock of the Bank and public stockholders shall own 100% of the parent
company common stock shall not be deemed a Change in Control. The provisions of
this Section 9(a) shall survive the expiration of this Agreement occurring after
a Change in Control.
(b) Notwithstanding any other provision of this Agreement to the
contrary, Executive may voluntarily terminate his employment during the term of
this Agreement following a Change in Control of the Bank or Parent, or within
one year following such Change in Control, and upon the occurrence, or within
120 days thereafter, of any of the following events enumerated hereinafter,
which have not been consented to in advance by the Executive in writing: (i) if
Executive would be required to move his personal residence or perform his
principal executive functions more than thirty-five (35) miles from the
Executive's primary office as of the signing of this Agreement; (ii) if in the
organizational structure of the Bank, Executive would be required to report to a
person or persons other than the Board of Directors of the Bank; (iii) if the
Bank should fail to maintain Executive's base compensation in effect as of the
date of the Change in Control and the existing employee benefits plans,
including material fringe benefit, stock option and retirement plans, except to
the extent that such reduction in benefit programs is part of an overall
adjustment in benefits applicable to all employees of the Bank and does not
disproportionately adversely impact the Executive; (iv) if Executive would be
assigned duties and responsibilities other than those normally associated with
his position as referenced at Section 1, herein; (v) if Executive's
responsibilities or authority have in any way been materially diminished or
reduced; or (vi) if Executive would not be reelected to the Board of Directors
of the Bank. Upon such voluntary termination of employment by the Executive in
accordance with this subsection, Executive shall thereupon be entitled to
receive the payments described in Section 9(a) of this Agreement. The provisions
of this Section 9(b) shall survive the expiration of this Agreement occurring
after a Change in Control.
10. Withholding. All payments required to be made by the Bank hereunder
to the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.
11. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Bank or Parent which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Parent.
(b) Since the Bank is contracting for the unique and personal
skills of the Executive, the Executive shall be precluded from assigning or
delegating his rights or duties hereunder without first obtaining the written
consent of the Bank.
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12. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing, signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Bank to sign on its
behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of New
Jersey.
14. Nature of Obligations. Nothing contained herein shall create or
require the Bank to create a trust of any kind to fund any benefits which may be
payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Bank hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Bank.
15. Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
17. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in accordance with the rules then in effect of the district office
of the American Arbitration Association ("AAA") nearest to the home office of
the Bank, and judgment upon the award rendered may be entered in any court
having jurisdiction thereof, except to the extent that the parties may otherwise
reach a mutual settlement of such issue. The provisions of this Section 17 shall
survive the expiration of this Agreement.
18. Confidential Information. The Executive acknowledges that during his
or her employment he or she will learn and have access to confidential
information regarding the Bank and the Parent and its customers and businesses
("Confidential Information"). The Executive agrees and covenants not to disclose
or use for his or her own benefit, or the benefit of any other person or entity,
any such Confidential Information, unless or until the Bank or the Parent
consents to such disclosure or use, or such information becomes common knowledge
in the industry or is otherwise legally in the public domain. The Executive
shall not knowingly disclose or reveal to any unauthorized person any
Confidential Information relating to the Bank, the Parent, or any subsidiaries
or affiliates,
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or to any of the businesses operated by them, and the Executive confirms that
such information constitutes the exclusive property of the Bank and the Parent.
The Executive shall not otherwise knowingly act or conduct himself (a) to the
material detriment of the Bank or the Parent, or its subsidiaries, or
affiliates, or (b) in a manner which is inimical or contrary to the interests of
the Bank or the Parent. Executive acknowledges and agrees that the existence of
this Agreement and its terms and conditions constitutes Confidential Information
of the Bank, and the Executive agrees not to disclose the Agreement or its
contents without the prior written consent of the Bank; provided, however, the
Executive may disclose this Agreement to his personal attorney and personal tax
advisor without prior consent from the Bank. Notwithstanding the foregoing, the
Bank reserves the right in its sole discretion to make disclosure of this
Agreement as it deems necessary or appropriate in compliance with its regulatory
reporting requirements. Notwithstanding anything herein to the contrary, failure
by the Executive to comply with the provisions of this Section may result in the
immediate termination of the Agreement within the sole discretion of the Bank,
disciplinary action against the Executive taken by the Bank, including but not
limited to the termination of employment of the Executive for breach of the
Agreement and the provisions of this Section, and other remedies that may be
available in law or in equity. The provisions of this Section shall survive the
expiration of this Agreement.
19. Indemnification; Insurance
(a) Indemnification. The Bank agrees to indemnify the Executive
and his heirs, executors, and administrators to the fullest extent permitted
under applicable law and regulations, including, without limitation 12 U.S.C.
Section 1828(k), against any and all expenses and liabilities reasonably
incurred by the Executive in connection with or arising out of any action, suit
or proceeding in which the Executive may be involved by reason of his having
been a director or officer of the Bank or any of its subsidiaries, whether or
not the Executive is a director or officer of the Bank at the time of incurring
any such expenses or liabilities. Such expenses and liabilities shall include,
but shall not be limited to, judgments, court costs and attorney's fees and the
cost of reasonable settlements. The Executive shall be entitled to
indemnification in respect of a settlement only if the Board of Directors of the
Bank has approved such settlement. Notwithstanding anything herein to the
contrary, (i) indemnification for expenses shall not extend to matters for which
the Executive's employment or service has been terminated, and (ii) the
obligations of this Section 19 shall survive the termination of this Agreement.
Nothing contained herein shall be deemed to provide indemnification prohibited
by applicable law or regulation.
(b) Insurance. During the Term of the Agreement, the Bank shall
provide the Executive (and his heirs, executors, and administrators) with
coverage under a directors' and officers' liability policy at the Bank's
expense, at least equivalent to such coverage otherwise provided to the other
directors and senior officers of the Bank.
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(c) Compliance with Regulatory Limitations. Notwithstanding
anything herein to the contrary, the provisions of this Section 19 shall be
subject to the limitations and restrictions provided at 12 CFR 545.121 as it may
be amended from time to time.
20. Compliance With Section 409A. Notwithstanding anything herein to the
contrary, any payments to be made in accordance with this Agreement shall not be
made prior to the date that is 184 calendar days from the date of the
Executive's termination of employment if it is determined by the Bank or the
Parent in good faith that such payments to be made to such Executive are subject
to such limitations at Section 409A of the Code and regulations promulgated
thereunder, and payments made in advance of such date would result in the
requirement for the Executive to pay additional interest and taxes to be imposed
in accordance with Section 409A(a)(1)(B) of the Code. The provisions of this
Section 20 shall survive the expiration of this Agreement.
21. Entire Agreement. This Agreement together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto. This Agreement shall supersede
any prior employment agreements and/or change in control severance agreements
between the Executive and the Bank.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first hereinabove written.
Gloucester County Federal Savings Bank
By:
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Xxxx X. Xxxxxx, Xx., Chairman of the Board
ATTEST:
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Secretary
WITNESS:
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/s/Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Executive
