EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 1st day of April, 1998, by and between Catskill Savings Bank, a stock
savings bank organized and operating under the laws of the United States and
having its executive office at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000
(hereinafter referred to as the "Bank"), and Xxxxxx X. Xxxxx, residing at 00
Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000.
WHEREAS, Xx. Xxxxx is currently serving as President and Chief
Executive Officer of the Bank pursuant to an Employment Agreement dated April 1,
1996;
WHEREAS, certain deficiencies have been identified in such 1996
Employment Agreement which the parties agree are inequitable; and
WHEREAS, the Board of Directors of the Bank (the "Board") believes it
is in the best interests of the Bank to enter into this Agreement with Xx. Xxxxx
in order to correct such deficiencies, assure continuity and reinforce and
encourage the continued attention and dedication of Xx. Xxxxx to his assigned
duties without distraction; and
WHEREAS, the Board has approved and authorized the execution of this
Agreement and Xx. Xxxxx is agreeable thereto.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations of the parties hereto hereinafter set forth, it is agreed as
follows:
1. DEFINITIONS.
(a) The term "Change in Control" means: (1) an event of a nature that
(i) results in a change in control of the Bank or of Catskill Financial
Corporation, the Delaware corporation which owns all of the Bank's stock (the
"Holding Company"), within the meaning of the Home Owners' Loan Act of 1993 and
12 C. F. R. Part 574 as in effect on the date hereof; or (ii) would be required
to be reported in response to Item 1 of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); (2) any person (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly of securities of the Bank or the Holding Company representing 25% or
more of the Bank's or the Holding Company's then outstanding securities; (3)
individuals who are members of the board of directors of the Bank or the Holding
Company on the date hereof (each the "Incumbent Board") cease, for any reason,
to constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Holding Company's stockholders was approved
by the nominating committee serving under an Incumbent Board, shall be
considered a member of the Incumbent Board; or (4) a reorganization, merger,
consolidation, sale of all or substantially all of the assets of the Bank or the
Holding Company or a similar transaction in which the Bank or the Holding
Company is not the resulting entity. The term "Change in Control" shall not
include an
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acquisition of securities by: (1) the trustee of an employee benefit plan of the
Bank or the Holding Company; (2) a corporation owned, directly or indirectly, by
the stockholders of the Holding Company in substantially the same proportions as
their ownership of stock of the Holding Company; or (3) Xx. Xxxxx, or any group
otherwise constituting a person in which Xx. Xxxxx is a member.
(b) The term "Commencement Date" means April 1, 1998.
(c) The term "Date of Termination" means the date upon which Xx. Xxxxx
ceases to serve as President and Chief Executive Officer of the Bank.
(d) The term "Voluntary Termination" means termination of the
employment by Xx. Xxxxx by resignation upon 90 days written notice but shall not
include resignation following a Change in Control (see subparagraph 1(e) below),
or material breach of this Agreement (see subparagraph 1(e) below) or
disability.
(e) The term "Involuntarily Termination" means termination of the
employment of Xx. Xxxxx by the Bank for any reason other than those reasons
which constitute Termination for Cause (see subparagraph 1(f),(below).
Involuntarily Termination shall also include termination of the employment by
Xx. Xxxxx as a result of his resignation, upon 30 days written notice, following
a Change in Control or material breach of this Agreement such as a material
diminution or interference with his duties, responsibilities and benefits as
President and Chief Executive Officer of the Bank, including (without
limitation) any of the following actions unless consented to in writing by Xx.
Xxxxx: (1) a change in the principal workplace of Xx. Xxxxx to a location (i)
outside of a 30 mile radius from the 000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx or (ii)
other
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than the Bank's executive office; (2) a material demotion of Xx. Xxxxx; (3) a
material reduction in the number or seniority of other Bank personnel reporting
to Xx. Xxxxx or a material reduction in the number or frequency with which, or
in the nature of the matters with respect to which, such personnel are to report
to Xx. Xxxxx, other than as part of a Bank- or Holding Company-wide reduction in
staff; (4) a material adverse change in Xx. Xxxxx' salary, perquisites,
benefits, contingent benefits or vacation, other than as part of an overall
program applied uniformly and with equitable effect to all members of the senior
management of the Bank or the Holding Company; (5) a material permanent increase
in the required hours of work or the workload of Xx. Xxxxx; and (6) a material
reduction in the support services and facilities available to Xx. Xxxxx in
connection with his performance of his duties and responsibilities.
(f) The term "Termination for Cause" means termination of the
employment of Xx. Xxxxx because of his personal dishonesty, incompetence,
willful misconduct, breach of a 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.
Xx. Xxxxx shall not be deemed to have been Terminated for Cause unless and until
there shall have been delivered to him a copy of a resolution, duly adopted by
the affirmative vote of not less than a majority of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice to Xx. Xxxxx and an opportunity for him, together with his
counsel, to be heard before the Board), stating that, in the good faith opinion
of the Board, Xx. Xxxxx has
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engaged in conduct described in this subparagraph 1(f), and specifying the
particulars thereof in detail.
2. TERM. The term of this Agreement shall be a period of three years
commencing on the Commencement Date, subject to earlier termination as provided
herein. Beginning on the first anniversary of the Commencement Date, and on each
anniversary thereafter, the term of this Agreement shall be extended for a
period of one year in addition to the then-remaining term, provided that (1) the
Bank has not given notice in writing to Xx. Xxxxx at least 90 days prior to such
anniversary that the term of this Agreement shall not be extended further; and
(2) prior to such anniversary, the Board of the Bank explicitly reviews ad
approves the extension. Reference herein to the term of this Agreement shall
refer to both such initial term and such extended terms.
3. EMPLOYMENT.
(a) Xx. Xxxxx is employed as President and Chief Executive Officer the
Bank and, except to the extent allowed under subparagraph 3(b), below, shall
devote his full business time and attention to the business and affairs of the
Bank and the Holding Company and use his best efforts to advance their
interests. He shall render such administrative and management services as are
customarily performed by persons situated in similar executive capacities, and
shall have such other powers and duties, not inconsistent with his title and
office, as the Board may prescribe from time to time. Xx. Xxxxx shall have such
authority as is necessary or appropriate to carry out his assigned duties and
shall report directly to the Board.
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(b) Xx. Xxxxx may engage in personal business and investment activities
for his own account and serve as a member of the board of directors of such
business, community and charitable organizations as he may disclose, in advance,
to the Board from time to time so long as such activities and services do not
materially interfere with the performance of his duties under this Agreement or
involve entities which either compete with the Bank or may be reasonably
expected to negatively impact on the Bank's standing and reputation in the
community it serves.
4. COMPENSATION.
(a) SALARY. The Bank agrees to pay Xx. Xxxxx during the term of this
Agreement, not less frequently than monthly, the salary established by the
Board, which shall be at least equal to Xx. Xxxxx' salary in effect as of the
Commencement Date. The amount of Xx. Xxxxx' salary shall be reviewed by the
Board, at least annually beginning not later than the first anniversary of the
Commencement Date. Adjustments in salary or other compensation shall not limit
or reduce any other obligation of the Bank under this Agreement. Xx. Xxxxx'
salary in effect from time to time during the term of this Agreement shall not
thereafter be reduced. At each anniversary of the commencement date following a
Change in Control, Xx. Xxxxx' salary shall be increased at least by multiplying
it by the greater of: (1) the quotient of (i) the U.S. Department of Labor
Consumer Price Index for all Urban Consumers (N.Y.-Northeastern N.J.) for
January of the then current calendar year divided by (ii) the U.S. Department of
Labor Consumer Price Index for all Urban Consumers (N.Y.-Northeastern N.J.) for
January of the immediately preceding calendar year; and (2) the quotient of (i)
the average annual rate of salary, determined as of the first business day of
such calendar year, of the officers of the Bank (other than Xx. Xxxxx) who are
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assistant vice president or more senior officers, divided by (ii) the average
annual rate of salary, determined as of the first business day of the
immediately preceding calendar year, of the officers of the Bank (other than Xx.
Xxxxx) who are assistant vice presidents or more senior officers.
(b) Discretionary Bonuses. Xx. Xxxxx shall be entitled to participate
in an equitable manner with all other executive officers of the Bank in such
discretionary bonuses as are authorized and declared by the Board to its
executive employees. No other compensation provided for in this Agreement shall
be deemed to substitute for Xx. Xxxxx' right to participate in such bonuses when
and as declared by the Board.
(c) Expenses. Xx. Xxxxx shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by him in performing services
under this Agreement in accordance with the policies and procedures applicable
to executive officers of the Bank, provided that he accounts for such expenses
as required under such policies and procedures.
5. BENEFITS.
(a) PARTICIPATION IN RETIREMENT AND EMPLOYEE BENEFIT PLANS. Xx. Xxxxx
shall be entitled to participate in all plans relating to pension, thrift,
profit-sharing, group life and disability insurance, medical and dental
coverage, education, cash bonuses, and other retirement or employee benefits or
combinations thereof, in which the Bank's executive officers participate.
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(b) Fringe Benefits. Xx. Xxxxx shall be eligible to participate in, and
receive benefits under, any fringe benefit plans which are or may become
applicable to the Bank's executive officers.
6. VACATIONS, LEAVE. Xx. Xxxxx shall be entitled to annual paid
vacation in accordance with the policies established by the Board for executive
officers and to voluntary leaves of absence, with or without pay, from time to
time, at such times and upon such conditions as the Board may determine in its
discretion.
7. TERMINATION OF EMPLOYMENT.
(a) INVOLUNTARY TERMINATION. The Board may terminate Xx. Xxxxx'
employment at any time. In the event of Involuntary Termination other than in
connection with a Change in Control, the Bank shall, during remaining term of
this Agreement, (1) pay to Xx. Xxxxx, his salary at the rate in effect
immediately prior to the Date of Termination, payable in such manner and at such
times as such salary would have been payable under Section 4 if Xx. Xxxxx had
continued to be employed by the Bank, (2) provide to Xx. Xxxxx substantially the
same life, health and disability insurance benefits as the Bank maintained for
its executive officers immediately prior to the Date of Termination reduced by
the amount of any such insurance benefits provided to Xx. Xxxxx by a subsequent
employer, and (3) provide to Xx. Xxxxx such other benefits, if any, to which he
and his family and dependents would have been entitled as a former officer or
the family or dependents of a former officer under the employee benefit plans
and programs maintained for the benefit of the Bank's officers in accordance
with the terms of such plans and programs in effect immediately prior to the
Date of Termination.
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(b) TERMINATION FOR CAUSE. In the event of Termination for Cause, the
Bank shall (1) pay Xx. Xxxxx his salary and benefits through the Date of
Termination, (2) pay him for unused vacation days, and (3) have no further
obligations to him under this Agreement.
(c) VOLUNTARY TERMINATION. Xx. Xxxxx' employment may be voluntarily
terminated by him at any time by resignation. In the event of such Voluntary
Termination, the Bank shall be obligated to (1) pay to Xx. Xxxxx his salary and
benefits through the Date of Termination, (2) pay him for unused vacation days,
and (3) have no further obligations to him under this Agreement.
(d) CHANGE IN CONTROL. In the event of Involuntary Termination in
connection with or within 12 months after a Change in Control, the Bank shall,
subject to paragraph 8 of this Agreement, (1) pay to Xx. Xxxxx an amount equal
to 299% of his "base amount" as defined in 26 U.S.C. Section 28OG which payment
shall be made in the three equal installments, the first within 10 days after
the Date of Termination, the second on the fifth business day of January of the
next succeeding calendar year and the third on the fifth business day of January
of the second succeeding calendar year, (2) provide to Xx. Xxxxx during the
remaining term of this Agreement substantially the same life, health and
disability insurance benefits as the Bank maintained for its executive officers
immediately prior to the Date of Termination, and (3) provide to Xx. Xxxxx such
other benefits, if any, to which he and his family and dependents would have
been entitled as a former officer or the family or dependents of a former
officer under the employee benefit plans and programs maintained for the benefit
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of the Bank's officers in accordance with the terms of such plans and programs
in effect immediately prior to the Date of Termination.
(e) DEATH; DISABILITY. In the event of the death of the Xx. Xxxxx
during the term of this Agreement, within 60 days following such death his
estate, or such person(s) as he may have designated in writing, shall be
entitled to receive from the Bank a death benefit, payable through life
insurance or otherwise, which is equal to two times Xx. Xxxxx' then current
salary. If Xx. Xxxxx becomes disabled as defined in the Bank's then current
disability plan, if any, or if he is otherwise unable to serve as President and
Chief Executive Officer, this Agreement shall continue in full force and effect,
except that the salary paid to Xx. Xxxxx shall be reduced by any disability
insurance payments made to him on policies of insurance maintained by the Bank
at its expense. In addition, in the event of the death or disability of Xx.
Xxxxx during the term of this Agreement, Xx. Xxxxx and his family and dependents
(in the event of disability) and his family and dependents (in the event of
death) shall be provided with such benefits as they would have been entitled as
a former officer or the family or dependents of a former officer under the
employee benefit plans and programs maintained for the benefit of the Bank's
officers in accordance with the terms of such plans and programs in effect
immediately prior to the death or disability.
(f) TEMPORARY SUSPENSION OR PROHIBITION. If Xx. Xxxxx 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 FDIA, 12
U.S.C. Section 1818(e)(3) and (g)(1), the Bank's obligations under this
Agreement, other than those which have vested,
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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 (1) pay Xx. Xxxxx all or part of the compensation withheld while its
obligations under this Agreement were suspended and (2) reinstate in whole or in
part any of its obligations which were suspended.
(g) PERMANENT SUSPENSION OR PROHIBITION. If Xx. Xxxxx 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 (g)(1) of the FDIA, 12 U.S.C.
Section 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 vested rights of the
contracting parties shall not be affected.
(h) DEFAULT OF THE BANK. If the Bank is in default (as defined in
Section 3(x)(1) of the FDIA), all obligations under this Agreement shall
terminate as of the date of default, but this provision shall not affect any
vested rights of the contracting parties.
(i) TERMINATION BY REGULATORS. 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 by the Director
of the Office of Thrift Supervision (the "Director") or his or her designee, at
the time: (1) the Federal Deposit Insurance Corporation enters into an agreement
to provide assistance to or on behalf of the Bank under the authority contained
in Section 13(c) of the FDIA; or (2) the Director or his or her designee
approves a supervisory merger to resolve problems related to operation of the
Bank; or (3) the Director or his or her designee determines the Bank to be in an
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unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by any such action.
8. CERTAIN REDUCTION OF PAYMENTS BY THE BANK. Notwithstanding any other
provision of this Agreement, if payments under this Agreement, together with any
other payments received or to be received by Xx. Xxxxx in connection with a
Change in Control would cause any amount to be nondeductible by the Bank for
federal income tax purposes pursuant to 26 U.S.C. Section 28OG, then benefits
under this Agreement shall be reduced (not less than zero) to the extent
necessary so as to maximize payments to Xx. Xxxxx without causing any amount to
become nondeductible by the Bank. Xx. Xxxxx shall determine the allocation of
such reduction among payments to him.
9. NO MITIGATION. Xx. Xxxxx shall not be required to mitigate the
amount of any salary or other payment or benefit provided for in this Agreement
by seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Agreement be reduced by any compensation earned by
Xx. Xxxxx as the result of employment by another employer unless explicitly
stated herein, by retirement benefits after the Date of Termination or
otherwise.
10. ATTORNEYS FEES. In the event the Bank exercises its right of
Termination for Cause, but it is determined by a court of competent jurisdiction
or by an arbitrator pursuant to Paragraph 17 that cause did not exist for such
termination, or if it is determined by a court or arbitrator that the Bank has
failed to meet any of its obligations or abide by any of the terms of this
Agreement, Xx. Xxxxx shall be entitled to reimbursement for all reasonable
costs, including attorneys' fees, incurred in challenging such termination or
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enforcing such obligations or terms. Such reimbursement shall be in addition to
all rights to which Xx. Xxxxx is otherwise entitled under this Agreement.
11. NO ASSIGNMENTS.
(a) This Agreement is personal to each of the parties hereto, and
neither party may assign or delegate any of its rights or obligations hereunder
without first obtaining the written consent of the other party; provided,
however, that the Bank shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Bank, by an assumption
agreement in form and substance satisfactory to Xx. Xxxxx, 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 or
assignment had taken place. Failure of the Bank to obtain such an assumption
agreement prior to the effectiveness of any such succession or assignment shall
be a breach of this Agreement and shall entitle Xx. Xxxxx to compensation from
the Bank in the same amount and on the same terms as the compensation pursuant
to Paragraph 7(d) hereof. For purposes of implementing the provisions of this
Paragraph 11(a), the date on which any such succession becomes effective shall
be deemed the Date of Termination.
(b) This Agreement and all rights of Xx. Xxxxx hereunder shall inure to
the benefit of and be enforceable by his personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Xx. Xxxxx should die while any amounts would still be payable
to him hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
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his devisee, legatee or other designee or if there is no such designee, to his
estate.
12. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, if to the Bank at its executive
office, to the attention of the Board with a copy to the Secretary of the Bank,
or, if to Xx. Xxxxx, to his home at the address stated above, unless notice of a
change of address has been given pursuant hereto.
13. AMENDMENTS. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
14. HEADINGS. The headings used in this Agreement are included solely
for convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. WAIVER. Failure, by either party, to insist on strict compliance
with any of the terms or conditions hereof shall not be deemed a waiver of such
term or condition.
17. GOVERNING LAW. This Agreement shall be governed by the laws of the
United States to the extent applicable and otherwise by the laws of the State of
New York.
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18. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Albany, New York in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Attest: CATSKILL SAVINGS BANK
/s/ Xxxxx X. Xxxxxxxxxxx By: /s/ Xxxxx Xxxx
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VP/Secretary DIRECTOR
WITNESS:
/s/ Xxxxx X. Xxxxxxxxxxx /s/ Xxxxxx X. Xxxxx
------------------------------ ---------------------------
VP/Secretary XXXXXX X. XXXXX
Chairman/President/CEO
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