EMPLOYMENT AGREEMENT
Employment Agreement, dated as of January 11, 2005, between Somerset Valley
Bank, a New Jersey bank (the "Bank"), Xxxxxx Financial Corporation, a
Pennsylvania corporation ("Xxxxxx", and together with Bank, the "Employer"), and
Xxxxxx X. Xxxxxxxx, an adult individual (the "Executive").
BACKGROUND
Executive is currently employed as the President and Chief Executive
Officer of the Bank and the President & CEO of SVB Financial Services, Inc.
("Somerset"). Bank and Executive have previously entered into an Employment
Agreement, dated January 1, 1996 ("Original Agreement"), which provides for
certain payments upon the occurrence of a change in control. Somerset and Fulton
have entered into an Agreement and Plan of Merger of even date (the "Merger
Agreement") providing for the merger (the "Merger") of Somerset with and into
Fulton. Following the effective date of the Merger, the Employer desires to
employ Executive, and Executive desires to be employed by the Employer, on the
terms and conditions contained in this Agreement. In addition, the Executive
will receive the change of control payments provide for in the Original
Agreement as further set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:
Section 1. Capacity and Duties.
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1.1. Employment: Acceptance of Employment. The Employer hereby employs
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Executive, and Executive hereby agrees to be employed by the Employer, for the
period and upon the terms and conditions hereinafter set forth.
1.2. Capacity and Duties.
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(a) Executive shall serve as President and Chief Executive Officer of the
Bank. Executive shall perform such other duties and shall have such authority
consistent with his position as may from time to time reasonably be specified by
the Board of Directors of the Bank (the "Board"). Executive shall report
directly to the Board and Fulton Senior Management and shall perform his duties
for the Bank principally at the Bank's offices located in, or at such other
locations determined by the Board and Fulton Senior Management within, a 45 mile
radius of Somerville, New Jersey, except for periodic travel that may be
necessary or appropriate in connection with the performance of Executive's
duties hereunder.
(b) Executive shall devote his full working time, energy, skill and best
efforts to the performance of his duties hereunder, in a manner that will
faithfully and diligently further the business and interests of the Bank, and
shall not be employed by or participate or engage in or be a part of in any
manner the management or operation of any business enterprise other than the
Bank without the prior written consent of FFC Senior Management, which consent
may be granted or withheld in FFC Management's sole discretion.
Section 2. Term of Employment.
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2.1. Term. The term of Executive's employment hereunder shall commence on
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the effective date of the Merger and shall terminate on the date two (2) years
from such effective date, unless further extended or sooner terminated in
accordance with the provisions hereof.
Section 3. Compensation.
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3.1. Basic Compensation. As compensation for Executive's services
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hereunder, the Bank shall pay to Executive a salary at an annual rate equal to
$255,000 (inclusive of any holiday bonus paid by the Bank), payable in periodic
installments in accordance with the Bank's regular payroll practices in effect
from time to time. For years subsequent to such year, Executive's salary shall
be at least in the amount of his salary for such initial year with such
increases, if any, as may be established by FFC Senior Management. Executive's
annual salary, as determined in accordance with this Section 3.1, is hereinafter
referred to as his "Base Salary".
3.2. Employee Benefits. In addition to the compensation provided for in
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Section 3.1, Executive shall be entitled during the term of his employment to
participate in such of the Bank's employee retirement and welfare benefit plans
and other benefit programs, including but not limited to, his current
perquisites, medical and disability benefit programs and stock option plans, as
may from time to time be provided for similarly situated executive officers of
Xxxxxx'x subsidiary banks.
3.3. Vacation. Executive shall be entitled to annual paid vacation in
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conformity with the Bank's regular policies and practices, as determined from
time to time by the Board.
3.4. Expense Reimbursement. During the term of his employment, the Bank
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shall reimburse Executive for all reasonable expenses incurred by him in
connection with the performance of his duties hereunder in accordance with its
regular reimbursement policies as in effect from time to time and upon receipt
of itemized vouchers therefor and such other supporting information as the Bank
may reasonably require.
Section 4. Termination of Employment.
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4.1. Voluntary Termination. In the event Executive's employment is
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voluntarily terminated by Executive other than for Good Reason, the Bank shall
be obligated to pay Executive his Base Salary through the effective date of his
termination. Upon making the payments described in this Section 4.1, the Bank
shall have no further obligation to Executive hereunder.
4.2. Termination Without Cause; Termination for Good Reason.
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(a) In the event:
(i) Executive's employment is terminated by the Bank for any reason other
than "Cause", (as defined herein); or
(ii) Executive's employment is terminated by Executive for "Good Reason"
(as defined herein);
then the Bank shall continue to pay Executive all of the consideration provided
for in Section 3.1 above during the remainder of the term of this Agreement,
subject to the applicable provisions thereof. Executive shall also continue to
receive employee benefits cited in Section 3.2 (other than stock options).
(b) As used herein, the term "Good Reason" shall mean the following:
(i) material breach of the Bank's material obligations under this
Agreement, provided that the Bank has not remedied such breach after notice and
a reasonable opportunity to cure;
(ii) any decrease in Executive's Base Salary as increased during his term
of employment pursuant to this Agreement (except for decreases that are in
conjunction with decreases in executive salaries generally), any material
reduction in Executive's duties or authority (other than as a result of the
consolidation of the Bank with an affiliate of Fulton), and any material
reduction in Executive's employee benefits below those required to be provided
from time to time pursuant to Section 3.2 and 3.3; or
(iii) The Bank requiring Executive to be based at a location outside a 45
mile radius of Somerville, New Jersey, except for reasonably required travel on
the Bank's business.
4.3. Termination for Cause. Executive's employment hereunder shall
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terminate immediately upon notice of termination for "Cause" (as defined
herein), in which event the Bank shall not thereafter be obligated to make any
further payments hereunder other than amounts (including salary, expense
reimbursement, etc.) accrued under this Agreement as of the date of such
termination in accordance with generally accepted accounting principles. As used
herein, "Cause" shall mean the following, provided that, in the case of
circumstances described in clauses (c) and (d) below, Executive shall have been
given notice and a reasonable opportunity to cure:
(a) fraud committed in connection with Executive's employment, dishonesty,
theft, misappropriation or embezzlement of the Bank's funds;
(b) conviction of any felony, crime involving fraud or misrepresentation,
or of any other crime (whether or not connected with his employment) the effect
of which is likely to adversely affect the Bank or its affiliates;
(c) repeated and consistent failure of Executive to be present at work
during normal business hours unless the absence is because of a disability as
described in Section 4.4;
(d) insubordination, gross incompetence or misconduct in the performance
of, or gross neglect of, Executive's duties hereunder;
(e) use of alcohol or other drugs which interferes with the performance by
Executive of his duties; or
(f) conduct on the part of Executive that brings public discredit or
injures the reputation of the Bank or Fulton, in Xxxxxx'x reasonable opinion.
4.4. Benefits Following Death or Disability. Following Executive's total
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disability (as determined under the Bank's long-term disability plan or, if no
such plan then exists, by a physician selected by the Bank's Board of Directors)
or death during the term of this Agreement, the employment of the Executive will
terminate automatically, in which event the Bank shall not thereafter be
obligated to make any further payments hereunder other than amounts (including
salary, expense reimbursement, etc.) accrued under this Agreement as of the date
of such termination in accordance with generally accepted accounting principles
or as otherwise specifically provided herein.
4.5. Death or Disability Following Termination of Employment. Executive's
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disability or death following his termination pursuant to Section 4.2 shall not
effect his right, or if applicable, the right of his beneficiaries, to receive
the payments for the balance of the period described in Section 4.2, nor will it
affect the right of Executive or his beneficiaries to receive the balance of
payments due under Section 6 herein.
4.6. Beneficiary Designation. Executive may, at any time, by written notice
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to the Bank, name one or more beneficiaries of any benefits which may become
payable by the Bank pursuant to this Agreement. If Executive fails to designate
a beneficiary any benefits to be paid pursuant to this Agreement shall be paid
to Executive's estate.
Section 5. Restrictive Covenants.
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5.1. Confidentiality. Executive acknowledges a duty of confidentiality owed
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to the Bank and shall not, at any time during or after his employment by the
Bank, retain in writing, use, divulge, furnish, or make accessible to anyone,
without the express authorization of the Board or Fulton Senior Management, any
trade secret, private or confidential information or knowledge of the Bank or
any of its affiliates obtained or acquired by him while so employed. All
computer software, business cards, customer lists, price lists, contract forms,
catalogs, books, records, files and know-how acquired while an employee of the
Bank, are acknowledged to be the property of the Bank (or the applicable
affiliate) and shall not be duplicated, removed from the Bank's possession or
made use of other than in pursuit of the Bank's business and, upon termination
of employment for any reason, Executive shall deliver to the Bank, without
further demand, all copies thereof which are then in his possession or under his
control.
5.2. Non-Competition and Nonsolicitation. Executive shall not, during the
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term of employment hereunder and for a period of one (1) year thereafter,
directly or indirectly:
(a) engage, anywhere in a county in which a branch office of the Bank is
then located, in commercial banking;
(b) be or become an officer, director or employee or agent of, or a
consultant to or give financial or other assistance to any person or entity
considering engaging in commercial banking or so engaged;
(c) seek in competition with the business of the Bank or Fulton to procure
orders from or do business with any customer of the Bank or Fulton;
(d) solicit, or contact with a view to the engagement or employment by, any
person or entity of any person who is an employee of the Bank or Fulton;
(e) seek to contract with or engage (in such a way as to adversely affect
or interfere with the business of the Bank or Fulton) any person or entity who
has been contracted with or engaged to provide goods or services to the Bank; or
(f) engage in or participate in any effort or act to induce any of the
customers, associates, consultants, or employees of the Bank, Xxxxxx or any of
their affiliates to take any action which might be disadvantageous to the Bank,
Xxxxxx or any of their affiliates; provided, however, that nothing herein shall
prohibit the Executive and his affiliates from owning, as passive investors, in
the aggregate not more than 5% of the outstanding publicly traded stock of any
corporation so engaged.
For the purpose of the foregoing, Fulton shall be deemed to refer to Fulton
and all of its present or future affiliates.
5.3. Injunctive and Other Relief.
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(a) Executive acknowledges and agrees that the covenants contained herein
are fair and reasonable in light of the consideration paid hereunder, and that
damages alone shall not be an adequate remedy for any breach by Executive of his
covenants which then apply and accordingly expressly agrees that, in addition to
any other remedies which the Bank may have, the Bank shall be entitled to
injunctive relief in any court of competent jurisdiction for any breach or
threatened breach of any such covenants by Executive. Nothing contained herein
shall prevent or delay the Bank from seeking, in any court of competent
jurisdiction, specific performance or other equitable remedies in the event of
any breach or intended breach by Executive of any of its obligations hereunder.
(b) In the event Executive breaches his obligations under Section 5.2, the
one year period specified therein shall be tolled during the period of any such
breach and any litigation seeking remedies for such breach and shall resume upon
the conclusion or termination of any such breach and any such litigation. In
addition to the other remedies set forth in this Section, Bank shall be entitled
to recover the costs and expenses of enforcing its rights under this Agreement,
including, without limitation, attorney's fees and costs whether incurred in
litigation or otherwise. The remedies set forth in this Section are cumulative
and in addition to any and all other remedies available to Bank at law or in
equity.
Section 6. Prior Agreement. Bank shall pay to Executive the amounts provided
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for in Section 6(d) of the Original Agreement for a termination by Executive for
"Good Reason", as defined in the Original Agreement. Such payment shall be made
as follows: (a) one half of the total amount due on the Closing Date; and the
remainder in twelve (12) equal monthly installments beginning on the one year
anniversary of the Closing Date, provided Executive remains employed by Bank on
each payment date (unless such employment is terminated by the employer without
Cause, by the employee for Good Reason or by virtue of the Executive's death or
Disability). If Executive does not remain employed by Bank on any payment date
(unless such employment is terminated by the employer without Cause, by the
employee for Good Reason or by virtue of the Executive's death or Disability),
Executive shall immediately forfeit all future payments to be made on and after
such date pursuant to this Section 6.
Section 7. Miscellaneous.
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7.1. Invalidity. If any provision hereof is determined to be invalid or
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unenforceable by a court of competent jurisdiction, Executive shall negotiate in
good faith to provide the Bank with protection as nearly equivalent to that
found to be invalid or unenforceable and if any such provision shall be so
determined to be invalid or unenforceable by reason of the duration or
geographical scope of the covenants contained therein, such duration or
geographical scope, or both, shall be considered to be reduced to a duration or
geographical scope to the extend necessary to cure such invalidity.
7.2. Assignment: Benefit. This Agreement shall not be assignable by
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Executive, and shall be assignable by the Bank only to any affiliate or to any
person or entity which may become a successor in interest (by purchase of assets
or stock, or by merger, or otherwise) to the Bank in the business or a portion
of the business presently operated by it. Subject to the foregoing, this
Agreement and the rights and obligations set forth herein shall inure to the
benefit of, and be binding upon, the parties hereto and each of their respective
permitted successors, assigns, heirs, executors and administrators, including
the restrictive covenants of this Agreement.
7.3. Notices. All notices hereunder shall be in writing and shall be
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sufficiently given if hand-delivered, sent by documented overnight delivery
service or registered or certified mail, postage prepaid, return receipt
requested or by telegram, fax or telecopy (confirmed by U. S. mail), receipt
acknowledged, addressed as set forth below or to such other person and/or at
such other address as may be furnished in writing by any party hereto to the
other. Any such notice shall be deemed to have been given as of the date
received, in the case of personal delivery, or on the date shown on the receipt
or confirmation therefor, in all other cases. Any and all service of process and
any other notice in any such action, suit or proceeding shall be effective
against any party if given as provided in this Agreement; provided that nothing
herein shall be deemed to affect the right of any party to serve process in any
other manner permitted by law.
(a) If to the Bank:
Xxxxxx Financial Corporation
Xxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
(b) If to Executive:
Xxxxxx X. Xxxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
7.4. Entire Agreement and Modification. This Agreement constitutes the
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entire agreement between the parties hereto with respect to the matters
contemplated herein and supersedes all prior agreements and understandings with
respect thereto. The Original Agreement shall be terminated, with no further
rights or obligations thereunder due to or from either party, as of the
effective date of the Merger. Any amendment, modification, or waiver of this
Agreement shall not be effective unless in writing and agreed and executed by
the Bank and the Executive. Neither the failure nor any delay on the part of any
party to exercise any right, remedy, power or privilege shall preclude any other
or further exercise of the same or of any other right, remedy, power, or
privilege with respect to any occurrence and such failure or delay to exercise
any right shall be construed as a waiver of any right, remedy, power, or
privilege with respect to any other occurrence.
7.5. Governing Law. This Agreement is made pursuant to, and shall be
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construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania (and United States federal law, to the extent applicable), without
giving effect to otherwise applicable principles of conflicts of law.
7.6. Headings; Counterparts. The headings of paragraphs in this Agreement
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are for convenience only and shall not affect its interpretation. This Agreement
may be executed in two or more counterparts, each of which shall be deemed to be
an original and all of which, when taken together, shall be deemed to constitute
but one and the same Agreement.
7.7. Further Assurances. Each of the parties hereto shall execute such
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further instruments and take such other actions as any other party shall
reasonably request in order to effectuate the purposes of this Agreement.
7.8. Section 280G. Notwithstanding any other provisions of this Agreement
or any other agreement entered into by Executive and the Bank, except any
agreement which expressly modifies this Section 7.8 ("Other Agreement"), and
notwithstanding any formal or informal plan or other arrangement heretofore or
hereafter adopted by the Bank for the direct or indirect provision of
compensation to Executive (including groups of participants or beneficiaries of
which Executive is a member), whether or not such compensation is deferred, is
in cash, or is in the form of a benefit to or for Executive (a "Benefit Plan"),
Executive shall not
have any right to receive any payment or other benefit under this Agreement, any
Other Agreement, or any Benefit Plan if such payment or benefit, taking into
account all other payments or benefits to or for Executive under this Agreement,
all Other Agreements, and all Benefit Plans, would cause any payment to
Executive under this Agreement to be considered a "parachute payment" within the
meaning of Section 280G of the Internal Revenue Code as then in effect (a
"Parachute Payment"). In the event that the receipt of any such payment or
benefit under this Agreement, any Other Agreement, or any Benefit Plan would
cause Executive to be considered to have received a Parachute Payment under this
Agreement or any Other Agreement, then Executive shall have the right, in
Executive's sole discretion, to designate those payments or benefits under this
Agreement, any Other Agreements and/or any Benefit Plans, which should be
reduced, amended or eliminated so as to avoid having the payment to Executive
under this Agreement or any Other Agreement to be deemed to be a Parachute
Payment.
7.9. Attorneys' Fees and Related Expenses. All attorneys' fees and related
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expenses incurred by Executive in connection with or relating to enforcement by
him of his rights under this Agreement shall be paid in full by the Bank
provided Executive prevails in connection with enforcing his rights under this
Agreement.
7.10. Mitigation. Executive shall not be required to mitigate the amount of
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any payment or benefit provided for in Section 4 hereto by seeking employment or
otherwise and the Bank shall not be entitled to setoff against the amount of any
payments made pursuant to Section 4 hereto with respect to any compensation
earned by Executive arising from other employment.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SOMERSET VALLEY BANK
By: /s/ Xxxx X. Kitchen
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Title:Chairman of the Board
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XXXXXX FINANCIAL CORPORATION
By: /s/ R. Xxxxx Xxxxx
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Title: President and Chief Operating Officer
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/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
