EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 3rd day of July, 1998, by and between Peekskill Financial Corporation (the
"Holding Company"), and Xxxxx Xxxxxx (the "Employee").
WHEREAS, the Employee is currently serving as Vice President of Finance
of the Holding Company and Vice President of Finance of the Holding Company's
wholly-owned subsidiary, First Federal Savings Bank (the "Bank"); and
WHEREAS, the board of directors of the Holding Company (the "Board of
Directors") recognizes that, as is the case with publicly held corporations
generally, the possibility of a change in control of the Holding Company and/or
the Bank may exist and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or distraction
of key management personnel to the detriment of the Bank, the Holding Company
and their respective stockholders; and
WHEREAS, the Board of Directors believes it is in the best interests of
the Holding Company to enter into this Agreement with the Employee in order to
assure continuity of management of the Holding Company and the Bank and to
reinforce and encourage the continued attention and dedication of the Employee
to the Employee's assigned duties without distraction in the face of potentially
disruptive circumstances arising from the possibility of a change in control of
the Holding Company or the Bank, although no such change is now contemplated;
and
WHEREAS, the Board of Directors has approved and authorized the
execution of this Agreement with the Employee to take effect as stated in
Section 2 hereof;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein, 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 the Holding
Company within the meaning of the Home Owners' Loan Act of 1933 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 under the Exchange Act), directly or indirectly of
securities of the Bank or the Holding Company representing 20% or more of the
Bank's or the Holding Company's outstanding securities; (3) individuals who are
members of the board of directors of the Bank or the Holding Company on the date
hereof (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
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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 acquisition of securities by an employee benefit
plan of the Bank or the Holding Company. In the application of 12 C.F.R. Part
574 to a determination of a Change in Control, determinations to be made by the
OTS or its Director under such regulations shall be made by the Board of
Directors.
(b) The term "Commencement Date" means July 3, 1998.
(c) The term "Date of Termination" means the earlier of (1)
the date upon which the Holding Company or the Bank gives notice to the Employee
of the termination of the Employee's employment with the Holding Company or the
Bank or (2) the date upon which the Employee ceases to serve as an employee of
either the Holding Company or the Bank.
(d) The term "Involuntarily Termination" means termination of
the employment of Employee by either the Holding Company or the Bank without the
Employee's express written consent, and shall include a material diminution of
or interference with the Employee's duties, responsibilities and benefits as
Vice President of Finance of the Holding Company and of the Bank, including
(without limitation) any of the following actions unless consented to in writing
by the Employee: (1) a change in the principal workplace of the Employee to a
location outside of a 30 mile radius from the Bank's headquarters office as of
the date hereof; (2) a material demotion of the Employee; (3) a material
reduction in the number or seniority of other Holding Company and Bank personnel
reporting to the Employee or a material reduction in the frequency with which,
or in the nature of the matters with respect to which, such personnel are to
report to the Employee, other than as part of a Bank- or Holding Company-wide
reduction in staff; (4) a material adverse change in the Employee's 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; and (5) a material
permanent increase in the required hours of work or the workload of the
Employee. The term "Involuntary Termination" does not include Termination for
Cause or termination of employment due to retirement, death, disability or
suspension or temporary or permanent prohibition from participation in the
conduct of the Bank's affairs under Section 8 of the Federal Deposit Insurance
Act ("FDIA") and shall not include a material diminution of or interference with
the Employee's duties, responsibilities and benefits unless the Employee submits
to the Holding Company within 120 days after the occurrence of such event
written notice of his determination that such material diminution constitutes
Involuntary Termination.
(e) The terms "Termination for Cause" and "Terminated for
Cause" mean termination of the employment of the Employee because of the
Employee's 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.
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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 day following the Commencement Date, and on each day
thereafter, the term of this Agreement shall be extended for a period of one day
in addition to the then-remaining term, provided that the Holding Company has
not given notice to the Employee in writing at least 90 days prior to such day
that the term of this Agreement shall not be extended further; and provided
further that the term this Agreement shall expire on the date on which the
Employee reaches age 65. Reference herein to the term of this Agreement shall
refer to both such initial term and such extended terms.
3. Employment. The Employee is employed as Vice President of Finance of
the Holding Company and of the Bank. As such, the Employee shall render
administrative and management services as are customarily performed by persons
situated in similar executive capacities, and shall have such other powers and
duties of an officer of the Holding Company or the Bank as the Board of
Directors or the board of directors of the Bank, respectively, may prescribe
from time to time.
4. Compensation.
(a) Salary. The Holding Company agrees to pay the Employee
during the term of this Agreement the salary payable by the Bank established by
the Bank's board of directors, which shall be at least the Employee's salary
payable by the Bank in effect as of the Commencement Date, and shall be
increased in accordance with salary increases approved by the Board of Directors
and such additional salary, if any, as the Board of Directors may determine to
pay the Employee from time to time. Adjustments in salary or other compensation
shall not limit or reduce any other obligation of the Holding Company under this
Agreement. The Employee's salary in effect from time to time during the term of
this Agreement shall not thereafter be reduced other than as part of an overall
program applied uniformly and with equitable effect on all members of the senior
management of the Bank and the Holding Company. To the extent that the Bank pays
salary and provides other compensation to the Employee provided for in any
section of this Agreement, to the Employee, the Holding Company's obligations to
pay salary and provide other compensation under this Agreement shall be deemed
satisfied.
(b) Benefits. While employed under this Agreement, the
Employee shall receive the same health insurance benefits as the Bank provides
generally from time to time during the term of this Agreement ("Health Insurance
Benefits").
5. Termination of Employment.
(a) Involuntary Termination. The Board of Directors may
terminate the Employee's employment at any time, but, except in the case of
Termination for Cause, termination of employment shall not prejudice the
Employee's right to compensation or other benefits under this Agreement. In the
event of Involuntary Termination other than in connection with or within 12
months after a Change in Control and subject to the provisions of Sections 6 and
7 of this Agreement, (1) the Holding Company shall pay to the Employee during
the remaining term of this Agreement the Employee's salary at the rate in effect
immediately prior to the Date of Termination, in such manner and at such times
as such salary would have been payable to the Employee under
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Section 4 of this Agreement, if the Employee had continued to be employed, and
(2) the Holding Company shall provide to the Employee during the remaining term
of this Agreement benefits substantially the same as the Health Insurance
Benefits as of the Date of Termination on terms as favorable to him as applied
as of the Date of Termination. The total of salary payments to the Employee
under this Section 7(a) shall not exceed three times his average annual cash
compensation from the Holding Company and the Bank over the five most recent
taxable years (or if employed by the Bank or the Holding Company for a shorter
period, over such period of his employment).
(b) Termination for Cause. In the event of Termination for
Cause, the Holding Company shall pay the Employee the Employee's salary through
the Date of Termination, and the Holding Company shall have no further
obligation to the Employee under this Agreement.
(c) Voluntary Termination. The Employee's employment may be
voluntarily terminated by the Employee at any time upon 90 days' written notice
to the Board of Directors or such shorter period as may be agreed upon between
the Employee and the Board of Directors. In the event of such voluntary
termination, the Holding Company shall be obligated to continue to pay to the
Employee the Employee's salary and benefits only through the Date of
Termination, at the time such payments are due, and the Holding Company shall
have no further obligation to the Employee 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 which occurs at
any time while the Employee is employed under this Agreement, the Holding
Company shall, subject to Sections 6 and 7 of this Agreement, (1) pay to the
Employee in a lump sum in cash within 25 business days after the Date of
Termination an amount equal to 299% of the Employee's "base amount" as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code");
and (2) provide to the Employee during the remaining term of this Agreement such
health benefits as are substantially the same as the Health Insurance Benefits
as of the Date of Termination on terms as favorable to him as applied as of Date
of Termination.
(e) Death; Disability. In the event of the death of the
Employee while employed under this Agreement and prior to any termination of
employment, the Employee's estate, or such person as the Employee may have
previously designated in writing, shall be entitled to receive from the Holding
Company the salary of the Employee through the last day of the calendar month in
which the Employee died. If the Employee becomes disabled as defined in the then
current disability plan, if any, of the Holding Company (or of the Bank, if, in
the absence of the such a plan of the Holding Company, the Bank has such a
plan), or if the Employee is otherwise unable to serve as Vice President of
Finance of the Holding Company and the Bank, the Employee shall be entitled to
receive group and other disability income benefits of the type, if any, then
provided for executive officers. However, the Holding Company shall be obligated
only to pay the Employee's salary pursuant to Section 4(a) of this Agreement
only to the extent the Employee's salary, in the absence of such disability,
would exceed (on an after tax basis) the disability income benefits received
pursuant to this paragraph. In addition, the Holding Company shall have the
right, upon resolution of the Board of Directors, to discontinue paying salary
pursuant to Section 4(a) beginning six months following a determination that the
Employee qualifies for the foregoing disability income benefits.
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(f) Temporary Suspension or Prohibition. If the Employee 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. ss. 1818(e)(3) and (g)(1), the Holding Company's obligations under
this Agreement shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the Holding
Company may in its discretion (i) pay the Employee all or part of the
compensation withheld while its obligations under this Agreement were suspended
and (ii) reinstate in whole or in part any of its obligations which were
suspended.
(g) Permanent Suspension or Prohibition. If the Employee is
removed and/or permanently prohibited from participating in the conduct of the
Bank's affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA,
12 U.S.C. ss. 1818(e)(4) and (g)(1), all obligations of the Holding Company
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.
6. Certain Reductions of Payments.
(a) Notwithstanding any other provision of this Agreement, if
the value and amounts of benefits under this Agreement, together with any other
amounts and the value of benefits received or to be received by the Employee in
connection with a Change in Control would cause any amount to be nondeductible
by the Bank or the Holding Company for federal income tax purposes pursuant to
Section 280G of the Code, then amounts and benefits under this Agreement shall
be reduced (not less than zero) to the extent necessary so as to maximize
amounts and the value of benefits to the Employee without causing any amount to
become nondeductible by the Bank or the Holding Company pursuant to or by reason
of such Section 280G. The Employee shall determine the allocation of such
reduction among payments and benefits to the Employee.
(b) Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with 12 U.S.C. 1828(k) and any regulations promulgated thereunder.
7. Mitigation.
(a) Reduction of Salary Payments. The Holding Company's obligations to
pay salary under Section 5(a) of this Agreement shall be reduced by the amounts,
if any, of cash income (as defined below) earned by the Employee from providing
services during the remaining term of this Agreement. For purposes of this
Section 7, the term "cash income" shall include the amounts of salary, wages and
fees paid to the Employee in cash, but shall not include bonuses, incentive
compensation, shares of stock, stock, stock options, stock appreciation rights
or other benefits or earned income not paid to the Employee in cash.
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(b) Reduction of Health Insurance Benefits. The Bank's obligations to
provide benefits under Section 5(a) of this Agreement shall be reduced to the
extent, if any, of substantially the same benefits provided to the Employee on
no less favorable terms by another employer during the remaining term of this
Agreement.
(c) Reporting by Employee. The Employee agrees that, in the event he
becomes entitled to payment of salary and to benefits pursuant to Section 5(a)
of this Agreement during the remaining term of this Agreement, he shall promptly
inform the Holding Company of the nature and amounts of cash income and benefits
of the same or similar nature which he earns or receives from another employer
during the remaining term of this Agreement and shall provide such documentation
concerning such cash income and benefits as the Holding Company may reasonably
request from time to time. Changes in such cash income and benefits shall be
reported within 10 days following each change.
8. Attorneys Fees. In the event the Holding Company exercises its right
of Termination for Cause, but it is determined by a court of competent
jurisdiction or by an arbitrator pursuant to Section 16 of this Agreement that
cause as contemplated by Section 1(e) of this Agreement did not exist for such
termination, or if in any event it is determined by any such court or arbitrator
that the Holding Company has failed to make timely payment of any amounts owed
to the Employee under this Agreement, the Employee shall be entitled to
reimbursement for all reasonable costs, including attorneys' fees, incurred in
challenging such termination or collecting such amounts. Such reimbursement
shall be in addition to all rights to which the Employee is otherwise entitled
under this Agreement.
9. Confidential Information; Loyalty; Noncompetition
(a) During the term of the Employee's employment hereunder and
thereafter, the Employee shall not except as may be required to perform his
duties hereunder or as required by law, disclose to others or use, whether
directly or indirectly, any Confidential Information; provided, however, that
this prohibition shall not apply to requests for information from federal
banking regulators. "Confidential Information" means information about the
clients and customers of the Bank and the Holding Company which is not available
to the general public and was or shall be learned by the Employee in the course
of his employment by the Bank and the Holding Company, including without
limitation any data, formulae, information, proprietary knowledge, trade
secrets, and credit reports and analyses owned, developed and used in the course
of the business of the Bank or the Holding Company, including client and
customer lists and information related thereto; and all papers, records and
other documents (and all copies thereof) containing such Confidential
Information. The Employee acknowledges that such Confidential Information is
specialized, unique in nature and of great value to the Bank and the Holding
Company. The Employee agrees that upon the termination of his employment, the
Employee will promptly deliver to the Bank or the Holding Company all documents
(and all copies thereof) containing any Confidential Information.
(b) The Employee shall devote his full time to the performance
of his employment under this Agreement; provided, however, that the Employee may
serve, without compensation, as a director of charitable, community and industry
organizations and continue to serve, with
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compensation, as a director of the business corporations of which he is
currently a director to the extent such directorships do not inhibit the
performance of his duties hereunder or conflict with the business of the Bank
and the Holding Company. While employed by the Bank or the Holding Company, the
Employee shall not engage in any business or activity contrary to the business
affairs or interests of the Bank or the Holding Company.
(c) Upon the expiration of the term of the Employee's
employment hereunder or in the event the Employee's employment hereunder
terminates prior thereto for any reason whatsoever, the Employee shall not, for
a period of one year after the occurrence of such event, for himself, or as the
agent of, on behalf of, or in conjunction with, any person or entity, solicit or
attempt to solicit, whether directly or indirectly: (i) any employee of the Bank
or the Holding Company or any subsidiary thereof to terminate such employee's
employment relationship with the Bank or the Holding Company or any subsidiary
thereof; or (ii) any savings and loan, banking or either business from any
person or entity that is or was a client, employee, or customer of the Bank or
the Holding Company or any subsidiary thereof and had dealt with the Employee or
any other employee of the Bank or the Holding Company or any subsidiary thereof
under the supervision of the Employee.
(d) In the event that the Employee voluntarily resigns
pursuant to Section 7(c) of this Agreement, the Employee shall not for a period
of one year from the effective date of such resignation, or in the event the
Employee's employment hereunder is terminated for cause, the Employee shall not,
for a period of one year from the date of termination, directly or indirectly,
own, manage, operate or control, or participate in the ownership, management,
operation or control of, or be employed by or connected in any manner with, any
financial institution having an office located within five miles of any office
of the Bank as of the date of termination of employment.
(e) The provisions of this Section 9 shall not prevent the
Employee from purchasing, solely for investment, not more five percent of any
financial institution's stock or other securities which are traded on any
national or regional securities exchange or are actively traded in the
over-the-counter market and registered under Section 12(g) of the Securities
Exchange Act of 1934.
(f) The provisions of this Section 9 shall survive the
termination of the Employee's employment hereunder whether by expiration of the
term hereof or otherwise.
10. 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 Holding Company 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
Holding Company or the Bank, by an assumption agreement in form and substance
satisfactory to the Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Holding Company
would be required to perform it if no such succession or assignment had taken
place. Failure of the Holding Company 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 the Employee to compensation
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from the Holding Company in the same amount and on the same terms as the
compensation pursuant to Section 5(d) hereof. For purposes of implementing the
provisions of this Section 10(a), the date on which any such succession becomes
effective shall be deemed the Date of Termination.
(b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while any
amounts would still be payable to the Employee hereunder if the Employee had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Employee's devisee,
legatee or other designee or if there is no such designee, to the Employee's
estate.
11. 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, to the Holding Company at its
principal office, to the attention of the Board of Directors with a copy to the
Secretary of the Holding Company, or, if to the Employee, to such home or other
address as the Employee has most recently provided in writing to the Holding
Company or the Bank.
12. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
13. 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.
14. 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.
15. 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.
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
Attest: Peekskill Financial Corporation
--------------------- ---------------------------
Secretary
By:
Its:
Employee
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Xxxxx Xxxxxx
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