EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Agreement is made effective as of March 1, 2006 by and between Fairport Savings
Bank (the “Bank”), a federally-chartered savings association with its principal
executive office at 00 Xxxxx Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, and Xxxx
Xxxxxxx (“Executive”).
WHEREAS,
the Bank
wishes to assure itself of the continued services of Executive for the period
provided in this Agreement; and
WHEREAS,
Executive is willing to continue to serve in the employ of the Bank on a
full-time basis for said period.
NOW,
THEREFORE,
in
consideration of the mutual covenants herein contained, and upon the other
terms
and conditions hereinafter provided, the parties hereby agree as
follows:
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1.
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POSITION
AND RESPONSIBILITIES
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(a)
During
the period of his employment hereunder, Executive agrees to serve as President
and Chief Executive Officer, and as a member of the Board of Directors (the
“Board”), of the Bank. During said period, Executive also agrees to serve, if
elected, as an officer and director of any subsidiary or affiliate of the Bank.
Failure to reelect Executive as the President and Chief Executive Officer of
the
Bank without the consent of Executive during the term of this Agreement shall
constitute a breach of this Agreement.
(b)
During
the period of his employment hereunder, except for periods of absence occasioned
by illness, reasonable vacation periods, and reasonable leaves of absence,
Executive shall devote substantially all his business time, attention, skill,
and efforts to the faithful performance of his duties as President and Chief
Executive Officer of the Bank, including overseeing and directing the day-to-day
operations and management of the Bank; making recommendations to the Board
regarding asset/liability management, long-range planning and compensation
of
officers; promoting the business of the Bank; and such other duties as the
Board
may from time to time reasonably direct. Provided, however, that with the
approval of the Board, as evidenced by a resolution of the Board, Executive
may
serve, or continue to serve, on the boards of directors of, and hold other
offices or positions with business or not-for-profit organizations, which,
in
the Board’s judgment, do not compete with the Bank or will not present any
conflict of interest with the Bank, or materially affect the performance of
Executive’s duties pursuant to this Agreement (for purposes of this Section
1(b), Board approval shall be deemed provided as to service with any such
business or other organizations that Executive was serving as of the date of
this Agreement).
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2.
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TERM
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The
period of Executive’s employment under this Agreement shall begin as of the date
first above written and shall continue for a period of thirty-six (36) full
calendar months thereafter. Commencing on the first anniversary date of this
Agreement and continuing at each anniversary date thereafter, this Agreement
shall renew for an additional year such that the remaining term shall be three
(3) years; provided, however, that after the initial thirty-six (36) month
term
of this Agreement, if written notice of nonrenewal is provided to Executive
at
least ten (10) days and not more than sixty (60) days prior to any anniversary
date, the employment of Executive hereunder shall cease at the end of twelve
(12) months following such anniversary date. Prior to each notice period for
non-renewal, the disinterested members of the Board will conduct a performance
evaluation and review of Executive for purposes of determining whether to extend
the Agreement, and the results thereof shall be included in the minutes of
the
Board’s meeting and communicated to Executive.
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3.
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COMPENSATION
AND REIMBURSEMENT
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(a)
The
compensation specified under this Agreement shall constitute the salary and
benefits paid for the duties described in Section 1(b). The Bank shall pay
Executive as compensation a salary of $140,000 per year (“Base Salary”), which
Base Salary shall be payable in accordance with the normal and customary payroll
practices of the Bank, but in no event less frequently than monthly. During
the
period of this Agreement, Executive’s Base Salary shall be reviewed at least
annually and such Base Salary shall be $147,500 for the twelve (12) months
beginning March 1, 2007, and 155,000 for the twelve (12) months beginning March
1, 2008, subject to annual approval by the Board. Such review shall be conducted
by a Committee designated by the Board, and the Board may increase or decrease,
Executive’s Base Salary (any increase in Base Salary shall become the “Base
Salary” for purposes of this Agreement). In addition to the Base Salary provided
in this Section 3(a), the Bank shall provide Executive, at no cost to Executive,
with all such other benefits as are provided uniformly to permanent full-time
employees of the Bank. Base Salary shall include any amounts of compensation
deferred by Executive under tax-qualified and nontax-qualified plans maintained
by the Bank.
(b)
The
Bank
will provide Executive with employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving benefit from immediately prior to the beginning of the term
of this Agreement, and the Bank will not, without Executive’s prior written
consent, make any changes in such plans, arrangements or perquisites which
would
adversely affect Executive’s rights or benefits thereunder, unless such change
is part of a change in benefits applicable to all employees of the Bank in
connection with a bank-wide benefit plan. Without limiting the generality of
the
foregoing provisions of this Subsection (b), Executive will be entitled to
participate in or receive benefits under any employee benefit plans including
but not limited to, retirement plans, supplemental retirement plans, pension
plans, profit-sharing plans, stock benefit plans, health-and-accident plans,
medical coverage and any other employee benefit plan or arrangement made
available by the Bank in the future to its senior executives and key management
employees, subject to and on a basis consistent with the terms, conditions
and
overall administration of such plans and arrangements. Executive will be
entitled to incentive compensation and/or bonuses as provided in any plan of
the
Bank in which Executive is eligible to participate (and he shall be entitled
to
a pro rata distribution under any incentive compensation or bonus plan as to
any
year in which a termination of employment occurs, other than termination for
Cause). Such incentive compensation and/or bonuses shall be based on Executive’s
performance and the performance and financial condition of the Bank. Nothing
paid to Executive under any such plan or arrangement will be deemed to be in
lieu of other compensation to which Executive is entitled under this
Agreement.
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(c)
In
addition to the Base Salary provided for by paragraph (a) of this Section 3,
the
Bank shall pay or reimburse Executive for all reasonable travel and other
reasonable expenses incurred by Executive in performing his obligations under
this Agreement and may provide such additional compensation in such form and
such amounts as the Board may from time to time determine.
(d)
Executive
shall be entitled to five (5) weeks of paid vacation per calendar year, or
such
greater period as may be approved from time to time by the Board of Directors.
In the event that the full vacation is not taken in any year due to the work
commitments of Executive, Executive may carry over any such unused vacation
time
from year to year unless such carryover is prohibited by law or regulation.
Upon
any termination of Executive, Executive will be entitled to be paid the value
of
any accrued or accumulated vacation time and shall be required to reimburse
the
Bank for the value of any vacation time taken but not yet accrued.
(e)
Executive
shall also be entitled to an automobile of the Bank’s selection to be used by
Executive in rendering services to the Bank and for limited personal use,
together with reimbursement for all gas, oil, maintenance, insurance and repairs
required by reason of the use of such vehicle. Executive shall be required
to
account for all costs of use of such automobile in the manner prescribed by
the
Board.
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4.
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PAYMENTS
TO EXECUTIVE UPON AN EVENT OF
TERMINATION
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(a)
Upon
the
occurrence of an Event of Termination (as herein defined) during Executive’s
term of employment under this Agreement, the provisions of this Section shall
apply. As used in this Agreement, an “Event of Termination” shall mean and
include any one or more of the following:
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(i)
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the
termination by the Bank of Executive’s full-time employment hereunder for
any reason other than following a Change in Control, as defined in
Section
5(a) hereof, or termination for Cause, as defined in Section 8 hereof,
or
upon Retirement as defined in Section 7 hereof, or for Disability
as set
forth in Section 6 hereof; and
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(ii)
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Executive’s
resignation from the Bank’s employ, upon any (A) failure to elect or
reelect or to appoint or reappoint Executive as President and Chief
Executive Officer of the Bank, unless consented to by Executive,
(B)
material change in Executive’s function, duties, or responsibilities,
which change would cause Executive’s position to become one of lesser
responsibility, importance, or scope from the position and attributes
thereof described in Section 1 above, to which Executive has not
agreed in
writing (and any such material change shall be deemed a continuing
breach
of this Agreement), (C) relocation of Executive’s principal place of
employment by more than 30 miles from its location at the effective
date
of the Agreement, or a material reduction in the benefits and perquisites
to Executive from those being provided as of the effective date of
this
Agreement (unless such reduction is part of a reduction in benefits
to all
employees of the Bank in connection with a bankwide benefit plan),
(D) liquidation or dissolution of the Bank, or (E) material breach of
this Agreement by the Bank.
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Upon
the
occurrence of any event described in clauses (ii) (A), (B), (C), (D) or (E)
above, Executive shall have the right to elect to terminate his employment
under
this Agreement by resignation upon not less than thirty (30) days prior written
notice given within a reasonable period of time (not to exceed, except in case
of a continuing breach, four calendar months) after the event giving rise to
said right to elect, which termination by Executive shall be an Event of
Termination. Notwithstanding the preceding sentence, in the event of a
continuing breach of this Agreement by the Bank, Executive, after giving due
notice within the prescribed time frame of an initial event specified above,
shall not waive any rights solely under this Agreement and this Section by
virtue of the fact that Executive has submitted his resignation but has remained
in the employment of the Bank and is engaged in good faith discussions to
resolve any occurrence of an event described in clauses (A), (B), (C), (D)
or
(E) above.
(b)
Upon
the
occurrence of an Event of Termination, the Bank shall pay Executive, or, in
the
event of his subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay or liquidated damages, or both, a cash
amount equal to the greater of the payments due for the remaining term of the
Agreement, or one (1) times the sum of: (i) the highest annual rate of Base
Salary paid to Executive at any time under this Agreement, and (ii) the
greater of (x) the average annual cash bonus paid to Executive with respect
to
the three (3) completed fiscal years prior to the Event of Termination, or
(y)
the cash bonus paid to Executive with respect to the fiscal year ended prior
to
the Event of Termination; provided
however, that
if
the Bank is not in compliance with its minimum capital requirements or if such
payments would cause the Bank’s capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Bank is
in
capital compliance; and provided
further,
that in
no event shall total severance compensation from all sources exceed ne (1)
times
Executive’s average annual compensation over the five (5) fiscal years preceding
the fiscal year in which the termination of employment occurs (for purposes
of
this provision and only for purposes of this provision, compensation shall
mean
any payment of money or provision of any other thing of value in consideration
of employment, including, without limitation, base salary, commissions, bonuses,
pension and profit sharing plans, severance payments, retirement, director
or
committee fees, fringe benefits, and the payment of expense items without
accountability or business purpose or that do not meet the Internal Revenue
Service (“IRS”) requirement for deductibility by the Bank). The present value of
the payment required hereunder shall be made in a lump sum within thirty (30)
days following Executive’s termination of employment, or, if Code Section 409A
is applicable, on the first day of the seventh full month following Executive’s
termination of employment. For these purposes, present value shall be determined
using the applicable federal rate under Section 1274(d) of the Internal Revenue
Code (“Code”). Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(c)
Upon
the
occurrence of an Event of Termination, the Bank will cause to be continued
at
the Bank’s expense, life, medical, dental and disability insurance coverage
substantially identical to the coverage maintained by the Bank for Executive
prior to his termination, except to the extent such coverage may be changed
in
its application to all Bank employees. Such coverage shall cease thirty-six
(36)
months following the Event of Termination.
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5.
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CHANGE
IN CONTROL
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(a)
No
benefit shall be payable under this Section 5 unless there shall have been
a
Change in Control, as set forth below. For purposes of this Agreement, a “Change
in Control” shall mean a change in control of the Bank or the Bank’s mid-tier
holding company (the “Company”) or mutual holding company (the “MHC”), of a
nature that: (i) would be required to be reported in response to Item 1(a)
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 1934 (the “Exchange Act”);
or (ii) without limitation such a Change in Control shall be deemed to have
occurred at such time as (a) 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 Company representing 25% or more of the combined voting power
of
Bank’s or the Company’s outstanding securities except for any securities
purchased by the Bank’s employee stock ownership plan or trust; or (b)
individuals who constitute the Board 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 members of the entire
Board
of Directors then in office shall be considered, for purposes of this
clause (b), as though he were a member of the Incumbent Board; or (c) a
plan of reorganization, merger, consolidation, sale of all or substantially
all
the assets of the Bank or the Company or similar transaction in which the Bank
or Company is not the surviving institution occurs; or (d) a proxy statement
soliciting proxies from stockholders of the Bank or the Company, by someone
other than the current management of the Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Bank or the Company
or similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to the plan are
exchanged for or converted into cash or property or securities not issued by
the
Company; or (e) a tender offer is made for 25% or more of the voting securities
of the Bank or the Company, and the shareholders owning beneficially or of
record 25% or more of the outstanding securities of the Bank or the Company
have
tendered or offered to sell their shares pursuant to such tender offer and
such
tendered shares have been accepted by the tender offeror. Notwithstanding
anything in this sub-section to the contrary, a Change in Control shall not
be
deemed to have occurred upon the issuance of common stock by the Company in
a
minority stock offering, or upon conversion of the Company’s mutual holding
company parent to stock form, or in connection with any reorganization used
to
effect such a conversion.
(b)
If
any of
the events described in Section 5(a) hereof constituting a Change in Control
shall have occurred, Executive shall be entitled to the benefits provided in
paragraphs (c) and (d) of this Section 5 upon his subsequent termination of
employment at any time during the term of this Agreement (regardless of whether
such termination results from his resignation or his dismissal).
(c)
Upon
the
occurrence of a Change in Control, Executive, or, in the event of his subsequent
death (subsequent to such termination), his beneficiary or beneficiaries, or
his
estate, as the case may be, shall receive as severance pay or liquidated
damages, or both, an amount equal to three times the sum of: (i) the highest
annual rate of Base Salary paid to Executive at any time under this Agreement,
and (ii) the greater of (x) the average annual cash bonus paid to Executive
with respect to the three completed fiscal years prior to the termination,
or
(y) the cash bonus paid to Executive with respect to the fiscal year ended
prior
to the termination; provided
however, that
if
the Bank is not in compliance with its minimum capital requirements or if such
payments would cause the Bank’s capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Bank is
in
capital compliance; and provided
further
that in
no event shall total severance compensation from all sources exceed three times
Executive’s average annual compensation over the five fiscal years preceding the
fiscal year in which the termination of employment occurs (for purposes of
this
provision and only for purposes of this provision, compensation shall mean
any
payment of money or provision of any other thing of value in consideration
of
employment, including, without limitation, base salary, commissions, bonuses,
pension and profit sharing plans, severance payments, retirement, director
or
committee fees, fringe benefits, and the payment of expense items without
accountability or business purpose or that do not meet the IRS requirement
for
deductibility by the Bank). The foregoing severance/liquidated damages
payment(s), as well as all other benefits described in this Agreement that
would
be payable upon a Change in Control, shall be made to Executive’s surviving
spouse, or if no surviving spouse, to his estate, in the event that the Company
or the Bank enters into an agreement that would cause a Change in Control of
the
Bank, and Executive dies after such agreement is executed but prior to
consummation of the Change in Control, which payments shall commence upon,
and
shall be contingent upon, the actual consummation of the Change in Control.
The
present value of the payment required hereunder shall be made in a lump sum
within thirty (30) days following Executive’s termination of employment, or, if
Code Section 409A is applicable, on the first day of the seventh full month
following Executive’s termination of employment. For these purposes, present
value shall be determined using the applicable federal rate under Section
1274(d) of the Internal Revenue Code (“Code”).
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(d)
Upon
the
occurrence of a Change in Control followed by the termination of Executive’s
employment, the Bank will cause to be continued at the Bank’s expense life,
health and disability insurance coverage substantially identical to the coverage
maintained by the Bank for Executive prior to the Change in Control, except
to
the extent such coverage is changed in its application to all employees of
the
Bank. Such coverage shall cease thirty-six (36) months from the date of
Executive’s termination of employment.
(e)
Notwithstanding
the preceding paragraphs of this Section 5, in no event shall the aggregate
payments or benefits to be made or afforded to the Executive under said
paragraphs (the “Termination Benefits”) constitute an “excess parachute payment”
under Section 280G of the Code or any successor thereto, and in order to avoid
such a result, Termination Benefits will be reduced, if necessary, to an amount
(the “Non-Triggering Amount”), the value of which is one dollar ($1.00) less
than an amount equal to three (3) times the Executive’s “base amount,” as
determined in accordance with said Code Section 280G. The allocation of the
reduction required hereby among Termination Benefits provided by the preceding
paragraphs of this Section 5 shall be determined by the Executive.
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6.
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DISABILITY
OR DEATH
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(a)
If
(A)
Executive is unable to perform his duties hereunder by reason of incapacity
or
illness and Executive shall have been absent from his duties with the Bank
on a
full-time basis for six (6) months within any twelve (12) month period, or
(B)
Executive becomes “Totally Disabled,” the Bank may terminate Executive’s
employment for “Disability.” Termination for Disability shall be determined by a
majority of the disinterested directors of the Board, and shall be effective
thirty (30) days after written notice of such termination is given to Executive.
If Executive resumes his duties on a full-time basis within thirty (30) days
after the Bank gives notice of termination pursuant to this Section 6(a) and
Executive continues to perform such duties on a full-time basis for four (4)
consecutive weeks thereafter, this Agreement shall continue in full force and
effect without a reduction in Base Salary and other benefits, and the notice
of
termination shall be considered to be null and void and of no
effect.
(b)
“Totally
Disabled” shall mean a mental or physical condition which in the reasonable
opinion of the disinterested members of the Board renders Executive unable
or
incompetent to properly carryout the job responsibilities attendant to
Executive’s position and office under this Agreement. If any controversy arises
as to whether Executive is Totally Disabled, the Board may require that
Executive be examined by a physician and, in such case, the decision of such
physician shall be conclusive and binding on all parties. The examining
physician shall be selected by the Board. Notwithstanding anything to the
contrary herein, if at the time that the Executive is determined to be “Totally
Disabled,” counsel to the Bank determines that Section 409A of the Internal
Revenue Code (“Code”) applies to the disability benefit paid to the Executive,
then the term “Totally Disabled” shall mean “disability” within the meaning of
Code Section 409A.
(c)
In
the
event the Bank terminates Executive’s employment due to Disability, the Bank
will:
(1)
Pay
Executive, or cause Executive to be paid under a disability insurance plan,
as
disability pay, a bi-weekly payment equal to the 65% of Executive’s monthly rate
of Base Salary on the effective date of such termination. These disability
payments shall commence on the effective date of Executive’s termination and
will end on the earlier (1) the date Executive returns to the full-time
employment of the Bank in the same capacity as he was employed prior to his
termination for Disability; (ii) Executive’s full-time employment by another
employer; (iii) three (3) years from the effective date of Executive’s
termination; (iv) Executive attaining the age of 65; or (v) Executive’s death.
If Executive is covered by a disability insurance policy purchased by the Bank
for Executive’s benefit, any payments required by this Section 6 shall be
satisfied first through the benefits paid to Executive under said policy, and
the Bank will be responsible only for payments required hereunder that are
in
excess of the policy limits.
(2)
Cause
to
be continued life and health care coverage substantially identical to the
coverage maintained by the Bank for Executive prior to his termination for
Disability, except to the extent such coverage may be changed in its application
to all Bank employees. This coverage shall cease upon the termination of
payments to Executive under Section 6(c)(1) above.
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(d)
In
the
event of Executive’s death during the term of the Agreement, his estate, legal
representatives or named beneficiaries (as directed by executive in writing)
shall be paid Executive’s Base Salary as defined in paragraph 3(a) at the rate
in effect at the time of Executive’s death for a period of one (1) year from the
date of Executive’s death, and the Bank will continue to provide medical, dental
and other insurance benefits normally provided for Executive’s family for one
(1) year after Executive’s death.
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7.
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TERMINATION
UPON RETIREMENT
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Termination
by the Bank of Executive based on “Retirement” shall mean termination for any
reason of Executive’s employment on or after age 65 or in accordance with any
retirement policy established with Executive’s consent with respect to him. Upon
termination of Executive upon Retirement, Executive shall be entitled to all
benefits under any retirement plan of the Bank and other plans to which
Executive is a party, but Executive shall not be entitled to any payments or
benefits that would be due as a result of an Event of Termination under Section
4 hereof.
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8.
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TERMINATION
FOR CAUSE
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The
term
“Termination for Cause” shall mean termination by a vote of at least a majority
of the entire membership of the Board because of Executive’s personal
dishonesty, incompetence, willful misconduct, any 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, the willful commission of
any
act that in the judgment of the Board would likely cause substantial economic
damage to the Bank or the Company or substantial injury to the business
reputation of the Bank or the Company, or material breach of any provision
of
this Agreement. Executive shall not have the right to receive compensation
or
other benefits for any period after Termination for Cause
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9.
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NOTICE
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(a)
Any
termination by the Bank or the Executive shall be communicated by Notice of
Termination to the other party. For purposes of this Agreement, a “Notice of
Termination” shall mean a written notice which shall: indicate the specific
termination provision in this Agreement relied upon; in the case of Termination
for Cause, include a copy of a resolution duly adopted by the affirmative vote
of not less than a majority of the entire membership of the Board; and, set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of employment under the provision so indicated. “Date of
Termination” shall mean the date of the Notice if Termination. If, within thirty
(30) days after any Notice of Termination for Cause is given, the party
receiving the Notice of Termination notifies the other party that a dispute
exists concerning the termination, the parties shall promptly proceed to
arbitration. Executive’s services with the Bank shall be suspended pending
resolution of such dispute by arbitration, and the Bank shall discontinue to
pay
Executive compensation until the dispute is finally resolved in accordance
with
this Agreement. If it is determined that Executive is entitled to compensation
and benefits under Sections 4 or 5 of this Agreement, the payment of such
compensation and benefits by the Bank shall commence immediately following
the
date of resolution by arbitration, with interest due Executive on the cash
amount that would have been paid pending arbitration (at the prime rate as
published in The
Wall Street Journal from
time
to time).
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10.
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POST-TERMINATION
OBLIGATIONS
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(a)
As
a
material inducement for the Bank to enter into this Agreement, upon termination
of this Agreement for any reason, other than the reasons set forth in Sections
5
or 6 of this Agreement, for a period of two (2) years from the Date of
Termination (one year from the termination of the Agreement as a result of
a
Change in Control) Executive shall not at any time or place, either directly
or
indirectly, engage in any business or activity in competition with the business
of the Bank, or be a director, officer or employee or consultant to any bank,
savings bank, savings association or credit union, operating in Monroe County,
if such entity has assets of less than $1.0 billion.
(b)
All
payments and benefits to Executive under this Agreement shall be subject to
Executive’s compliance with paragraph (c) of this Section 10 during the term of
this Agreement and for one (1) full year after the expiration or termination
hereof.
(c)
Executive
shall, upon reasonable notice, furnish such information and assistance to the
Bank as may reasonably be required by the Bank in connection with any litigation
in which it or any of its subsidiaries or affiliates is, or may become, a
party.
(d)
Executive
recognizes and acknowledges that the knowledge of the business activities and
plans for business activities of the Bank and affiliates thereof, as it may
exist from time to time, is a valuable, special and unique asset of the business
of the Bank. Executive will not, during or after the term of his employment,
disclose any knowledge of the past, present, planned or considered business
activities of the Bank or affiliates thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever (except for such disclosure
as may be required to be provided to the Office of Thrift Supervision (“OTS”),
the Federal Deposit Insurance Corporation (“FDIC”), or other federal banking
agency with jurisdiction over the Bank or Executive). Notwithstanding the
foregoing, Executive may disclose any knowledge of banking, financial and/or
economic principles, concepts or ideas which are not solely and exclusively
derived from the business plans and activities of the Bank, and Executive may
disclose any information regarding the Bank which is otherwise publicly
available. In the event of a breach or threatened breach by Executive of the
provisions of this Section 10, the Bank will be entitled to an injunction
restraining Executive from disclosing, in whole or in part, the knowledge of
the
past, present, planned or considered business activities of the Bank or
affiliates thereof, or from rendering any services to any person, firm,
corporation, other entity to whom such knowledge, in whole or in part, has
been
disclosed or is threatened to be disclosed. Nothing herein will be construed
as
prohibiting the Bank from pursuing any other remedies available to the Bank
for
such breach or threatened breach, including the recovery of damages from
Executive.
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11.
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EFFECT
ON PRIOR AGREEMENTS AND EXISTING BENEFITS
PLANS
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This
Agreement contains the entire understanding between the parties hereto and
supersedes any prior employment agreement between the Bank or any predecessor
of
the Bank and Executive, except that this Agreement shall not affect or operate
to reduce any benefit or compensation inuring to Executive of a kind elsewhere
provided. No provision of this Agreement shall be interpreted to mean that
Executive is subject to receiving fewer benefits than those available to him
without reference to this Agreement.
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12.
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NO
ATTACHMENT
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(a)
Except
as
required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation, or to execution, attachment, levy, or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to affect any such action shall be null, void, and of no
effect.
(b)
This
Agreement shall be binding upon, and inure to the benefit of, Executive and
the
Bank and their respective successors and assigns.
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13.
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MODIFICATION
AND WAIVER
|
(a)
This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(b)
No
term
or condition of this Agreement shall be deemed to have been waived, nor shall
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to
the
specific term or condition waived and shall not constitute a waiver of such
term
or condition for the future as to any act other than that specifically
waived.
|
14.
|
REQUIRED
PROVISIONS
|
(a)
The
Bank’s Board of Directors may terminate Executive’s employment at any time, but
any termination by the Bank’s Board of Directors, other than Termination for
Cause, shall not prejudice Executive’s right to compensation or other benefits
under this Agreement. Executive shall not have the right to receive compensation
or other benefits for any period after Termination for Cause as defined in
Section 8 hereinabove.
(b)
If
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs by a notice served under
Section 8(e)(3) (12 U.S.C. §§ 1818(e)(3)) or 8(g) (12 U.S.C. § 1818(g)) of the
Federal Deposit Insurance Act, as amended by the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (the “FDI Act”), the Bank’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
Bank
may in its discretion (i) pay Executive all or part of the compensation withheld
while their contract obligations were suspended and (ii) reinstate (in whole
or
in part) any of the obligations which were suspended.
(c)
If
Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank’s affairs by an order issued under Section 8(e) (12 U.S.C.
§§ 1818(e)) or 8(g) (12 U.S.C. § 1818(g)) of the FDI Act, 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.
10
(d)
If
the
Bank is in default as defined in Section 3(x) (12 U.S.C. § 1813(x)(1)) of the
FDI Act, all obligations of the Bank under this Agreement shall terminate as
of
the date of default, but this paragraph shall not affect any vested rights
of
the contracting parties.
(e)
All
obligations of the Bank under this Agreement shall be terminated, except to
the
extent determined that continuation of the contract is necessary for the
continued operation of the institution, (i) by the Director, at the time the
FDIC or the Resolution Trust Corporation enters into an agreement to provide
assistance to or on behalf of the Bank; or (ii) by the OTS at the time the
OTS
or its Regional Director approves a supervisory merger to resolve problems
related to the operations of the Bank or when the Bank is determined by the
OTS
or FDIC 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.
(f)
Any
payments made to Executive pursuant to this Agreement, or otherwise, are subject
to and conditioned upon their compliance with 12 USC Section 1828(k) and any
regulations promulgated thereunder.
|
15.
|
SEVERABILITY
|
If,
for
any reason, any provision of this Agreement, or any part of any provision,
is
held invalid, such invalidity shall not affect any other provision of this
Agreement or any part of such provision not held so invalid, and each such
other
provision and part thereof shall to the full extent consistent with law continue
in full force and effect.
|
16.
|
HEADINGS
FOR REFERENCE ONLY
|
The
headings of sections and paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of
the
provisions of this Agreement.
|
17.
|
GOVERNING
LAW
|
This
Agreement shall be governed in all respects, including validity, construction,
capacity and performance, by the laws of the State of New York, but only to
the
extent not superseded by federal law.
|
18.
|
ARBITRATION
|
Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by the Bank within fifty (50) miles
of Fairport, New York, in accordance with the rules of the American Arbitration
Association then in effect. In the event the need for arbitration arises the
Bank shall select one arbitrator and the Executive shall select one arbitrator.
The arbitrators selected by the parties shall select a third arbitrator. The
arbitrators shall not have any authority to add to or modify the provisions
of
this Agreement in any way. Judgment may be entered on the arbitrators’ award in
any court having jurisdiction.
11
|
19.
|
PAYMENT
OF FEES AND EXPENSES
|
In
the
event of any dispute between the Executive and the Bank regarding this
Agreement, whether instituted by formal legal proceedings or otherwise,
including any action taken by Executive in defending against any action taken
by
the Bank, the prevailing party shall be reimbursed for all costs and expenses,
including reasonable attorney’s fees, arising from such dispute, proceedings or
actions. In the event of a settlement of such dispute, each party shall bear
its
own costs and expenses. Any reimbursement owed under this Section 19 shall
be
paid within ten (10) days of the furnishing to the non-prevailing party of
written evidence of any costs or expenses incurred by the prevailing
party.
|
20.
|
INDEMNIFICATION
|
The
Bank
shall provide Executive (including his heirs, executors and administrators)
with
coverage under a standard directors’ and officers’ liability insurance policy at
its expense, and shall indemnify Executive (and his heirs, executors and
administrators) to the fullest extent permitted under federal law against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been a director or officer of the Bank (whether or not
he
continues to be a director or officer at the time of incurring such expenses
or
liabilities), such expenses and liabilities to include, but not be limited
to,
judgments, court costs and attorneys’ fees and the cost of reasonable
settlements (such settlements must be approved by the Board of Directors of
the
Bank). The obligations of the Bank under this Section 20 shall be subject to
12
C.F.R. § 545.121.
|
21.
|
SUCCESSOR
TO THE BANK
|
The
Bank
shall require any successor or assignee, whether direct or indirect, by
purchase, merger, consolidation or otherwise, to all or substantially all the
business or assets of the Bank, expressly and unconditionally to assume and
agree to perform the Bank’s obligations under this Agreement, in the same manner
and to the same extent that the Bank would be required to perform if no such
succession or assignment had taken place.
12
SIGNATURES
IN
WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly
authorized officer, and Executive has signed this Agreement, on the day and
date
first above written.
| ATTEST: |
FAIRPORT
SAVINGS BANK
|
|
| |
|
|
| /s/ Xxxxxx X. Xxxxxx | By: | /s/ D. Xxxxxxxx Xxxx |
|
Secretary
|
Chairman
of the Board
|
|
| WITNESS: |
EXECUTIVE:
|
|
| |
|
|
| /s/ Xxxxx Xxxx | By: | /s/ Xxxx X. Xxxxxxx |
|
|
Xxxx
Xxxxxxx
|
|
13
