Exhibit 10-2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
this ______ day of ___________________, 1998, by and between Cortland Savings
Bank (the "Bank") and F. Xxxxxxx Xxxxxxxxx ("Xx. Xxxxxxxxx").
In consideration of the mutual covenants set forth below, the parties agree
as follows:
1. EMPLOYMENT. The Bank hereby employs Xx. Xxxxxxxxx as its Executive Vice
President and Chief Operating Officer and Xx. Xxxxxxxxx accepts such
employment during the Employment Period. Employment subsequent to the
Employment Period shall be employment at will, unless otherwise provided
for by a separate, mutually agreed and duly executed agreement subsequently
entered into by the parties.
2. EMPLOYMENT PERIOD. This Agreement shall be in effect for three years
beginning on the date set forth above (the "Employment Period").
3. DUTIES. During the Employment Period, Xx. Xxxxxxxxx shall:
(a) devote his full business time and attention to the business and affairs
of the Bank, its parent and subsidiary corporations (if any), and use his
best efforts to advance their interests;
(b) serve as Executive Vice President and Chief Operating Officer of the
Bank; and
(c) have such functions, duties and responsibilities not inconsistent with
his title and office as may be assigned to him by or under the authority of
the Chief Executive Officer of the Bank or the Board.
4. COMPENSATION, SALARY AND BONUS.
During the Employment Period, the Bank shall pay to Xx. Xxxxxxxxx a salary
at an annual rate of $110,000 or such higher annual rate as may be provided
for by the Board in its discretion.
5. EMPLOYEE BENEFIT PLANS AND PROGRAMS; OTHER COMPENSATION. Xx. Xxxxxxxxx
shall be entitled to participate in and receive benefits under the Bank's
pension plan, group life and health and disability insurance plans, and
such other employee benefit plans and programs as the Bank may maintain
from time to time, on terms no less favorable than any other similarly
situated employee.
6. BOARD MEMBERSHIPS AND PERSONAL ACTIVITIES. Xx. Xxxxxxxxx may serve as a
member of the board of directors of such business, community and charitable
organizations as he shall disclose to the Board from time to time, and he
may engage in personal business and investment activities for his own
account; provided, however, that such service and personal business and
investment activities shall not (a) interfere with the performance of
his duties under this Agreement or (b) involve entities which either
compete with the Bank or may reasonably be expected to impact negatively on
the Bank's standing and reputation in the community it serves.
7. EXPENSES. The Bank shall reimburse Xx. Xxxxxxxxx for his ordinary and
necessary reasonable business expenses incurred in connection with the
performance of his duties under this Agreement upon presentation to the
Bank of itemized accounts in such form as the Bank may reasonably require.
The Bank shall also reimburse Xx. Xxxxxxxxx for his reasonable moving
expenses in moving his personal effects, furniture and household goods to
Cortland. Xx. Xxxxxxxxx shall be entitled annually to four weeks of paid
vacation during the Employment Period.
8. TERMINATION GIVING RISE TO SEVERANCE BENEFITS.
(a) If Xx. Xxxxxxxxx'x employment with the Bank is terminated prior to the
end of the Employment Period for any reason other than the reasons
described in 8(b) below, including, without limitation, a resignation by
Xx. Xxxxxxxxx, then the Bank shall pay Xx. Xxxxxxxxx for each year, or
portion thereof, left in the unexpired Employment Period a termination
payment equal to one year's, or portion thereof, regular salary at the
annual rate being paid to Xx. Xxxxxxxxx immediately prior to such
termination, reduced by the aggregate market value immediately prior to
such termination of any vested stock grants and vested in-the-money stock
options which may have been issued to Xx. Xxxxxxxxx during the Employment
Period pursuant to such employee benefit programs adopted by the Bank.
(b) Xx. Xxxxxxxxx shall not be entitled to receive the benefits described
in (a) if his employment is terminated:
(i) for Cause (as defined in Section 10(a) of the Agreement);
(ii) upon his resignation not for Good Reason (as defined in
Section 10(b) of this Agreement);
(iii) on account of his death; or
(iv) has been absent from the full-time service of the Bank on
account of his Disability (as defined in Section 12 of this
Agreement) for at least three consecutive months, and he fails to
return to work full-time within thirty days after written notice
requesting such return is given to Xx. Xxxxxxxxx by the Bank.
(c) Xxxxxxxxx shall not be required to mitigate the amount of payment
provided for in this section nor shall any payment be reduced by any
compensation or benefit earned by or paid to Xx. Xxxxxxxxx after
termination regardless of source.
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9. TERMINATION WITHOUT SEVERANCE BENEFITS. If Xx. Xxxxxxxxx'x employment is
terminated for the reasons described in 8(b)(I) through 8(b)(iv), then the
Bank shall have no further obligations under this Agreement, other than to
pay accrued but unpaid salary.
10. DEFINITION OF FOR CAUSE AND RESIGNATION FOR GOOD REASON.
(a) Termination for "Cause," shall mean personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law
(other than traffic violations or similar offense), willful violation of
any law, rule or regulation or final cease and desist order applicable to
the Bank, or material breach of any provision of this Agreement, in each
case as measured against standards generally prevailing at the relevant
time in the savings and community banking industry.
(b) Xx. Xxxxxxxxx'x resignation shall be deemed a resignation for Good
Reason if Xx. Xxxxxxxxx resigns within two months after any one or more of
the following events:
(i) the assignment to Xx. Xxxxxxxxx of any duties inconsistent with Xx.
Xxxxxxxxx'x status as Executive Vice President and Chief Operating Officer
of the Bank;
(ii) any reduction in Xx. Xxxxxxxxx'x salary unless mandated by any
regulatory authority having jurisdiction over the Bank;
(iii) the relocation of either the Bank's executive offices or the
principal location at which Xx. Xxxxxxxxx works outside of Cortland County;
(iv) the failure of the Bank to pay, within seven days of the date when
due, any portion of Xx. Xxxxxxxxx'x compensation, which failure is not
inadvertent and immaterial and which is not promptly cured by the Bank
after notice of such failure is given to the Bank by Xx. Xxxxxxxxx; or
(v) a material breach of the Agreement by the Bank, which the Bank fails to
cure within thirty days following written notice thereof from Xx.
Xxxxxxxxx.
11. DEFINITION OF CHANGE IN CONTROL. For purposes of this Agreement, a Change
in Control of the Bank shall occur if:
(a) any "person" (as such term is used in sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), other than
(I) the holding company to be formed in connection with the conversion of
the Bank to the stock form of ownership; or (ii) a trustee or other
fiduciary holding securities under an employee benefit plan maintained for
the benefit of employees of the Bank, becomes the "beneficial owner" (as
defined in rule 13d-3 promulgated under the 1934 Act), directly or
indirectly, of securities issued by the Bank representing 25% or more of
the combined voting power of all of the Bank's then outstanding securities;
or
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(b) the individuals who on the date this Agreement is made are members of
the Board, together with their successors as defined below, cease for any
reason to constitute a majority of the members of the Board; or
(c) the shareholders of the Bank approve either:
(i) a merger or consolidation of the Bank with any other corporation, other
than a merger or consolidation following which both of the following
conditions are satisfied:
(A) either (x) the members of the Board of the Bank immediately prior to
such merger or consolidation constitute at least a majority of the members
of the governing body of the institution resulting from such merger or
consolidation; or (y) the shareholders of the Bank own securities of the
institution resulting from such merger or consolidation representing eighty
percent or more of the combined voting power of all such securities of the
Bank before such merger or consolidation; and
(B) the entity which results from such merger or consolidation expressly
agrees in writing to assume and perform the Bank's obligations under this
Agreement; or
(ii) a plan of complete liquidation of the Bank or an Agreement for the
sale or disposition by the Bank of all or substantially all of its assets;
and
(d) any event which would be described in sections 11(a), (b) or (c) if
the term "Parent Corporation of the Bank" were substituted for the term
"Bank" therein. Such an event shall be deemed a Change in Control under
the relevant provisions of sections 11(a), (b) or (c).
(e) It is understood and agreed that more than one Change in Control may
occur at the same time or different times during the Employment Period and
that the provisions of this Agreement shall apply with equal force and
effect with respect to each such Change in Control.
12. ADDITIONAL DEFINITIONS. "Disability" shall mean any physical or mental
condition which makes Xx. Xxxxxxxxx reasonably unable to perform any
material portion of his services as an officer of the Bank, as defined in
the Bank's disability insurance program. "Successors" as used in Section
11(b) shall mean any person who, in the future, is elected or nominated for
election to the Board by a majority of the directors of the Bank then in
office who are either directors of the Bank as of the date of this
Agreement or who are themselves successors as defined in this sentence.
13. ADDITIONAL RETENTION BENEFIT.
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(a) If during the Employment Period there occurs a Change in Control
approved by the Board of Directors, and within six (6) months after such
Change in Control Xx. Xxxxxxxxx either is terminated other than for Cause
or resigns for a Good Reason, then the Bank shall pay to Xx. Xxxxxxxxx an
amount equal to the amount described in section 8(a).
(b) If during the Employment Period there occurs a Change in Control not
approved by the Board of Directors, and within six (6) months after such
Change in Control Xx. Xxxxxxxxx either is terminated other than for Cause
or resigns for a Good Reason, then the Bank shall pay to Xx. Xxxxxxxxx an
amount equal to two and ninety nine one hundredths (2.99) times the annual
salary being paid to Xx. Xxxxxxxxx immediately prior to such Change in
Control
(c) In no event shall the amount payable under Sections 13(a) or 13(b)
exceed the maximum permitted to be paid without the imposition of an excise
tax under Section 280G of the Internal Revenue Code.
(d) Amounts paid to Xx. Xxxxxxxxx pursuant to this section or section 8(a),
if they occur under circumstances in which Xx. Xxxxxxxxx would otherwise be
entitled to receive a payment under any employee severance compensation
plan, shall be in lieu of and shall supersede any lesser payments under
such plan.
14. NOTICES. Any communication required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given at
such time as it is delivered personally, or five days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below or at such
other address as one party may by written notice specify to the other
party:
If to Xx. Xxxxxxxxx:
000 Xxxxxx Xxxxxxx
Xxxxxx, Xxx Xxxx 00000
With a copy to:
Xxxxx & Xxxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Xx., Esq.
If to the Bank:
Cortland Savings Bank:
Xxx Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Corporate Secretary
With a copy to:
Xxxxxxx & Xxxxxxxxx, LLP
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00 Xxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: Xxx X. Hack, Esq.
15. SEVERABILITY. A determination that any provision of this Agreement is
invalid or unenforceable shall not effect the validity or enforceability of
any other provisions hereof.
16. WAIVER. Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition. A waiver of any provision of this Agreement must be
made in writing, designated as a waiver, and signed by the party against
who its enforcement is sought. Any waiver or relinquishment of such right
or power at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
17. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without
reference to conflicts of law principles.
18. ENTIRE AGREEMENT; MODIFICATIONS. This instrument contains the entire
agreement of the parties relating to the subject matter hereof, and
supersedes in its entirety any and all prior agreements, understandings or
representations relating to the subject matter hereof between the Bank and
Xx. Xxxxxxxxx. No modifications of this Agreement shall be valid unless
made in writing and signed by the parties hereto.
19. REQUIRED REGULATORY PROVISIONS. The following provisions are included for
the purpose of complying with various laws, rules and regulations
applicable to the Bank. These provisions shall supersede any contrary
provision contained in this Agreement.
(a) Xx. Xxxxxxxxx shall have no right to receive compensation or other
benefits for any period after termination for Cause.
(b) Any payments to Xx. Xxxxxxxxx by the Bank, whether pursuant to this
Agreement or otherwise, are subject to and conditioned upon their
compliance with section 18(k) of the Federal Deposit Insurance Act (the
"FDI Act"), 12 U.S.C. Section 1828(k), and any regulations promulgated
thereunder.
(c) If Xx. Xxxxxxxxx is suspended from office and/or temporarily
prohibited from participating in the conduct of the affairs of the Bank
pursuant to a notice served under section 8(e)(3) or 8(g)(1) of the FDI
Act, 12 U.S.C. Section 1818(e)(3) or 1818(g)(1), the Bank's obligations
under this Agreement shall be suspended as of the date of service of such
notice, unless stayed by appropriate proceedings. If the charges in such
notice are dismissed, the Bank, in its discretion, may (I) pay to Xx.
Xxxxxxxxx all or part of the compensation withheld while the Bank's
obligations hereunder are suspended and (ii) reinstate, in whole or in
part, any of the obligations which were suspended.
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(d) If Xx. Xxxxxxxxx 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 8(g)(1) of the FDI Act, 12 U.S.C. Section 1818(e)(4) or
(g)(1), all obligations of the Bank under this Agreement shall terminate as
of the effective date of the order, but vested rights and obligations of
the Bank and Xx. Xxxxxxxxx shall not be affected.
(e) If the Bank is in default (within the meaning of section 3(x)(1) of
the FDI Act, 12 U.S.C. Section 1813(x)(1)), all obligations of the Bank
under this Agreement shall terminate as of the date of default, but vested
rights and obligations of the Bank and Xx. Xxxxxxxxx shall not be affected.
(f) All obligations of the Bank hereunder shall be terminated, except to
the extent that a continuation of this Agreement is necessary for the
continued operation of the Bank: (I) by the New York Superintendent of
Banks or the Federal Deposit Insurance Corporation ("FDIC"), at the time
the FDIC enters into an agreement to provide assistance to or on behalf of
the Bank under the authority contained in section 13(c) of the FDI Act, 12
U.S.C. Section 1823(c); (ii) by the Superintendent of Banks if the
Superintendent approves a supervisory merger to resolve problems related to
the operation of the Bank or when the Bank is determined to be in an unsafe
or unsound condition. The vested rights and obligations of the parties
shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative as though eliminated by formal amendment to this Agreement.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed and
Xx. Xxxxxxxxx has hereto set his hand, all as of the day and year first
above written.
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Xxxxxxx Xxxxxxxxx
Cortland Savings Bank
By:
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Xxxxxx X. Xxxxxxx, Xx.
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