EXHIBIT 10.8
AGREEMENT
THIS AGREEMENT is dated the 15th day of March 2001 among Commonwealth
Bancorp, Inc. (the "Company"), Commonwealth Bank (the "Bank"), a Pennsylvania
chartered savings bank and a wholly owned subsidiary of the Company, and Xxxxxxx
X. Xxxxxxx (the "Executive"). This Agreement shall be effective May 1, 2001.
WITNESSETH
WHEREAS, the Executive is presently Chairman of the Board and Chief
Executive Officer of the Company and the Bank (together, the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's continued
participation in the business of the Employers, and the Employers desire to have
this new Agreement supersede their respective current agreements with the
Executive dated October 20, 1998;
WHEREAS, the Executive desires to retire as Chief Executive Officer of the
Company and the Bank effective May 1, 2001 and to continue as Chairman of the
Board of the Company and as Corporate Secretary for both the Company and the
Bank; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the terms of such
employment;
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. RETIREMENT AS CHIEF EXECUTIVE OFFICER. Effective May 1, 2001, the
Executive agrees that he will retire as Chief Executive Officer of the Company
and as Chief Executive Officer of the Bank.
2. TERMINATION OF EMPLOYMENT AGREEMENT. Effective with his retirement as
Chief Executive Officer of the Company and the Bank on May 1, 2001, the parties
hereto agree that the Executive's employment agreement with the Company dated
October 20, 1998 and his employment agreement with the Bank dated October 20,
1998 (collectively, the "1998 Employment Agreements") shall be terminated by
mutual agreement. The Executive agrees that by electing early retirement he is
voluntarily relinquishing all of his rights under the 1998 Employment
Agreements.
3. CONTINUATION AS A DIRECTOR OF THE COMPANY AND THE BANK. The parties
hereto agree that the Executive shall continue to serve as a director of both
the Company and the Bank, in each case at least until his term as a director of
the Company and the Bank expires in 2003. Any extension beyond the expiration of
such term in 2003 shall be subject to the mutual agreement of the parties.
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4. CONTINUATION AS CHAIRMAN OF THE BOARD AND CORPORATE SECRETARY. The
parties hereto agree that the Executive shall continue to serve as Chairman of
the Board of the Company and shall serve as Corporate Secretary of both the
Company and the Bank, in each case at least until the Executive's term as a
director of the Company and the Bank expires in 2003. Any extension beyond the
expiration of such term in 2003 shall be subject to the mutual agreement of the
parties. Under the Company's Bylaws, the Chairman is deemed to be an officer of
the Company. The Executive agrees to make himself available to consultations
with the President of the Company and the Bank with respect to all banking,
transition and Board matters.
5. HEALTH INSURANCE. The parties hereto agree that the Bank shall continue
to provide health and accident insurance to the Executive and his spouse for a
period of five years from May 1, 2001, with the coverage to be substantially
identical to the coverage currently maintained by the Bank for the Executive.
The coverage for the Executive's spouse shall continue even if the Executive
dies prior to the expiration of such five-year period.
6. AUTOMOBILE. The Company and the Bank agree to continue to provide the
Executive with the use of his Bank-leased automobile until the expiration of the
current lease in December 2001. During this period, the Company and the Bank
agree to pay all costs associated with such automobile, including lease costs,
registration, licensing and insurance.
7. DURATION OF AND RIGHT TO EXERCISE STOCK OPTIONS. (a) The parties hereto
agree that the duration of the Executive's stock options granted by the Company,
and the Executive's right to exercise such stock options, shall not be affected
in any way by the Executive's retirement as Chief Executive Officer effective
May 1, 2001. For so long as the Executive remains as Chairman of the Board of
the Company and Corporate Secretary of both the Company and the Bank, the
duration of his stock options and the period of time that he has to exercise his
stock options shall not be affected.
(b) During his service as Chairman of the Board of the Company and
Corporate Secretary of both the Company and the Bank, the Executive shall
continue to vest in the ordinary course in his currently unexercisable stock
options granted by the Company. In the event that the Executive's service as
Chairman of the Board and Corporate Secretary terminates due to death,
Disability or Retirement, or in the event there is a Change in Control of the
Company (as such terms are defined in the Company's stock option plans), then
all stock options then held by the Executive shall be deemed fully vested and
exercisable in accordance with the terms of the Company's stock option plans.
8. REQUIRED EXERCISE OF STOCK OPTIONS. The Executive agrees to exercise on
or before May 31, 2001 a total of 102,610 incentive stock options that currently
have an exercise price of $4.81 per share. The Executive further agrees to hold
the 102,610 shares of the Company's common stock ("Common Stock") to be received
upon such exercise for at least one year from the date of exercise, provided
that there is no Change in Control of the Company (as defined in the October 20,
1998 Employment Agreements) during such one-year period.
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9. CONTINUED VESTING OF RESTRICTED STOCK AWARDS. During his service as
Chairman of the Board of the Company and Corporate Secretary of both the Company
and the Bank, the Executive shall continue to vest in the ordinary course in his
currently unvested restricted stock awards granted by the Company. In the event
that the Executive's service as Chairman of the Board and Corporate Secretary
terminates due to death, Disability or Retirement, or in the event there is a
Change in Control of the Company (as such terms are defined in the Company's
restricted stock plans), then all unvested restricted stock awards then held by
the Executive shall be deemed fully vested in accordance with the terms of the
Company's stock plans.
10. RIGHT TO SELL SHARES; RIGHT OF FIRST REFUSAL. Following the public
release of the Company's earnings for the quarter ending March 31, 2001, the
Executive shall have the right to sell up to 112,000 shares of Common Stock.
Prior to any sale of such shares in the open market, the Executive shall give
the Company a right of first refusal to purchase such shares at the then current
market price by providing written notice to the Company of the number of shares
to be sold and the then current market price per share. The Company shall have a
period of three business days from the date of receiving notice from the
Executive to exercise its right of first refusal.
11. REQUIREMENT TO CONTINUE TO HOLD COMMON STOCK IN THE BANK'S VOLUNTARY
INVESTMENT PLAN. The Executive agrees that he will continue to hold the 76,400
shares of Common Stock currently held in his account balance under the Bank's
Voluntary Investment Plan, either by maintaining his account balance under the
Voluntary Investment Plan or by holding such shares if the account balance is
distributed to the Executive, for a period of five years from May 1, 2001,
provided that (a) the Executive does not die during such five-year period, (b)
there is no Change in Control of the Company (as defined in the October 28, 1998
Employment Agreements) during such five-year period, and (c) there is no failure
to re-nominate or re-elect the Executive as a director of each of the Employers
during such five-year period (excluding any voluntary resignation by the
Executive).
12. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. (a) The parties hereto agree
that upon the retirement of the Executive as Chief Executive Officer of the
Company and the Bank effective May 1, 2001, the Executive shall be entitled to
receive early retirement benefits pursuant to Section 3.2 of the Bank's
Supplemental Executive Retirement Plan, as amended effective January 1, 1998
(the "SERP"). The parties agree that the lump sum benefit as of the May 1, 2001
retirement date shall be $1,154,319.
(b) In consideration of the Executive agreeing to continue to provide
services as Chairman of the Board of the Company and as Corporate Secretary of
both the Company and the Bank, and in consideration of the other provisions
contained herein, the Employers increased the lump sum benefit set forth in
Section 12(a) above by $25,000, which amount the parties acknowledge is payment
in full for such services.
(c) The parties agree that the Employers shall contribute the requisite
funds to the rabbi trust Deferred Compensation Trust Agreement of the Bank dated
September 18, 1995, as amended
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(the "Trust"), with respect to the above benefits on or before May 1, 2001. The
Bank agrees that it will direct the trustee of the Trust to use the combined
lump sum benefit of $1,154,319 to purchase an annuity which provides for a
10-year, certain benefit.
(d) The Executive agrees to have his SERP benefits paid to him in the form
of a 10-year, certain benefit.
13. EMPLOYEE STOCK OWNERSHIP PLAN AND EXCESS BENEFIT PLAN. The parties
hereto agree that the Executive shall not be entitled to any additional
contributions to his accounts under the Company's Employee Stock Ownership Plan
("ESOP") and Excess Benefit Plan ("EBP") based upon his compensation. The
Employers agree that the Executive is fully vested as to his account balances
under the ESOP and the EBP, and the Executive shall be entitled to receive
distributions from such plans in accordance with the terms of the plans.
14. TARGET BENEFIT PLAN AND VOLUNTARY INVESTMENT PLAN. The parties hereto
agree that no additional contributions shall be made to the Bank's Target
Benefit Plan or Voluntary Investment Plan on behalf of or by the Executive on or
after May 1, 2001. The Employers agree that the Executive is fully vested as to
his account balances under the Target Benefit Plan and the Voluntary Investment
Plan, and the Executive shall be entitled to receive distributions from such
plans in accordance with the terms of the plans.
15. NON-COMPETITION.
(a) The Executive hereby agrees that from May 1, 2001 until three
years after he ceases to be a director of either the Company or the Bank, the
Executive will not (i) engage in the banking or financial services business
other than on behalf of the Company or the Bank or their affiliates within the
Market Area (as hereinafter defined), (ii) directly or indirectly own, manage,
operate, control, be employed by, or provide management or consulting service in
any capacity to any firm, corporation or other entity (other than the Company or
the Bank or their affiliates) engaged in the banking or financial services
business in the Market Area, or (iii) directly or indirectly solicit or
otherwise intentionally cause any employee, officer or member of the respective
Board of Directors of the Company or the Bank or any of their affiliates to
engage in any action prohibited under (i) or (ii) of this Section 15(a);
provided that the ownership by the Executive as an investor of not more than
five percent of the outstanding shares of stock of any corporation whose stock
is listed for trading on any securities exchange or is quoted on the automated
quotation system of the National Association of Securities Dealers, Inc., or the
shares of any investment company as defined in Section 3 of the Investment
Company Act of 1940, as amended, shall not in itself constitute a violation of
the Executive's obligations under this Section 15(a).
(b) The Executive acknowledges and agrees that irreparable injury
will result to the Employers in the event of a breach of any of the provisions
of this Section 15 (the "Designated Provisions") and that the Employers will
have no adequate remedy at law with respect thereto. Accordingly, in the event
of a material breach of any Designated Provision, and in addition to any
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other legal or equitable remedy the Employers may have, the Employers shall be
entitled to the entry of a preliminary and permanent injunction to restrain the
violation or breach thereof by the Executive or any affiliates, agents or any
other persons acting for or with the Executive in any capacity whatsoever.
(c) It is the desire and intent of the parties that the provisions
of this Section 15 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Section 15 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of such
provision in the particular jurisdiction in which such adjudication is made. In
addition, should any court determine that the provisions of this Section 15
shall be unenforceable with respect to scope, duration or geographic area, such
court shall be empowered to substitute, to the extent enforceable, provisions
similar hereto or other provisions so as to provided to the Employers, to the
fullest extent permitted by applicable law, the benefits intended by this
Section 15.
(d) As used herein, "Market Area" shall mean Berks, Bucks, Chester,
Delaware, Lehigh, Xxxxxxxxxx and Philadelphia Counties in the State of
Pennsylvania.
16. MITIGATION; EXCLUSIVITY OF BENEFITS.
(a) The Executive shall not be required to mitigate the amount of any
payments and benefits hereunder by seeking other employment or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
17. ASSIGNABILITY. The Employers may assign this Agreement and their
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Employers may hereafter merge or
consolidate or to which the Employers may transfer all or substantially all of
their assets, if in any such case said corporation, bank or other entity shall
by operation of law or expressly in writing assume all obligations of the
Employers hereunder as fully as if it had been originally made a party hereto,
but may not otherwise assign this Agreement or its rights and obligations
hereunder. The Executive may not assign or transfer this Agreement or any of his
obligations hereunder.
18. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
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To the Bank: Xxxxxxx X. Xxxx, President
Commonwealth Bank
0 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
To the Corporation: Xxxxxxx X. Xxxx, President
Commonwealth Bancorp, Inc.
0 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
To the Executive: Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
19. CONFIDENTIALITY. The Executive acknowledges that by virtue of his
employment hereunder, he will maintain an intimate knowledge of the activities
and affairs of the Employers, including confidential matters. As a result, the
Executive agrees to maintain the confidentiality of all confidential information
relating to the Employers during the term of employment hereunder and for a
period of three years thereafter, provided that nothing in this Section 19 shall
be deemed to prevent the Executive from either (a) being employed by any other
corporation, firm or entity upon termination of the Executive's employment by
the Employers as long as the Executive does not violate the foregoing
prescription, or (b) responding to inquiries from regulatory authorities.
20. ARBITRATION. The Executive and the Employers agree to submit to final
and binding arbitration pursuant to the rules of the American Arbitration
Association, any and all claims arising from the termination, for any reason, of
the Executive's employment by the Employers including, but not limited to:
(a) any and all claims for benefits (including without limitation health
and welfare benefits);
(b) any and all claims for wrongful discharge and breach of contract
(whether express or implied), and implied covenants of good faith and fair
dealing;
(c) any and all claims for alleged employment discrimination on the basis
of age, race, color, religion, sex, national origin, veteran status, disability
and/or handicap, in violation of any federal, state or local statute, ordinance,
judicial precedent or executive order, including but not limited to claims for
discrimination under the following statutes: Title VII of the Civil Rights Act
of 1964, 42 U.S.C. ss.2000 et. seq., the Civil Rights Act of 1866, 42 U.S.C.
ss.1981, the Age Discrimination in Employment Act, as amended, 29 U.S.C. ss.621
et. seq., the Older Workers Benefit Protection Act, the Rehabilitation Act of
1972, as amended, 29 U.S.C. ss.701 et. seq., the Americans with Disabilities
Act, 42 U.S.C. ss.12101 et. seq., and the Pennsylvania Human Relations Act, 43
P.S. ss.951 et. seq.;
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(d) any and all claims under any federal or state statute relating to
employee benefits or pensions;
(e) any and all claims in tort (including but not limited to any claims
for misrepresentation, defamation, interference with contract or prospective
economic advantage, intentional infliction of emotional distress and
negligence); and
(f) any and all claims for attorney's fees and costs.
21. AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employers to sign on
their behalf. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
22. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.
23. NATURE OF OBLIGATIONS. Nothing contained herein shall create or
require the Employers to create a trust of any kind to fund any benefits which
may be payable hereunder (other than Section 11 hereof), and to the extent that
the Executive acquires a right to receive benefits from the Employers hereunder,
such right shall be no greater than the right of any unsecured general creditor
of the Bank.
24. HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
25. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
26. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
27. REGULATORY PROVISIONS. This Agreement shall be subject to the
provisions of 12 C.F.R. ss.563.39(b), 12 U.S.C. ss.1828(k), 12 C.F.R. Part 359
and any successors to such provisions, to the extent that such provisions are
applicable by their terms.
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28. ENTIRE AGREEMENT. This Agreement embodies the entire agreement between
the Employers and the Executive with respect to the matters agreed to herein.
All prior agreements between the Employers and the Executive with respect to the
matters agreed to herein, including without limitation the 1998 Employment
Agreements are hereby superseded and shall have no force or effect.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Attest: COMMONWEALTH BANCORP, INC.
_____________________________ By:_____________________________________
Xxxxxxx X. Xxxx, President Xxxxxx X. Xxxxx, Xx., Director and
Member of the Compensation and
Benefits Committee of the Board
of Directors
Attest: COMMONWEALTH BANK
_____________________________ By:_____________________________________
Xxxxxxx X. Xxxx, President Xxxxxx X. Xxxxx, Xx., Director and
Member of the Compensation and
Benefits Committee of the Board
of Directors
Witness: EXECUTIVE
_____________________________ By:_____________________________________
Xxxxxxx X. Xxxx, President Xxxxxxx X. Xxxxxxx
