EXHIBIT 10.4
AGREEMENT
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AGREEMENT, dated this 1st day of May, 1997, between ML Bancorp, Inc.
(the "Corporation") and Xxxxxx X. Xxxxx (the "Executive).
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation and
Main Line Bank (the "Bank") (together, the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers, and the Bank
currently has an agreement with the Executive dated January 6, 1995, which is
being concurrently amended;
WHEREAS, in accordance with Office of Thrift Supervision ("OTS")
Regulatory Bulletin 27a, the Corporation and the Bank desire to enter into
separate agreements with the Executive with respect to his employment by each of
the Employers; 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 severance benefits
which shall be due the Executive by the Corporation in the event that his
employment with the Corporation is terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings
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set forth below for the purposes of this Agreement:
(a) Average Annual Compensation. The Executive's "Average Annual
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Compensation" for purposes of this Agreement shall be deemed to mean the average
level of compensation paid to the Executive by the Employers or any subsidiary
thereof during the most recent five taxable years preceding the Date of
Termination, including Base Salary and bonuses under any employee benefit plans
of the Employers.
(b) Base Salary. "Base Salary" shall have the meaning set forth in
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Section 3(a) hereof.
(c) Cause. Termination of the Executive's employment for "Cause"
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shall mean termination because of personal dishonesty, incompetence, willful
misconduct, 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 or material breach of any provision of this Agreement.
(d) Change in Control of the Corporation. "Change in Control of the
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Corporation" shall mean a change in control of a nature than would be required
to be reported in
response to Item (9e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or any successor
thereto, whether or not the Corporation is registered under the Exchange Act;
provided that, without limitation, such a change in control shall be deemed to
have occurred if (i) any "person" (as such 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
corporation representing 25% or more of the combined voting power of the
corporation's then outstanding securities; or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Corporation cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
(e) Code. "Code" shall mean the Internal Revenue Code of 1986, as
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amended.
(f) Date of Termination. "Date of Termination" shall mean (i) if
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the Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(g) Disability. Termination by the Corporation of the Executive's
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employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employers or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(h) Good Reason. Termination by the Executive of the Executive's
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employment for "Good Reason" shall mean termination by the Executive
following a Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, a
reduction by either of the Employers in the Executive's Base Salary as the
same may be increased from time to time or, except to the extent permitted
by Section 3(b) hereof, a reduction in the package of fringe benefits
provided to the Executive, taken as a whole;
(ii) The principal executive office of either of the Employers
is relocated outside of the Villanova, Pennsylvania area or, without the
Executive's express written consent, either of the Employers requires the
Executive to be based anywhere other than an area in which the Employers'
principal executive office is located, except for required travel on
business of the Employers to an extent substantially consistent with the
Executive's present business travel obligations;
(iii) Any purported termination of the Executive's employment
for Cause, Disability or Retirement which is not effected pursuant to a
Notice of Termination satisfying the requirements of paragraph (j) below;
or
(iv) The failure by the Corporation to obtain the assumption
of and agreement to perform this Agreement by any successor as contemplated
in Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
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(j) Notice of Termination. Any purported termination of the
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Executive's employment by the Corporation for any reason, including without
limitation for Cause, Disability or Retirement, or by the Executive for any
reason, including without limitation for Good Reason, shall be communicated by
written "Notice of Termination" to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated, (iii) specified a Date of Termination, which shall be not less than
thirty (30) nor more than ninety (90) days after such Notice of Termination is
given, except in the case of the Corporation's termination of Executive's
employment for Cause, which shall be effective immediately; and (iv) is given in
the manner specified in Section 10 hereof.
(k) Retirement. "Retirement" shall mean voluntary termination by
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The Executive in accordance with the Employers' retirement policies, including
early retirement, generally applicable to their salaried employees.
2. Term of Employment.
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(a) The Corporation hereby employs the Executive as President and Chief
Executive Officer and Executive hereby accepts said employment and agrees to
render such services to the Corporation on the terms and conditions set forth in
this Agreement. The term of employment under this Agreement shall be for three
years, commencing on the date of this Agreement and, upon approval of the Board
of Directors of the Corporation, shall extend for an additional year on each
annual anniversary of the date of this Agreement such that at any time the
remaining term of this Agreement shall be from two to three years. Prior to the
first annual anniversary of the date of this Agreement and each annual
anniversary thereafter, the Board of Directors of the Corporation shall consider
and review (with appropriate corporate documentation thereof, and after taking
into account all relevant factors, including the Executive's performance
hereunder) extension of the term under this Agreement, and the term shall
continue to extend each year if the Board of Directors approves such extension
unless the Executive gives written notice to the Corporation of the Executive's
election not to extend the term, with such written notice to be given not less
than thirty (30) days prior to any such anniversary date. If the Board of
Directors elects not to extend the term, it shall give written notice of such
decision to the Executive not less than thirty (30) days prior to any such
anniversary date. If any party gives timely notice that the term will not be
extended as of any annual anniversary date, then this Agreement shall terminate
at the conclusion of its remaining term. References herein to the term of this
Agreement shall refer both to the initial term and successive terms.
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Corporation as may be consistent with his titles and
from time to time assigned to him by the Corporation's Board of Directors.
3. Compensation and Benefits.
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(a) The Employers shall compensate and pay Executive for his services
during the term of this Agreement at a minimum base salary of $330,000 per year
("Base Salary"), which may be increased from time to time in such amounts as may
be determined by the Boards of Directors of the Employers and may not be
decreased without the Executive's express written consent. In addition to this
Base Salary, the Executive shall be entitled to receive during the term of this
Agreement such bonus payments as may be determined by the Boards of Directors of
the Employers.
(b) During the term of the Agreement, Executive shall be entitled to
participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, employee stock ownership, or other
plans, benefits and privileges given to employees and executives of the
Employers, to the extent commensurate with his then duties and responsibilities,
as fixed by the Boards of Directors of the Employers. The Corporation shall not
make any changes in such plans, benefits or privileges which would adversely
affect Executive's rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of the corporation
and does not result in a proportionately greater adverse change in the rights of
or benefits to Executive as compared with any other executive officer of the
Corporation. Nothing paid to Executive under any plan or arrangement presently
in effect or made available in the future shall be deemed to be in lieu of the
salary payable to Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, Executive shall be entitled to
paid annual vacation in accordance with the policies as established from time to
time by the Boards of Directors of the Employers, which shall in no event be
less than four weeks per annum. Executive shall not be entitled to receive any
additional compensation from the Employers for failure to take a vacation, nor
shall Executive be able to accumulate unused vacation time from one year to the
next, except to the extent authorized by the Boards of Directors of the
Employers.
(d) During the term of this Agreement, the Employers shall continue to
provide the Executive with the automobile he presently drives. The Employers
shall be responsible and shall pay for all costs of insurance coverage, repairs,
maintenance and other incidental expenses, including license, fuel and oil. The
Employers shall provide the Executive with a replacement automobile of a similar
type as selected by the Executive at approximately the time that his present
automobile reaches (3) years of age and approximately every three (3) years
thereafter, upon the same terms and conditions.
(e) During the term of this Agreement, the Employers shall pay the
Executive's annual membership dues at one (1) club of his choice.
(f) The Employers shall provide continued medical insurance for the
benefit of the Executive and his spouse until the Executive shall have attained
the age of 66, and such insurance shall be comparable to that which is provided
to the Executive as of the date of this Agreement notwithstanding anything to
the contrary in this Agreement.
(g) In the event of the Executive's death during the term of this
Agreement, his spouse, estate, legal representative or named beneficiaries (as
directed by the
Executive in writing) shall be paid on a monthly basis the Executive's annual
compensation from the Employer at the rate in effect at the time of the
Executive's death for a period of twenty-four (24) months from the date of the
Executive's death.
(h) The Executive's compensation, benefits and expenses shall be paid
by the Corporation and the Bank in the same proportion as the time and services
actually expended by the Executive on behalf of each respective Employer.
4. Expenses. The Employers shall reimburse Executive or otherwise provide
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for or pay for all reasonable expenses incurred by Executive in furtherance of,
or in connection with the business of the Employers, including, but not by way
of limitation, automobile expenses described in Section 3(d) hereof, and
traveling expenses, and all reasonable entertainment expenses (whether incurred
at the Executive's residence, while traveling or otherwise), subject to such
reasonable documentation and other limitations as may be established by the
Boards of Directors of the Employers. If such expenses are paid in the first
instance by Executive, the Employers shall reimburse the Executive therefore.
5. Termination.
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(a) The Corporation shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event that (i) Executive's employment is terminated by the
Corporation for Cause, Disability or Retirement, or (ii) Executive terminates
his employment hereunder other than for Good Reason, Executive shall have no
right pursuant to this Agreement to compensation or other benefits for any
period after the applicable Date of Termination, except as provided for in
Section 3(f) in the event of termination for Disability or Retirement.
(c) In the event that (i) Executive's employment is terminated by the
Corporation for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive (a) due to a
material breach of this Agreement by the Corporation, which breach has not been
cured within fifteen (15) days after a written notice of non-compliance has been
given by the Executive to the Employers, or (b) for Good Reason, then the
Corporation shall
(A) pay to the Executive, in thirty-six (36) equal monthly
installments beginning with the first business day of the month following
the Date of Termination, a cash severance amount equal to three (3) times
that portion of the Executive's Base Salary paid by the Corporation, and
(B) maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of employment pursuant hereto prior to the
Notice of Termination or (ii) the date of the Executive's full-time
employment by another employer (provided that the Executive is entitled
under the terms of such employment to benefits substantially similar to
those described in this subparagraph (B)), at no cost to the Executive, the
Executive's continued participation in all group insurance, life insurance,
health and accident, disability and other employee benefit plans, programs
and arrangements offered by the Corporation in which the Executive was
entitled to
participate immediately prior to the Date of Termination (other than
stock option and restricted stock plans of the employers), provided
that in the event that the Executive's participation in any plan,
program or arrangement as provided in this subparagraph (B) is barred,
or during such period any such plan, program or arrangement is
discontinued or the benefits thereunder are materially reduced, the
Corporation shall arrange to provide the Executive with benefits
substantially similar to those which the Executive was entitled to
receive under such plans, programs and arrangements immediately prior
to the Date of Termination.
(d) In the event of the failure by either of the employers to elect or
to re-elect or to appoint or to re-appoint the Executive to the offices of
President and Chief Executive Officer of the Employers or a material
adverse change made by either of the employers in the Executive's
functions, duties or responsibilities as President and Chief Executive
Officer of the Employers without the Executive's express written consent,
the Executive shall be entitled to terminate his employment hereunder and
shall be entitled to the payments and benefits provided for in Section
5(c)(A) and (B).
6. Payment of Additional Benefits under Certain Circumstances.
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(a) If the payments and benefits pursuant to Section 5 hereof, either
alone or together with other payments and benefits which Executive has the
right to receive from the Employers (including, without limitation, the
payments and benefits which Executive would have the right to receive from
the Bank pursuant to Section 5 of the Agreement between the Bank and
Executive dated May 1, 1997 ("Bank Agreement"), before giving effect to any
reduction in such amounts pursuant to Section 6 of the Bank Agreement)
would constitute a "parachute payment" as defined in Section 280G(b)(2) of
the Code (the "Initial Parachute Payment," which includes the amounts paid
pursuant to clause (A) below), then the Corporation shall pay to the
Executive, in thirty-six (36) equal monthly installments beginning with the
first business day of the month following the Date of Termination, a cash
amount equal to the sum of the following:
(A) the amount by which the payments and benefits that would have
otherwise been paid by the Bank to the Executive pursuant to Section 5
of the Bank Agreement are reduced by the provisions of Section 6 of
the Bank Agreement;
(B) twenty (20) percent (or such other percentage equal to the
tax rate imposed by Section 4999 of the Code) of the amount by which
the Initial Parachute Payment exceeds the Executive's "base amount"
from the Employers, as defined in Section 280(b)(3) of the Code, with
the difference between the Initial Parachute Payment and the
Executive's base amount being hereinafter referred to as the "Initial
Excess Parachute Payment;"
(C) such additional amount (tax allowance) as may be necessary to
compensate the Executive for the payment by the Executive of state and
federal income and excise taxes on the payment provided under clause
(B) above and on any payments under this clause (C). In computing such
tax allowance, the payment to be made under clause (B) above shall be
multiplied by the "gross up percentage" ("GUP"). The GUP shall be
determined as follows:
Tax Rate
GUP = _______________
1-Tax Rate
The Tax Rate for purposes of computing the GUP shall be the highest
marginal federal and state income and employment-related tax rate,
including any applicable excise tax rate, applicable to the Executive
in the year in which the payment under clause (B) above is made.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which the Executive is a party that the actual excess parachute
payment as defined in Section 280G(b)(1) of the Code is different from the
Initial Excess Parachute Payment (such different amount being hereafter referred
to as the "Determinative Excess Parachute Payment"), then the Corporation's
independent tax counsel or accountants shall determine the amount (the
"Adjustment Amount") which either the Executive must pay to the Corporation or
the Corporation must pay to the Executive in order to put the Executive (or the
Corporation, as the case may be) in the same position the Executive (or the
Corporation, as the case may be) would have been if the Initial excess Parachute
Payment had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent tax counsel or accountants
shall take into account any and all taxes (including any penalties and interest)
paid by or for the Executive or refunded to the Executive or for the Executive's
benefit. As soon as practicable after the Adjustment Amount has been so
determined, the Corporation shall pay the Adjustment Amount to the Executive or
the Executive shall repay the Adjustment Amount to the Corporation, as the case
may be.
(c) In each calendar year that the Executive receives payments of
benefits under this Section 6, the Executive shall report on his state and
federal income tax returns such information as is consistent with the
determination made by the independent tax counsel or accountants of the
Corporation as described above. The Corporation shall indemnify and hold the
Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorneys' fees, interest, fines and penalties)
which the Executive incurs as a result of so reporting such information.
Executive shall promptly notify the Corporation in writing whenever the
Executive receives notice of the institution of a judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Section 6 is being
reviewed or is in dispute. The Corporation shall assume control at its expense
over all legal and accounting matters pertaining to such federal tax treatment
(except to the extent necessary or appropriate for the Executive to resolve any
such proceeding with respect to any matter unrelated to amounts paid or payable
pursuant to this Section 6) and the Executive shall cooperate fully with the
Corporation in any such proceeding. The Executive shall not enter into an
compromise or settlement or otherwise prejudice any rights the Corporation may
have in connection therewith without the prior consent of the Corporation.
7. Mitigation; Exclusivity of Benefits.
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(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such
benefits be reduced by any compensation earned by the Executive as a result of
employment by another employer after the Date of Termination 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.
8. Withholding. All payments required to be made by the Corporation
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hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Corporation may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
9. Assignability. The Corporation may assign this Agreement and its rights
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and obligations hereunder in whole, but not in part, to any corporation, bank or
other entity with or into which the Corporation may hereafter merge or
consolidate or to which the Corporation may transfer all or substantially all of
its 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
Corporation 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 rights
or obligations hereunder.
10. Notice. For the purposes of this Agreement, notices and all other
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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:
To the Corporation:
Chairman of the Board
ML Bancorp, Inc.
Xxx Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx and Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
To the Bank:
Chairman of the Board
Main Line Bank
Two Aldwyn Center
Lancaster Avenue and Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
To the Executive:
Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
11. Amendment; Waiver. No provisions of this Agreement may be modified,
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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 Corporation to sign on its 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.
12. Governing Law. The validity, interpretation, construction and
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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.
13. Nature of Obligations. Nothing contained herein shall create or
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required the Corporation to create a trust of any kind to fund any benefits
which may be payable hereunder, and to the extent that the Executive acquires a
right to receive benefits from the Corporation hereunder, such right shall be no
greater than the right of any unsecured general creditor of the Corporation.
14. Headings. The section headings contained in this Agreement are for
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reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of this
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Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Entire Agreement. This Agreement embodies the entire agreement between
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the Corporation and the Executive with respect to the matters agreed to herein.
All prior agreements between the Corporation and the Executive with respect to
the matters agreed to herein are hereby superseded and shall have no force or
effect. Notwithstanding the foregoing, nothing contained in this Agreement shall
affect the agreement of even date being entered into between the Bank and the
Executive.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
/S/ ML BANCORP, INC.
/S/ XXXXXX X. XXXXX
