ACKNOWLEDGMENT AND RELEASE AGREEMENT
EXHIBIT
10.11
This
Acknowledgment and Release Agreement (the “Acknowledgment and Release”) is
entered into as of June 23, 2006, by and among Xxxx X. Xxxxxxxx (“Executive”),
Peoples Savings Bank (the “Bank”) and Xxxxxxxxxx Bancorp, Inc. (the “Company”)
and Sterling Bank (“Sterling”).
WHEREAS,
the
Bank
and the Company have entered into separate Employment Agreements with Executive,
effective as of October 17, 2005 (the “Employment Agreements”), which provide
Executive with a certain severance benefits in the event of Executive’s
termination of employment following a change in control of the Bank or the
Company; and
WHEREAS,
the
Company entered into an Agreement and Plan of Merger by and among the Company,
Sterling and Sterling Banks, Inc., dated as of June 23, 2006 (the “Merger
Agreement”), pursuant to which the Company shall merge with and into Sterling
Banks, Inc.(the “Merger”) and the Bank will merge with and into Sterling, and
thereafter the separate corporate existence of the Company and the Bank shall
cease; and
WHEREAS,
this
Acknowledgment and Release is required under Section 63(e) of the Merger
Agreement; and
WHEREAS,
Section
9(a) of the Employment Agreements provide that Executive shall be eligible
to
receive severance payments, if, within twenty-four (24) months following a
change in control of the Bank or the Company, Executive’s employment is
involuntarily terminated; and
WHEREAS,
in
connection with the Merger, Executive’s employment shall be terminated by the
Bank as of and immediately prior to the effective date of the Merger (the
“Effective Time”), thereby entitling Executive to receive the payments set forth
herein; and
WHEREAS,
pursuant
to section 6.3(e) of the Merger Agreement, the Bank and Sterling have agreed
to
make the payments set forth herein in exchange for the termination of the
Employment Agreements as of the Effective Time and the execution of this
Acknowledgment and Release.
NOW
THEREFORE, in
consideration of the foregoing and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, it is agreed as
follows:
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1.
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Acknowledgement
of Severance Payment.
The Executive shall receive a lump sum payment of [$600,405] (subject
to
recalculation if the Merger closes in 2007), less the present value
of any
benefits paid or payable by the Company and the Bank that are contingent
on a “change of control” as defined under Section 280G of the Internal
Revenue Code of 1986, as amended and the regulations thereunder
(“Code’)(the total amount due under the Employment Agreements),
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| subject to applicable withholding taxes (the “Payment”) in full satisfaction of the cash severance benefit payable under Section 9(a) of the Employment Agreements. Such amount shall equal the product of 2.999 times the Executive’s “base amount” as defined in Code Section 280G, but reduced in such a manner and to such extent that this payment shall not be an “excess parachute payment” under Code Section 280G and shall not be subject to the excise taxes described in Code Section 4999(a). |
Notwithstanding
the foregoing, the Payment will be paid by Sterling or the Bank to the Executive
as of the Effective Time or as soon as permissible thereafter such that there
will not be the imposition of additional taxes and penalties levied against
the
Executive under Code Section 409A resulting from the timing of such
Payment.
If
the
Executive is deemed to be a “Specified Employee” under Code Section 409A, such
payment must be withheld until the required time period provided for in the
regulations promulgated under Code Section 409A.
Under
Code Section 409A, a “Separation from Service” may be required to receive the
Payment.
In
accordance with Code Section 409A, a “separation from service” shall be deemed
to have occurred where a former employee is providing services to a former
employer in a capacity other than as an employee and the former employee is
providing such services at an annual rate that is less than 50 percent of the
services rendered, on average, during the immediately preceding three full
calendar years of employment (or if employed less than three years, such lesser
period) and the annual remuneration for such services is less than 50 percent
of
the annual remuneration earned during the final three full calendar years of
employment (or if less, such lesser period). The annual rate of providing
services is determined based upon the measurement used to determine the
employee’s base compensation (for example, amounts of time required to earn
salary, hourly wages, or payments for specific projects).
Upon
the
Effective Time, at no unreimbursed expense to the Bank, the Executive and his
dependents covered under any medical, dental, eye-care, prescription drugs
or
medical reimbursement or other similar plans sponsored by the Bank as of the
date hereof shall be eligible to continue to participate in all medical, dental,
eye-care, prescription drugs or medical reimbursement or other similar plans
sponsored by the Bank or Sterling, as the successor to the Bank, at the
Executive’s expense for a period of 36 months, on the same terms and conditions
as if the Executive was an employee of the Bank or Sterling following the
Effective Time. This provision shall survive the Merger.
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2.
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Consulting
Agreement.
The Executive shall enter into a Consulting Agreement with Sterling
simultaneously with this Agreement whereby the Executive shall be
retained
as a consultant to Sterling for a period of three years from the
Effective
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| Time during which time certain restrictions shall apply to the Executive with respect to competition, non-solicitation of clients and non-solicitation of employees (collectively, the “Post-Termination Obligations”), all as described in the Consulting Agreement. The Executive shall receive remuneration in support of the Post-Termination Obligations, as described in the Consulting Agreement. |
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3.
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Release
and Waiver.
Executive hereby agrees that the Payment will be in full satisfaction
of
all obligations of the Bank, the Company and Sterling to Executive
under
the Employment Agreements. Executive, the Bank, the Company and Sterling
hereby expressly understand and acknowledge that such Payment shall
not
affect or reduce Executive’s right to receive (i) his salary through the
date of termination in accordance with Section 3(a) of the Employment
Agreement; (ii) any bonus earned for the 2006 calendar year in the
amount
disclosed to the Company in connection with the merger negotiations;
(iii)
continued eligibility to participate in the health insurance coverage
under applicable state and federal group health care continuation
coverage
laws (e.g., Code section 4980B(f)) following Executive’s date of
termination of employment with the Bank; (iv) any benefit vested
in
Executive under any tax-qualified or non-tax qualified employee benefit
plan of the Bank; and (v) any benefit attributable to Executive under
a
stock option plan of the Company (i.e. the 1999 Stock Option Plan
and 2002
Stock Option Plan).
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4.
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General
Provisions.
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(a)
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Heirs,
Successors and Assigns.
The terms of this Acknowledgment and Release shall be binding upon
the
parties hereto and their respective heirs, successors and assigns,
including but not limited to the Bank, the Company, and
Sterling.
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(b)
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Final
Agreement.
This Acknowledgment and Release represents the entire understanding
of the
parties with respect to the subject matter hereof and supersedes
all prior
understandings, written or oral. The terms of this Acknowledgment
and
Release may be changed, modified or discharged only by an instrument
in
writing signed by the parties
hereto.
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(c)
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Governing
Law.
This Acknowledgment and Release shall be construed, enforced and
interpreted in accordance with and governed by the laws of the State
of
New Jersey, without reference to its principles of conflicts of
law.
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(d)
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Counterparts.
This Acknowledgment and Release may be executed in one or more
counterparts, each of which counterpart, when so executed and delivered,
shall be deemed an original and all of which counterparts, taken
together,
shall constitute but one and the same
agreement.
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5.
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Upon
payment to Executive of the amount set forth in Section I hereof,
neither
the Bank, the Company, nor Sterling shall have any further obligation
to
Executive under the Employment Agreements, other than with respect
to the
payments and other benefits described
herein.
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3
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6.
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Any
term or provision of this Acknowledgment and Release which is held
to be
invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Acknowledgment and
Release.
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IN
WITNESS WHEREOF,
the
parties hereto have signed this Acknowledgment and Release.
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EXECUTIVE
/s/
Xxxx X. Xxxxxxxx
Xxxx
X. Xxxxxxxx
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06/23/06
Date
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PEOPLES
SAVINGS BANK
/s/
Xxxx X. Xxxxxxxx
By:
Xxxx X. Xxxxxxxx, President
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06/23/06
Date
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XXXXXXXXXX
BANCORP, INC.
/s/
Xxxx X. Xxxxxxxx
By:
Xxxx X. Xxxxxxxx, President
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06/23/06
Date
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STERLING
BANK
/s/
Xxxxxx X. Xxxx
By:
Xxxxxx X. Xxxx, President
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06/23/06
Date
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