EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
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THIS AGREEMENT, made and entered into as of _____________, 2004 (the
"Effective Date"), by and among Royal Financial, Inc. (hereinafter referred to
as "Royal Financial"), Royal Savings Bank (the "Bank" and together with Royal
Financial, hereinafter the "Employer"), and Xxxxxx X. Xxxx (hereinafter called
the "Executive").
W I T N E S S E T H T H A T:
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WHEREAS, the Employer desires to continue to employ the Executive as
President and Chief Executive Officer of the Bank, and the Executive desires to
continue in such employment;
NOW, THEREFORE, in consideration of the mutual promises herein
contained and subject to the conditions precedent set forth herein, the parties
agree as follows:
1. Employment and Term.
(a) Employment. Royal Financial shall cause the Bank to employ, and the
Bank shall employ, the Executive as the President and Chief Executive Officer of
the Bank, and the Executive shall so serve, for the term set forth in Paragraph
1(b).
(b) Term. The Executive's employment under this Agreement shall
commence on the Effective Date and extend through _____________, 2007, subject
to the extension of such term as hereinafter provided and subject to earlier
termination as provided in Paragraph 7. The term of this Agreement shall
automatically be extended for an additional year as of _____________, 2007 and
each anniversary date thereof unless, no later than ninety (90) days prior to
any such renewal date, either the board of directors of Royal Financial (the
"Board"), or a duly authorized committee thereof, on behalf of the Employer, or
the Executive gives written notice to the other, in accordance with Paragraph
15, that the term of this Agreement shall not be so extended.
2. Duties and Responsibilities.
(a) The duties and responsibilities of the Executive shall be of an
executive nature as shall be required by the Employer in the conduct of its
business. The Executive's powers and authority shall be as prescribed by the
by-laws of the Employer, if applicable, and shall include all those presently
delegated to the Executive, together with the performance of such other duties
and responsibilities as the Chairman of the Employer may from time to time
assign to the Executive not inconsistent with the Executive's position(s) with
the Employer. The Executive recognizes, that during the period of the
Executive's employment hereunder, the Executive owes an undivided duty of
loyalty to the Employer, and agrees to devote the Executive's entire business
time and attention to the performance of said duties and responsibilities and to
use the Executive's best efforts to promote and develop the business of the
Employer. Recognizing and acknowledging that it is essential for the protection
and enhancement of the name and business of the Employer and the goodwill
pertaining thereto, the Executive shall perform his duties under this Agreement
professionally, in accordance with the applicable laws, rules and regulations
and such standards, policies and procedures established by the Employer and the
industry from time to time. The Executive will not perform any duties for any
other business without the prior written consent of the Employer, but may engage
in charitable, civic or community activities, provided that such duties or
activities do not materially interfere with the proper performance of the
Executive's duties under this Agreement. During the period of employment, the
Executive agrees to serve as a director on the Board of Directors of the
Employer and/or the board of directors or managers, as applicable, of any of its
subsidiaries and affiliates, as well as to serve as a member of any committee of
any said boards, to which the Executive may be elected or appointed.
(b) Notwithstanding that this Agreement provides for the employment of
the Executive in the Executive's capacity as the President and Chief Executive
Officer of the Bank, nothing herein contained shall assure the Executive of, nor
in any manner shall be construed to constitute an agreement by the Employer to,
the continued employment of the Executive after the expiration or termination
of this Agreement in such capacity or in any other capacity.
3. Base Salary. For services performed by the Executive for the
Employer pursuant to this Agreement during the period of employment as provided
in Paragraph 1(b) hereof, the Employer shall pay the Executive a base salary at
the rate of ____________________ dollars ($_________) per year, payable in
substantially equal installments in accordance with the Employer's regular
payroll practices. The Executive's base salary (with any increases under this
Paragraph 3) shall not be subject to reduction without the Executive's written
consent. Any compensation which may be paid to the Executive under any
additional compensation or incentive plan of the Employer or which may be
otherwise authorized from time to time by the Board (or an appropriate committee
thereof) shall be in addition to the base salary to which the Executive shall be
entitled under this Agreement. Executive's base salary shall be subject to
review from time to time, and the Employer may (but is not required to) increase
the base salary as the Board, in its discretion, may determine.
4. Annual Bonuses. For each fiscal year during the term of employment,
the Executive shall be eligible to receive a bonus in the amount, if any, as may
be determined from time to time by the Board in its discretion.
5. Equity Incentive Compensation. During the term of employment
hereunder, the Executive shall be eligible to participate in any other
equity-based incentive compensation plan or program adopted by the Employer.
6. Other Benefits. In addition to the compensation described in
Paragraphs 3, 4 and 5, above, the Executive shall also be entitled to the
following:
(a) Participation in Benefit Plans. The Executive shall be entitled to
participate in such life insurance, disability, medical, dental, pension, profit
sharing and retirement plans and other programs as may be made generally
available from time to time by the Employer for the benefit of executives of the
Executive's level or its employees generally.
(b) Vacation. The Executive shall be entitled to such number of days of
vacation with pay during each calendar year during the period of employment in
accordance with the Employer's applicable personnel policy as in effect from
time to time.
(c) Executive Perquisites. The Employer shall furnish Executive with
such perquisites as are provided from time to time by the Employer to its
officers generally and are suitable to the Executive's position, adequate for
the performance of the Executive's duties hereunder, and reasonable in the
circumstances.
(d) Expense Reimbursement. The Employer shall reimburse the Executive
for all reasonable expenses incurred by the Executive in performing services
hereunder, which are incurred and accounted for in accordance with the
Employer's policies and procedures applicable thereto.
7. Termination. Unless earlier terminated in accordance with the
following provisions of this Paragraph 7, the Employer shall continue to employ
the Executive and the Executive shall remain employed by the Employer during the
entire term of this Agreement as set forth in Paragraph 1(b). Paragraph 8 hereof
sets forth certain obligations of the Employer in the event that the Executive's
employment hereunder is terminated. Certain capitalized terms used in this
Paragraph 7 and in Paragraph 8 hereof are defined in Paragraph 7(d), below. In
the event of termination of the Executive's employment with the Employer for any
reason, or if the Executive is required by the Board, the Executive agrees to
resign, and shall automatically be deemed to have resigned, from any offices
(including any directorship) the Executive holds with the Employer and/or any of
its affiliates effective as of the termination date of the Executive's
employment hereunder, or, if applicable, effective as of a date selected by the
Board; provided, however, that the foregoing resignation shall not prejudice or
otherwise affect the Executive's rights and obligations, if any, under this
Agreement.
(a) Death or Disability. Except to the extent otherwise provided in
Paragraphs 8, 12 and 13 with respect to death benefits and certain post-Date of
Termination obligations of the parties, this Agreement shall terminate
immediately as of the Date of Termination in the event of the Executive's death
or in the event that the Executive becomes Disabled (as hereinafter defined).
The Board shall promptly give the Executive written notice of any such
determination of the Executive's Disability and of any decision of the Board to
terminate the Executive's employment by reason thereof. In the event of
Disability, until the Date of Termination, the base salary payable to
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the Executive under Paragraph 3 hereof shall be reduced dollar-for-dollar by the
amount of disability benefits, if any, paid to the Executive in accordance with
any disability policy or program of the Employer.
(b) Discharge for Cause. In accordance with the procedures hereinafter
set forth, the Board may discharge the Executive from the Executive's employment
hereunder for Cause (as hereinafter defined). Except to the extent otherwise
provided in Paragraphs 8, 12 and 13 with respect to certain post-Date of
Termination obligations of the parties, this Agreement shall terminate
immediately as of the Date of Termination in the event the Executive is
discharged for Cause. Any discharge of the Executive for Cause shall be
communicated by a Notice of Termination to the Executive given in accordance
with Paragraph 15 of this Agreement.
(c) Termination for Other Reasons. The Employer may discharge the
Executive without Cause by giving written notice to the Executive in accordance
with Paragraph 15. The Executive may resign from the Executive's employment with
or without Good Reason, without liability to the Employer, by giving written
notice to the Employer in accordance with Paragraph 15 at least thirty (30) days
prior to the Date of Termination; provided, however, that no resignation shall
be treated as a resignation for Good Reason unless the written notice thereof is
given within sixty (60) days after the occurrence which constitutes "Good
Reason" or during the ninety (90) day period described in the final sentence of
Paragraph 7(d)(vi); provided, further, that the Employer retains the right after
proper notice of the Executive's voluntary termination to require the Executive
to cease the Executive's employment immediately. Except to the extent otherwise
provided in Paragraphs 8, 12 and 13 with respect to certain post-Date of
Termination obligations of the parties, this Agreement shall terminate
immediately as of the Date of Termination in the event the Executive is
discharged without Cause or resigns for any reason or no reason.
(d) Definitions. For purposes of this Agreement, the following
capitalized terms shall have the meanings set forth below:
(i) "Accrued Obligations" shall mean, as of the Date of
Termination, the sum of (A) the Executive's base salary under Paragraph
3 through the Date of Termination to the extent not theretofore paid,
(B) the amount of any deferred compensation and other cash compensation
accrued by the Executive as of the Date of Termination to the extent
not theretofore paid, (C) any vacation pay, expense reimbursements and
other cash entitlements accrued by the Executive as of the Date of
Termination to the extent not theretofore paid, (D) any grants and
awards vested or accrued under any equity-based incentive compensation
plan or program and (E) all other benefits which have accrued as of the
Date of Termination. For the purpose of this Paragraph 7(d)(i), except
as provided in the applicable plan, program or policy, amounts shall be
deemed to accrue ratably over the period during which they are earned,
but no discretionary compensation shall be deemed earned or accrued
until it is specifically approved by the Board in accordance with the
applicable plan, program or policy.
(ii) "Cause" shall mean (A) the Executive's willful and
continued (for a period of not less than ten (10) business days after
written notice thereof) failure to perform substantially the duties of
his employment (other than as a result of physical or mental
incapacity, or while on vacation); or (B) the Executive's engaging in
illegal conduct or gross misconduct which is materially and
demonstrably injurious to the Employer; or (C) the Executive's
conviction of a felony involving moral turpitude; provided, however,
that no act or omission by the Executive shall constitute Cause
hereunder unless the Employer has given detailed written notice thereof
to the Executive, and the Executive has failed to remedy such act or
omission.
(iii) "Change in Control" shall mean the occurrence of any one
of the following events:
(A) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than (i) a trustee or other fiduciary holding
securities under an employee benefit plan of Royal Financial
or any of its subsidiaries, or (ii) a corporation owned
directly or indirectly by the stockholders of Royal Financial
in substantially the same proportions as their ownership of
stock of Royal Financial, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of Royal Financial representing 25%
or more of the total voting power of the then outstanding
shares of capital stock of Royal Financial entitled to vote
generally in the election of directors (the "Voting
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Stock"), provided, however, that the following shall not
constitute a change in control: (1) such person becomes a
beneficial owner of 25% or more of the Voting Stock as the
result of an acquisition of such Voting Stock directly from
Royal Financial, or (2) such person becomes a beneficial owner
of 25% or more of the Voting Stock as a result of the decrease
in the number of outstanding shares of Voting Stock caused by
the repurchase of shares by Royal Financial, or
(B) During any period of two consecutive years,
individuals (the "Incumbent Board"), who at the beginning of
such period constitute the Board, and any new director, whose
election by the Board or nomination for election by Royal
Financial's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof, or
(C) Consummation of a reorganization, merger or
consolidation or the sale or other disposition of all or
substantially all of the assets of Royal Financial (a
"Business Combination"), in each case, unless (1) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Voting Stock
immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of the total voting
power represented by the voting securities entitled to vote
generally in the election of directors of the corporation
resulting from the Business Combination (including, without
limitation, a corporation which as a result of the Business
Combination owns Royal Financial or all or substantially all
of Royal Financial's assets either directly or through one or
more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to the Business Combination
of the Voting Stock of Royal Financial, and (2) at least a
majority of the members of the board of directors of the
corporation resulting from the Business Combination were
members of the Incumbent Board at the time of the execution of
the initial agreement, or action of the Incumbent Board,
providing for such Business Combination; or
(D) Approval by the stockholders of Royal Financial
of a plan of complete liquidation or dissolution of Royal
Financial.
The Board has final authority to construe and interpret the provisions of the
foregoing Paragraphs (A), (B), (C) and (D) and to determine the exact date on
which a Change in Control has been deemed to have occurred thereunder.
(iv) "Date of Termination" shall mean (A) in the event of a
discharge of the Executive for or without Cause, the date the Executive
receives a Notice of Termination, or any later date specified in such
Notice of Termination, as the case may be, (B) in the event of a
resignation by the Executive, the date specified in the written notice
to the Employer, which date shall be no less than thirty (30) days from
the date of such written notice (or such earlier date as the Employer
may elect in its sole discretion), (C) in the event of the Executive's
death, the date of the Executive's death, and (D) in the event of
termination of the Executive's employment by reason of Disability
pursuant to Paragraph 7(a), the date the Executive receives written
notice of such termination.
(v) "Disabled" and "Disability" shall mean that the Executive
will be deemed to be disabled upon the earlier of (i) the end of a six
(6) consecutive month period, or an aggregate period of nine (9) months
out of any consecutive twelve (12) months, during which, by reason of
physical or mental injury or disease, the Executive has been unable to
perform substantially all of the Executive's usual and customary duties
under this Agreement or (ii) the date that a reputable physician
selected by the Board, and as to whom the Executive has no reasonable
objection, determines in writing that the Executive will, by reason of
physical or mental injury or disease, be unable to perform
substantially all of the Executive's usual and customary duties under
this Agreement for a period of at least six (6) consecutive months. If
any question arises as to whether the Executive is Disabled, upon
reasonable request therefore by the Board, the Executive shall submit
to a reasonable medical examination for the purpose of determining the
existence, nature and extent of any such disability.
(vi) "Good Reason" shall mean the occurrence, other than in
connection with a discharge, of any of the following without the
Executive's consent: (A) the Executive is not re-elected or is
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removed from the positions with the Employer set forth in Paragraph
1(a), other than as a result of the Executive's election or appointment
to positions of equal or superior scope and responsibility; or (B) the
Executive shall fail to be vested by the Employer with the power and
authority of any of said positions, excluding for this purpose any
isolated action not taken in bad faith and which is remedied by the
Employer promptly after receipt of written notice thereof given by the
Executive in accordance with Paragraph 15; or (C) any failure by the
Employer to materially comply with any of the provisions of this
Agreement, other than any isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the
Employer promptly after receipt of written notice thereof given by the
Executive in accordance with Paragraph 15; or (D) the Employer
requiring the Executive to be based at an office or location which is
more than twenty (20) miles from any location of the Royal Financial,
the Bank or any of their subsidiaries as of the Effective Date or any
renewal date of the extended term of this Agreement. In addition, any
termination by the Executive during the ninety (90) day period
beginning on the first anniversary of the date of a Change in Control
shall be deemed to be for "Good Reason."
(vii) "Notice of Termination" shall mean a written notice
which (A) indicates the specific termination provision in this
Agreement relied upon, (B) sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (C) if the
Date of Termination is to be other than the date of receipt of such
notice or the date otherwise specified under this Agreement, specifies
the termination date.
8. Obligations of the Employer Upon Termination. The following
provisions describe the obligations of the Employer to the Executive under this
Agreement upon termination of employment. However, except as explicitly provided
in this Agreement, nothing in this Agreement shall limit or otherwise adversely
affect any rights which the Executive may have under applicable law, under any
other agreement with the Employer or any of its affiliates or subsidiaries, or
under any compensation or benefit plan, program, policy or practice of the
Employer or any of its affiliates or subsidiaries.
(a) Death, Disability, Discharge for Cause, or Resignation without Good
Reason. In the event this Agreement terminates pursuant to Paragraph 7(a) by
reason of the death or Disability of the Executive, pursuant to Paragraph 7(b)
by reason of the discharge of the Executive by the Employer for Cause, or
pursuant to Paragraph 7(c) by reason of the resignation of the Executive other
than for Good Reason, the Employer shall pay to the Executive, or the
Executive's heirs or estate in the event of the Executive's death, all Accrued
Obligations in a lump sum in cash within thirty (30) days after the Date of
Termination; provided, however, that any portion of the Accrued Obligations
which consists of bonus, deferred compensation, incentive compensation,
insurance benefits or other employee benefits shall be determined and paid in
accordance with the terms of the relevant plan or policy as applicable to the
Executive. In addition, in the event this Agreement terminates pursuant to
Paragraph 7(a) by reason of death of the Executive, the Employer shall pay to
the Executive's heirs or estate death benefits in a lump sum amount equal to six
(6) months of the Executive's then-current annual base salary.
(b) Discharge without Cause or Resignation with Good Reason. In the
event that this Agreement terminates pursuant to Paragraph 7(c) by reason of the
discharge of the Executive by the Employer other than for Cause, death or
Disability or by reason of the resignation of the Executive for Good Reason:
(i) The Employer shall pay all Accrued Obligations to the
Executive in a lump sum in cash within thirty (30) days after the Date
of Termination; provided, however, that any portion of the Accrued
Obligations which consists of bonus, deferred compensation, incentive
compensation, insurance benefits or other employee benefits shall be
determined and paid in accordance with the terms of the relevant plan
or policy as applicable to the Executive;
(ii) Within thirty (30) days after the Date of Termination,
the Employer shall pay to the Executive a bonus for the year during
which termination occurs, calculated as a pro rata portion of the
Executive's prior year's bonus amount (if any) based on the number of
days elapsed during the year through the Date of Termination;
(iii) Severance payments equal to one hundred percent (100%)
of the sum of (A) the Executive's then-current annual base salary, plus
(B) the average of the sum of the bonus amounts earned by the Executive
with respect to the three (3) calendar years (or such fewer number of
years as Executive
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has been employed) immediately preceding the calendar year in which the
Executive's Date of Termination occurs, payable in substantially equal
monthly installments for a period of twelve (12) months (the "Severance
Period") in accordance with the Employer's regular payroll practices;
and
(iv) Continuation for the Severance Period of the Executive's
right to maintain COBRA continuation coverage under the applicable
plans at premium rates on the same "cost-sharing" basis as the
applicable premiums paid for such coverage by active employees as of
the Date of Termination.
(c) Effect of Change in Control. In the event that a Change in Control
occurs and this Agreement thereafter terminates pursuant to Paragraph 7(c) by
reason of the discharge of the Executive by the Employer other than for Cause,
death or Disability, or by reason of the resignation of the Executive for Good
Reason:
(i) The Employer shall pay all Accrued Obligations to the
Executive in a lump sum in cash within thirty (30) days after the Date
of Termination; provided, however, that any portion of the Accrued
Obligations which consists of bonus, deferred compensation, incentive
compensation, insurance benefits or other employee benefits shall be
determined and paid in accordance with the terms of the relevant plan
or policy as applicable to the Executive;
(ii) Within thirty (30) days after the Date of Termination,
the Employer shall pay to the Executive a bonus for the year during
which termination occurs, calculated as a pro rata portion of the
Executive's prior year's bonus amount (if any) based on the number of
days elapsed during the year through the Date of Termination;
(iii) The Employer shall pay the Executive a lump sum payment
within thirty (30) days after such termination of employment in the
amount of three (3) times the sum of the following:
(A) the amount of the Executive's annual base salary
determined as of the Date of Termination, or the date
immediately preceding the date of the Change in Control,
whichever is greater; plus
(B) the greater of (A) the Executive's bonus amount,
if any, for the calendar year immediately preceding that in
which the Date of Termination occurs, or (B) the average of
the sum of the bonus amounts earned by the Executive with
respect to the three (3) calendar years (or such fewer number
of years as Executive has been employed) immediately preceding
the calendar year in which the Executive's Date of Termination
occurs, or if such sum would be greater, with respect to the
three (3) calendar years immediately preceding the calendar
year of the date of the Change in Control; plus
(C) the sum of:
(I) the annual value of the contributions
that would have been expected to be made or credited
by the Employer to, and benefits expected to be
accrued under, the qualified and non-qualified
employee profit sharing, 401(k), pension and any
other benefit plans maintained by the Employer to or
for the benefit of the Executive; plus
(II) the annual value of the Other Benefits
described in Paragraph 6(a) and (c) above.
Notwithstanding the foregoing, if a Change in Control occurs and this
Agreement is terminated prior to the Change in Control pursuant to Paragraph
7(c) by reason of the discharge of the Executive by the Employer other than for
Cause, death or Disability or by reason of the resignation of the Executive for
Good Reason, then the Executive shall be deemed for purposes of this Paragraph
8(c) to have so terminated pursuant to Paragraph 7(c) immediately following the
date the Change in Control occurs if it is reasonably demonstrated by the
Executive that such earlier termination was (i) at the request of a third party
who had taken steps reasonably calculated to effect the
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Change in Control, or (ii) otherwise arose, or the circumstances that
precipitated the termination otherwise arose, in connection with or in
anticipation of the Change in Control.
(d) Effect on Other Amounts. The payments provided for in this
Paragraph 8 shall be in addition to all other sums then payable and owing to the
Executive, shall be subject to applicable federal and state income and other
withholding taxes and shall be in full settlement and satisfaction of all of the
Executive's claims and demands. Upon such termination of this Agreement, the
Employer shall have no rights or obligations under this Agreement, other than
its obligations under this Paragraph 8, and the Executive shall have no rights
and obligations under this Agreement, other than the Executive's obligations
under Paragraphs 12 and 13 hereof (to the extent applicable); provided, however,
termination of this Agreement shall not terminate the obligation of the
Executive to pay to the Employer any amounts for which the Executive may be
liable to the Employer under any provision of the Xxxxxxxx-Xxxxx Act of 2002
(including, without limitation, Section 304 of such Act), or any rules and
regulations promulgated thereunder, as amended from time to time.
(e) Conditions. Any payments or benefits made or provided pursuant to
this Paragraph 8 are subject to the Executive's:
(i) compliance with the provisions of Paragraphs 12 and 13
hereof (to the extent applicable);
(ii) delivery to the Employer of an executed Release and
Severance Agreement, which shall be substantially in the form attached
hereto as Exhibit A, with such changes therein or additions thereto as
needed under then applicable law to give effect to its intent and
purpose; and
(iii) delivery to the Employer of a resignation from all
offices, directorships and fiduciary positions with the Employer, its
affiliates and employee benefit plans.
Notwithstanding the due date of any post-employment payments, any amounts due
under this Paragraph 8 shall not be due until after the expiration of any
revocation period applicable to the Release and Severance Agreement.
9. Certain Additional Payments by the Employer.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Employer to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Paragraph 9) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or if any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, being
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payment.
(b) Subject to the provisions of Paragraph (c), below, all
determinations required to be made under this Paragraph 9, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the independent public accountants then regularly retained by the Employer
(the "Accounting Firm") in consultation with counsel acceptable to Executive,
which shall provide detailed supporting calculations both to the Employer and
the Executive within fifteen (15) business days of the receipt of notice from
the Executive that there has been a Payment, or such earlier time as is
requested by the Employer. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting a Change in
Control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder) in consultation with
counsel acceptable to Executive. All fees and expenses of the Accounting Firm
and such counsel shall be borne solely by the Employer. Any Gross-Up Payment, as
determined pursuant to this Paragraph 9, shall be paid by the Employer to the
Executive
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within five (5) days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall furnish the Executive with a written opinion that failure to report the
Excise Tax on the Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty. Any good faith
determination by the Accounting Firm shall be binding upon the Employer and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Employer should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Employer
exhausts its remedies pursuant to Paragraph (c), below, and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Employer to or for the benefit of the
Executive.
(c) The Executive shall notify the Employer in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Employer of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than fifteen (15) business days after the Executive is
informed in writing of such claim and shall apprise the Employer of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty
(30)-day period following the date on which Executive gives such notice to the
Employer (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Employer notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) Give the Employer any information reasonably requested by
the Employer relating to such claim,
(ii) Take such action in connection with contesting such claim
as the Employer shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Employer,
(iii) Cooperate with the Employer in good faith in order
effectively to contest such claim, and
(iv) Permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Paragraph (c), the Employer shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and xxx for a refund or contest the claim
in any permissible manner; and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Employer shall
determine; provided, however, that if the Employer directs the Executive to pay
such claim and xxx for a refund, the Employer shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Employer's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to Paragraph (c), above, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Employer's complying with the requirements of said Paragraph (c)) promptly
pay to the Employer the amount of such refund (together with any interest paid
or credited thereon, after taxes applicable
8
thereto). If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to said Paragraph (c), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Employer does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of thirty (30) days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid; and the amount of such advance shall offset, to the extent thereof,
the amount of the Gross-Up Payment required to be paid.
10. Dispute Resolution. In the event any dispute arises and the parties
after good faith efforts are unable to agree as to the calculation of the
amounts payable under this Agreement, it shall be settled in accordance with the
majority opinion of a committee consisting of an accountant chosen by the
Employer, an accountant chosen by the Executive and an independent accountant
acceptable to both the Executive and the Employer, as the case may be. The
committee's determination shall be binding and conclusive on the parties hereto.
The Employer shall pay all fees and expenses of the dispute resolution.
11. Enforcement. In the event the Employer shall fail to pay any
amounts due to the Executive under this Agreement as they come due, the Employer
agrees to pay interest on such amounts at a rate equal to the prime rate plus
four percent (4%) per annum (as from time to time published in The Wall Street
Journal (Midwest Edition)). The Employer agrees that Executive and any successor
shall be entitled to recover all costs of successfully enforcing any provision
of this Agreement, including reasonable attorneys' fees and costs of litigation,
if Executive is the prevailing party.
12. Confidential Information.
The Executive shall not at any time during or following the Executive's
employment with the Employer, directly or indirectly, disclose or use on the
Executive's behalf or another's behalf, publish or communicate, except in the
course of the Executive's employment and in the pursuit of the business of the
Employer or any of its subsidiaries or affiliates, any proprietary information
or data of the Employer or any of its subsidiaries or affiliates, which is not
generally known to the public or which could not be recreated through public
means and which the Employer may reasonably regard as confidential and
proprietary. The Executive recognizes and acknowledges that all knowledge and
information which the Executive has or may acquire in the course of the
Executive's employment, such as, but not limited to the business, developments,
procedures, techniques, activities or services of the Employer or the business
affairs and activities of any customer, prospective customer, individual firm or
entity doing business with the Employer are its sole valuable property, and
shall be held by Executive in confidence and in trust for their sole benefit.
All records of every nature and description which come into the Executive's
possession, whether prepared by the Executive, or otherwise, shall remain the
sole property of the Employer and upon termination of the Executive's employment
for any reason, said records shall be left with the Employer as part of its
property.
13. Non-Competition; Non-Solicitation. The Executive acknowledges that
the Employer and its affiliates and subsidiaries by nature of their respective
businesses have a legitimate and protectable interest in their clients,
customers and employees with whom they have established significant
relationships as a result of a substantial investment of time and money, and but
for the Executive's employment hereunder, the Executive would not have had
contact with such clients, customers and employees. The Executive agrees that
during the period of the Executive's employment with the Employer and for a
period of one (1) year after termination of the Executive's employment for any
reason (the "Non-Compete Period"), the Executive will not (except in the
Executive's capacity as an employee of the Employer) directly or indirectly, for
the Executive's own account, or as an agent, employee, director, owner, partner,
or consultant of any corporation, firm, partnership, joint venture, syndicate,
sole proprietorship or other entity which has a place of business (whether as a
principal, division, subsidiary, affiliate, related entity, or otherwise)
located within the Market Area (as hereinafter defined):
(a) engage, directly or indirectly, in any business that provides
banking products or services or that otherwise competes in any way with the
Employer or any of its subsidiaries or affiliates;
(b) solicit or induce, or attempt to solicit or induce any client or
customer of the Employer or any of its subsidiaries or affiliates not to do
business with the Employer or any of its subsidiaries or affiliates; or
9
(c) solicit or induce, or attempt to solicit or induce, any employee or
agent of the Employer or any of its subsidiaries or affiliates to terminate his
or her relationship with the Employer or any of its subsidiaries or affiliates.
For purposes of this Agreement, "Market Area" shall be an area
encompassed within a twenty (20) mile radius surrounding any location of Royal
Financial, the Bank or any of their subsidiaries as of the Date of Termination
of employment.
The foregoing provisions shall not be deemed to prohibit (i) the
Executive's ownership, not to exceed five percent (5%) of the outstanding
shares, of capital stock of any corporation whose securities are publicly traded
on a national or regional securities exchange or in the over-the-counter market
or (ii) the Executive serving as a director of other corporations and entities
to the extent these directorships do not inhibit the performance of the
Executive's duties hereunder or conflict with the business of the Employer.
14. Remedies.
(a) The Executive acknowledges that the restraints and agreements
herein provided are fair and reasonable, that enforcement of the provisions of
Paragraphs 12 and 13 will not cause the Executive undue hardship and that said
provisions are reasonably necessary and commensurate with the need to protect
the Employer and its legitimate and proprietary business interests and property
from irreparable harm. The Executive acknowledges and agrees that (a) a breach
of any of the covenants and provisions contained in Paragraphs 12 or 13 above,
will result in irreparable harm to the business of the Employer, (b) a remedy at
law in the form of monetary damages for any breach by the Executive of any of
the covenants and provisions contained in Paragraphs 12 and 13 is inadequate,
(c) in addition to any remedy at law or equity for such breach, the Employer
shall be entitled to institute and maintain appropriate proceedings in equity,
including a suit for injunction to enforce the specific performance by Executive
of the obligations hereunder and to enjoin Executive from engaging in any
activity in violation hereof and (d) the covenants on the Executive's part
contained in Paragraphs 12 and 13, shall be construed as agreements independent
of any other provisions in this Agreement, and the existence of any claim,
setoff or cause of action by the Executive against the Employer, whether
predicated on this Agreement or otherwise, shall not constitute a defense or bar
to the specific enforcement by the Employer of said covenants. In the event of a
breach or a violation by the Executive of any of the covenants and provisions of
this Agreement, the running of the Non-Compete Period (but not of Executive's
obligation thereunder) shall be tolled during the period of the continuance of
any actual breach or violation.
(b) The parties hereto agree that the covenants set forth in Paragraphs
12 and 13 are reasonable with respect to their duration, geographical area and
scope. If the final judgment of a court of competent jurisdiction declares that
any term or provision of Paragraph 12 or 13 is invalid or unenforceable, the
parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
15. Notices. Any notice or other communication required or permitted to
be given hereunder shall be determined to have been duly given to any party (a)
upon delivery to the address of such party specified below if delivered
personally or by courier; (b) upon dispatch if transmitted by telecopy or other
means of facsimile, provided a copy thereof is also sent by regular mail or
courier; (c) within forty-eight (48) hours after deposit thereof in the U.S.
mail, postage prepaid, for delivery as certified mail, return receipt requested;
or (d) within twenty-four (24) hours after deposit thereof with a reputable
overnight courier (charges prepaid), addressed, in any case to the party at the
following address(es) or telecopy numbers:
10
(a) If to Executive, at the address set forth on the signature page
hereof.
(b) If to the Employer:
Royal Financial, Inc.
Royal Savings Bank
0000 X. Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Vedder, Price, Xxxxxxx & Kammholz, P.C.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. XxXxx XX
Telecopy No.: (000) 000-0000
or to such other address(es) or telecopy number(s) as any party may designate by
written notice in the aforesaid manner.
16. Indemnification.
(a) In the event that legal action is instituted against the Executive
during or after the term hereof by a third party (or parties) based on the
performance or nonperformance by the Executive of the Executive's duties
hereunder, the Employer will assume the defense of such action by its attorneys
or attorneys selected by the Executive reasonably satisfactory to the Employer
and advance the costs and expenses thereof (including reasonable attorneys'
fees) without prejudice to or waiver by the Employer of its rights and remedies
against the Executive. In the event that there is a final judgment entered
against the Executive in any such litigation, and Executive is obligated, in
accordance with its charter, by-laws, or insurance, to reimburse such entities,
the Executive shall be liable to the Employer for all such costs and expenses
paid or incurred by them in the defense of any such litigation (the
"Reimbursement Amount"). The Reimbursement Amount shall be paid by the Executive
within thirty (30) days after rendition of the final judgment. The Employer
shall be entitled to set off the reimbursement amount against all sums which may
be owed or payable by the Employer to the Executive hereunder or otherwise. The
parties shall cooperate in the defense of any asserted claim, demand or
liability against the Executive or the Employer or its subsidiaries or
affiliates. The term "final judgment" as used herein shall be defined to mean
the decision of a court of competent jurisdiction, and in the event of an
appeal, then the decision of the appellate court, after petition for rehearing
has been denied, or the time for filing the same (or the filing of further
appeal) has expired.
(b) The rights to indemnification under this Section 16 shall be in
addition to any rights which the Executive may now or hereafter have under the
charter or By-laws of the Employer or any of its affiliates or subsidiaries,
under any insurance contract maintained by the Employer or any of its affiliates
or subsidiaries, or any agreement between the Executive and the Employer or any
of its affiliates or subsidiaries.
17. Full Settlement; No Mitigation. The Employer's obligation to make
the payments and provide the benefits provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Employer may have against the Executive or others. In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether or
not the Executive obtains other employment.
18. Payment in the Event of Death. In the event payment is due and
owing by the Employer to the Executive under this Agreement upon the death of
the Executive, payment shall be made to such beneficiary as the Executive may
designate in writing, or failing such designation, then the executor of the
Executive's estate, in full settlement and satisfaction of all claims and
demands on behalf of the Executive, shall be entitled to receive all amounts
owing to the Executive at the time of the Executive's death under this
Agreement. Such payments shall be in addition to any other death benefits of the
Employer and in full settlement and satisfaction of all severance benefit
payments provided for in this Agreement.
19. Entire Understanding. This Agreement constitutes the entire
understanding between the parties relating to Executive's employment hereunder
and supersedes and cancels all prior written and oral understandings and
agreements with respect to such matters and except for the terms and provisions
of any employee benefit or
11
other compensation plans (or any agreements or awards thereunder), referred to
in this Agreement, or as otherwise expressly contemplated by this Agreement.
20. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the heirs and representatives of the Executive and the successors
and assigns of the Employer. The Employer shall require any successor (whether
direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) to all or a
substantial portion of its assets, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Employer would be
required to perform this Agreement if no such succession had taken place.
Regardless of whether such an agreement is executed, this Agreement shall be
binding upon any successor of the Employer in accordance with the operation of
law, and such successor shall be deemed the "Employer" for purposes of this
Agreement.
21. Tax Withholding. The Employer shall provide for the withholding of
any taxes required to be withheld by federal, state, or local law with respect
to any payment in cash, shares of stock and/or other property made by or on
behalf of the Employer to or for the benefit of the Executive under this
Agreement or otherwise. The Employer may, at its option: (a) withhold such taxes
from any cash payments owing from the Employer to the Executive, (b) require the
Executive to pay to the Employer in cash such amount as may be required to
satisfy such withholding obligations and/or (c) make other satisfactory
arrangements with the Executive to satisfy such withholding obligations.
22. No Assignment. Except as otherwise expressly provided herein, this
Agreement is not assignable by any party and no payment to be made hereunder
shall be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or other charge.
23. Execution in Counterparts. This Agreement may be executed by the
parties hereto in two (2) or more counterparts, each of which shall be deemed to
be an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
24. Jurisdiction and Governing Law. Except as provided in Paragraph 10,
jurisdiction over disputes with regard to this Agreement shall be exclusively in
the courts of the State of Illinois, and this Agreement shall be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Illinois, without regard to the choice of laws provisions of such
State.
25. Severability. If any provision of this Agreement shall be adjudged
by any court of competent jurisdiction to be invalid or unenforceable for any
reason, such judgment shall not affect, impair or invalidate the remainder of
this Agreement. Furthermore, if the scope of any restriction or requirement
contained in this Agreement is too broad to permit enforcement of such
restriction or requirement to its full extent, then such restriction or
requirement shall be enforced to the maximum extent permitted by law, and the
Executive consents and agrees that any court of competent jurisdiction may so
modify such scope in any proceeding brought to enforce such restriction or
requirement.
26. Survival. Provisions of this Agreement shall survive the
termination of the Executive's employment with the Employer to the extent
provided herein.
27. Waiver. The waiver of any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach.
28. Amendment. No change, alteration or modification hereof may be made
except in a writing, signed by each of the parties hereto.
29. Construction. The language used in this Agreement will be deemed to
be the language chosen by Employer and the Executive to express their mutual
intent and no rule of strict construction shall be applied against any person.
Wherever from the context it appears appropriate, each term stated in either the
singular of plural shall include the singular and the plural, and the pronouns
stated in either the masculine, the feminine or the neuter gender shall include
the masculine, feminine or neuter. The headings of the Paragraphs of this
Agreement are for reference
12
purposes only and do not define or limit, and shall not be used to interpret or
construe the contents of this Agreement.
30. No Duplication. Notwithstanding anything herein to the contrary, to
the extent that any compensation or benefits are paid to or received by the
Executive from the Bank, Royal Financial or any other subsidiary of Royal
Financial or the Bank, such compensation or benefits shall be subtracted from
any amounts simultaneously due hereunder from Royal Financial and/or the Bank,
as the case may be.
[Signature Page Follows]
13
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
ROYAL FINANCIAL, INC.
By:______________________________________
Title:___________________________________
ROYAL SAVINGS BANK
By:______________________________________
Title:___________________________________
EXECUTIVE
Address:_________________________ _________________________________________
_________________________________ Name: Xxxxxx X. Xxxx
_________________________________
Telecopy No.:____________________
14
EXHIBIT A TO EMPLOYMENT AGREEMENT
---------------------------------
RELEASE AND SEVERANCE AGREEMENT
-------------------------------
THIS RELEASE AND SEVERANCE AGREEMENT is made and entered into this ____
day of _________, _____ by and between Royal Financial, Inc. and its
subsidiaries and affiliates (including, without limitation, Royal Savings Bank)
(collectively, the "Company") and Xxxxxx X. Xxxx (hereinafter "EXECUTIVE").
EXECUTIVE'S employment with the Company terminated on __________,
______; and EXECUTIVE has voluntarily agreed to the terms of this RELEASE AND
SEVERANCE AGREEMENT in exchange for severance benefits under the Employment
Agreement ("Employment Agreement") to which EXECUTIVE otherwise would not be
entitled.
NOW THEREFORE, in consideration for severance benefits provided under
the Employment Agreement, EXECUTIVE on behalf of EXECUTIVE and EXECUTIVE'S
spouse, heirs, executors, administrators, children, and assigns does hereby
fully release and discharge the company, its officers, directors, employees,
agents, subsidiaries and divisions, benefit plans and their administrators,
fiduciaries and insurers, successors, and assigns from any and all claims or
demands for wages, back pay, front pay, attorneys' fees and other sums of money,
insurance, benefits, contracts, controversies, agreements, promises, damages,
costs, actions or causes of action and liabilities of any kind or character
whatsoever, whether known or unknown, from the beginning of time to the date of
these presents, relating to EXECUTIVE'S employment or termination of employment
from the Company, including but not limited to any claims, actions or causes of
action arising under the statutory, common law or other rules, orders or
regulations of the United States or any State or political subdivision thereof
including the Age Discrimination in Employment Act and the Older Workers Benefit
Protection Act.
EXECUTIVE acknowledges that EXECUTIVE'S obligations pursuant to
Paragraphs 12 and 13, of the Employment Agreement relating to the use or
disclosure of confidential information and non-solicitation of customers and
employees shall continue to apply to EXECUTIVE.
This Release and Settlement Agreement supersedes any and all other
agreements between EXECUTIVE and the Company except agreements relating to
proprietary or confidential information belonging to the Company, and any other
agreements, promises or representations relating to severance pay or other terms
and conditions of employment are null and void.
This release does not affect EXECUTIVE'S right to any benefits to which
EXECUTIVE may be entitled under any employee benefit plan, program or
arrangement sponsored or provided by the Company, including but not limited to
the Employment Agreement and the plans, programs and arrangements referred to
therein.
EXECUTIVE and the Company acknowledge that it is their mutual intent
that the Age Discrimination in Employment Act waiver contained herein fully
comply with the Older Workers Benefit Protection Act. Accordingly, EXECUTIVE
acknowledges and agrees that:
(a) The severance benefits exceed the nature and scope of that
to which EXECUTIVE would otherwise have been legally entitled to
receive.
(b) Execution of this Agreement and the Age Discrimination in
Employment Act waiver herein is EXECUTIVE'S knowing and voluntary act;
(c) EXECUTIVE has been advised by the Company to consult with
EXECUTIVE'S personal attorney regarding the terms of this Agreement,
including the aforementioned waiver;
(d) EXECUTIVE has had at least twenty-one (21) calendar days
within which to consider this Agreement;
15
(e) EXECUTIVE has the right to revoke this Agreement in full
within seven (7) calendar days of execution and that none of the terms
and provisions of this Agreement shall become effective or be
enforceable until such revocation period has expired;
(f) EXECUTIVE has read and fully understands the terms of this
Agreement; and
(g) Nothing contained in this Agreement purports to release
any of EXECUTIVE'S rights or claims under the Age Discrimination in
Employment Act that may arise after the date of execution.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date indicated above.
ROYAL FINANCIAL, INC., EXECUTIVE
for itself and its Subsidiaries
and Affiliates
By:_________________________________ ___________________________________
Its:________________________________ Xxxxxx X. Xxxx
16
