EXHBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made as of July 11, 1998
(the "Effective Date"), is by and between Premier National Bancorp, Inc. (the
"Company"), Xxxxx 00, XxXxxxxxxxxxx, Xxx Xxxx 00000 and Xxxxx Xxx Xxxxxx,
residing at 00 Xxx Xxxxxxxxxx Xx. Xxxxxxxxxxxx, Xxx Xxxx 00000 (the
"Executive").
RECITALS
WHEREAS, the Company, through its Board of Directors (the "Board"),
considers the maintenance of competent and experienced executive officers to be
essential to its long-term success;
WHEREAS, in this regard, the Company has determined that it is in its
best interests that the Executive serve as President and Chief Executive Officer
of the Company, pursuant to a written employment agreement;
NOW, THEREFORE, in furtherance of the interests described above and in
consideration of the respective covenants and agreements herein contained, the
parties hereto agree as follows:
1. CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
(a) "Applicable Interest" means interest at the rate provided in
Section 1274(b)(2)(B) of the Code.
(b) "Cause" means the occurrence of any of the following:
(i) the Willful and continued failure of the Executive to
substantially perform the Executive's duties with the Company (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to the Executive by
the Board which specifically identifies the manner in which the Board believes
that the Executive has not substantially performed the Executive's duties;
(ii) the Willful engaging by the Executive in illegal
conduct (excluding traffic violations, minor misdemeanors or similar offenses)
or gross misconduct that, in the Board's reasonable opinion, may reflect
adversely on the business or reputation of the Company;
(iii) the removal and/or permanent prohibition of the
Executive from participation in the conduct of the affairs of the Company or any
of its subsidiary banks by an order issued under Section 8(e)(4) or 8(g)(1) of
the Federal Deposit Insurance Act, 12 U.S.C. Section 1818(e)(4) or 1818(g)(1);
(iv) the issuance by any court having appropriate
jurisdiction of an order under Section 21(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), 15 U.S.C. Section 78u(d)(2),
prohibiting the Executive from acting as an officer or director of the
Company; or
(v) the conviction of the Executive for commission of a
felony.
(c) "Change in Control" means the occurrence of any of the
following events:
(i) there shall be consummated any consolidation, merger,
stock-for-stock exchange or similar transaction (collectively, "Merger
Transactions") involving securities of the Company in which the holders of
voting securities of the Company immediately prior to such consummation own, as
a group, immediately after such consummation, voting securities of the Company
(or, if the Company does not survive the Merger Transaction, voting securities
of the corporation surviving such transaction) having less than 50% of the total
voting power in an election of directors of the Company (or such other surviving
corporation), excluding securities received by any members of such group which
represent disproportionate percentage increases in their shareholdings vis-a-vis
the other members of such group;
(ii) any individual, corporation (other than the Company),
partnership, trust, association, pool, syndicate, or any other entity or any
group or persons acting in concert (other than an employee benefit plan of the
Company or one of its affiliates) becomes the beneficial owner (as that concept
is defined in Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Exchange Act) as a result of any one or more securities transactions,
including gifts and stock repurchases but excluding any Merger Transactions, of
securities of the Company possessing one-third or more of the voting power for
the election of directors of the Company;
(iii) during any period of twenty-four consecutive months
after the date hereof, individuals who at the beginning of such period
constituted the Board (including for this purpose any new director whose
election or nomination for election by the Company's shareholders was approved
by a vote of at least a majority of the directors then still in office who were
directors at the beginning of such period) cease for any reason to constitute at
least a majority of the Board (excluding any Board seat that is vacant or
otherwise unoccupied); or
-2-
(iv) there shall be consummated any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions,
excluding any Merger Transactions), of all, or substantially all, of the assets
of the Company to a party which is not controlled by or under common control
with the Company.
Notwithstanding the foregoing, the Merger shall not be treated as a "Change in
Control" for purposes of this Agreement.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Company Bonus Plan" means any bonus, stock option,
profit-sharing or other cash-based or equity-based incentive plan offered by the
Company.
(f) "Company Benefit Plan" means any pension, thrift, deferred
compensation, stock purchase, life insurance, medical, dental, education,
accident, disability, welfare, retirement or other employee benefit plan offered
by the Company other than a Company Bonus Plan.
(g) "Designated Office" means Xxxxx 00, XxXxxxxxxxxxx, Xxx Xxxx
00000, or such other office of the Company designated by the Board from time to
time other than in anticipation of, or following, a Change in Control.
(h) "Merger" means the merger of Progressive Bank, Inc. into
Xxxxxx Chartered Bancorp, Inc.
(i) "Triggering Event" means the occurrence of any of the
following events:
(i) the termination by the Company of the employment of
the Executive for any reason other than Cause;
(ii) the assignment to the Executive without his consent of
any duties inconsistent in any material respect with the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities, or any other action by the Company which results in
a diminution in any material respect in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith that is remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(iii) in anticipation of, or following a Change in Control,
the requirement by the Company that the Executive be based at any office or
location that is more than 50 miles from the Designated Office;
-3-
(iv) after the Effective Date, the failure without the
consent of the Executive, to nominate the Executive for election as a member of
the Board, or if nominated, the failure of shareholders to elect the Executive
as a member of the Board;
(v) after the Effective Date, the failure of the Company
without the Executive's consent to:
(A) continue in effect any Company Bonus Plan in which
the Executive participates that is material to the Executive's total
compensation, unless a substantially equivalent arrangement, embodied in an
ongoing substitute or alternative plan, has been established;
(B) continue the Executive's participation in any
Company Bonus Plan and eligibility for bonuses or other compensation thereunder,
or in any substitute or alternative plan, on a basis at least as favorable as
that existing at the date hereof, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to other
participants;
(C) continue to provide the Executive with benefits
comparable to those received by the Executive under any Company Benefit Plan in
which the Executive was participating as of the date hereof, at participation
costs substantially similar to those paid by the Executive;
provided, however, that it shall not be deemed a Triggering Event if the
Company, for bona fide business purposes and not in anticipation of or following
a Change in Control, modifies the terms or conditions of any Company Bonus Plan
or Company Benefit Plan, so long as such modifications have or would have a
substantially similar effect upon all executive employees or all employees of
the Company who participate or who are eligible to participate in the plan;
(vi) the Company shall have materially breached any
provision of this Agreement and such breach shall not have been cured within 15
days after delivery of written notice thereof to the Board by the Executive,
identifying the breach with reasonable particularity; or
(vii) a reduction by the Company in the Executive's annual
base salary as in effect on the date hereof, as the same may be increased from
time to time as provided for in this Agreement.
(j) "Willful" means that an action, conduct or deed is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon the instructions or prior
approval of the Board or based upon the advice of counsel for the Company, shall
be conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company.
-4-
2. EMPLOYMENT TERM. The initial term of employment under this
Agreement shall be for a period of three years commencing on the Effective Date.
This Agreement shall be extended automatically for one additional year on each
annual anniversary date of the Effective Date unless either the Company, through
the Board, or the Executive gives contrary written notice (a "Non-Renewal
Notice") to the other not less than three months in advance of such anniversary
date. References herein to the term of this Agreement shall refer both to such
initial term and such successive terms.
3. EMPLOYMENT; BOARD MEMBERSHIP. During the term of employment
provided for in this Agreement, the Company agrees to employ the Executive in
the office or position set forth in the second Recital of this Agreement, and
the Executive agrees to serve in such office or position and to perform the
duties and discharge the responsibilities associated therewith or such other
duties and responsibilities as may reasonably be assigned to the Executive from
time to time by the Board. The Executive shall not undertake executive
responsibilities with any other corporation, partnership, association or other
entity and shall devote the necessary and customary time and attention to the
business and affairs of the Company and its subsidiaries, provided, however,
that the Executive may, with the approval of the Board, serve as a director or
officer of any non-competing business or engage in any other activity, including
without limitation charitable or community activity, to the extent that it does
not inhibit the performance of his duties hereunder. Subject to applicable
fiduciary duties, the Executive shall be nominated for membership on the Board
and the board of directors of the Company's bank subsidiary.
4. OFFICE AND SERVICES. In connection with the Executive's employment
hereunder, the Executive shall be based at the Designated Office, except for
required travel on the Company's business. The Company shall furnish the
Executive with office space, secretarial assistance, and such other facilities
and services as shall be suitable to the Executive's position and adequate for
the performance of his duties hereunder.
5. COMPENSATION. The regular compensation and benefits payable to the
Executive under this Agreement with respect to his period of employment shall
include the following:
(a) SALARY. The Company shall pay the Executive an annual base
salary hereunder of not less than $ 272,160, payable in equal semimonthly
installments or at such other intervals as shall be agreed upon by the parties.
The Executive's annual base salary may be increased from time to time as
determined by the Board and, if so increased, such annual base salary shall not
thereafter during the Executive's employment under this Agreement be decreased
and the obligation of the Company hereunder to pay the Executive's annual base
salary shall thereafter relate to such increased annual base salary.
(b) BOARD COMPENSATION. The Executive shall be entitled to
receive any fees or additional payments for serving as a member of the Board or
as a
-5-
member of any board of directors (or the equivalent thereof) of any subsidiary
of the Company to the extent provided to other directors of the Company or
applicable subsidiary; provided, however, that the Executive shall not be
entitled to fees for serving on any committee or subcommittee of the Board or
board of directors (or the equivalent thereof) of any subsidiary.
(c) DISCRETIONARY BONUSES. During the term of this Agreement, the
Executive shall be eligible to participate in an equitable manner with other
executive employees of the Company and its subsidiaries in any Company Bonus
Plan or in other discretionary bonuses authorized and declared by the Board, the
board of directors (or the equivalent thereof) of the Company's subsidiaries, or
by their respective delegees.
(d) PARTICIPATION IN BENEFIT PLANS. In addition to any
compensation and benefits provided for in this Agreement, the Executive shall be
eligible to participate in any Company Benefit Plan or any other employee fringe
benefits offered by the Company or its subsidiaries for the benefit of executive
employees or all employees generally in which the Executive is eligible to
participate. The Executive's participation in any such Company Benefit Plan
shall be subject to all generally applicable eligibility requirements thereof
and shall not in any way limit or reduce the obligation of the Company to pay
the Executive's annual base salary hereunder (except pursuant to, in accordance
with, or as required by the generally applicable terms of participation of any
such Company Benefit Plan).
(e) VACATION. The Executive shall be entitled to annual paid
vacation during the term of this Agreement of not less than four weeks per year.
(f) REIMBURSEMENT OF BUSINESS EXPENSES. The Company shall
promptly reimburse the Executive for all reasonable travel and other business
expenses incurred by him in the performance of his duties and responsibilities,
subject to such reasonable requirements with respect to substantiation and
documentation as may be specified by the Company.
(g) AUTOMOBILE. The Company shall provide the Executive with the
full time use of an automobile and shall bear the cost of maintenance of such
vehicle.
(h) DEFERRED COMPENSATION. (i) The Company shall maintain a
nonqualified deferred compensation plan that will allow the Executive the right
to defer the payment to him of such portion of his annual base salary and cash
bonus as the Executive shall elect. Any such deferred amounts that the Executive
elects to have hypothetically invested in one or more mutual funds shall be
transferred to a "rabbi trust" (the "Trust") and invested in such manner as
shall be provided by the Trust. Amounts deferred by the Executive shall be paid
to the Executive upon his retirement or other termination of employment, in a
lump sum or in such installments, as elected by the Executive prior to
retirement or termination in accordance with the terms of the plan. The
Executive acknowledges that, in the event of the insolvency of the Company, the
Trust's assets would be subject to the claims of the Company's creditors and in
such event
-6-
the Executive would have the status of an unsecured creditor with respect to
deferred amounts.
(ii) The Company agrees that it shall fund the Trust for a
period of up to two calendar years following the onset of a period of long-term
disability of the Executive in an amount equal to the amount deferred by the
Executive in the year period prior to the onset of the period of long-term
disability. If the period of long-term disability ends prior to the commencement
of the second calendar year following the onset of such long-term disability
period, no payment shall be made by the Company for such year unless the
Executive elects deferral of salary for such year pursuant to Section 5(h)(i)
above.
(i) SUPPLEMENTAL RETIREMENT BENEFITS. The Executive shall be
entitled to earn and accrue, for the term of employment, benefits under a
supplemental retirement benefit plan that provides benefits that are at least
equal to those provided under the plan or arrangement that covered the Executive
prior to the Merger.
(j) CLUB MEMBERSHIP. The Company shall pay the dues, assessments
and bond obligations for the Executive's and his wife's membership in one
country club.
(k) SUPPLEMENTAL LONG-TERM DISABILITY BENEFITS. The Company shall
pay such additional amounts to the Executive from time-to-time that are
sufficient, on an after-tax basis, to pay the premiums on a long-term disability
policy previously transferred to the Executive.
6. TERMINATION PROCEDURES.
(a) TERMINATION NOTICE. If the Executive's employment by the
Company is terminated for any reason during the term of this Agreement (other
than by reason of the Executive's death or as a result of a consensual
termination as provided in Section 8(c) of this Agreement), the terminating
party shall provide the other party with written notice (the "Termination
Notice") specifying: (i) the effective date of the termination (the "Termination
Date"), (ii) the specific provisions of this Agreement upon which the
termination is based and that are applicable to the termination, and (iii) a
reasonably detailed description of the facts and circumstances providing the
basis for the termination under the specified provisions of this Agreement.
(b) TERMINATION DATE. If the Executive's employment is terminated
by the Executive, the Termination Date shall not be less than thirty days after
the date the Termination Notice is tendered to the Company. If the Executive's
employment is terminated by the Company, the Termination Date shall not be less
than 30 days after the date the Termination Notice is tendered to the Executive.
Termination of the Executive's employment shall occur on the Termination Date
even if there is a dispute between the parties relating to the provisions of
this Agreement applicable to such termination (a "Termination Dispute").
-7-
(c) TERMINATION DISPUTE. If, prior to the Termination Date, the
party receiving the Termination Notice provides written notice to the other
party of the existence of a Termination Dispute (which notice shall provide a
reasonably detailed description of the nature of the dispute, including the
specific provisions of this Agreement that the disputing party believes are
applicable to the termination), the Termination Dispute shall be resolved by:
(i) mutual written agreement of the parties hereto or (ii) a final judgment,
order or decree of a court of competent jurisdiction or arbitrator (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected). The parties hereto shall pursue the
resolution of any Termination Dispute with reasonable diligence.
(d) TERMINATION PAYMENTS. If there is no Termination Dispute, any
amount owed by the Company to the Executive as a result of the termination of
the Executive's employment under this Agreement shall be payable in immediately
available funds on the Termination Date. If there is a Termination Dispute, any
amount owed by the Company to the Executive as a result of the termination of
the Executive's employment under this Agreement that is not in dispute shall be
paid on the Termination Date, and all other amounts shall be paid within five
business days of the resolution of the Termination Dispute as provided for in
Section 7(c) hereto, together with Applicable Interest.
7. TERMINATION DUE TO A TRIGGERING EVENT.
(a) If, during the term of this Agreement, the Executive's
employment by the Company is terminated (whether by the Company or by the
Executive) upon the occurrence of, or within 90 days after, a Triggering Event:
(i) the Company shall make a lump sum cash payment to the Executive in an amount
equal to 299% of the sum of (A) the Executive's annual base salary at the time
the Triggering Event occurs, and (B) the amount of any discretionary bonuses
paid by the Company to the Executive within the 12 months immediately preceding
the occurrence of the Triggering Event; (ii) the Company shall continue to
provide to the Executive for a three-year period the Executive's then-existing
coverage under the Company's health, dental and life insurance plans or, if
continued coverage under such plans cannot be provided, substantially equivalent
coverage under alternative arrangements; (iii) any restrictions remaining on any
restricted shares issued to the Executive under the Company's restricted stock
plans shall immediately lapse, any performance shares issued to the Executive
under the Company Bonus Plans shall immediately vest and any stock options
granted to the Executive shall become immediately exercisable, and (iv) the
Executive may exercise any such option that is not intended to be an incentive
stock option (within the meaning of Section 422 of the Code) until the later of
(i) the earlier of the expiration of the original term of the option or one year
after the effective date of the Executive's termination or (ii) such later date
as may be provided for under the terms of the option or applicable plan.
-8-
(b) In the event that the Executive becomes entitled to receive
any benefit or payment in connection with a Triggering Event or the Company's
termination of the Executive's employment, whether pursuant to the terms of this
Agreement or otherwise (collectively, the "Total Benefits"), and any of the
Total Benefits will be subject to any excise tax (the "Excise Tax") imposed
under Section 4999 of the Code, the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Executive from the Gross-Up Payment, after deduction of any federal, state
and local income taxes, Excise Tax, and FICA and Medicare withholding taxes on
the Gross-Up Payment, shall be equal to the Excise Tax on the Total Benefits.
For purposes of determining the amount of such Excise Tax on the Total Benefits,
the amount of the Total Benefits that shall be treated as subject to the Excise
Tax shall be equal to (i) the Total Benefits, minus (ii) the amount of such
Total Benefits that, in the opinion of tax counsel selected by the Company and
reasonably acceptable to the Executive ("Tax Counsel"), are not excess parachute
payments (within the meaning of Section 280G(b)(1) of the Code).
(c) For purposes of Section 7(b), the Executive shall be deemed
to pay federal income taxes at the highest marginal rate of federal income
taxation in the calendar year in which the Excise Tax is payable and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the effective date of his termination,
net of the reduction in federal income taxes which could be obtained from
deduction of such state and local taxes (calculated by assuming that any
reduction under Section 68 of the Code in the amount of itemized deductions
allowable to the Executive applies first to reduce the amount of such state and
local income taxes that would otherwise be deductible by the Executive). Except
as otherwise provided herein, all determinations required to be made under this
Section 7 shall be made by Tax Counsel, which determinations shall be conclusive
and binding on the Executive and the Company absent manifest error.
(d) In the event that the Excise Tax on the Total Benefits is
subsequently determined to be less than the amount taken into account hereunder
at the time of termination of the Executive's employment, the Executive shall
repay to the Company, at the time that the amount of such reduction in Excise
Tax is finally determined, the portion of the Gross-Up Payment attributable to
such reduction (plus that portion of the Gross-Up Payment attributable to the
Excise Tax, federal, state and local income taxes and FICA and Medicare
withholding taxes imposed on the Gross-Up Payment being repaid by the Executive
to the extent that such repayment results in a reduction in any such taxes
and/or a federal, state or local income tax deduction) plus Applicable Interest.
In the event that the Excise Tax on the Total Benefits is finally determined to
exceed the amount taken into account hereunder at the time of the termination of
the Executive's employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment, which shall be calculated by
Tax Counsel in the same manner and using the same assumptions as set forth in
Sections 7(b) and 7(c), to the Executive in respect of such excess (plus any
interest, penalties or additions payable by the Executive to the Internal
Revenue Service
-9-
or any other federal, state, local or foreign taxing authority with respect to
such excess or with respect to the additional Gross-Up Payment) at the time that
the amount of such additional Excise Tax is finally determined.
(e) Following the occurrence of a Triggering Event, if the
Company or the Executive brings any action, suit or proceeding for the
enforcement, performance or construction of this Agreement, the Company agrees
to reimburse the Executive for all reasonable costs and expenses incurred by him
in such action, suit or proceeding, including reasonable attorneys' and
accountants' fees and expenses.
8. OTHER TERMINATION. Notwithstanding any other provision of this
Agreement, the Executive's employment hereunder shall terminate under the
following circumstances with the following consequences:
(a) TERMINATION BY COMPANY FOR CAUSE. The Company may terminate
the Executive's employment under this Agreement for Cause. The termination of
the Executive's employment under this Agreement shall not be deemed for Cause
unless and until (i) the Company, through the Board delivers reasonable notice
to the Executive that it intends to terminate the Executive for Cause, (ii) the
Executive is given an opportunity, together with counsel, to be heard before the
Board, (iii) the Executive's termination is approved by the affirmative vote of
at least two-thirds of the Board, and (4) the Company provides the Executive
with a copy of the resolutions duly adopted by the Board finding that, in the
good faith opinion of the Board, the Executive should be terminated for Cause
and specifying the particulars thereof in detail. Upon termination for Cause,
the Executive will not be entitled to any further compensation for any period
subsequent to the effective date of such termination, except for pay or
benefits, if any, in accordance with the then existing severance policies of the
Company and the severance terms of the Company Bonus Plans and Company Benefit
Plans.
(b) TERMINATION BY COMPANY FOR DISABILITY. If, as a result of the
Executive's incapacity due to physical or mental illness, the Executive shall
not have performed his duties hereunder on a full-time basis for six consecutive
months, the Executive's employment under this Agreement may be terminated by the
Company upon written notice. Such termination for disability shall require the
affirmative vote of a majority of the entire Board. The Executive's compensation
during any period of disability prior to the effective date of such termination
shall be the amounts normally payable to him in accordance with his then current
annual base salary, reduced by the amounts of disability pay, if any, paid to
the Executive under any Company Benefit Plan that provides disability benefits.
The Executive shall not be entitled to any further compensation from the Company
or its subsidiaries for any period subsequent to the effective date of such
termination, except for pay or benefits, if any, in accordance with then
existing severance policies of the Company or its subsidiaries and the severance
terms of the Company Bonus Plans and Company Benefit Plans and Section 5(h)
hereof. The Company agrees to continue to maintain in effect, during the
Executive's term of employment hereunder, the Company Benefit Plan that
currently provides long-term
-10-
disability coverage to the Executive (or a substitute plan or arrangement that
provides long-term disability benefits that are at least substantially
equivalent).
(c) CONSENSUAL TERMINATION. The parties hereto may agree at any
time to terminate both this Agreement and the Executive's employment hereunder
upon such terms and conditions as the parties may mutually agree.
(d) TERMINATION BY EXECUTIVE. (i) If the Executive terminates his
employment with the Company for any reason other than the occurrence of a
Triggering Event as provided for in Section 7 hereof or a consensual termination
as provided for in Section 8(c) hereof, the Executive will not be entitled to
any further compensation for any period subsequent to the effective date of such
termination, except for pay or benefits, if any, in accordance with the then
existing severance policies of the Company and the severance terms of the
Company Bonus Plans and the Company Benefit Plans.
(ii) The Executive may voluntarily resign as President and
Chief Executive Officer of the Company only after serving in such capacity for a
period of at least one year; provided, however, that the Executive may resign
prior to the expiration of such one-year period by reason of the occurrence of a
Triggering Event or the Executive's illness or disability. If the Executive
receives a Non-Renewal Notice, he may voluntarily resign as President and Chief
Executive Officer and continue to receive his annual base salary (as in effect
as of the date of his resignation) for the remaining term of his employment
period under the Agreement. If the Executive voluntarily resigns as President
and Chief Executive Officer of the Company prior to serving in such capacity for
at least one year and other than due to a Triggering Event, the Executive shall
forfeit all of his rights with respect to the receipt of compensation and
benefits under this Agreement.
9. SUPERVISORY SUSPENSION. In the event the Executive is suspended
from office and/or temporarily prohibited from participating in the conduct of
the affairs of the Company or any of its subsidiary banks by a notice served
under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
Sections 1818(e)(3) or 1818(g)(1), the Company's obligations under this
Agreement shall be suspended effective as of the service date of the notice
of suspension or temporary prohibition, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Company shall
(a) pay the Executive all compensation withheld while its obligations under
this Agreement were suspended, together with Applicable Interest and (b)
reinstate all obligations under this Agreement that were suspended.
10. CONSULTING SERVICES. Upon termination of the Executive's service
as President and Chief Executive Officer of the Company (unless (a) such
termination shall have been upon the occurrence of or within 90 days after a
Triggering Event or by the Company for Cause, or (b) the Executive shall have
voluntarily resigned (other than by reason of illness/disability or the issuance
of a Non-Renewal Notice) prior to serving as President and Chief Executive
Officer of the Company for at least one year), the Executive shall be entitled
to serve as a consultant to the Company for a period of five
-11-
years and shall be available to render such advisory or consulting services as
and when the Company may reasonably request of him from time to time. The
Executive shall perform consulting services hereunder as an independent
contractor and the provisions of this Agreement relating to the Executive's
employment by the Company, including by not limited to Section 5 hereof, shall
only apply and be effective for the period hereunder that the Executive serves
as President and Chief Executive Officer of the Company. In consideration for
the Executive's consulting services, the Company shall pay to the Executive an
annual consulting fee equal to $100,000, reduced by the amount of Board fees
paid to the Executive for service on the Board, other than fees paid to all
directors; provided, however, that no fee for consulting services shall be
payable to the Executive with respect to any period during which the Executive
is receiving his base salary pursuant to Section 8(d)(ii) hereof. Such annual
consulting fee shall be paid in substantially equal monthly installments. In the
event that the Executive is unable to perform the consulting services
contemplated by this Section 10 (whether such inability occurs before or after
the commencement of consulting services) by reason of the Executive's death or
disability at any time prior to the end of the five-year consulting period
provided for by this Section 10, the Executive (or in the event of his death,
his spouse or, if he has no spouse at such time, his estate) shall nonetheless
be entitled to receive the annual $100,000 consulting fee, in monthly
installments, for the remaining term of the five-year consulting period. If,
after a Change in Control, the Executive's consulting services are involuntarily
terminated prior to the expiration of the 5-year consulting period provided for
herein, the Company shall make a lump sum cash payment to the Executive in the
amount of $300,000. During the period that the Executive serves as a consultant
to the Company, he shall not engage in any Competitive Activity. "Competitive
Activity" shall mean any participation in, employment by, ownership of any
equity interest exceeding 1% in, or promotion or organization of, any person,
partnership, corporation, firm, association or other business organization,
entity or enterprise that is engaged in a business that is substantially similar
to some or all of the businesses of the Company whether the Executive is acting
as agent, consultant, employee, officer, director, investor, partner,
shareholder, proprietor or in any other individual or representative capacity
therein.
11. CONFIDENTIAL INFORMATION. During the Executive's employment with
the Company and thereafter, the Executive shall not disclose or use in any way
any confidential business or technical information or any trade secret acquired
in the course of such employment, other than (a) information that is generally
known in the Company's industry or acquired from public sources, (b) as required
in the course of such employment, (c) as required by any court, supervisory
authority, administrative agency or applicable law, or (d) with the prior
written consent of the Company. This Section 11 shall survive termination of
this Agreement.
12. NO-RAID. The Executive agrees that, in the event that (a) the
Executive's employment with the Company is terminated other than upon the
occurrence of, or within 90 days after, a Triggering Event and as a result of
such termination the Executive is entitled to receive compensation, benefits or
payments hereunder or under the Company's then existing severance policies that,
in the aggregate, equal or exceed
-12-
100% of the Executive's annual base salary at the time of termination plus the
amount of any discretionary bonuses paid by the Company to the Executive within
the 12 months immediately preceding the termination, or (b) the Executive
becomes entitled to the $300,000 payment described in Section 10 hereof, the
Executive shall not, for a period of one year (or such lesser period as may be
determined by the Board and disclosed to the Executive in writing) after the
effective date of the Executive's termination of employment or service as a
consultant, solicit, actively interfere with the Company's or any Company
affiliate's relationship with, or attempt to divert or entice away, any officer
of the Company or its affiliates.
13. PAYMENT OBLIGATION ABSOLUTE. The obligation of the Company to pay
the Executive the compensation, benefits or payments provided herein during the
term hereof shall be absolute and unconditional and shall not be affected by any
circumstances, including without limitation any set-off, counterclaim,
recoupment, defense or other right which the Company may have against the
Executive. All amounts payable by the Company hereunder shall be paid without
notice or demand. Each and every payment made hereunder by the Company shall be
final and the Company will not seek to recover all or any part of such payment
from the Executive, or from whosoever may be entitled thereto, for any reason
whatsoever except as provided in Section 8(d) hereof. The Executive shall not be
obligated to seek other employment in mitigation of the amounts payable under
any provision of this Agreement and the obtaining of any such other employment
shall in no event limit or reduce the obligations of the Company to make the
payments required to be made under this Agreement.
14. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement shall
be deemed to give the Executive the right to be retained in the employ or
service of the Company, or to interfere with the right of the Company to
discharge the Executive at any time, subject in all cases to the terms of this
Agreement.
15. WITHHOLDING. Any payments provided for hereunder shall be paid net
of any applicable withholding required under federal, state or local law and any
additional withholding to which the Executive has agreed.
16. SUCCESSORS AND ASSIGNS. This Agreement is a personal services
contract which may not be assigned by the Company, or assumed from the Company
by, any other party without the prior written consent of the Executive. Subject
to the foregoing limitation, all rights hereunder shall inure to the benefit of
the parties hereto, their personal or legal representatives, heirs, successors
and assigns. The Company will require any successor (whether direct or indirect,
by purchase, assignment, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume this Agreement and to agree to perform hereunder in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place. References herein to the Company will be understood
to refer to the successor or successors of the Company, respectively.
-13-
17. NOTICES. Any notice required or desired to be given hereunder
shall be in writing and shall be deemed given when delivered personally or sent
by certified or registered mail, postage prepaid, to the address of the other
party set forth in the first paragraph of this Agreement, provided that any
notice to the Company shall be directed to the Chairman of the Board.
18. WAIVER OF BREACH. Waiver by any party of a breach of any provision
shall not operate as or be construed a waiver by such party of any subsequent
breach hereof.
19. ENTIRE AGREEMENT; EFFECT ON PRIOR AGREEMENT. This agreement
contains the entire agreement among the parties concerning the employment of the
Executive by the Company, and supersedes any employment or change in control
agreements between the Executive and the Company or any of its predecessors,
subsidiaries or predecessors of subsidiaries. Executive agrees that, for
purposes of the Employment Agreement entered into between Progressive Bank, Inc.
and the Executive, dated as of December 1, 1994, the Merger will not constitute
a "change of control" for purposes of such agreement and that the Executive
waives all change of control benefits under such agreement that are associated
with the Merger.
20. WRITTEN MODIFICATION, AMENDMENT OR WAIVER. No modification,
amendment or waiver of any provision hereof shall be effective unless in writing
specifically referring hereto and signed by the party against whom such
provision as modified or amended or such waiver is sought to be enforced.
21. COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party hereto and delivered
to the other party, it being understood that all parties need not sign the same
counterpart.
22. GOVERNING LAW. This Agreement is governed by and is to be
construed and enforced in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely therein.
23. CONSENT TO JURISDICTION. Each party hereto irrevocably consents to
the exclusive jurisdiction of the courts of the State of New York and the
federal courts situated in the State of New York in connection with any action
to enforce the provisions of this Agreement, to recover damages or other relief
for breach or default under this Agreement, to enforce any decision or award of
any arbitrators, or otherwise arising under or by reason of this Agreement.
24. CONSTRUCTION.
(a) The section headings of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be a part of this
Agreement.
-14-
(b) All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders where
the context so requires.
(c) The singular shall include the plural, and vice versa, where
the context so requires.
(d) All references to sections of, or regulations promulgated
under, the Exchange Act, the Code or other statutes shall be deemed also to
refer to such sections or regulations as amended from time to time and to any
successor provisions to such sections or regulations. All references to employee
benefit plans of the Company shall be deemed also to refer to such plans as
amended from time to time and to any successor plans thereto.
25. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
affecting the validity or enforceability of any other term or provision hereof
in that or any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted so as to be
enforceable.
26. AUTHORIZATION. The Company represents and warrants that the
execution of this Agreement has been duly authorized by resolution of the Board.
-15-
IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Agreement as of the date first above written.
PREMIER NATIONAL BANCORP
/s/Xxxxx Xxx Xxxxx
President & CEO
/s/T. Xxxxxxxxx Xxxxxxxxxx III
Chairman of Premier
-16-
