EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into this 18th day of November 1997, ("Effective
Date") by and between Xxxxxxx Federal Savings Bank (the "Bank") and Xxxxxx X.
Xxxxxxxxx (the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by the Bank as the
Senior Vice President and is experienced in all phases of the business of the
Bank; and
WHEREAS, the Bank desires to be ensured of the Executive's continued active
participation in the business of the Bank; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Bank and in consideration of the Executive's agreeing to remain in the employ of
the Bank, the parties desire to specify the continuing employment relationship
between the Bank and the Executive;
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
1. Employment. The Bank hereby employs the Executive in the capacity of
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Senior Vice President. The Executive hereby accepts said employment and agrees
to render such administrative and management services to the Bank and to any
to-be-formed parent holding company ("Parent") as are currently rendered and as
are customarily performed by persons situated in a similar executive capacity.
The Executive shall promote the business of the Bank and Parent. The Executive's
other duties shall be such as the Board of Directors for the Bank (the "Board of
Directors" or "Board") may from time to time reasonably direct, including normal
duties as an officer of the Bank.
2. Term of Employment. The term of employment of Executive under this
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Agreement shall be for the period commencing on the Effective Date and ending
November 18, 2000 thereafter ("Term"). Additionally, on, or before, each annual
anniversary date from the Effective Date, the Term of employment under this
Agreement shall be extended for up to an additional period beyond the then
effective expiration date upon a determination and resolution of the Board of
Directors that the performance of the Executive has met the requirements and
standards of the Board, and that the Term of such Agreement shall be extended.
References herein to the Term of this Agreement shall refer both to the initial
term and successive terms.
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3. Compensation, Benefits and Expenses.
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(a) Base Salary. The Bank shall compensate and pay the Executive during the
Term of this Agreement a minimum base salary at the rate of $63,600.00 per annum
("Base Salary"), payable in cash not less frequently than bi-weekly; provided,
that the rate of such salary shall be reviewed by the Board of Directors not
less often than annually, and the Executive shall be entitled to receive
increases at such percentages or in such amounts as determined by the Board of
Directors. The base salary may not be decreased without the Executive's express
written consent.
(b) Discretionary Bonus. The Executive shall be entitled to participate in
an equitable manner with all other senior management employees of the Bank in
discretionary bonuses that may be authorized and declared by the Board of
Directors to its senior management executives from time to time. No other
compensation provided for in this Agreement shall be deemed a substitute for the
Executive's right to participate in such discretionary bonuses when and as
declared by the Board.
(c) Participation in Benefit and Retirement Plans. The Executive shall be
entitled to participate in and receive the benefits of any plan of the Bank
which may be or may become applicable to senior management relating to pension
or other retirement benefit plans, profit-sharing, stock options or incentive
plans, or other plans, benefits and privileges given to employees and executives
of the Bank, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Bank.
(d) Participation in Medical Plans and Insurance Policies. The Executive
shall be entitled to participate in and receive the benefits of any plan or
policy of the Bank which may be or may become applicable to senior management
relating to life insurance, long term disability, medical, dental, eye-care,
prescription drugs or medical reimbursement plans. Additionally, Executive's
dependent family shall be eligible to participate in medical and dental
insurance plans sponsored by the Savings Bank or Parent with the cost of such
premiums paid by the Savings Bank.
(e) Vacations and Sick Leave. The Executive shall be entitled to paid
annual vacation leave in accordance with the policies as established from time
to time by the Board of Directors, which shall in no event be less than four
weeks per annum. The Executive shall also be entitled to an annual sick leave
benefit as established by the Board for senior management employees of the Bank.
(f) Expenses. The Bank shall reimburse the Executive or otherwise provide
for or pay for all reasonable expenses incurred by the Executive in furtherance
of, or in connection with the business of the Bank, including, but not by way of
limitation, automobile and traveling expenses, and all reasonable entertainment
expenses, subject to such reasonable documentation and
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other limitations as may be established by the Board of Directors of the Bank.
If such expenses are paid in the first instance by the Executive, the Bank shall
reimburse the Executive therefor.
(g) Changes in Benefits. The Bank shall not make any changes in such plans,
benefits or privileges previously described in Section 3(c), (d) and (e) which
would adversely affect the Executive's rights or benefits thereunder, unless
such change occurs pursuant to a program applicable to all executive officers of
the Bank and does not result in a proportionately greater adverse change in the
rights of, or benefits to, the Executive as compared with any other executive
officer of the Bank. Nothing paid to Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to Executive pursuant to Section 3(a) hereof.
4. Loyalty; Noncompetition.
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(a) The Executive shall devote his full time and attention to the
performance of his employment under this Agreement. During the term of the
Executive's employment under this Agreement, the Executive shall not engage in
any business or activity contrary to the business affairs or interests of the
Bank or Parent.
(b) Nothing contained in this Section 4 shall be deemed to prevent or limit
the right of Executive to invest in the capital stock or other securities of any
business dissimilar from that of the Bank or Parent, or, solely as a passive or
minority investor, in any business.
5. Standards. During the term of this Agreement, the Executive shall
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perform his duties in accordance with such reasonable standards expected of
executives with comparable positions in comparable organizations and as may be
established from time to time by the Board of Directors.
6. Termination and Termination Pay. The Executive's employment under this
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Agreement shall be terminated upon any of the following occurrences:
(a) The death of the Executive during the term of this Agreement, in which
event the Executive's estate shall be entitled to receive the compensation due
the Executive through the last day of the calendar month in which Executive's
death shall have occurred.
(b) The Board of Directors may terminate the Executive's employment at any
time, but any termination by the Board of Directors other than termination for
Just Cause, shall not prejudice the Executive's right to compensation or other
benefits under the Agreement. The Executive shall have no right to receive
compensation or other benefits for any period after termination for Just Cause.
The Board may within its sole discretion, acting in good faith, terminate the
Executive for Just Cause and shall notify such Executive accordingly.
Termination for "Just Cause" shall include termination because of the
Executive's personal dishonesty,
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incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of the
Agreement.
(c) Except as provided pursuant to Section 9 hereof, in the event
Executive's employment under this Agreement is terminated by the Board of
Directors without Just Cause, the Bank shall be obligated to continue to pay the
Executive the salary provided pursuant to Section 3(a) herein, up to the date of
termination of the remaining Term of this Agreement, but in no event for a
period of less than twelve months, and the cost of Executive obtaining all
health, life, disability, and other benefits which the Executive would be
eligible to participate in through such date based upon the benefit levels
substantially equal to those being provided Executive at the date of termination
of employment.
(d) The voluntary termination by the Executive during the term of this
Agreement with the delivery of no less than 60 days written notice to the Board
of Directors, other than pursuant to Section 9(b), in which case the Executive
shall be entitled to receive only the compensation, vested rights, and all
employee benefits up to the date of such termination.
7. Regulatory Exclusions.
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(a) If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)), the
Bank's obligations under the Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Bank may within its discretion (i) pay the Executive all or
part of the compensation withheld while its contract obligations were suspended
and (ii) reinstate any of its obligations which were suspended.
(b) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Bank under this Agreement
shall terminate, as of the effective date of the order, but the vested rights of
the parties shall not be affected.
(c) If the Bank is in default (as defined in Section 3(x)(1) of FDIA) all
obligations under this Agreement shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the contracting parties.
(d) All obligations under this Agreement shall be terminated, except to the
extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank: (i) by the Director of the Office of Thrift
Supervision ("Director of OTS"), or his or her designee, at the time that the
Federal Deposit Insurance Corporation ("FDIC") enters into an
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agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) of FDIA; or (ii) by the Director of the OTS, or his
or her designee, at the time that the Director of the OTS, or his or her
designee approves a supervisory merger to resolve problems related to operation
of the Bank or when the Bank is determined by the Director of the OTS to be in
an unsafe or unsound condition. Any rights of the parties that have already
vested, however, shall not be affected by such action.
(e) Notwithstanding anything herein to the contrary, any payments made to
the Executive pursuant to the Agreement, or otherwise, shall be subject to and
conditioned upon compliance with 12 USC ss.1828(k) and any regulations
promulgated thereunder.
8. Disability. If the Executive shall become disabled or incapacitated to
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the extent that he is unable to perform his duties hereunder, by reason of
medically determinable physical or mental impairment, as determined by a doctor
engaged by the Board of Directors, Executive shall nevertheless continue to
receive the compensation and benefits provided under the terms of this Agreement
as follows: 100% of such compensation and benefits for a period of 12 months,
but not exceeding the remaining term of the Agreement, and 65% thereafter for
the remainder of the term of the Agreement. Such benefits noted herein shall be
reduced by any benefits otherwise provided to the Executive during such period
under the provisions of disability insurance coverage in effect for Bank
employees. Thereafter, Executive shall be eligible to receive benefits provided
by the Bank under the provisions of disability insurance coverage in effect for
Bank employees. Upon returning to active full-time employment, the Executive's
full compensation as set forth in this Agreement shall be reinstated as of the
date of commencement of such activities. In the event that the Executive returns
to active employment on other than a full-time basis, then his compensation (as
set forth in Section 3(a) of this Agreement) shall be reduced in proportion to
the time spent in said employment, or as shall otherwise be agreed to by the
parties.
9. Change in Control.
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(a) Notwithstanding any provision herein to the contrary, in the event of
the involuntary termination of Executive's employment during the term of this
Agreement following any Change in Control of the Bank or Parent, or within 24
months thereafter of such Change in Control, absent Just Cause, Executive shall
be paid an amount equal to the product of 2.99 times the Executive's "base
amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code") and regulations promulgated thereunder. Said sum shall
be paid, at the option of Executive, either in one (1) lump sum within thirty
(30) days of such termination of service or in periodic payments over the next
36 months or the remaining term of this Agreement whichever is less, as if
Executive's employment had not been terminated, and such payments shall be in
lieu of any other future payments which the Executive would be otherwise
entitled to receive under Section 6 of this Agreement. Notwithstanding the
forgoing, all sums payable hereunder shall be reduced in such manner and to such
extent so that no such payments made hereunder when aggregated with all other
payments to be made to the Executive by the Bank or the Parent shall be deemed
an "excess parachute payment" in accordance with Section 280G
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of the Code and be subject to the excise tax provided at Section 4999(a) of the
Code. The term "Change in Control" shall refer to (i) the control of voting
proxies whether related to stockholders or mutual members by any person, other
than the Board of Directors of the Savings Bank, to direct more than 25% of the
outstanding votes of the Savings Bank, the control of the election of a majority
of the Savings Bank's directors, or the exercise of a controlling influence over
the management or policies of the Savings Bank by any person or by persons
acting as a group within the meaning of Section 13(d) of the Exchange Act, (ii)
an event whereby the OTS, FDIC or any other department, agency or quasi-agency
of the federal government cause or bring about, without the consent of the
Savings Bank, a change in the corporate structure or organization of the Savings
Bank; (iii) an event whereby the OTS, FDIC or any other agency or quasi-agency
of the federal government cause or bring about, without the consent of the
Savings Bank, a taxation or involuntary distribution of retained earnings or
proceeds from the sale of securities to depositors, borrowers, any government
agency or organization or civic or charitable organization; or (iv) a merger or
other business combination between the Savings Bank and another corporate entity
whereby the Savings Bank is not the surviving entity. In the event that the
Savings Bank shall convert in the future from mutual-to-stock form, the term
"Change in Control" shall also refer to: (i) the sale of all, or a material
portion, of the assets of the Savings Bank or the Parent; (ii) the merger or
recapitalization of the Savings Bank or the Parent whereby the Savings Bank or
the Parent is not the surviving entity; (iii) a change in control of the Savings
Bank or the Parent, as otherwise defined or determined by the Office of Thrift
Supervision or regulations promulgated by it; or (iv) the acquisition, directly
or indirectly, of the beneficial ownership (within the meaning of that term as
it is used in Section 13(d) of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder) of twenty-five percent (25%) or more of
the outstanding voting securities of the Savings Bank or the Parent by any
person, trust, entity or group. The term "person" means an individual other than
the Executive, or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.
(b) Notwithstanding any other provision of this Agreement to the contrary,
Executive may voluntarily terminate his employment during the term of this
Agreement following a Change in Control of the Bank or Parent, or within
twenty-four months following such Change in Contriol, and Executive shall
thereupon be entitled to receive the payment described in Section 9(a) of this
Agreement, upon the occurrence, or within 120 days thereafter, of any of the
following events, which have not been consented to in advance by the Executive
in writing: (i) if Executive would be required to move his personal residence or
perform his principal executive functions more than thirty-five (35) miles from
the Executive's primary office as of the signing of this Agreement; (ii) if in
the organizational structure of the Bank, Executive would be required to report
to a person or persons other than the Board of Directors of the Bank or the
President; (iii) if the Bank should fail to maintain Executive's base
compensation in effect as of the date of the Change in Control and the existing
employee benefits plans, including material fringe benefit, stock option and
retirement plans; (iv) if Executive would be assigned duties and
responsibilities other than those normally associated with his position as
referenced at Section 1, herein; (v) if
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Executive's responsibilities or authority have in any way been materially
diminished or reduced; or (vi) if Executive would not be reelected to the Board
of Directors of the Bank.
10. Withholding. All payments required to be made by the Bank hereunder to
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the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.
11. Successors and Assigns.
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(a) This Agreement shall inure to the benefit of and be binding upon any
corporate or other successor of the Bank or Parent which shall acquire, directly
or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Parent.
(b) Since the Bank is contracting for the unique and personal skills of the
Executive, the Executive shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of the
Bank.
12. Amendment; Waiver. No provisions of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed to
in writing, signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Bank to sign on its
behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. Governing Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of
Pennsylvania.
14. Nature of Obligations. Nothing contained herein shall create or require
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the Bank to create a trust of any kind to fund any benefits which may be payable
hereunder, and to the extent that the Executive acquires a right to receive
benefits from the Bank hereunder, such right shall be no greater than the right
of any unsecured general creditor of the Bank.
15. Headings. The section headings contained in this Agreement are for
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reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
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17. Arbitration. Any controversy or claim arising out of or relating to
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this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules then in effect of the district office of the American
Arbitration Association ("AAA") nearest to the home office of the Bank, and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof, except to the extent that the parties may otherwise reach a mutual
settlement of such issue. Further, the settlement of the dispute to be approved
by the Board of the Bank may include a provision for the reimbursement by the
Bank to the Executive for all reasonable costs and expenses, including
reasonable attorneys' fees, arising from such dispute, proceedings or actions,
or the Board of the Bank or the Parent may authorize such reimbursement of such
reasonable costs and expenses by separate action upon a written action and
determination of the Board following settlement of the dispute. Such
reimbursement shall be paid within ten (10) days of Executive furnishing to the
Bank or Parent evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by Executive.
18. Entire Agreement. This Agreement together with any understanding or
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modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
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