EXHIBIT 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of _________ ___, 2005, between Prudential
Savings Bank, a Pennsylvania-chartered, stock-form savings bank (the "Bank" or
the "Employer"), and Xxxxxx X. Xxxxxxx (the "Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Bank;
WHEREAS, the Employer desires to be ensured of the Executive's continued
active participation in the business of the Employer; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Employer and in consideration of the Executive's agreeing to remain in the
employ of the Employer, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employer is terminated under specified circumstances.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) AVERAGE ANNUAL COMPENSATION. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the average
amount of Base Salary and cash bonus received by the Executive from the Employer
or any subsidiary thereof (excluding any deferred amounts) during the most
recent five calendar years preceding the Date of Termination (or such shorter
period as the Executive was employed).
(b) BASE SALARY. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(c) CAUSE. Termination of the Executive's employment for "Cause" shall
mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, willful conduct which is materially detrimental
(monetarily or otherwise) to the Employer or material breach of any provision of
this Agreement.
(d) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of the
Corporation" shall mean the occurrence of any of the following: (i) an event
that would be required to be reported by, or with respect to, the Corporation in
response to Item 5.01 of Form 8-K or Item 6(e) of Schedule 14A of Regulation 14A
pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor thereto, whether or not any class of
securities of the Corporation is registered under the Exchange Act; (ii) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
other than the MHC is or becomes the "beneficial owner" (as defined in Rule
13d-under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities; or (iii) during any period of three
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Corporation cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period; provided, however, that no Change in Control of the Corporation shall be
deemed to have occurred solely because the MHC undertakes a "second-step" mutual
to stock conversion.
(e) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) CORPORATION. "Corporation" shall mean Prudential Bancorp, Inc. of
Pennsylvania, the "mid-tier" holding company for the Bank, or any successor
thereto.
(g) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination is
given or as specified in such Notice.
(h) DISABILITY. Termination by the Employer of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Employer or any
subsidiary or, if no such plan applies, which would qualify the Executive for
disability benefits under the Federal Social Security System.
(i) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive within
twelve (12) months following a Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the failure
to elect or to re-elect or to appoint or to re-appoint the
Executive to the office of Executive Vice President and Chief
Financial Officer of the Employer or a material adverse change
made by the Employer in the Executive's functions, duties or
responsibilities as Executive Vice President and Chief
Financial Officer of the Employer;
(ii) Without the Executive's express written consent, a reduction
by the Employer in the Executive's Base Salary as the same may
be increased from time to time or, except to the extent
permitted by Section 3(b) hereof, a reduction in the package
of fringe benefits provided to the Executive, taken as a
whole;
2
(iii) The principal executive office of the Employer is relocated
more than 20 miles from the Employer's current main office
location in Philadelphia, Pennsylvania, or, without the
Executive's express written consent, the Employer requires the
Executive to be based anywhere other than an area in which the
Employer's principal executive office is located, except for
required travel on business of the Employer to an extent
substantially consistent with the Executive's present business
travel obligations;
(iv) Any purported termination of the Executive's employment for
Disability or Retirement which is not effected pursuant to a
Notice of Termination satisfying the requirements of paragraph
(l) below; or
(v) The failure by the Employer to obtain the assumption of and
agreement to perform this Agreement by any successor as
contemplated in Section 9 hereof.
(j) IRS. "IRS" shall mean the Internal Revenue Service.
(k) MHC. "MHC" shall mean Prudential Mutual Holding Company, the parent
mutual holding company for the Corporation and the Bank.
(l) NOTICE OF TERMINATION. Any purported termination of the Executive's
employment by the Employer for any reason, including without limitation for
Cause, Disability or Retirement, or by the Executive for any reason, including
without limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated,
(iii) specifies a Date of Termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of the Employer's termination of the Executive's employment for
Cause, which shall be effective immediately; and (iv) is given in the manner
specified in Section 10 hereof.
(m) RETIREMENT. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employer's retirement policies, including early
retirement, generally applicable to the Employer's salaried employees.
2. TERM OF EMPLOYMENT.
(a) The Employer hereby employs the Executive as Executive Vice
President and Chief Financial Officer and the Executive hereby accepts said
employment and agrees to render such services to the Employer on the terms and
conditions set forth in this Agreement. Subject to the terms hereof, this
Agreement shall terminate two (2) years after the date first above written.
Beginning on the day which is one year subsequent to the date first above
written, and on each annual anniversary thereafter, the term of this Agreement
shall be extended for a period of one additional year provided that the Employer
has not given notice to the Executive in writing at least
3
30 days prior to such day that the term of this Agreement shall not be extended
further and/or the Executive has not given notice to the Employer of his
election not to extend the term at least thirty (30) days prior to any such
anniversary date. If any party gives timely notice that the term will not be
extended as of any such annual anniversary date, then this Agreement shall
terminate at the conclusion of its remaining term. References herein to the term
of this Agreement shall refer both to the initial term and successive terms.
(b) During the term of this Agreement, the Executive shall perform such
executive services for the Employer as is consistent with his title of Executive
Vice President and Chief Financial Officer and from time to time assigned to him
by the Employer's Board of Directors.
3. COMPENSATION AND BENEFITS.
(a) The Employer shall compensate and pay the Executive for his services
during the term of this Agreement at a minimum base salary of $______ per year
("Base Salary"), which may be increased from time to time in such amounts as may
be determined by the Board of Directors of the Employer and may not be decreased
without the Executive's express written consent. In addition to his Base Salary,
the Executive shall be entitled to receive during the term of this Agreement
such bonus payments as may be determined by the Board of Directors of the
Employer.
(b) During the term of this Agreement, the Executive shall be entitled
to participate in and receive the benefits of any pension or other retirement
benefit plan, profit sharing, stock option, restricted stock, employee stock
ownership, or other plans, benefits and privileges given to employees and
executives of the Employer, to the extent commensurate with his then duties and
responsibilities, as fixed by the Board of Directors of the Employer. The
Employer shall not make any changes in such plans, benefits or privileges 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 Employer 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 Employer. Nothing paid to the 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 the Executive pursuant to Section 3(a)
hereof.
(c) During the term of this Agreement, the Executive shall be entitled
to paid annual vacation in accordance with the policies as established from time
to time by the Board of Directors of the Employer. The Executive shall not be
entitled to receive any additional compensation from the Employer for failure to
take a vacation, nor shall the Executive be able to accumulate unused vacation
time from one year to the next, except to the extent authorized by the Board of
Directors of the Employer.
4. EXPENSES. The Employer 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 Employer, including,
but not by way of limitation, automobile and traveling expenses, subject to such
reasonable documentation and other limitations as may be established by the
Board of Directors of the Employer. If such expenses are paid in the first
instance by the Executive, the Employer shall reimburse the Executive therefor.
4
5. TERMINATION.
(a) The Employer shall have the right, at any time upon prior Notice of
Termination, to terminate the Executive's employment hereunder for any reason,
including without limitation termination for Cause, Disability or Retirement,
and the Executive shall have the right, upon prior Notice of Termination, to
terminate his employment hereunder for any reason.
(b) In the event that the (i) the Executive's employment is terminated
by the Employer for Cause, or (ii) the Executive terminates his employment
hereunder other than for Good Reason, the Executive shall have no right pursuant
to this Agreement to compensation or other benefits for any period after the
applicable Date of Termination.
(c) In the event that the Executive's employment is terminated as a
result of Disability, Retirement or the Executive's death during the term of
this Agreement, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.
(d) In the event that (i) the Executive's employment is terminated by
the Employer for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive due to a material
breach of this Agreement by the Employer, which breach has not been cured within
fifteen (15) days after a written notice of non-compliance has been given by the
Executive to the Employer then the Employer shall,
(A) pay to the Executive, in either twelve (12) equal monthly
installments beginning with the first business day of the month following
the Date of Termination or in a lump sum within five business days of the
Date of Termination (at the Executive's election), a cash severance amount
equal to one (1) times the Executive's Average Annual Compensation;
provided, however, that this Section 5(d) shall not be applicable if the
termination of employment occurs concurrently with or subsequent to a
Change in Control of the Corporation; and
(B) maintain and provide for a period ending at the earlier of (i)
one (1) year subsequent to the Date of Termination or (ii) the date of the
Executive's full-time employment by another employer (provided that the
Executive is entitled under the terms of such employment to benefits
substantially similar to those described in this subparagraph (B)), [AT NO
COST TO THE EXECUTIVE,] the Executive's continued participation in all
group insurance, life insurance, health and accident, disability and other
employee benefit plans, programs and arrangements in which the Executive
was entitled to participate immediately prior to the Date of Termination
(other than stock option and restricted stock plans of the Employer or the
Corporation), provided that in the event that the Executive's
participation in any plan, program or arrangement as provided in this
subparagraph (B) is barred or during such period any such plan, program or
arrangement is discontinued or the benefits thereunder materially reduced,
the Employer shall arrange to provide the Executive with benefits
substantially similar to those which the Executive was entitled to receive
under such plans, programs and arrangements immediately prior to the Date
of Termination.
5
(e) In the event that (i) the Executive's employment is terminated
concurrently with or subsequent to a Change in Control of the Corporation for
other than Cause, Disability, Retirement or the Executive's death or (ii) the
Executive elects to terminate his employment for Good Reason, then the Employer
shall, subject to the provisions of Section 6 hereof, if applicable,
(A) pay to the Executive, in either twenty-four (24) equal monthly
installments beginning with the first business day of the month following
the Date of Termination or in a lump sum within five business days of the
Date of Termination (at the Executive's election), a cash severance amount
equal to two (2) times the Executive's Average Annual Compensation; and
(B) maintain and provide for a period ending at the earlier of (i)
two (2) years subsequent to the Date of Termination or (ii) the date of
the Executive's full-time employment by another employer (provided that
the Executive is entitled under the terms of such employment to benefits
substantially similar to those described in this subparagraph (B)), [AT NO
COST TO THE EXECUTIVE,] the Executive's continued participation in all
group insurance, life insurance, health and accident, disability and other
employee benefit plans, programs and arrangements in which the Executive
was entitled to participate immediately prior to the Date of Termination
(other than stock option and restricted stock plans of the Employer),
provided that in the event that the Executive's participation in any plan,
program or arrangement as provided in this subparagraph (B) is barred or
during such period any such plan, program or arrangement is discontinued
or the benefits thereunder are materially reduced, the Employer shall
arrange to provide the Executive with benefits substantially similar to
those which the Executive was entitled to receive under such plans,
programs and arrangements immediately prior to the Date of Termination.
6. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the payments
and benefits pursuant to Section 5 hereof, either alone or together with other
payments and benefits which the Executive has the right to receive from the
Employer, would constitute a "parachute payment" under Section 280G of the Code,
the payments and benefits payable by the Employer pursuant to Section 5 hereof
shall be reduced, in the manner determined by the Executive, by the amount, if
any, which is the minimum necessary to result in no portion of the payments and
benefits under Section 5 being non-deductible to the Employer pursuant to
Section 280G of the Code and subject to the excise tax imposed under Section
4999 of the Code. The determination of any reduction in the payments and
benefits to be made pursuant to Section 5 shall be based upon the opinion of
independent tax counsel selected by the Employer and paid by the Employer. Such
counsel shall be reasonably acceptable to the Employer and the Executive; shall
promptly prepare the foregoing opinion, but in no event later than thirty (30)
days from the Date of Termination; and may use such actuaries as such counsel
deems necessary or advisable for the purpose. Nothing contained herein shall
result in a reduction of any payments or benefits to which the Executive may be
entitled upon termination of employment under any circumstances other than as
specified in this Section 6, or a reduction in the payments and benefits
specified in Section 5 below zero.
6
7. MITIGATION; EXCLUSIVITY OF BENEFITS.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise, except as set forth in Sections 5(d)(B)(ii) and
5(e)(B)(ii) hereof.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employer pursuant to employee benefit plans
of the Employer or otherwise.
8. WITHHOLDING. All payments required to be made by the Employer
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employer may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
9. ASSIGNABILITY. The Employer may assign this Agreement and its rights
and obligations hereunder in whole, but not in part, to any corporation, bank or
other entity with or into which the Employer may hereafter merge or consolidate
or to which the Employer may transfer all or substantially all of its assets, if
in any such case said corporation, bank or other entity shall by operation of
law or expressly in writing assume all obligations of the Employer hereunder as
fully as if it had been originally made a party hereto, but may not otherwise
assign this Agreement or its rights and obligations hereunder. The Executive may
not assign or transfer this Agreement or any rights or obligations hereunder.
10. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employer: Board of Directors
Prudential Savings Bank
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
To the Executive: Xxxxxx X. Xxxxxxx
At the address last appearing on the
personnel records of Executive
11. AMENDMENT; WAIVER. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Employer 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.
7
12. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.
13. NATURE OF OBLIGATIONS. Nothing contained herein shall create or
require the Employer 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 Employer hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employer.
14. HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. REGULATORY PROHIBITION. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C. Section 1828(k)) and the regulations
promulgated thereunder, including 12 C.F.R. Part 359. In the event of the
Executive's termination of employment with the Bank for Cause, all employment
relationships and managerial duties with the Bank shall immediately cease
regardless of whether the Executive is in the employ of the Corporation
following such termination. Furthermore, following such termination for Cause,
the Executive will not, directly or indirectly, influence or participate in the
affairs or the operations of the Bank.
18. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS. In
the event any dispute or controversy arising under or in connection with the
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, the Executive shall be entitled to the
payment of (a) all legal fees incurred by the Executive in resolving such
dispute or controversy, and (b) any back-pay, including Base Salary, bonuses and
any other cash compensation, fringe benefits and any compensation and benefits
due to the Executive under this Agreement.
19. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Employer and the Executive with respect to the matters agreed to
herein. All prior agreements between the Employer and the Executive with respect
to the matters agreed to herein are hereby superseded and shall have no force or
effect.
8
IN WITNESS WHEREOF, this Agreement is effective as of the date first above
written.
Attest PRUDENTIAL SAVINGS BANK
__________________________ By: _______________________________
Xxxxxx X. Xxxxx
President and Chief Executive Officer
EXECUTIVE
By: __________________________
Xxxxxx X. Xxxxxxx
9
