EXHIBIT 10.3
AMERICAN FINANCIAL HOLDINGS, INC.
EMPLOYMENT AGREEMENT
AMERICAN FINANCIAL HOLDINGS, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT, effective January 18, 2002, by and between AMERICAN
FINANCIAL HOLDINGS, INC. (the "Holding Company"), a corporation organized under
the laws of Delaware, with its principal administrative office at 000 Xxxx Xxxx
Xxxxxx, Xxx Xxxxxxx, XX 00000 and XXXX X. XXXXX ("Executive"). Any reference to
"the Bank" herein shall mean AMERICAN SAVINGS BANK or any successor thereto.
WHEREAS, the Bank, the Holding Company, and American Bank of
Connecticut, a Connecticut chartered savings bank ("ABC"), have entered into an
Agreement and Plan of Merger, dated as of July 18, 2001 (the "Merger"),
providing for, among other things, the merger of ABC with and into the Bank,
with the Bank being the surviving institution.
WHEREAS, continued employment of Executive is valuable to the success
of combined companies; and
WHEREAS, Executive is willing to serve in the employ of the Holding
Company in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. CONSIDERATION PROVIDED BY THE EXECUTIVE.
On the terms and subject to the conditions set forth in this Agreement,
commencing at the Effective Time of the Merger (the "Effective Date"), the
Holding Company shall employ and Executive agrees to serve as an executive vice
president and Chief Commercial Bank Officer of the Holding Company. Executive
shall render administrative and management services to the Holding Company such
as are customarily performed by persons in a similar executive capacity and
shall report directly to the Chief Banking Officer of the Holding Company.
During the period of his employment hereunder, Executive also agrees to serve,
if appointed, as an officer of any subsidiary of the Holding Company. Failure to
reappoint Executive as an executive vice president and Chief Commercial Banking
Officer of the Holding Company or failure to reappoint Executive as an executive
vice president and Chief Commercial Banking Officer of the Bank without the
consent of Executive, shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the Effective Date and shall continue for a
period of thirty-six (36) full calendar months from said date. The term of this
Agreement shall be extended for one day each day so that a constant thirty-six
(36) calendar month term shall remain in effect, until such time as the Board of
Directors of the Holding Company (the "Board") or Executive elects not to extend
the term of the Agreement by giving written notice to the other party in
accordance with
Section 8 of this Agreement, in which case the term of this Agreement shall be
fixed and shall end on the third anniversary of the date of such written notice.
(b) During the period of his employment hereunder, except for periods
of absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Holding Company and the Bank and participation
in community and civic organizations; provided, however, that, with the approval
of the Board, as evidenced by a resolution of such Board, from time to time,
Executive may serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations, which, in
the Board's judgment, will not present any conflict of interest with the Holding
Company, or materially affect the performance of Executive's duties pursuant to
this Agreement.
(c) Notwithstanding anything herein contained to the contrary,
Executive's employment with the Holding Company may be terminated by the Holding
Company or Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement.
3. CONSIDERATION PROVIDED BY THE HOLDING COMPANY.
(a) The compensation specified under this Agreement shall constitute
consideration paid by the Holding Company in exchange for the duties described
in Section 1 of this Agreement. The Holding Company shall pay Executive as
compensation a salary of not less than $138,500 per year ("Base Salary"). Base
Salary shall include any amounts of compensation deferred by Executive under any
employee benefit plan or deferred compensation arrangement maintained by the
Bank or the Holding Company. Executive's Base Salary shall be payable in
accordance with the Holding Company's general payroll practices. During the
period of this Agreement, Executive's Base Salary shall be reviewed at least
annually; the first such review will be made no later than one year from the
date of this Agreement. Such review shall be conducted by the Board or a
committee designated by the Board, and the Board may increase Executive's Base
Salary at any time. The increased Base Salary shall become the new "Base Salary"
for purposes of this Agreement. In addition to the Base Salary provided in this
Section 3(a), the Holding Company shall also provide Executive at no cost to
Executive with all such other benefits as are provided uniformly to permanent
full-time employees of the Holding Company and the Bank.
(b) The Holding Company will provide Executive with the opportunity to
participate in employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving a benefit from immediately prior to the beginning of the term
of this Agreement. Without limiting the generality of the foregoing provisions
of this paragraph (b), Executive will be entitled to participate in or receive
benefits under any employee benefit plans, whether tax-qualified or otherwise,
including, but not limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, employee
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stock ownership plans, health-and-accident plan, medical coverage or any other
employee benefit plan or arrangement made available by the Holding Company now
or in the future to its senior executives and key management employees, subject
to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Executive will be entitled to
incentive compensation and bonuses as provided in any plan or arrangement of the
Holding Company in which Executive is eligible to participate. Nothing paid to
Executive under any such plan or arrangement will be deemed to be in lieu of
other compensation to which Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of
this Section 3 and other compensation and benefits provided for by paragraph (b)
of this Section 3, the Holding Company shall pay or reimburse Executive for all
reasonable travel and other expenses incurred by Executive in performing his
obligations under this Agreement, including expenses associated with membership
in clubs or organizations, as mutually agreed to between the Board and
Executive.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this Section 4 shall apply. As used in this Agreement, an "Event of Termination"
shall mean and include any one or more of the following: (i) the termination by
the Holding Company of Executive's full-time employment hereunder for any reason
other than Termination for Cause, as defined in Section 7 hereof; or (ii)
Executive's resignation from the Holding Company's employ, upon any of (A)
notice to Executive by the Holding Company of non-renewal of the term of this
Agreement, (B) failure to appoint or reappoint Executive as an executive vice
president and Chief Commercial Banking Officer of the Holding Company, or
failure to appoint or reappoint Executive as an executive vice president and
Chief Commercial Banking Officer of the Bank, unless Executive consents to any
such event, (C) a material change in Executive's function, duties, or
responsibilities, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1 above (and any such material change shall be
deemed a continuing breach of this Agreement), (D) a relocation of Executive's
principal place of employment by more than fifty (50) miles from its location at
the effective date of this Agreement, or a material reduction in the benefits
and perquisites available to Executive to which Executive does not consent, (E)
liquidation or dissolution of the Bank or the Holding Company, or (F) breach of
this Agreement by the Holding Company. Upon the occurrence of any event
described in clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have
the right to elect to terminate his employment under this Agreement by
resignation upon not less than sixty (60) days prior written notice given within
a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination on the Date of
Termination as defined in Section 8, the Holding Company shall be obligated to
pay Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be: (i) the
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amount of the remaining payments and benefits that Executive would have earned
or accrued if he had continued his employment with the Holding Company or the
Bank during the remaining unexpired term of this Agreement, based on the
Executive's Base Salary and benefits provided at the Date of Termination, as set
out in Sections 3(a) and (b) hereof, as the case may be, and (ii) the amount
still due the Executive under any paragraph of Section 3 for service through the
Date of Termination. At the election of Executive, which election is to be made
within thirty (30) days of the Date of Termination, such payments shall be made
in a lump sum or paid monthly during the remaining term of the agreement
following Executive's termination. In the event that no election is made,
payment to Executive will be made in a lump sum. Such payments shall not be
reduced in the event Executive obtains other employment following termination of
employment.
(c) Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Bank or the
Holding Company on his behalf pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Bank or the Holding Company on Executive's behalf to the
extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.
(d) To the extent that the Holding Company or the Bank continues to
offer any life, medical, health, disability or dental insurance plan or
arrangement in which Executive participates in on the last day of his employment
(each being a "Welfare Plan"), after an Event of Termination (as herein
defined), Executive and his dependents shall continue participating in such
Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death; (ii) his employment by another employer other than
one of which he is the majority owner; or (iii) the end of the remaining term of
this Agreement. If the Holding Company or Bank does not offer the Welfare Plans
after the Event of Termination, then the Holding Company shall provide Executive
with a payment equal to the actuarial value of the provision of such benefit for
the period which runs until the earlier of (i) his death; (ii) his employment by
another employer other than one of which he is the majority owner; or (iii) the
end of the remaining term of this Agreement.
(e) In the event that Executive is receiving monthly payments pursuant
to Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis. Such election shall be irrevocable for the year for
which such election is made.
(f) For the purpose of this Section, termination of Executive based on
"Retirement" shall mean termination in accordance with the Holding Company's or
Bank's retirement policy or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Holding Company or the Bank and other plans to which
Executive is a party or a participant.
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5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Holding Company or the Bank shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a
Change in Control of the Bank or the Holding Company within the meaning of the
Change in Bank Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R. ss. 303.4(a), with
respect to the Bank, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") (or its predecessor agency), with respect to the
Holding Company, as in effect on the date of this Agreement; or (iii) without
limitation such a Change in Control shall be deemed to have occurred at such
time as (A) any "person" (as the term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of voting securities of the
Bank or the Holding Company representing 20% or more of the Bank's or the
Holding Company's outstanding voting securities or right to acquire such
securities except for any voting securities of the Bank purchased by the Holding
Company and any voting securities purchased by any employee benefit plan of the
Holding Company or its Subsidiaries, or (B) individuals who constitute the Board
on the date hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board, or whose
nomination for election by the Holding Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members, shall be, for purposes of this clause (B), considered as though he were
a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Bank or the
Holding Company or similar transaction occurs or is effectuated in which the
Bank or Holding Company is not the resulting entity, or (D) a proxy statement
has been distributed soliciting proxies from stockholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Bank with one or more corporations as a
result of which the outstanding shares of the class of securities then subject
to such plan or transaction are exchanged for or converted into cash or property
or securities not issued by the Bank or the Holding Company shall be
distributed, or (E) a tender offer is made for 20% or more of the voting
securities of the Bank or Holding Company then outstanding.
(b) If any of the events described in Section 5(a) hereof constituting
a Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive shall be entitled to the benefits provided in
paragraphs (c), (d), (e), (f) and (g) of this Section 5 upon his termination of
employment on or after the date the Change in Control occurs at any time during
the term of this Agreement due to (1) Executive's dismissal; (2) Executive's
voluntary resignation for any reason on or within the sixty (60) day period
immediately following the date a Change in Control has occurred; or (3)
Executive's resignation during the term of this Agreement following any
demotion, loss of title, office or significant authority or responsibility,
reduction in annual compensation or benefits or relocation of his principal
place of employment
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by more than 50 miles from its location immediately prior to the Change in
Control, unless such termination is because of his death, or Termination for
Cause; provided, however, that such payments shall be reduced by any payment
made under Section 4 of this agreement.
(c) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, as provided in Section 5(b), the Holding Company
shall pay Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the greater of: (1) the payments due for the
remaining term of the Agreement or (2) three (3) times Executive's average
annual compensation for the three (3) preceding taxable years. In determining
Executive's average annual compensation, annual compensation shall include Base
Salary and any other taxable income, including but not limited to amounts
related to the granting, vesting or exercise of restricted stock or stock option
awards, commissions, bonuses, pension, profit sharing and employee stock
ownership plan contributions or benefits (whether pursuant to a tax-qualified
plan or a deferred compensation arrangement and whether or not taxable),
retirement benefits, director or committee fees and fringe benefits paid or to
be paid to Executive or paid for Executive's benefit during any such year. At
the election of Executive, which election is to be made prior to or within
thirty (30) days of the Date of Termination on or following a Change in Control,
such payment may be made in a lump sum (without discount for early payment) on
or immediately following the Date of Termination (which may be the date a Change
in Control occurs) or paid in equal monthly installments during the thirty-six
(36) months following Executive's termination. In the event that no election is
made, payment to Executive will be made on a monthly basis during the thirty-six
(36) months following Executive's termination.
(d) Upon the occurrence of a Change in Control, Executive will be
entitled to receive benefits due him under or contributed by the Bank or the
Holding Company on his behalf pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Bank or the Holding Company on Executive's behalf to the
extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.
(e) Upon the occurrence of a Change in Control and Executive's
termination of employment in connection therewith, the Holding Company will
cause to be continued life, medical and disability coverage substantially
identical to the coverage maintained by the Bank or Holding Company for
Executive and any of his dependents covered under such plans prior to the Change
in Control. Such coverage and payments shall cease upon the expiration of
thirty-six (36) full calendar months following the Date of Termination. In the
event Executive's participation in any such plan or program is barred, the
Holding Company shall arrange to provide Executive and his dependents with
benefits substantially similar as those of which Executive and his dependents
would otherwise have been entitled to receive under such plans and programs from
which their continued participation is barred or provide their economic
equivalent.
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(f) The use or provision of any membership, license, automobile use, or
other perquisites shall be continued during the remaining term of the Agreement
on the same financial terms and obligations as were in place immediately prior
to the Change in Control. To the extent that any item referred to in this
paragraph will at the end of the term of this Agreement, no longer be available
to the Executive, the Executive will have the option to purchase all rights then
held by the Holding Company or Bank to such item for a price equal to the then
fair market value of the item.
(g) In the event that Executive is receiving monthly payments pursuant
to Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis pursuant to such section. Such election shall be
irrevocable for the year for which such election is made.
(h) Notwithstanding the preceding paragraphs of this Section 5, for any
taxable year in which the Executive shall be liable, as determined for the
payment of an excise tax under Section 4999 of the Code (or any successor
provision thereto), with respect to any payment in the nature of the
compensation made by the Holding Company or the Bank to (or for the benefit of)
Executive pursuant to this Agreement or otherwise, the Holding Company shall pay
to the Executive an amount determined under the following formula:
An amount equal to: (E x P) + X
WHERE:
X = E x P
---------------
1 - [(FI x (1 - SLI)) + SLI + E + (M + PO)]
E = the rate at which the excise tax is assessed under
Section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
5;
FI = the highest marginal rate of federal income,
employment, and other taxes (other than taxes imposed
under Section 4999 of the Code) applicable to
Executive for the taxable year in question;
SLI = the sum of the highest marginal rates of income and
payroll tax applicable to Executive under applicable
state and local laws for the taxable year in question;
M = highest marginal rate of Medicare Tax; and
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PO = adjustment for phase out of or loss of deduction,
personal exemption or other similar items.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Section 5 or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 5 shall be made to Executive on the
earliest of (i) the date the Holding Company is required to withhold such tax,
(ii) the date the tax is required to be paid by Executive, or (iii) at the time
of the Change in Control. It is the intention of the parties that the Holding
Company provide Executive with a full tax gross-up under the provisions of this
Section, so that on a net after-tax basis, the result to Executive shall be the
same as if the excise tax under Section 4999 (or any successor provisions) of
the Code had not been imposed. The tax gross-up may be adjusted if alternative
minimum tax rules are applicable to Executive.
(i) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which Executive is a party that the excess parachute payment as
defined in Section 4999 of the Code, reduced as described above, is more than
the amount determined as "P", above (such greater amount being hereafter
referred to as the "Determinative Excess Parachute Payment") then the Holding
Company's independent accountants shall determine the amount (the "Adjustment
Amount"), the Holding Company must pay to the Executive, in order to put the
Executive (or the Holding Company, as the case may be) in the same position as
the Executive (or the Holding Company, as the case may be) would have been if
the amount determined as "P" above had been equal to the Determinative Excess
Parachute Payment. In determining the Adjustment Amount, the independent
accountants shall take into account any and all taxes (including any penalties
and interest) paid by or for Executive or refunded to Executive or for
Executive's benefit. As soon as practicable after the Adjustment Amount has been
so determined, the Holding Company shall pay the Adjustment Amount to Executive.
(j) In each calendar year that Executive receives payments or benefits
under this Agreement, Executive shall report on his state and federal income tax
returns such information as is consistent with the determination made by the
independent accountants of the Holding Company as described above. The Holding
Company shall indemnify and hold Executive harmless from any and all losses,
costs and expenses (including without limitation, reasonable attorney's fees,
interest, fines and penalties) which Executive incurs as a result of so
reporting such information. Executive shall promptly notify the Holding Company
in writing whenever the Executive receives notice of the Bank of a judicial or
administrative proceeding, formal or informal, in which the federal tax
treatment under Section 4999 of the Code of any amount paid or payable under
this Agreement is being reviewed or is in dispute. The Holding Company shall
assume control at its expense over all legal and accounting matters pertaining
to such federal tax treatment (except to the extent necessary or appropriate for
Executive to resolve any such proceeding with respect to any matter unrelated to
amounts paid or payable pursuant to this contract) and Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall not enter
into any compromise or settlement or otherwise prejudice any rights the
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Holding Company may have in connection therewith without prior consent of the
Holding Company.
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6. DISABILITY BENEFITS.
In the event of the disability of Executive, the Holding Company shall
continue to pay Executive the compensation provided by this Agreement during the
period of his disability. In the event Executive is disabled for a continuous
period exceeding 12 calendar months, the Holding Company may, at its election,
terminate this Agreement; provided, however, the last 6 months of such 12-month
period shall constitute the "elimination period" for benefit determination under
the Holding Company's or the Bank's Long-Term Disability Plan. As used in this
Agreement, the term "disability" shall mean the complete and permanent inability
of Executive to perform his duties under this Agreement as determined by an
independent physician selected with the approval of the Holding Company or the
Bank and Executive. If, in the opinion of said physician, there is a reasonable
prognosis of recovery, this Agreement may not be terminated by the Holding
Company pursuant to this paragraph 6.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of: (1)
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order or material breach of any provision of
this Agreement which results in a material loss to the Bank or the Holding
Company, or (2) Executive's conviction of a crime or act involving moral
turpitude or a final judgement rendered against Executive based upon actions of
Executive which involve moral turpitude. For the purposes of this Section, no
act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Bank or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of conduct justifying Termination for Cause and specifying
the particulars thereof in detail. The Executive shall not have the right to
receive compensation or other benefits for any period after Termination for
Cause. During the period beginning on the date of the Notice of Termination for
Cause pursuant to Section 8 hereof through the Date of Termination, stock
options and related limited rights granted to Executive under any stock option
plan shall not be exercisable nor shall any unvested awards granted to Executive
under any stock benefit plan of the Bank, the Holding Company or any subsidiary
or affiliate thereof, vest. At the Date of Termination, such stock options and
related limited rights and any such unvested awards shall become null and void
and shall not be exercisable by or delivered to Executive at any time subsequent
to such Termination for Cause. Notwithstanding anything in this Section 7 or
this Agreement to the contrary, Executive's rights with respect to stock options
granted to him during his service as an employee of ABC shall be governed solely
by the terms of the ABC stock option plans and agreements under which such stock
options were granted, which plans and agreements have been assumed by the
Holding
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Company, and in no event shall Executive's rights with respect to such
options be affected by his termination of employment during the term of this
Agreement, including upon Executive's Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by Executive
shall be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given);
provided, however, that if a dispute regarding the Executive's termination
exists, the "Date of Termination" shall be determined in accordance with Section
8(c) of this Agreement.
(c) If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, except upon the occurrence of
a Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and; provided, further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the Holding Company
will continue to pay Executive his full compensation in effect when the notice
giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
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10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant
to Section 4 hereof, Executive agrees not to compete with the Holding Company or
its Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which the Executive's normal business office is located
and the Holding Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board. Executive agrees that during such period and within
said cities, towns and counties, Executive shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Holding Company or its Subsidiaries. The parties hereto, recognizing that
irreparable injury will result to the Holding Company or its Subsidiaries, its
business and property in the event of Executive's breach of this Subsection
10(a) agree that in the event of any such breach by Executive, the Holding
Company or its Subsidiaries, will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employees and all persons
acting for or under the direction of Executive. Executive represents and admits
that in the event of the termination of his employment pursuant to Section 4
hereof, Executive's experience and capabilities are such that Executive can
obtain employment in a business engaged in other lines and/or of a different
nature than the Holding Company or its Subsidiaries, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Holding Company
or its Subsidiaries from pursuing any other remedies available to the Holding
Company or its Subsidiaries for such breach or threatened breach, including the
recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. Further, Executive may
disclose information regarding the business activities of the Bank or Holding
Company to the Superintendent of Banks of the State of Connecticut, the
Connecticut Banking Department, OTS and the FDIC pursuant to a formal regulatory
request. In the event of a breach or threatened breach by the Executive of the
provisions of this Section, the Holding Company will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Holding Company or its Subsidiaries or from rendering any services to any
person, firm, corporation, other entity to whom such knowledge, in whole or in
part, has been disclosed or is threatened to
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be disclosed. Nothing herein will be construed as prohibiting the Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in
cash or check from the general funds of the Holding Company subject to Section
13 hereof.
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under the Employment Agreement of even date herewith,
between Executive and the Bank, such compensation payments and benefits paid by
the Bank will be subtracted from any amount due simultaneously to Executive
under similar provisions of this Agreement.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes Executive's employment agreement with ABC dated June 27,
2001, except that this Agreement shall not affect or operate to reduce any
benefit or compensation inuring to Executive of a kind elsewhere provided. No
provision of this Agreement shall be interpreted to mean that Executive is
subject to receiving fewer benefits than those available to him without
reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall
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operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of
Connecticut, unless otherwise specified herein.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Bank, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
19. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of: (1) all legal fees incurred by Executive in resolving such dispute or
controversy, and (2) any back-pay, including salary, bonuses and any other cash
compensation, fringe benefits and any compensation and benefits due Executive
under this Agreement.
20. INDEMNIFICATION.
During the term of this Agreement and for an additional period of seven
years thereafter, the Holding Company shall provide Executive (including his
heirs, executors and administrators)
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with coverage under a standard directors' and officers' liability insurance
policy at its expense, and shall indemnify, hold harmless and defend Executive
(and his heirs, executors and administrators) to the fullest extent permitted
under Delaware law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suit or proceeding in which
he may be involved by reason of his having been a director or officer of the
Holding Company (whether or not he continues to be a director or officer at the
time of incurring such expenses or liabilities), such expenses and liabilities
to include, but not be limited to, judgments, court costs and attorneys' fees
and the cost of reasonable settlements.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank or the Holding Company,
expressly and unconditionally to assume and agree to perform the Holding
Company's obligations under this Agreement, in the same manner and to the same
extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, the Holding Company has caused this Agreement to be
executed and its seal to be affixed hereunto by its duly authorized officers,
and Executive has signed this Agreement, on the 18th day of January, 2002.
ATTEST: AMERICAN FINANCIAL HOLDINGS, INC.
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------ ---------------------------
Secretary Xxxxxx X. Xxxxxx
President and Chief Executive Officer
[SEAL]
WITNESS: EXECUTIVE
/s/ Xxxx Xxxxxx /s/ Xxxx X. Xxxxx
------------------------ ------------------------------
Xxxx X. Xxxxx
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