Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of March 29, 2005, between
Prudential Savings Bank, a Pennsylvania-chartered, stock-form
savings bank (the "Bank" or the "Employer"), and Xxxxxx X. Xxxxx
(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 twenty-four (24) 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
President and Chief Executive Officer of the
Employer or a material adverse change made by the
Employer in the Executive's functions, duties or
responsibilities as President and Chief Executive
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;
(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
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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 President
and Chief Executive 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 three (3) 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 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
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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 President and Chief Executive 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 $236,000 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.
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
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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 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; 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) 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 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.
(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,
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(A) pay to the Executive, in either thirty-six (36)
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 three (3) times the Executive's Average
Annual Compensation; and
(B) maintain and provide for a period ending at the
earlier of (i) three (3) 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 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 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.
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.
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(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. Xxxxx
At the address last appearing on the
personnel records of the 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.
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
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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.
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IN WITNESS WHEREOF, this Agreement is effective as of the
date first above written.
Attest PRUDENTIAL SAVINGS BANK
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx, Xx.
_________________ _________________________
Xxxxxx X. Xxxxxx, Xx.
Chairman of the Board
EXECUTIVE
By: /s/ Xxxxxx X. Xxxxx
___________________
Xxxxxx X. Xxxxx
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