AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Agreement was originally effective as of March 1, 2006 by and between
Fairport Savings Bank (the "Bank"), a federally-chartered savings association
with its principal executive office at 45 South Main Street, Fairport, New York
14450, and Dana Gavenda ("Executive"). The Agreement has been amended and
restated on September 24, 2008 and effective as of March 1, 2006, in order to
comply with certain changes in the law made by Section 409A of the Internal
Revenue Code of 1986, as amended (the "Code").
WHEREAS, the Bank wishes to assure itself of the continued services of
Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to continue to serve in the employ of the
Bank on a full-time basis for said period.
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. POSITION AND RESPONSIBILITIES
(a) During the period of his employment hereunder, Executive agrees to
serve as President and Chief Executive Officer, and as a member of the Board of
Directors (the "Board"), of the Bank. During said period, Executive also agrees
to serve, if elected, as an officer and director of any subsidiary or affiliate
of the Bank. Failure to reelect Executive as the President and Chief Executive
Officer of the Bank without the consent of Executive during the term of this
Agreement shall constitute a breach of this Agreement.
(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 as
President and Chief Executive Officer of the Bank, including overseeing and
directing the day-to-day operations and management of the Bank; making
recommendations to the Board regarding asset/liability management, long-range
planning and compensation of officers; promoting the business of the Bank; and
such other duties as the Board may from time to time reasonably direct.
Provided, however, that with the approval of the Board, as evidenced by a
resolution of the Board, Executive may serve, or continue to serve, on the
boards of directors of, and hold other offices or positions with business or
not-for-profit organizations, which, in the Board's judgment, do not compete
with the Bank or will not present any conflict of interest with the Bank, or
materially affect the performance of Executive's duties pursuant to this
Agreement (for purposes of this Section 1(b), Board approval shall be deemed
provided as to service with any such business or other organizations that
Executive was serving as of the date of this Agreement).
2. TERM
The period of Executive's employment under this Agreement shall begin as of
the date first above written and shall continue for a period of thirty-six (36)
full calendar months thereafter. Commencing on the first anniversary date of
this Agreement and continuing at each anniversary date thereafter, this
Agreement shall renew for an additional year such that the remaining term shall
be three (3) years; provided, however, that after the initial thirty-six (36)
month term of this Agreement, if written notice of nonrenewal is provided to
Executive at least ten (10) days and not more than sixty (60) days prior to any
anniversary date, the employment of Executive hereunder shall cease at the end
of twelve (12) months following such anniversary date. Prior to each notice
period for non-renewal, the disinterested members of the Board will conduct a
performance evaluation and review of Executive for purposes of determining
whether to extend the Agreement, and the results thereof shall be included in
the minutes of the Board's meeting and communicated to Executive.
3. COMPENSATION AND REIMBURSEMENT
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1(b). The Bank
shall pay Executive as compensation a salary of not less than $140,000 per year
("Base Salary"), which Base Salary shall be payable in accordance with the
normal and customary payroll practices of the Bank, but in no event less
frequently than monthly. During the period of this Agreement, Executive's Base
Salary shall be reviewed at least annually and such Base Salary shall not be
less than $147,500 for the twelve (12) months beginning March 1, 2007, and not
less than $155,000 for the twelve (12) months beginning March 1, 2008. Such
review shall be conducted by a Committee designated by the Board, and the Board
may increase, but not decrease, Executive's Base Salary (any increase in Base
Salary shall become the "Base Salary" for purposes of this Agreement). In
addition to the Base Salary provided in this Section 3(a), the Bank shall
provide Executive, at no cost to Executive, with all such other benefits as are
provided uniformly to permanent full-time employees of the Bank. Base Salary
shall include any amounts of compensation deferred by Executive under
tax-qualified and nontax-qualified plans maintained by the Bank.
(b) The Bank will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Bank will not, without
Executive's prior written consent, make any changes in such plans, arrangements
or perquisites which would adversely affect Executive's rights or benefits
thereunder, unless such change is part of a change in benefits applicable to all
employees of the Bank in connection with a bank-wide benefit plan. Without
limiting the generality of the foregoing provisions of this Subsection (b),
Executive will be entitled to participate in or receive benefits under any
employee benefit plans including but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans, stock
benefit plans, health-and-accident plans, medical coverage and any other
employee benefit plan or arrangement made available by the Bank 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/or
bonuses as provided in any plan of the Bank in which Executive is eligible to
participate (and he shall be entitled to a pro rata distribution under any
incentive compensation or bonus plan as to any year in which a termination of
employment occurs, other than termination for Cause). Such incentive
compensation and/or bonuses shall be based on Executive's performance and the
performance and financial condition of the Bank. Nothing paid to Executive under
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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, the Bank shall pay or reimburse Executive for all reasonable travel
and other reasonable expenses incurred by Executive in performing his
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine.
(d) Executive shall be entitled to five (5) weeks of paid vacation per
calendar year, or such greater period as may be approved from time to time by
the Board of Directors. In the event that the full vacation is not taken in any
year due to the work commitments of Executive, Executive may carry over any such
unused vacation time from year to year unless such carryover is prohibited by
law or regulation. Upon any termination of Executive, Executive will be entitled
to be paid the value of any accrued or accumulated vacation time and shall be
required to reimburse the Bank for the value of any vacation time taken but not
yet accrued.
(e) Executive shall also be entitled to an automobile of the Bank's
selection to be used by Executive in rendering services to the Bank and for
limited personal use, together with reimbursement for all gas, oil, maintenance,
insurance and repairs required by reason of the use of such vehicle. Executive
shall be required to account for all costs of use of such automobile in the
manner prescribed by the Board.
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 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 Bank of Executive's full-time employment
hereunder for any reason other than following a Change in Control, as
defined in Section 5(a) hereof, or termination for Cause, as defined
in Section 8 hereof, or upon Retirement as defined in Section 7
hereof, or for Disability as set forth in Section 6 hereof; and
(ii) Executive's resignation from the Bank's employ, upon any (A) failure
to elect or reelect or to appoint or reappoint Executive as President
and Chief Executive Officer of the Bank, unless consented to by
Executive, (B) 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, to which
Executive has not agreed in writing (and any such material change
shall be deemed a continuing breach of this Agreement), (C) relocation
of Executive's principal place of employment by more than 30 miles
from its location at the effective date of the Agreement, or a
material reduction in the benefits and perquisites to Executive from
those being provided as of the effective date of this Agreement
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(unless such reduction is part of a reduction in benefits to all
employees of the Bank in connection with a bank-wide benefit plan), or
(D) material breach of this Agreement by the Bank.
Upon the occurrence of any event described in clauses (ii) (A), (B), (C),
or (D) above, Executive shall have the right to elect to terminate his
employment under this Agreement by resignation upon not less than thirty (30)
days prior written notice given within a reasonable period of time (not to
exceed90 days) after the event giving rise to said right to elect, which
termination by Executive shall be an Event of Termination; provided, however,
that the Bank shall have 30 days following its receipt of such written notice to
cure the situation identified by Executive as the basis for the Event of
Termination. Notwithstanding the preceding sentence, in the event of a
continuing breach of this Agreement by the Bank, Executive, after giving due
notice within the prescribed time frame of an initial event specified above,
shall not waive any rights solely under this Agreement and this Section by
virtue of the fact that Executive has submitted his resignation but has remained
in the employment of the Bank and is engaged in good faith discussions to
resolve any occurrence of an event described in clauses (A), (B), (C), or (D)
above.
(b) Upon the occurrence of an Event of Termination, the Bank 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 cash amount equal to the greater of the payments due for the
remaining term of the Agreement, or three (3) times the sum of: (i) the highest
annual rate of Base Salary paid to Executive at any time under this Agreement,
and (ii) the greater of (x) the average annual cash bonus paid to Executive with
respect to the three (3) completed fiscal years prior to the Event of
Termination, or (y) the cash bonus paid to Executive with respect to the fiscal
year ended prior to the Event of Termination; provided however, that if the Bank
is not in compliance with its minimum capital requirements or if such payments
would cause the Bank's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Bank is in
capital compliance; and provided further, that in no event shall total severance
compensation from all sources exceed three (3) times Executive's average annual
compensation over the five (5) fiscal years preceding the fiscal year in which
the termination of employment occurs (for purposes of this provision and only
for purposes of this provision, compensation shall mean any payment of money or
provision of any other thing of value in consideration of employment, including,
without limitation, base salary, commissions, bonuses, pension and profit
sharing plans, severance payments, retirement, director or committee fees,
fringe benefits, and the payment of expense items without accountability or
business purpose or that do not meet the Internal Revenue Service ("IRS")
requirement for deductibility by the Bank). The present value of the payment
required hereunder shall be made in a lump sum within thirty (30) days following
Executive's "Separation from Service," as defined in Code Section 409A,
provided, however, if Executive is a "Specified Employee," as defined in Code
Section 409A, then, solely to the extent required to avoid penalties under Code
Section 409A, such payment shall be delayed until the first day of the seventh
full month following Executive's Separation from Service. For these purposes,
present value shall be determined using the applicable federal rate under Code
Section 1274(d). Such payments shall not be reduced in the event Executive
obtains other employment following termination of employment.
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(c) Upon the occurrence of an Event of Termination, the Bank will cause to
be continued at the Bank's expense, life, insurance coverage and non-taxable
medical and dental insurance that is substantially identical to the coverage
maintained by the Bank for Executive prior to his termination, except to the
extent such coverage may be changed in its application to all Bank employees.
Such coverage shall cease thirty-six (36) months following the Event of
Termination.
5. CHANGE IN CONTROL
(a) No benefit shall be payable under this Section 5 unless there shall
have been a Change in Control, as set forth below. For purposes of this
Agreement, a "Change in Control" shall mean a change in control of the Bank or
the Bank's mid-tier holding company (the "Company") or mutual holding company
(the "MHC"), 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 1934 (the
"Exchange Act"); or (ii) 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 securities of the Bank or the Company representing 25% or more of
the combined voting power of Bank's or the Company's outstanding securities
except for any securities purchased by the Bank's employee stock ownership plan
or trust; 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
members of the entire Board of Directors then in office shall be considered, for
purposes of this clause (b), 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 Company or similar transaction
in which the Bank or Company is not the surviving institution occurs; or (d) a
proxy statement soliciting proxies from stockholders of the Bank or the Company,
by someone other than the current management of the Company, seeking stockholder
approval of a plan of reorganization, merger or consolidation of the Bank or the
Company or similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then subject to the plan
are exchanged for or converted into cash or property or securities not issued by
the Company; or (e) a tender offer is made for 25% or more of the voting
securities of the Bank or the Company, and the shareholders owning beneficially
or of record 25% or more of the outstanding securities of the Bank or the
Company have tendered or offered to sell their shares pursuant to such tender
offer and such tendered shares have been accepted by the tender offeror.
Notwithstanding anything in this sub-section to the contrary, a Change in
Control shall not be deemed to have occurred upon the issuance of common stock
by the Company in a minority stock offering, or upon conversion of the Company's
mutual holding company parent to stock form, or in connection with any
reorganization used to effect such a conversion.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control shall have occurred, Executive shall be entitled to the
benefits provided in paragraphs (c) and (d) of this Section 5 upon his
subsequent termination of employment at any time during the term of this
Agreement (regardless of whether such termination results from his resignation
or his dismissal).
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(c) Upon the occurrence of a Change in Control, Executive, or, in the event
of his subsequent death (subsequent to such termination), his beneficiary or
beneficiaries, or his estate, as the case may be, shall receive as severance pay
or liquidated damages, or both, an amount equal to three times the sum of: (i)
the highest annual rate of Base Salary paid to Executive at any time under this
Agreement, and (ii) the greater of (x) the average annual cash bonus paid to
Executive with respect to the three completed fiscal years prior to the
termination, or (y) the cash bonus paid to Executive with respect to the fiscal
year ended prior to the termination; provided however, that if the Bank is not
in compliance with its minimum capital requirements or if such payments would
cause the Bank's capital to be reduced below its minimum capital requirements,
such payments shall be deferred until such time as the Bank is in capital
compliance; and provided further that in no event shall total severance
compensation from all sources exceed three times Executive's average annual
compensation over the five fiscal years preceding the fiscal year in which the
termination of employment occurs (for purposes of this provision and only for
purposes of this provision, compensation shall mean any payment of money or
provision of any other thing of value in consideration of employment, including,
without limitation, base salary, commissions, bonuses, pension and profit
sharing plans, severance payments, retirement, director or committee fees,
fringe benefits, and the payment of expense items without accountability or
business purpose or that do not meet the IRS requirement for deductibility by
the Bank). The foregoing severance/liquidated damages payment(s), as well as all
other benefits described in this Agreement that would be payable upon a Change
in Control, shall be made to Executive's surviving spouse, or if no surviving
spouse, to his estate, in the event that the Company or the Bank enters into an
agreement that would cause a Change in Control of the Bank, and Executive dies
after such agreement is executed but prior to consummation of the Change in
Control, which payments shall commence upon, and shall be contingent upon, the
actual consummation of the Change in Control. The present value of the payment
required hereunder shall be made in a lump sum within thirty (30) days following
Executive's "Separation from Service," as defined in Code Section 409A; provided
however, if Executive is a "Specified Employee," as defined in Code Section
409A, then, solely to the extent required to avoid penalties under Code Section
409A, such payment shall be delayed until the first day of the seventh full
month following Executive's Separation from Service. For these purposes, present
value shall be determined using the applicable federal rate under Code Section
1274(d).
(d) Upon the occurrence of a Change in Control followed by the termination
of Executive's employment, the Bank will cause to be continued at the Bank's
expense life, health and disability insurance coverage substantially identical
to the coverage maintained by the Bank for Executive prior to the Change in
Control, except to the extent such coverage is changed in its application to all
employees of the Bank. Such coverage shall cease thirty-six (36) months from the
date of Executive's termination of employment.
(e) Notwithstanding the preceding paragraphs of this Section 5, in no event
shall the aggregate payments or benefits to be made or afforded to the Executive
under said paragraphs (the "Termination Benefits") constitute an "excess
parachute payment" under Section 280G of the Code or any successor thereto, and
in order to avoid such a result, Termination Benefits will be reduced, if
necessary, to an amount (the "Non-Triggering Amount"), the value of which is one
dollar ($1.00) less than an amount equal to three (3) times the Executive's
"base amount," as determined in accordance with said Code Section 280G. The
allocation of the reduction required hereby among Termination Benefits provided
by the preceding paragraphs of this Section 5 shall be determined by the
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Executive, provided, however, that if it is determined that such election by
Executive shall be in violation of Code Section 409A, the allocation of the
required reduction shall be pro-rata.
6. DISABILITY OR DEATH
(a) If Executive is unable to perform his duties hereunder by reason of
Disability, the Bank may terminate Executive's employment. Termination for
Disability shall be determined by a majority of the disinterested directors of
the Board, and shall be effective thirty (30) days after written notice of such
termination is given to Executive.
(b) For purposes of this Agreement, "Disability" or being "Disabled" shall
be deemed to have occurred if: (i) Executive is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death, or last for a
continuous period of not less than 12 months; (ii) by reason of any medically
determinable physical or mental impairment that can be expected to result in
death, or last for continuous period of not less than 12 months, Executive is
receiving income replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the Bank; or (iii)
Executive is determined to be totally disabled by the Social Security
Administration. If any controversy arises as to whether Executive is Disabled,
the Board may require that Executive be examined by a physician and, in such
case, the decision of such physician shall be conclusive and binding on all
parties. The examining physician shall be selected by the Board.
(c) In the event the Bank terminates Executive's employment due to
Disability, the Bank will:
(1) Pay Executive, or cause Executive to be paid under a
disability insurance plan, as disability pay, a bi-weekly payment
equal to the 65% of Executive's monthly rate of Base Salary on the
effective date of such termination. These disability payments shall
commence on the effective date of Executive's termination and will end
on the earlier (i) the date Executive returns to the full-time
employment of the Bank in the same capacity as he was employed prior
to his termination for Disability; (ii) Executive's full-time
employment by another employer; (iii) three (3) years from the
effective date of Executive's termination; (iv) Executive attaining
the age of 65; or (v) Executive's death. If Executive is covered by a
disability insurance policy purchased by the Bank for Executive's
benefit, any payments required by this Section 6 shall be satisfied
first through the benefits paid to Executive under said policy, and
the Bank will be responsible only for payments required hereunder that
are in excess of the policy payments.
(2) Cause to be continued life and health care coverage
substantially identical to the coverage maintained by the Bank for
Executive prior to his termination for Disability, except to the
extent such coverage may be changed in its application to all Bank
employees. This coverage shall cease upon the termination of payments
to Executive under Section 6(c)(1) above.
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(d) In the event of Executive's death during the term of the Agreement, his
estate, legal representatives or named beneficiaries (as directed by executive
in writing) shall be paid Executive's Base Salary as defined in paragraph 3(a)
at the rate in effect at the time of Executive's death for a period of one (1)
year from the date of Executive's death, and the Bank will continue to provide
medical, dental and other insurance benefits normally provided for Executive's
family for one (1) year after Executive's death.
7. TERMINATION UPON RETIREMENT
Termination by the Bank of Executive based on "Retirement" shall mean
termination for any reason of Executive's employment on or after age 65 or in
accordance with any retirement policy 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 Bank and other
plans to which Executive is a party, but Executive shall not be entitled to any
payments or benefits that would be due as a result of an Event of Termination
under Section 4 hereof.
8. TERMINATION FOR CAUSE
The term "Termination for Cause" shall mean termination by a vote of at
least a majority of the entire membership of the Board because of Executive's
personal dishonesty, incompetence, willful misconduct, any 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, the willful commission of
any act that in the judgment of the Board would likely cause substantial
economic damage to the Bank or the Company or substantial injury to the business
reputation of the Bank or the Company, or material breach of any provision of
this Agreement. Executive shall not have the right to receive compensation or
other benefits for any period after Termination for Cause
9. NOTICE
(a) Any termination by the Bank or the Executive shall be communicated by
Notice of Termination to the other party. 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; in the case of
Termination for Cause, include a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the entire membership of the
Board; and, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of employment under the provision so
indicated. "Date of Termination" shall mean the date of the Notice if
Termination. If, within thirty (30) days after any Notice of Termination for
Cause is given, the party receiving the Notice of Termination notifies the other
party that a dispute exists concerning the termination, the parties shall
promptly proceed to arbitration. Executive's services with the Bank shall be
suspended pending resolution of such dispute by arbitration, and the Bank shall
discontinue to pay Executive compensation until the dispute is finally resolved
in accordance with this Agreement. If it is determined that Executive is
entitled to compensation and benefits under Sections 4 or 5 of this Agreement,
the payment of such compensation and benefits by the Bank shall commence
immediately following the date of resolution by arbitration, with interest due
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Executive on the cash amount that would have been paid pending arbitration (at
the prime rate as published in The Wall Street Journal from time to time).
10. POST-TERMINATION OBLIGATIONS
(a) As a material inducement for the Bank to enter into this Agreement,
upon termination of this Agreement for any reason, other than the reasons set
forth in Sections 5 or 6 of this Agreement, for a period of two (2) years from
the Date of Termination (one year from the termination of the Agreement as a
result of a Change in Control) Executive shall not at any time or place, either
directly or indirectly, engage in any business or activity in competition with
the business of the Bank, or be a director, officer or employee or consultant to
any bank, savings bank, savings association or credit union, operating in Monroe
County, if such entity has assets of less than $1.0 billion.
(b) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (c) of this Section 10 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(c) Executive shall, upon reasonable notice, furnish such information and
assistance to the Bank as may reasonably be required by the Bank in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party.
(d) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Bank and affiliates
thereof, as it may exist from time to time, is a valuable, special and unique
asset of the business of the Bank. 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 Bank or affiliates thereof to any person,
firm, corporation, or other entity for any reason or purpose whatsoever (except
for such disclosure as may be required to be provided to the Office of Thrift
Supervision ("OTS"), the Federal Deposit Insurance Corporation ("FDIC"), or
other federal banking agency with jurisdiction over the Bank or Executive).
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 Bank, and
Executive may disclose any information regarding the Bank which is otherwise
publicly available. In the event of a breach or threatened breach by Executive
of the provisions of this Section 10, the Bank 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 Bank or
affiliates thereof, 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 be disclosed. Nothing herein will be construed as
prohibiting the Bank from pursuing any other remedies available to the Bank for
such breach or threatened breach, including the recovery of damages from
Executive.
11. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Bank or any
predecessor of the Bank and Executive, except that this Agreement shall not
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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.
12. 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 Bank and their respective successors and assigns.
13. 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 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.
14. REQUIRED PROVISIONS
(a) The Bank's Board of Directors may terminate Executive's employment at
any time, but any termination by the Bank's Board of Directors, other than
Termination for Cause, shall not prejudice Executive's right to compensation or
other benefits under this Agreement. Executive shall not have the right to
receive compensation or other benefits for any period after Termination for
Cause as defined in Section 8 hereinabove.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) (12 U.S.C. ss.ss. 1818(e)(3)) or 8(g) (12 U.S.C. ss. 1818(g)) of
the Federal Deposit Insurance Act, as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (the "FDI Act"), the Bank's
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Bank may in its discretion (i) pay Executive all or part of the
compensation withheld while their contract obligations were suspended and (ii)
reinstate (in whole or in part) any of the obligations which were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e) (12 U.S.C. ss.ss. 1818(e)) or 8(g) (12 U.S.C. ss. 1818(g)) of the
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FDI Act, all obligations of the Bank under this Agreement shall terminate as of
the effective date of the order, but vested rights of the contracting parties
shall not be affected.
(d) If the Bank is in default as defined in Section 3(x) (12 U.S.C. ss.
1813(x)(1)) of the FDI Act, all obligations of the Bank under this Agreement
shall terminate as of the date of default, but this paragraph shall not affect
any vested rights of the contracting parties.
(e) All obligations of the Bank under this Agreement shall be terminated,
except to the extent determined that continuation of the contract is necessary
for the continued operation of the institution, (i) by the Director, at the time
the FDIC or the Resolution Trust Corporation enters into an agreement to provide
assistance to or on behalf of the Bank; or (ii) by the OTS at the time the OTS
or its Regional Director approves a supervisory merger to resolve problems
related to the operations of the Bank or when the Bank is determined by the OTS
or FDIC to be in an unsafe or unsound condition. Any rights of the parties that
have already vested, however, shall not be affected by such action.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12 USC
Section 1828(k) and any regulations promulgated thereunder.
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 in all respects, including validity,
construction, capacity and performance, by the laws of the State of New York,
but only to the extent not superseded by federal law.
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 Bank within fifty
(50) miles of Fairport, New York, in accordance with the rules of the American
Arbitration Association then in effect. In the event the need for arbitration
arises the Bank shall select one arbitrator and the Executive shall select one
arbitrator. The arbitrators selected by the parties shall select a third
arbitrator. The arbitrators shall not have any authority to add to or modify the
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provisions of this Agreement in any way. Judgment may be entered on the
arbitrators' award in any court having jurisdiction.
19. PAYMENT OF FEES AND EXPENSES
In the event of any dispute between the Executive and the Bank regarding
this Agreement, whether instituted by formal legal proceedings or otherwise,
including any action taken by Executive in defending against any action taken by
the Bank, the prevailing party shall be reimbursed for all costs and expenses,
including reasonable attorney's fees, arising from such dispute, proceedings or
actions. In the event of a settlement of such dispute, each party shall bear its
own costs and expenses. Any reimbursement owed under this Section 19 shall be
paid within ten (10) days of the furnishing to the non-prevailing party of
written evidence of any costs or expenses incurred by the prevailing party.
20. INDEMNIFICATION
The Bank shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, and shall indemnify Executive (and
his heirs, executors and administrators) to the fullest extent permitted under
federal 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 Bank
(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 (such settlements must be approved by the
Board of Directors of the Bank). The obligations of the Bank under this Section
20 shall be subject to 12 C.F.R. ss. 545.121.
21. SUCCESSOR TO THE BANK
The Bank 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, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer, and Executive has signed this Agreement, on the day
and date first above written.
ATTEST: FAIRPORT SAVINGS BANK
/s/ Leslie J. Zornow By: /s/ Thomas J. Hanss
- ------------------------------- -------------------------------
Secretary Chairman of the Board
WITNESS: EXECUTIVE:
/s/ Kathleen Tuff By: /s/ Dana C. Gavenda
- --------------------------- --------------------------------
Dana Gavenda
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