1
EXHIBIT 10.2
AGREEMENT
AGREEMENT, dated this 23rd day of April 1996, between Main Line Bank (the
"Bank"), a federally chartered savings bank, and DENNIS S. MARLO (the
"Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of MLF Bancorp, Inc. (the
"Corporation") and the Bank (together, the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's continued
active participation in the business of the Employers, and the Bank currently
has an agreement with the Executive dated January 6, 1995;
WHEREAS, in accordance with Office of Thrift Supervision ("OTS")
Regulatory Bulletin 27a, the Corporation and the Bank desire to enter into
separate agreements with the Executive with respect to his employment by each
of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Bank in the event that his employment
with the Bank 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 level of compensation paid to the Executive by
the Employers or any subsidiary thereof during the most recent
five taxable years preceding the Date of Termination, including
Base Salary and bonuses under any employee benefit plans of the
Employers.
(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,
2
2
intentional failure to perform stated duties, willful violation
of any law, rule or regulation (other than traffic violations
or similar offenses) or final cease-and-desist order or
material breach of any provision of this Agreement.
(d) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of
the Corporation" shall mean a change in control of a nature
that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"),
or any successor thereto, whether or not the Corporation is
registered under the Exchange Act; provided that, without
limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as such 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 Corporation
representing 25% or more of the combined voting power of the
Corporation's then outstanding securities; or (ii) during any
period of two 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.
(e) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) 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.
(g) DISABILITY. Termination by the Bank 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 Employers or any
subsidiary or, if no such plan applies, which would qualify the
Executive for disability benefits under the Federal Social
Security System.
3
3
(h) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the
Executive following a Change in Control of the Corporation
based on:
(i) Without the Executive's express written consent, a
reduction by either of the Employers 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;
(ii) The principal executive office of either of the
Employers is relocated outside of the Villanova,
Pennsylvania area or, without the Executive's express
written consent, either of the Employers requires the
Executive to be based anywhere other than an area in
which the Employers' principal executive office is
located, except for required travel on business of the
Employers to an extent substantially consistent with
the Executive's present business travel obligations;
(iii) Any purported termination of the Executive's employment
for Cause, Disability or Retirement which is not
effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (j) below; or
(iv) The failure by the Bank to obtain the assumption of and
agreement to perform this Agreement by any successor as
contemplated in Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Bank 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 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
Bank's
4
4
termination of Executive's employment for Cause, which shall be
effective immediately; and (iv) is given in the manner
specified in Section 10 hereof.
(k) RETIREMENT. "Retirement" shall mean voluntary termination by
the Executive in accordance with the Employers' retirement
policies, including early retirement, generally applicable to
their salaried employees.
2. TERM OF EMPLOYMENT.
(a) The Bank hereby employs the Executive as President and
Chief Executive Officer and Executive hereby accepts said
employment and agrees to render such services to the
Bank on the terms and conditions set forth in this Agreement.
The term of employment under this Agreement shall be for three
years, commencing on the date of this Agreement and, upon
approval of the Board of Directors of the Bank, shall
extend for an additional year on each annual anniversary of the
date of this Agreement such that at any time the remaining term
of this Agreement shall be from two to three years. Prior to
the first annual anniversary of the date of this Agreement and
each annual anniversary thereafter, the Board of Directors of
the Bank shall consider and review (with appropriate
corporate documentation thereof, and after taking into account
all relevant factors, including the Executive's performance
hereunder) extension of the term under this Agreement, and the
term shall continue to extend each year if the Board of
Directors approves such extension unless the Executive gives
written notice to the Bank of the Executive's election
not to extend the term, with such written notice to be given
not less than thirty (30) days prior to any such anniversary
date. If the Board of Directors elects not to extend the term,
it shall give written notice of such decision to the Executive
not less than 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 annual anniversary date, then this
Agreement shall terminate at the conclusion of its remaining
term. References herein to the term of this Agreement shall
refer both to the initial term and successive terms.
(b) During the term of this Agreement, the Executive shall perform
such executive services for the Bank as may be consistent with
his titles and from time to time assigned to him by the Bank's
Board of Directors.
5
5
3. COMPENSATION AND BENEFITS.
(a) The Employers shall compensate and pay Executive for his
services during the term of this Agreement at a minimum base
salary of $300,000 per year ("Base Salary"), which may be
increased from time to time in such amounts as may be
determined by the Boards of Directors of the Employers 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 Boards of Directors
of the Employers.
(b) During the term of the Agreement, Executive shall be entitled
to participate in and receive the benefits of any pension or
other retirement benefit plan, profit sharing, stock option,
employee stock ownership, or other plans, benefits and
privileges given to employees and executives of the Employers,
to the extent commensurate with his then duties and
responsibilities, as fixed by the Boards of Directors of the
Employers. The Bank shall not make any changes in such plans,
benefits or privileges which would adversely affect Executive's
rights or benefits thereunder, unless such change occurs
pursuant to a program applicable to all executive officers of
the Bank and does not result in a proportionately greater
adverse change in the rights of or benefits to Executive as
compared with any other executive officer of the Bank. Nothing
paid to Executive under any plan or arrangement presently in
effect or made available in the future shall be deemed to be in
lieu of the salary payable to Executive pursuant to Section 3(a)
hereof.
(c) During the term of this Agreement, Executive shall be entitled
to paid annual vacation in accordance with the policies as
established from time to time by the Boards of Directors of the
Employers, which shall in no event be less than four weeks per
annum. Executive shall not be entitled to receive any
additional compensation from the Employers for failure to take
a vacation, nor shall Executive be able to accumulate unused
vacation time from one year to the next, except to the extent
authorized by the Boards of Directors of the Employers.
(d) During the term of this Agreement, the Employers shall continue
to provide the Executive with the automobile he presently
drives. The Employers shall be responsible and shall pay for
all costs of insurance coverage, repairs, maintenance and other
incidental expenses, including license, fuel and oil. The
Employers shall provide the Executive with a replacement
automobile of a similar type as selected by the
6
6
Executive at approximately the time that his present automobile
reaches (3) years of age and approximately every three (3)
years thereafter, upon the same terms and conditions.
(e) During the term of this Agreement, the Employers shall pay the
Executive's annual membership dues at (1) one club of his
choice.
(f) The Employers shall provide continued medical insurance for the
benefit of the Executive and his spouse until the Executive
shall have attained the age of 66, and such insurance shall be
comparable to that which is provided to the Executive as of the
date of this Agreement notwithstanding anything to the contrary
in this Agreement.
(g) In the event of the Executive's death during the term of this
Agreement, his spouse, estate, legal representative or named
beneficiaries (as directed by the Executive in writing) shall
be paid on a monthly basis the Executive's annual compensation
from the Employer at the rate in effect at the time of the
Executive's death for a period of twenty-four (24) months from
the date of the Executive's death.
(h) The Executive's compensation, benefits and expenses shall be
paid by the Corporation and the Bank in the same proportion as
the time and services actually expended by the Executive on
behalf of each respective Employer.
4. EXPENSES. The Employers shall reimburse Executive or otherwise
provide for or pay for all reasonable expenses incurred by Executive
in furtherance of, or in connection with the business of the
Employers, including, but not by way of limitation, automobile
expenses described in Section 3(d) hereof, and traveling expenses,
and all reasonable entertainment expenses (whether incurred at the
Executive's residence, while traveling or otherwise), subject to
such reasonable documentation and other limitations as may be
established by the Boards of Directors of the Employers. If such
expenses are paid in the first instance by Executive, the Employers
shall reimburse the Executive therefor.
5. TERMINATION.
(a) The Bank shall have the right, at any time upon prior Notice of
Termination, to terminate the Executive's employment hereunder
for any reason, including without limitation termination for
Cause, Disability or Retirement, and Executive shall have the
right, upon prior
7
7
Notice of Termination, to terminate his employment hereunder
for any reason.
(b) In the event that (i) Executive's employment is terminated by
the Bank for Cause, Disability or Retirement, or (ii) Executive
terminates his employment hereunder other than for Good Reason,
Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the
applicable Date of Termination, except as provided for in
Section 3(f) in the event of termination for Disability or
Retirement.
(c) In the event that (i) Executive's employment is terminated by
the Bank for other than Cause, Disability, Retirement or the
Executive's death or (ii) such employment is terminated by the
Executive (a) due to a material breach of this Agreement by the
Bank, 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 Employers, or (b) for Good Reason, then the
Bank shall, subject to the provisions of Section 6 hereof, if
applicable
(A) pay to the Executive, in thirty-six (36) equal monthly
installments beginning with the first business day of the
month following the Date of Termination, a cash severance
amount equal to three (3) times that portion of the
Executive's Base Salary paid by the Bank, and
(B) maintain and provide for a period ending at the earlier of
(i) the expiration of the remaining term of employment
pursuant hereto prior to the Notice 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 offered by the Bank 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 Employers), 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 Bank shall arrange to provide
8
8
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.
(d) In the event of the failure by either of the Employers to elect
or to re-elect or to appoint or to re-appoint the Executive to
the offices of President and Chief Executive Officer of the
Employers or a material adverse change made by either of the
Employers in the Executive's functions, duties or
responsibilities as President and Chief Executive Officer of
the Employers without the Executive's express written consent,
the Executive shall be entitled to terminate his employment
hereunder and shall be entitled to the payments and benefits
provided for in Section 5(c)(A) and (B).
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 Executive has the
right to receive from the Bank, would constitute a "parachute
payment" under Section 280G of the Code, the payments and benefits
payable by the Bank 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 payable by the Bank under Section 5 being non-deductible to
the Bank pursuant to Section 280G of the Code and subject to the
excise tax imposed under Section 4999 of the Code. The parties
hereto agree that the payments and benefits payable pursuant to this
Agreement to the Executive upon termination shall be limited to three
times the Executive's average annual compensation (based upon the
most recent five taxable years) in accordance with OTS Regulatory
Bulletin 27a. 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 Bank's independent
public accountants and paid by the Bank. Such counsel shall be
reasonably acceptable to the Bank 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.
9
9
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.
(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 Employers
pursuant to employee benefit plans of the Employers or
otherwise.
8. WITHHOLDING. All payments required to be made by the Bank
hereunder to the Executive shall be subject to the withholding of
such amounts, if any, relating to tax and other payroll deductions
as the Bank may reasonably determine should be withheld
pursuant to any applicable law or regulation.
9. ASSIGNABILITY. The Bank 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 Bank
may hereafter merge or consolidate or to which the Bank 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 Bank 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 Bank:
Chairman of the Board
Main Line Bank
Two Aldwyn Center
Lancaster Avenue and Route 320
Villanova, Pennsylvania 19085
10
10
To the Corporation:
Chairman of the Board
MLF Bancorp, Inc.
Two Aldwyn Center
Lancaster Avenue and Route 320
Villanova, Pennsylvania 19085
To the Executive:
Dennis S. Marlo
208 Tinker Hill Lane
Malvern, Pennsylvania 19355
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 signed by the Executive and such
officer or officers as may be specifically designated by the Board of
Directors of the Bank to sign on its behalf. No waiver by any party
hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
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 Bank to create a trust of any kind to fund any
benefits which may be payable hereunder, and to the extent that the
Executive acquires a right to receive benefits from the Bank
hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Bank.
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.
11
11
17. REGULATORY ACTIONS. The following provisions shall be applicable to
the parties to the extent that they are required to be included
in employment agreements between a savings association and its
employees pursuant to Section 563.39(b) of the Regulations Applicable
to all Associations, 12 C.F.R. Section 563.39(b), or any successor
thereto, and shall be controlling in the event of a conflict with any
other provision of this Agreement, including without limitation
Section 5 hereof.
(a) If Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank's
affairs pursuant to notice served under Section 8(e)(3) or
Section 8(g)(1) of the Federal Deposit Insurance Act ("FDIA")(12
U.S.C. Section Section 1818(e)(3) and 1818(g)(1)), 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 its obligations under this Agreement were
suspended, and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
(b) If Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Bank's
affairs by an order issued under Section 8(e)(4) or Section
8(g)(1) of the FDIA (12 U.S.C. Section Section 1818(e)(4) and
(g)(1)), all obligations of the Bank under this Agreement shall
terminate as of the effective date of the order, but vested
rights of the Executive and the Bank as of the date of
termination shall not be affected.
(c) If the Bank is in default, as defined in Section 3(x)(1) of
the FDIA (12 U.S.C. Section 1813(x)(1)), all obligations under
this Agreement shall terminate as of the date of default, but
vested rights of the Executive and the Bank as of the date of
termination shall not be affected.
(d) All obligations under this Agreement shall be terminated
pursuant to 12 C.F.R. Section 563.39(b)(5) (except to the extent
that it is determined that continuation of the Agreement for the
continued operation of the Employer is necessary): (i) by the
Director of the OTS, or his/her designee, at the time the
Federal Deposit Insurance Corporation ("FDIC") or Resolution
Trust Corporation enters into an agreement to provide assistance
to or on behalf of the Bank under the authority contained in
Section 13(c) of the FDIA (12 U.S.C. Section 1823(c)); or (ii)
by the Director of the OTS, or his/her designee, at the time the
Director or his/her designee approves a supervisory merger to
resolve
12
12
problems related to operation of the Bank or when the
Bank is determined by the Director of the OTS to be in
an unsafe or unsound condition, but vested rights of the
Executive and the Bank as of the date of termination
shall not be affected.
18. 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 any regulations promulgated thereunder.
19. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Bank and the Executive with respect to the matters
agreed to herein. All prior agreements between the Bank and the
Executive with respect to the matters agreed to herein, including
without limitation the Agreement between the Bank and the Executive
dated January 6, 1995, are hereby superseded and shall have no force
or effect. Notwithstanding the foregoing, nothing contained in this
Agreement shall affect the agreement of even date being entered into
between the Corporation and the Executive.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Attest: MAIN LINE BANK
/s/ Lynn Robinson /s/ John R. Eppinger
- -------------------------- By: -------------------------
John R. Eppinger
Chairman of the Board
EXECUTIVE
/s/ Dennis S. Marlo
By: -------------------------
Dennis S. Marlo
13
AGREEMENT
AGREEMENT, dated this 23rd day of April 1996, between MLF Bancorp, Inc.
(the "Corporation") and DENNIS S. MARLO (the "Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation and
Main Line Bank (the "Bank") (together, the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's continued
active participation in the business of the Employers, and the Bank
currently has an agreement with the Executive dated January 6, 1995, which is
being concurrently amended;
WHEREAS, in accordance with Office of Thrift Supervision ("OTS")
Regulatory Bulletin 27a, the Corporation and the Bank desire to enter
into separate agreements with the Executive with respect to his employment by
each of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Corporation in the event that his
employment with the Corporation 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 level of compensation paid to the Executive by
the Employers or any subsidiary thereof during the most recent
five taxable years preceding the Date of Termination, including
Base Salary and bonuses under any employee benefit plans of the
Employers.
(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,
14
2
rule or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order or material breach of
any provision of this Agreement.
(d) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of
the Corporation" shall mean a change in control of a nature
that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"),
or any successor thereto, whether or not the Corporation is
registered under the Exchange Act; provided that, without
limitation, such a change in control shall be deemed to have
occurred if (i) any "person" (as such 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 Corporation
representing 25% or more of the combined voting power of the
Corporation's then outstanding securities; or (ii) during any
period of two 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.
(e) CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) 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.
(g) DISABILITY. Termination by the Corporation 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 Employers or any
subsidiary or, if no such plan applies, which would qualify the
Executive for disability benefits under the Federal Social
Security System.
(h) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the
Executive following a Change in Control of the Corporation
based on:
15
3
(i) Without the Executive's express written consent, a
reduction by either of the Employers 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;
(ii) The principal executive office of either of the
Employers is relocated outside of the Villanova,
Pennsylvania area or, without the Executive's express
written consent, either of the Employers requires the
Executive to be based anywhere other than an area in
which the Employers' principal executive office is
located, except for required travel on business of the
Employers to an extent substantially consistent with
the Executive's present business travel obligations;
(iii) Any purported termination of the Executive's employment
for Cause, Disability or Retirement which is not
effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (j) below; or
(iv) The failure by the Corporation to obtain the assumption
of and agreement to perform this Agreement by any
successor as contemplated in Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Corporation 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 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 Corporation's termination of
Executive's employment for Cause, which shall be effective
immediately; and (iv) is given in the manner specified in
Section 10 hereof.
16
4
(k) RETIREMENT. "Retirement" shall mean voluntary termination by
the Executive in accordance with the Employers' retirement
policies, including early retirement, generally applicable to
their salaried employees.
2. TERM OF EMPLOYMENT.
(a) The Corporation hereby employs the Executive as President and
Chief Executive Officer and Executive hereby accepts said
employment and agrees to render such services to the
Corporation on the terms and conditions set forth in this
Agreement. The term of employment under this Agreement shall
be for three years, commencing on the date of this Agreement
and, upon approval of the Board of Directors of the
Corporation, shall extend for an additional year on each annual
anniversary of the date of this Agreement such that at any time
the remaining term of this Agreement shall be from two to three
years. Prior to the first annual anniversary of the date of
this Agreement and each annual anniversary thereafter, the
Board of Directors of the Corporation shall consider and review
(with appropriate corporate documentation thereof, and after
taking into account all relevant factors, including the
Executive's performance hereunder) extension of the term under
this Agreement, and the term shall continue to extend each year
if the Board of Directors approves such extension unless the
Executive gives written notice to the Corporation of the
Executive's election not to extend the term, with such written
notice to be given not less than thirty (30) days prior to any
such anniversary date. If the Board of Directors elects not to
extend the term, it shall give written notice of such decision
to the Executive not less than 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 annual anniversary
date, then this Agreement shall terminate at the conclusion of
its remaining term. References herein to the term of this
Agreement shall refer both to the initial term and successive
terms.
(b) During the term of this Agreement, the Executive shall perform
such executive services for the Corporation as may be
consistent with his titles and from time to time assigned to
him by the Corporation's Board of Directors.
17
5
3. COMPENSATION AND BENEFITS.
(a) The Employers shall compensate and pay Executive for his
services during the term of this Agreement at a minimum base
salary of $300,000 per year ("Base Salary"), which may be
increased from time to time in such amounts as may be
determined by the Boards of Directors of the Employers 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 Boards of Directors
of the Employers.
(b) During the term of the Agreement, Executive shall be entitled
to participate in and receive the benefits of any pension or
other retirement benefit plan, profit sharing, stock option,
employee stock ownership, or other plans, benefits and
privileges given to employees and executives of the Employers,
to the extent commensurate with his then duties and
responsibilities, as fixed by the Boards of Directors of the
Employers. The Corporation shall not make any changes in such
plans, benefits or privileges which would adversely affect
Executive's rights or benefits thereunder, unless such change
occurs pursuant to a program applicable to all executive
officers of the Corporation and does not result in a
proportionately greater adverse change in the rights of or
benefits to Executive as compared with any other executive
officer of the Corporation. Nothing paid to Executive under
any plan or arrangement presently in effect or made available
in the future shall be deemed to be in lieu of the salary
payable to Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, Executive shall be entitled
to paid annual vacation in accordance with the policies as
established from time to time by the Boards of Directors of the
Employers, which shall in no event be less than four weeks per
annum. Executive shall not be entitled to receive any
additional compensation from the Employers for failure to take
a vacation, nor shall Executive be able to accumulate unused
vacation time from one year to the next, except to the extent
authorized by the Boards of Directors of the Employers.
(d) During the term of this Agreement, the Employers shall continue
to provide the Executive with the automobile he presently
drives. The Employers shall be responsible and shall pay for
all costs of insurance coverage, repairs, maintenance and other
incidental expenses, including license, fuel and oil. The
Employers shall provide the Executive with a replacement
automobile of a similar type as selected by the
18
6
Executive at approximately the time that his present automobile
reaches (3) years of age and approximately every three (3)
years thereafter, upon the same terms and conditions.
(e) During the term of this Agreement, the Employers shall pay the
Executive's annual membership dues at (1) one club of his
choice.
(f) The Employers shall provide continued medical insurance for the
benefit of the Executive and his spouse until the Executive
shall have attained the age of 66, and such insurance shall be
comparable to that which is provided to the Executive as of the
date of this Agreement notwithstanding anything to the contrary
in this Agreement.
(g) In the event of the Executive's death during the term of this
Agreement, his spouse, estate, legal representative or named
beneficiaries (as directed by the Executive in writing) shall
be paid on a monthly basis the Executive's annual compensation
from the Employer at the rate in effect at the time of the
Executive's death for a period of twenty-four (24) months from
the date of the Executive's death.
(h) The Executive's compensation, benefits and expenses shall be
paid by the Corporation and the Bank in the same proportion as
the time and services actually expended by the Executive on
behalf of each respective Employer.
4. EXPENSES. The Employers shall reimburse Executive or otherwise
provide for or pay for all reasonable expenses incurred by Executive
in furtherance of, or in connection with the business of the
Employers, including, but not by way of limitation, automobile
expenses described in Section 3(d) hereof, and traveling expenses,
and all reasonable entertainment expenses (whether incurred at the
Executive's residence, while traveling or otherwise), subject to
such reasonable documentation and other limitations as may be
established by the Boards of Directors of the Employers. If such
expenses are paid in the first instance by Executive, the Employers
shall reimburse the Executive therefor.
5. TERMINATION.
(a) The Corporation shall have the right, at any time upon prior
Notice of Termination, to terminate the Executive's employment
hereunder for any reason, including without limitation
termination for Cause, Disability or Retirement, and Executive
shall have the right, upon prior
19
7
Notice of Termination, to terminate his employment hereunder
for any reason.
(b) In the event that (i) Executive's employment is terminated by
the Corporation for Cause, Disability or Retirement, or (ii)
Executive terminates his employment hereunder other than for
Good Reason, Executive shall have no right pursuant to this
Agreement to compensation or other benefits for any period
after the applicable Date of Termination, except as provided
for in Section 3(f) in the event of termination for Disability
or Retirement.
(c) In the event that (i) Executive's employment is terminated by
the Corporation for other than Cause, Disability, Retirement or
the Executive's death or (ii) such employment is terminated by
the Executive (a) due to a material breach of this Agreement by
the Corporation, 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 Employers, or (b) for Good
Reason, then the Corporation shall
(A) pay to the Executive, in thirty-six (36) equal monthly
installments beginning with the first business day of the
month following the Date of Termination, a cash severance
amount equal to three (3) times that portion of the
Executive's Base Salary paid by the Corporation, and
(B) maintain and provide for a period ending at the earlier of
(i) the expiration of the remaining term of employment
pursuant hereto prior to the Notice 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 offered by the Corporation 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 Employers), 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 Corporation shall
arrange to provide the
20
8
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.
(d) In the event of the failure by either of the Employers to elect
or to re-elect or to appoint or to re-appoint the Executive to
the offices of President and Chief Executive Officer of the
Employers or a material adverse change made by either of the
Employers in the Executive's functions, duties or
responsibilities as President and Chief Executive Officer of
the Employers without the Executive's express written consent,
the Executive shall be entitled to terminate his employment
hereunder and shall be entitled to the payments and benefits
provided for in Section 5(c)(A) and (B).
6. PAYMENT OF ADDITIONAL BENEFITS UNDER CERTAIN CIRCUMSTANCES.
(a) If the payments and benefits pursuant to Section 5 hereof,
either alone or together with other payments and benefits which
Executive has the right to receive from the Employers
(including, without limitation, the payments and benefits which
Executive would have the right to receive from the Bank pursuant
to Section 5 of the Agreement between the Bank and Executive
dated April 23, 1996 ("Bank Agreement"), before giving effect to
any reduction in such amounts pursuant to Section 6 of the Bank
Agreement), would constitute a "parachute payment" as defined in
Section 280G(b)(2) of the Code (the "Initial Parachute Payment,"
which includes the amounts paid pursuant to clause (A) below),
then the Corporation shall pay to the Executive, in thirty-six
(36) equal monthly installments beginning with the first
business day of the month following the Date of Termination, a
cash amount equal to the sum of the following:
(A) the amount by which the payments and benefits that
would have otherwise been paid by the Bank to the
Executive pursuant to Section 5 of the Bank Agreement
are reduced by the provisions of Section 6 of the Bank
Agreement;
(B) twenty (20) percent (or such other percentage equal
to the tax rate imposed by Section 4999 of the Code)
of the amount by which the Initial Parachute Payment
exceeds the Executive's "base amount" from the
Employers, as defined in Section 280G(b)(3) of the
Code, with the
21
9
difference between the Initial Parachute Payment and
the Executive's base amount being hereinafter
referred to as the "Initial Excess Parachute
Payment";
(C) such additional amount (tax allowance) as may be
necessary to compensate the Executive for the payment
by the Executive of state and federal income and
excise taxes on the payment provided under clause (B)
above and on any payments under this clause (C). In
computing such tax allowance, the payment to be made
under clause (B) above shall be multiplied by the
"gross up percentage" ("GUP"). The GUP shall be
determined as follows:
Tax Rate
GUP = ---------------
1- Tax Rate
The Tax Rate for purposes of computing the GUP shall
be the highest marginal federal and state income and
employment-related tax rate, including any applicable
excise tax rate, applicable to the Executive in the
year in which the payment under clause (B) above is
made.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final
administrative settlement to which the Executive is a party
that the actual excess parachute payment as defined in Section
280G(b)(1) of the Code is different from the Initial Excess
Parachute Payment (such different amount being hereafter
referred to as the "Determinative Excess Parachute Payment"),
then the Corporation's independent tax counsel or accountants
shall determine the amount (the "Adjustment Amount") which
either the Executive must pay to the Corporation or the
Corporation must pay to the Executive in order to put the
Executive (or the Corporation, as the case may be) in the same
position the Executive (or the Corporation, as the case may be)
would have been if the Initial Excess Parachute Payment had
been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent tax counsel
or accountants shall take into account any and all taxes
(including any penalties and interest) paid by or for the
Executive or refunded to the Executive or for the Executive's
benefit. As soon as practicable after the Adjustment Amount
has been so determined, the Corporation shall
22
10
pay the Adjustment Amount to the Executive or the Executive
shall repay the Adjustment Amount to the Corporation, as the
case may be.
(c) In each calendar year that the Executive receives payments of
benefits under this Section 6, the Executive shall report on
his state and federal income tax returns such information as is
consistent with the determination made by the independent tax
counsel or accountants of the Corporation as described above.
The Corporation shall indemnify and hold the Executive harmless
from any and all losses, costs and expenses (including without
limitation, reasonable attorneys' fees, interest, fines and
penalties) which the Executive incurs as a result of so
reporting such information. Executive shall promptly notify
the Corporation in writing whenever the Executive receives
notice of the institution 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 Section 6 is being reviewed or is in
dispute. The Corporation 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 the Executive to resolve any such proceeding
with respect to any matter unrelated to amounts paid or payable
pursuant to this Section 6) and the Executive shall cooperate
fully with the Corporation in any such proceeding. The
Executive shall not enter into any compromise or settlement or
otherwise prejudice any rights the Corporation may have in
connection therewith without the prior consent of the
Corporation.
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.
(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 Employers
pursuant to employee benefit plans of the Employers or
otherwise.
8. WITHHOLDING. All payments required to be made by the Corporation
hereunder to the Executive shall be subject to the withholding of
such amounts, if any, relating to tax and other payroll deductions
as the
23
11
Corporation may reasonably determine should be withheld pursuant to
any applicable law or regulation.
9. ASSIGNABILITY. The Corporation 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 Corporation
may hereafter merge or consolidate or to which the Corporation 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 Corporation
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 Corporation:
Chairman of the Board
MLF Bancorp, Inc.
Two Aldwyn Center
Lancaster Avenue and Route 320
Villanova, Pennsylvania 19085
To the Bank:
Chairman of the Board
Main Line Bank
Two Aldwyn Center
Lancaster Avenue and Route 320
Villanova, Pennsylvania 19085
To the Executive:
Dennis S. Marlo
208 Tinker Hill Lane
Malvern, Pennsylvania 19355
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 signed by the Executive and such officer or
officers as may be specifically designated by the Board of Directors
of the Corporation to sign on its behalf. No waiver by any party
hereto at any time of any breach by any
24
12
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 Corporation to create a trust of any kind to fund any
benefits which may be payable hereunder, and to the extent that the
Executive acquires a right to receive benefits from the Corporation
hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.
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. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the Corporation and the Executive with respect to the
matters agreed to herein. All prior agreements between the
Corporation and the Executive with respect to the matters agreed to
herein are hereby superseded and shall have no force or effect.
Notwithstanding the foregoing, nothing contained in this Agreement
shall affect the agreement of even date being entered into between
the Bank and the Executive.
25
13
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Attest: MLF BANCORP, INC.
/s/ Lynn Robinson /s/ John R. Eppinger
- -------------------------- By: ---------------------------
John R. Eppinger
Chairman of the Board
EXECUTIVE
/s/ Dennis S. Marlo
By: ---------------------------
Dennis S. Marlo