EMPLOYMENT AGREEMENT
This Agreement entered
into this 1st day of March, 2009 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").
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, 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, subject to the direction of the
Board, 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 as
heretofore identified
to the Board).
2. TERM
The period of Executive's employment under
this agreement shall begin as of
March 1, 2009 and shall continue for a period of
thirty-six (36) full months
thereafter. This period of employment shall
automatically be extended for an
additional twelve (12) full calendar
months, and on each succeeding year
thereafter, respectively, unless otherwise terminated
hereunder or the Board of
Directors provides notice to the Executive, not less than ninety
(90) days prior
to the expiration of the then current
term of this Agreement, that this
Agreement shall not be renewed. Any non-renewal
of the term of this Agreement
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shall be approved by the majority of the disinterested Directors of
the Bank and
the reasons therefore shall be noted in the minutes of the Board of
Directors.
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
$163,000 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, the Executive's
Base Salary shall be reviewed at least annually. 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 the 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
any such plan or arrangement will be deemed to be in lieu of
other compensation
to which Executive is entitled under this Agreement.
(c) If the Bank is required to prepare an
accounting restatement due to the
material noncompliance of the Bank with any
financial reporting requirement
under the securities laws, the Executive shall
reimburse the Bank for (i) any
bonus or other incentive-based or
equity-based compensation received by the
Executive from the Bank during the twelve (12) month period
following the first
public issuance or filing with the Commission
(whichever first occurs) of the
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financial document embodying such financial reporting
requirement and; (ii) any
profits realized from the sale of securities of
the issuer during that twelve
(12) month period.
(d) 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.
(e) Executive shall be
entitled to five (5) weeks of paid vacation per
calendar year to increase to six (6) weeks after ten (10)
years of service, or
such greater period as may be
approved from time to time by the Board
of
Directors. Any paid vacation time which is unused
during a calendar shall be
treated in a manner consistent with the Bank's
policy for unused vacation as
provided in the Employee Handbook.
(f) 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. As an
alternative, the Bank may provide the
Employee with an automobile allowance
equivalent to the value of the vehicle
being provided including expenses.
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
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material reduction in the benefits and perquisites to
Executive from
those
being provided as of the effective date
of this Agreement
(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
exceed 90 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 one
(1) 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 one
(1)
completed fiscal year 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 of the
Internal Revenue Code of 1986
(as amended, the "Code"), 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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<PAGE>
(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 twelve (12) 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
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