EMPLOYMENT AGREEMENT
This
Employment
Agreement (this "Agreement") is made effective as of
December 29, 2008 (the
"Effective
Date"), by and between Empire State Bank,
N.A., a national banking association (the "Bank") and Philip Guarnieri
("Executive"). The
Bank and Executive are
sometimes collectively
referred to
herein as the "parties." Any references to the "Company" shall mean ES
Bancshares, Inc., the holding company of the Bank.
WHEREAS, Executive is
serving as President and Chief Operating Officer of
the Bank pursuant to
an employment
agreement by and between Executive and the
Bank dated September 23, 2004 (the "2004 Agreement"); and
WHEREAS, the parties
wish to supersede
and update the 2004
Agreement to
take into account
certain changes in the law under Section 409A of the Internal
Revenue Code of 1986, as amended ("Code"), and for certain other
purposes; and
WHEREAS, the Bank
wishes to assure
itself of the services of Executive as
an officer of the Bank for the period provided in this Agreement, and in order
to induce Executive to
remain in the employ of the Bank and to provide further
incentive for Executive to achieve the financial and performance objectives of
the Bank, the parties desire to enter into this Agreement.
NOW,
THEREFORE, in
consideration of the mutual covenants herein contained,
and upon the terms and conditions hereinafter provided, the parties
hereby agree
as follows:
1. POSITION AND
RESPONSIBILITIES.
During the term of this Agreement, Executive shall serve as President
and
Chief Operating
Officer of the Bank. Executive shall have such duties,
responsibilities and
powers as are customary and appropriate for such offices,
including without
limitation,
keeping the board of
directors of the Bank (the
"Board") fully informed of his activities.
2. TERM AND
DUTIES.
(a)
Three Year Contract; Annual Renewal. The term of Executive's
employment
under this Agreement
shall commence as of the Effective Date and shall continue
for a period of three (3) years (the "Employment Period"). Commencing on the
first anniversary date of the Effective Date, and continuing at
each anniversary
date thereafter
(the "Anniversary Date"), the Agreement shall renew for an
additional year such that the remaining term shall be three (3)
years; provided,
however, if written
notice of nonrenewal is provided to Executive at least
thirty (30) days and not more than sixty (60) days prior to an
Anniversary Date,
the term of this
Agreement shall not so
renew, provided further that on an
annual basis prior to the issuance of the notice of nonrenewal or the deadline
for the notice period referenced above, which ever comes first, the Board
shall
conduct a performance review of Executive for purposes of
determining whether to
provide notice of
nonrenewal.
If (i) timely
notice is not
delivered to the
Executive, or (ii) if such performance review is not conducted as
required above
and its related findings provided in its entirety to the Executive, the
Agreement shall be automatically extended for an additional
year.
<PAGE>
(b)
Change in Control.
In the event of a
Change in Control (as defined in
Section 7 of
this Agreement), the Employment Period shall no longer be
applicable, and the
term of this Agreement
shall be deemed
amended such that
Executive's period of
employment shall be
automatically extended
to the third
anniversary of the
date on which such Change in Control occurs (the "Revised
Employment Period"),
and shall be further
extended automatically
for one (1)
additional day each
day following such Change in Control, unless either
Executive or the Bank elects not to extend the Revised Employment
Period further
by giving written
notice thereof to the other party, in which case the Revised
Employment Period
shall become fixed and shall end on the third anniversary of
such written notice.
(c)
Termination of Agreement. Notwithstanding anything contained in this
Agreement to
the contrary, either Executive or the Bank may terminate
Executive's employment
with the Bank at any time during the term of this
Agreement, subject to the terms and conditions of this
Agreement.
(d)
Continued Employment
Following Expiration of Term. Nothing in this
Agreement shall
mandate or prohibit a continuation of Executive's employment
following the
expiration
of the term of this
Agreement,
upon such terms
and
conditions as the Bank and Executive may mutually agree.
(e)
Duties. During the term of this Agreement, except for periods of
absence occasioned by
illness, reasonable
vacation periods, and reasonable
leaves of absence
approved by the Board,
Executive shall devote
substantially
all of his
business time, attention, skill, and efforts to the faithful
performance of his duties hereunder, including activities and services
related
to the organization,
operation and
management of the
Bank, and shall take all
reasonably necessary and appropriate actions to promote,
develop and extend
the
business of the Bank.
3. COMPENSATION,
BENEFITS AND REIMBURSEMENT.
(a)
Base Salary. In consideration of Executive's performance of the duties
set forth in Section
2, the Bank
shall provide Executive the compensation
specified in
this Agreement. The Bank shall pay Executive a salary of
$____________ per year
("Base Salary").
The Base Salary shall be payable in
accordance with the
Bank's regular payroll
practices. During the
term of this
Agreement, the Board
may consider increasing, but not decreasing, Executive's
Base Salary on an annual basis, as the Board deems appropriate.
Any increase in
Base Salary shall become "Base Salary" for purposes of this
Agreement.
(b)
Bonus. Executive shall
be entitled to participate in any bonus plan of
the Bank in
which Executive is eligible to participate. Nothing paid to
Executive under
any such plan or
arrangement
will be deemed to be
in lieu of
other compensation to which Executive is entitled under this
Agreement.
(c)
Employee Benefits.
The Bank shall
provide Executive with employee
benefit plans,
arrangements,
life insurance and perquisites substantially
equivalent to those in which Executive was participating or from which he was
deriving benefit
immediately
prior to the commencement of the term of this
Agreement, and the
Bank shall not, without Executive's prior written consent,
make any changes in such plans, arrangements or perquisites that
would
- 2 -
<PAGE>
adversely affect
Executive's rights or
benefits thereunder,
except as to any
changes that are applicable to all participating employees. Without
limiting the
generality of the foregoing provisions of this Section 3(c),
Executive will be
entitled to participate in and receive benefits under any employee
benefit plans
including, but not limited to, retirement plans, supplemental retirement plans,
pension plans,
profit-sharing
plans, health-and-accident
insurance plans,
medical coverage
or any other employee benefit plan or arrangement made
available by the Bank
in the future to its
senior executives,
including any
stock benefit
plans, subject to and on a basis consistent with the terms,
conditions and
overall administration of such plans and arrangements
(collectively, the "Benefit Plans").
(d)
Paid Time Off.
Executive shall be
entitled to paid
vacation time of
five (5) weeks each year during the term of this Agreement
(measured on a fiscal
or calendar year basis, in accordance with the Bank's usual
practices), as
well
as sick leave,
holidays and other paid absences in accordance with the Bank's
policies and procedures for senior executives. Any unused paid time off
during
an annual period
shall be treated
in accordance with the Bank's personnel
policies as in effect from time to time.
(e)
Expense
Reimbursements. Upon
submission of
appropriate
invoices or
vouchers as the Bank shall specify, the Bank shall pay or reimburse
Executive
for all reasonable
expenses incurred by Executive in the
performance
of his
duties hereunder
in furtherance of the business, and in keeping with the
policies of the Bank and its subsidiaries and affiliates, provided that such
payment or
reimbursement shall be
made as soon as practicable but in no event
later than March 15 of
the year following
the year in which such
the right to
such payment or reimbursement occurred.
4. OUTSIDE
ACTIVITIES.
Executive may serve as
a member of the board of directors (or a committee
thereof) of business,
civic, corporate,
community and charitable organizations
subject to the Executive giving notice thereof to the Board, provided that in
each case such service shall not materially interfere with the performance of
his duties under this
Agreement or present any conflict of interest. Such
service to and
participation in
outside organizations
shall be presumed
for
these purposes to be for the benefit of the Bank, and the Bank shall reimburse
Executive his reasonable expenses associated therewith.
5. WORKING
FACILITIES AND EXPENSES.
Executive's principal
place of employment
shall be the Bank's
principal
executive offices. The
Bank shall provide Executive, at his principal place of
employment, with a
private office,
stenographic
services and other support
services and facilities suitable to his position with the
Bank and necessary or
appropriate in
connection
with the performance of his duties under this
Agreement. The Bank
and/or its
affiliates
shall provide Executive with an
automobile suitable to
the position of President and Chief Operating Officer of
the Bank, and such
automobile
may be used by
Executive in carrying out his
duties under this
Agreement and for his personal use such as commuting between
his residence and his principal place of employment. The Bank shall reimburse
Executive for the cost of maintenance, use and servicing of such
automobile. The
Bank shall reimburse
Executive for his ordinary and necessary business
- 3 -
<PAGE>
expenses incurred in
connection with the
performance of his
duties under this
Agreement, including,
without limitation, fees for organizations that Executive
and the Board mutually
agree are necessary and appropriate to further the
business of
the Bank, and travel and reasonable entertainment expenses.
Reimbursement of such
expenses shall be made
upon submission
of appropriate
invoices or vouchers as the Bank shall specify.
6. PAYMENTS TO
EXECUTIVE UPON AN EVENT OF TERMINATION.
(a)
Upon the occurrence
of an Event of
Termination
(as herein
defined)
during the term of this Agreement, the provisions of this Section 6
shall apply;
provided, however,
that in the event such
Event of Termination
occurs within
eighteen (18)
months following a Change in Control (as defined in Section 7
hereof), Section 7
shall apply instead. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the
following:
(i) the involuntary termination of Executive's employment hereunder
by
the
Bank for any reason
other than termination
governed by Section 7
(in
connection with or
following a Change in Control), Section 9 (due to
Disability), or Section 10 (for Just Cause); or
(ii) Executive's
resignation
from the Bank's employ
upon any of the
following, unless consented to by Executive:
(A) failure to appoint
Executive to the
position set forth in
Section 1, or a material change in Executive's function, duties, or
responsibilities,
which change would
cause Executive's
position to
become one of lesser
responsibility,
importance,
or scope from the
position and
responsibilities
described in Section 1, to which
Executive has not
agreed in writing
(and any such
material change
shall be deemed a continuing breach of this Agreement by the
Bank);
(B) a relocation of Executive's principal place of employment
to
a
location that is more
than twenty (20) miles
from the location
of
the Bank's
principal executive offices as of the date of this
Agreement;
(C) a material reduction in the benefits and perquisites,
including Base Salary,
to Executive
from those being
provided as of
the Effective
Date (except for any reduction that is part of a
reduction in pay or benefits that is generally applicable to officers
or employees of the Bank);
(D) a liquidation or dissolution of the Company or the Bank; or
(E) a material breach
of this Agreement
by the Company or the
Bank.
Upon the occurrence of any event described in clause (ii) above,
Executive shall
have the right to elect to terminate his employment under this Agreement by
resignation for "Good
Reason" upon not less than thirty (30) days prior written
notice given within a reasonable period of time (not to exceed
ninety (90) days)
after the event giving rise to the right to elect, which termination by
Executive shall be an Event of Termination. The Bank shall have
thirty (30) days
to cure the
- 4 -
<PAGE>
condition giving rise
to the resignation for
Good Reason, provided,
that the
Bank may elect to waive said thirty (30) day period.
(b)
Upon the occurrence
of an Event of
Termination,
the Bank shall pay
Executive, or, in the
event of his subsequent death, his designated beneficiary
or beneficiaries, or,
if there are no designated beneficiaries, his estate, as
the case may be, as severance pay or liquidated damages, or both, a lump sum
cash payment equal to three (3) times the sum of (i) the average
annual rate of
Base Salary paid in the last three (3) years ending in the year of termination
and (ii) the average annual rate of bonus awarded to Executive
during the prior
three (3) years.
Such payments shall be paid within sixty (60) days of the
Executive's Separation
from Service (within
the meaning of Section 409A of the
Code) and shall not be reduced in the event Executive obtains other employment
following the Event of Termination.
(c)
Upon the occurrence
of an Event of
Termination,
the Bank shall pay
Executive, or in the
event of his subsequent death, his designated beneficiary
or beneficiaries, or,
if there are no designated beneficiaries, his estate, as
the case may be, a lump sum cash payment reasonably estimated to be
equal to the
present value of the contributions that would have been made on the
Executive's
behalf under the
Bank's Benefit
Plans (as defined in Section 3(c) of this
Agreement), as if Executive had continued working for the Bank for
the remaining
unexpired Employment
Period under the Agreement following such Event of
Termination, earning
the salary and credited service that would have been
achieved during such
period, where such present values are to be determined
using a discount rate
of six percent (6%)
and, in the case of defined benefit
plans, the mortality tables prescribed under Section 72 of the
Code. The amount
payable hereunder shall be paid as soon as reasonably practicable following the
occurrence of the Event of Termination but in no event shall be paid
later than
two and one-half
months following
the end of the
calendar year in which the
Event of Termination occurs.
(d)
Upon the occurrence of an Event of Termination, the Bank shall provide
at the Bank's expense for the remaining unexpired Employment Period under this
Agreement, life
insurance and non-taxable medical and dental coverage
substantially comparable, as reasonably available, to the coverage
maintained by
the Bank for Executive prior to the Event of Termination, except to the extent
such coverage may be changed in its application to all Bank
employees.
(e)
Upon the occurrence of an Event of Termination, Executive shall have
the right within thirty (30) days following such Event of
Termination, upon
the
surrender of stock options, stock, warrants, stock appreciation rights,
phantom
stock rights or other equity or equity rights (collectively, "Stock Rights")
issued to Executive by the Bank or its parent, subsidiaries and
affiliates, to a
lump sum payment equal to the product of:
(i) The excess of (A) the Fair Market Value (as herein defined) of a
share of stock of the
same class
as the stock that constitutes or is
subject to the Stock Right, determined as of the date of termination of
employment, over (B)
the exercise price per share, if any, for such Stock
Right, as specified in or under the relevant plan or program;
multiplied by
- 5 -
<PAGE>
(ii) The number of shares with respect to which Stock Rights are
being
surrendered.
For purposes of this Section 6(e), for purposes of determining
Executive's right
following an Event of Termination to exercise any Stock Rights not
surrendered
pursuant hereto, Executive shall be deemed to be fully vested in
and entitled to
exercise all Stock
Rights under any stock option or rights plan or program
maintained by, or covering employees of, the Bank or its
subsidiaries, even
if
Executive is not so vested or entitled to then exercise such rights under such
plan or program.
(f)
For purposes of this
Agreement,
"Fair Market Value" means the fair
market value per share of the Company's common stock ("Common Stock"). For
purposes hereof,
the Fair Market Value
of a share of Common Stock shall be the
closing sale
price of a share
of Common Stock on the date the Executive
exercises his right under Section 6(e) of this Agreement (or, if
such day is not
a trading day in the U.S. markets, on the nearest preceding trading day), as
reported with respect to the principal market (or the composite of the
markets,
if more than one) or
national quotation
system in which such
shares are then
traded, or if no such closing prices are reported, the mean between
the high bid
and low asked prices
that day on the
principal market or
national quotation
system then in use.
(g)
For purposes of this Agreement, a "Separation from Service" shall
have
occurred if the Bank and Executive reasonably anticipate that either no
further
services will be
performed by the Executive after the date of the Event of
Termination (whether
as an employee or as
an independent
contractor)
or the
level of further services performed will not exceed
forty-nine percent (49%) of
the average level of
bona fide services in
the twelve (12) months
immediately
preceding the Event of Termination. For all purposes hereunder,
the definition
of Separation
from Service shall be interpreted consistent with Treasury
Regulation Section
1.409A-1(h)(ii). If
Executive is a Specified Employee, as
defined in Code Section 409A and any payment to be made under
paragraph (b) or
(c) of this Section 6 shall be determined to be subject to Code Section
409A,
then if and to the extent necessary to comply with Code Section 409A
and avoid
additional tax
thereunder,
such payment or a portion of such
payment (to the
minimum extent
possible) shall be delayed and shall be paid on the first day
of
the seventh month following Executive's Separation from
Service.
7. CHANGE IN
CONTROL.
(a)
Any payments made to
Executive pursuant to
this Section 7 are in lieu
of any payments
that may otherwise be owed to Executive pursuant to this
Agreement under
Section 6, such that Executive shall either receive payments
pursuant to
Section 6 or
pursuant to Section 7, but not pursuant to both
Sections.
(b)
For purposes of this Agreement, the term "Change in Control" shall
mean
any of the following events:
(i) any "person" (as
the term is used in Sections 13(d) and 14(d) of
the
Securities Exchange Act of 1934 (the "Exchange Act")) is or becomes
the
"beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act),
directly or
indirectly,
of
- 6 -
<PAGE>
securities of the Bank
or the Company
representing
twenty-five
percent
(25%) or more of the combined voting power of such outstanding
securities,
except for any securities purchased by any employee stock ownership
plan or
trust established by the Bank or the Company; or
(ii) individuals
who constitute the
Board on the Effective Date (the
"Incumbent Board")
cease for any reason
to constitute at least a majority
thereof, provided
that any person
becoming a director
subsequent to the
Effective Date
whose election was approved by a vote of at least
three-quarters of the
directors comprising
the Incumbent Board,
or whose
nomination for
election by stockholders of the Bank or the Company was
approved by the same Nominating Committee serving under an
Incumbent Board,
shall be, for purposes of this Subsection (B), considered as though they
were
members of the Incumbent Board; or
(iii) a sale of all or substantially all the assets of the Bank or
the
Company, or a plan of
reorganization,
merger, consolidation,
or similar
transaction occurs in which the security holders of the Bank or the
Company
immediately prior to
the consummation
of the transaction do not own at
least fifty and one tenth of one percent (50.1%) of the securities of the
surviving entity to be
outstanding upon consummation of the transaction; or
(iv) a proxy statement is issued soliciting proxies from stockholders
of
the Bank or the Company by someone other than the current
management of
the
Bank or 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
to
be exchanged for or converted into cash or property or
securities
not
issued by the Bank or the Company; or
(v) a tender offer is made for twenty-five percent (25%) or more of
the
voting securities of the Bank or the Company, and stockholders owning
beneficially or of
record twenty-five percent (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.
(c)
Upon the occurrence of
a Change in Control
followed within
eighteen
(18) months by an Event of Termination (as defined in Section 6 hereof),
the
Bank shall
pay Executive, or in the event of his death, his designated
beneficiary or beneficiaries, or, if there are no designated
beneficiaries, his
estate, as the case may be, a lump sum cash payment equal to three
(3) times the
sum of: (i) his current Base Salary, plus (ii) the highest rate of
bonus paid to
Executive during the
three (3) year period ending in the year prior to the year
of the Change in Control. Such payment shall be made in a
lump sum within sixty
(60) days of the Event of Termination.
(d)
Upon the occurrence of
a Change in Control
followed within
eighteen
(18) months by an Event of Termination (as defined in Section 6 hereof),
the
Bank shall
pay
- 7
-
<PAGE>
Executive, or in
the event of his death, his designated beneficiary or
beneficiaries, or, if
there are no designated beneficiaries, his estate, as the
case may be, a lump sum cash payment reasonably estimated to be equal to the
present value of the
contributions
that would
have been made on
Execu
