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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 Arthur W.
Budich
("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 Executive Vice President and
Chief
Financial Officer of the Bank pursuant to an employment
agreement by and between
Executive and the Bank dated October 20, 2005 (the "2005
Agreement"); and
WHEREAS, the parties wish to supersede and update the 2005
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
Executive Vice
President and Chief Financial 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) One 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 one (1) year (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 one (1) year;
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.
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(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 first
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 first
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
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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
four (4) 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 shall reimburse Executive for his ordinary
and necessary
business 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.
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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 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
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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
(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
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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 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,
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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
here
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