EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“Agreement”) is made effective as of September 29,
2009 (the “Effective Date”), by and between Evans Bank,
N.A. (the “Bank”), Evans Bancorp, Inc. (the
“Company”), and Gary A. Kajtoch (the
“Executive”). Any reference to the
“Employer” shall mean both the Company and the
Bank.
WHEREAS , the Executive is
currently employed as Senior Vice President and Chief Financial
Officer of the Employer pursuant to an employment agreement that
was effective February 5, 2007 (the “Original
Agreement”); and
WHEREAS , the Employer desires
to terminate the Original Agreement and replace it with this
Agreement; and
WHEREAS , Executive is willing
to serve the Employer on the terms and conditions hereinafter set
forth and has agreed to such changes; and
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.
During the term of this Agreement,
Executive agrees to serve as Treasurer of the Company and Senior
Vice President and Chief Financial Officer of the Bank (the
“Executive Position”), and will perform all duties and
will have all powers associated with such position as set forth in
the job description for such Executive Position as established by
the Board of Directors of the Employer (the “Board”)
from time to time, and as may be set forth in the Bylaws and
Certificate of Incorporation of the Company or the Bank. During the
term of the Agreement, Executive also agrees to serve, if elected,
as an officer and/or director of any subsidiary or affiliate of
Employer and in such capacity carry out such duties and
responsibilities reasonably appropriate to that office. Executive
shall report to the President and Chief Executive Officer.
2. TERM AND DUTIES.
(a) Three Year Contract;
Daily Renewal . The Executive’s period of employment with
the Employer under this Agreement (“Employment Period”)
shall begin on the Effective Date and, except as provided in
(b) below, shall renew daily, such that the remaining
unexpired term of the Agreement shall always be thirty-six
(36) months, until the date that the Bank gives the Executive
written notice of non-renewal (“Non-Renewal Notice”).
Except as otherwise provided in (b) below, the Employment
Period shall end on the date that is thirty-six (36) months
after the date of the Non-Renewal Notice, unless the parties agree
that the Employment Period shall end on an earlier date.
(b) Effective upon the date that
is the Executive’s 62 nd birthday, the Employment
Period shall not renew daily, this Agreement shall have a remaining
(and declining) three year term, and the Employment Period shall
expire and this Agreement shall terminate upon the date that is the
Executive’s 65 th birthday.
(c) Annual Performance
Evaluation . On either a fiscal year or calendar year basis,
(consistently applied from year to year), the Chief Executive
Officer of the Employer (the “Chief Executive Officer”)
or the Board shall conduct an annual evaluation of the
Executive’s performance. The annual performance evaluation
proceedings shall be reported to the Board and included in the
minutes of the Board.
(d) Continued Employment
Following Termination of Employment Period . Nothing in this
Agreement shall mandate or prohibit a continuation of the
Executive’s employment following the expiration of the
Employment Period.
(e) Duties; Membership on
Other Boards . During the Employment Period, except for periods
of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence approved by the Chief Executive
Officer or the Board, Executive shall devote substantially all 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 Employer; provided, however, that, with the approval of the
Chief Executive Officer or the Board, Executive may serve, or
continue to serve, on the boards of directors of, and hold any
other offices or positions in, business companies or business
organizations, which, in the Board’s or Chief Executive
Officer’s judgment, will not present any conflict of interest
with the Employer, or materially affect the performance of
Executive’s duties pursuant to this Agreement it being
understood that membership in and service on boards or committees
of social, religious, charitable or similar organizations does not
require Chief Executive Officer or Board approval pursuant to this
Section. For purposes of this Section, Chief Executive Officer or
Board approval shall be deemed to have been granted as to service
with any such business company or organization that Executive was
serving as of the date of this Agreement and disclosed to the Chief
Executive Officer or Board.
3. COMPENSATION, BENEFITS AND
REIMBURSEMENT.
(a) Base Salary . The
Employer shall pay Executive a salary of not less than $161,400.
per year (“Base Salary”). Such Base Salary shall be
payable biweekly, or with such other frequency as officers and
employees are generally paid. During the period of this Agreement,
Executive’s Base Salary shall be reviewed at least annually.
Such review shall be conducted by the Chief Executive Officer or
Board, and the Employer may increase, but not decrease,
Executive’s Base Salary (with any increase in Base Salary to
become “Base Salary” for purposes of this
Agreement).
(b) Bonus and Incentive
Compensation . Executive will be entitled to participate in any
cash or equity-based incentive compensation or bonus plans or
programs as the Employer may make available to senior executive
officers from time to time. 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 .
Executive shall be entitled to participate in all employee benefit
plans, programs and arrangements as generally provided by the Bank
or Company to their senior executive officers and for which
Executive shall qualify. Without limiting the foregoing, the
Executive may participate in the medical, health and other
insurance (including life insurance) plans maintained by the
Employer for the benefit of employees.
(d) Paid Time Off .
Executive is entitled to no less than 4 weeks of paid vacation
per year, plus 5 personal days and customary Bank holidays. Any
unused paid time off during an annual period shall be treated in
accordance with the Employer’s personnel policies as in
effect from time to time.
(e) Expense
Reimbursements . During the Employment Period, the Employer
shall pay or reimburse Executive for her reasonable country club
dues, all reasonable travel, entertainment and other reasonable
expenses incurred by Executive during the course of performing his
obligations under this Agreement.. The Bank also shall reimburse
Executive for fees and expenses associated with membership in trade
associations or professional memberships related to the business of
the Bank or the Company. All reimbursements under this Section 3(e)
shall be paid as soon as practicable by the Employer upon
presentation to the Employer of an itemized account of such
expenses in such form as the Employer may reasonably require;
provided, however, that no payment shall be made later than
March 15 of the year immediately following the year in which
the expense was incurred.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF
TERMINATION.
(a) Upon the occurrence of an
Event of Termination (as herein defined), 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 involuntary termination
by the Company or the Bank of Executive’s full-time
employment hereunder for any reason other than a Termination for
Cause, as defined in Section 8 hereof, or a termination upon
Retirement as defined in Section 7 hereof, or a termination
for Disability as set forth in Section 6 hereof; and
(ii) Executive’s
resignation from the Employer’s employ upon any of the
following events (which shall be treated as termination of
employment for “Good Reason”), unless consented to by
Executive:
(A) failure to appoint
Executive to the Executive Position set forth in Section 1
above, 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 above (and any such material change shall be deemed
a continuing breach of this Agreement);
(B) a relocation of
Executive’s principal place of employment to a location that
is more than thirty-five (35) miles from the location of the
Employer’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 in the Agreement 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);
(D) a liquidation or
dissolution of the Bank or the Company other than liquidations or
dissolutions that are caused by reorganizations that do not affect
the status of the Executive; or
(E) a material breach of this
Agreement by the Employer.
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 within
90 days after the event giving rise to said right to elect,
which termination by Executive shall be an Event of Termination.
The Employer shall have 30 days to remedy any event set forth
in clauses (ii)(A) through (E) above; provided, however, that
the Employer shall be entitled to waive such period and make an
immediate payment hereunder. If the Employer remedies the event
within such 30-day cure period, then no Good Reason shall be deemed
to exist with respect to such event. If the Employer does not
remedy the event within such 30-day cure period, then the Executive
may deliver a Notice of Termination, as defined in Section 9(c)
hereof, for Good Reason at any time within 60 days following
the expiration of such cure period.
(iii) Executive’s
involuntary termination of employment without cause or voluntary
resignation for Good Reason from the Employer’s employ within
one (1) year following a Change in Control (as defined in
Section 5 below).
(b) Within 30 days
following the occurrence of an Event of Termination, the Employer
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 lump sum cash
amount equal to three times the sum of (x) highest annual rate
of Base Salary paid to Executive at any time under the Agreement,
and (y) the average annual incentive bonus paid to Executive
during the three completed calendar years preceding the Event of
Termination; provided, however, that if such payment is made in
connection with an involuntary termination of employment or
voluntary resignation for Good Reason within one year after a
Change in Control, then such payment is conditioned upon the
Executive signing a general release acceptable to the Employer, in
substantially the form set forth as Appendix A to this
Agreement. Such payment shall not be reduced in the event Executive
obtains other employment following termination of employment. Upon
an Event of Termination, the Executive shall have such rights as
specified in any other employee benefit plans or programs
maintained by the Employer, as may be in effect from time to
time.
(c) Upon the occurrence of an
Event of Termination, the Employer will continue to provide, under
the same cost-sharing arrangement as is in effect upon the Event of
Termination, life insurance and non-taxable medical and health
insurance coverage substantially comparable, as reasonably or
customarily available, to the coverage maintained by the Employer
for Executive prior to his termination, except to the extent such
coverage may be changed in its application to all Employer
employees. Such coverage shall cease 36 months following the
Event of Termination.
(d) Notwithstanding the
foregoing, in the event the Executive is a Specified Employee (as
defined herein), solely to the extent necessary to avoid penalties
under Code Section 409A, payment to the Executive’s
benefit pursuant to Sections 4(b) and 4(c), if applicable, shall be
made to the Executive on the first day of the seventh month
following the Executive’s Event of Termination; provided,
however, that the six-month delay for such payment shall not apply
in the event that the separation pay is due to upon an involuntary
Separation from Service or a Good Reason Separation from Service
and the amount of the separation pay does not exceed two times the
lesser of (i) the Executive’s annualized compensation
based upon his annual rate of pay for the taxable year preceding
the year in which the Separation from Service occurs; or
(ii) the limit set forth in Section 401(a)(17) of the
Internal Revenue Code for the year in which the Separation from
Service occurs (i.e. for 2009, $245,000), as provided in Treasury
Regulation Section 1.409A-1(b)(9)(iii) (which separation
pay, if in excess of the limit, shall be made as provided herein up
to the amount of the limit). “Specified Employee” shall
be interpreted to comply with Code Section 409A and shall mean
a key employee within the meaning of Code Section 416(i) (without
regard to paragraph 5 thereof), but an individual shall be a
“Specified Employee” only if the Company or the Bank or
any affiliate is a publicly traded company.
(e) For purposes of this
Agreement, Event of Termination shall be construed to require a
“Separation from Service” as defined in Code
Section 409A and the Treasury Regulations promulgated
thereunder, such that the Employer and Executive reasonably
anticipate that the level of bona fide services Executive would
perform after termination would permanently decrease to a level
that is less than 50% of the average level of bona fide services
performed (whether as an employee or an independent contractor)
over the immediately preceding 36-month period.
5. CHANGE IN CONTROL .
(a) For these purposes, a Change
in Control of the Company or the Bank shall mean a change in
control of a nature that:
(i) would be required to be
reported in response to Item 5.01 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) results in a Change in
Control of the Bank or the Company within the meaning of the Bank
Holding Company Act, as amended, and applicable rules and
regulations promulgated thereunder by the Federal Reserve Board
(collectively, the “BHCA”), or under the Bank in
Control Act and the rules and regulations promulgated thereunder by
the Federal Reserve Board, as in effect at the time of the Change
in Control; or
(iii) 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
Company representing 25% or more of the combined voting power of
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
directors comprising the Incumbent Board, or whose nomination for
election by the Company’s stockholders was approved by the
same Nominating Committee serving under an Incumbent Board, shall
be, for purposes of this clause (b), considered 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 is implemented; or (d) a proxy statement soliciting proxies
from stockholders of the Company is distributed, by someone other
than the current management of the Company, seeking stockholder
approval of a plan of reorganization, merger or consolidation of
the Company or similar transaction with one or more corporations as
a result of which the outstanding shares of the class of securities
then subject to the plan are exchanged for or converted into cash
or property or securities not issued by the Company; or (e) a
tender offer is made for 25% or more of the voting securities of
the Company and the shareholders owning beneficially or of record
25% or more of the outstanding securities of 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.
(b) Notwithstanding the
preceding paragraphs of this Section, in the event that the
aggregate payments or benefits to be made or afforded to Executive
in the event of a Change in Control would be deemed to include an
“excess parachute payment” under Section 280G of
the Code or any successor thereto, then the cash severance payable
under Section 4 shall be reduced by the minimum amount
necessary to result in no portion of the payments and benefits
payable by the Employer under Section 4 being non-deductible
pursuant to Code Section 280G and subject to an excise tax
imposed under Code Section 4999.
6. TERMINATION FOR DISABILITY
OR DEATH.
(a) Termination of
Executive’s employment based on “Disability”
shall be construed to comply with Code section 409A and shall be
deemed to have occurred if (i) the Executive is unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be
expected to result in death, or last for a continuous period of not
less than 12 months; (ii) by reason of any medically
determinable physical or mental impairment which can be expected to
result in death, or last for a continuous period of not less than
12 months, the Executive is receiving income replacement benefits
for a period of not less than three months under an accident and
health plan covering employees of the Employer; or (iii) the
Executive is determined to be totally disabled by the Social
Security Administration. The provisions of paragraph 6(b) and
(c) shall apply upon the termination of the Executive’s
employment for Disability.
(b) Executive shall participate
in the short and long term disability plans and benefits offered by
the Bank to senior executives, including, but not limited to,
(i) long term disability income replacement benefits equal to
no less than 60% of Executive’s base salary and bonus, based
on Executive being unable to perform the required functions of
Executive’s own occupation and (ii) supplemental retirement
benefits under a long-term disability program, such that, in the
event the Executive receives long term disability benefits, an
additional amount will be credited for the benefit of the Executive
and will be paid at the time and in the form specified in the plan
documents. If Executive pays the premiums for such long-term
disability coverage on an after-tax basis, the Bank shall
