Exhibit 10.1
E MPLOYMENT A GREEMENT
This E MPLOYMENT A GREEMENT (the “Agreement”) is made and
entered into as of
, 2005 by and between L AKE S HORE B ANCORP , I NC . , a
federally-chartered corporation having an office at 128 East 4th
Street, Dunkirk, New York 14048 (the “Company”) and
D AVID
C. M ANCUSO , an individual residing at [
] (the “Executive”).
I NTRODUCTORY S TATEMENT
L AKE S HORE S AVINGS B ANK , a
federally-chartered savings bank having an office at 128 East 4th
Street, Dunkirk, New York 14048 (the “Bank”) has
reorganized from a New York-chartered mutual savings and loan
association to a federally-chartered stock savings bank and has
become a wholly-owned subsidiary of the Company, a mid-tier stock
holding company, which is majority owned by L
AKE S HORE , MHC , a mutual holding company (the
“Reorganization”). In connection with the
Reorganization, certain shares of the Company’s common stock
were sold in an initial public stock offering. The Executive has
served the Bank in an executive capacity for many years and is
familiar with the Bank’s operations.
The Board of Directors of the
Company has concluded that it is in the best interests of the
Company and their prospective shareholders to secure a continuity
in management following the Reorganization. They also consider it
desirable to establish a working environment for the Executive
which minimizes the personal distractions that might result from
possible business combinations in which the Company might be
involved. For these reasons, the Board of Directors of the Company
has decided to offer to enter into a contract with the Executive
for his future services. The Executive has accepted this
offer.
The terms and conditions which the
Company and the Executive have agreed to are as follows.
A GREEMENT
Section 1. Employment
.
The Company hereby continues to
employ the Executive, and the Executive hereby accepts such
continued employment, during the period and upon the terms and
conditions set forth in this Agreement.
Section 2. Employment Period;
Remaining Unexpired Employment Period .
(a) The Company shall employ the
Executive during an initial period of three (3) years
beginning on the effective date of the Reorganization (the
“Employment Commencement Date”) and ending on the day
before the third (3rd) anniversary of the Employment
Commencement Date, and during the period of any additional
extensions described in section 2(b) (the “Employment
Period”).
(b) The Board of Directors of the
Company shall conduct an annual review of the Executive’s
performance on or about each anniversary of the Employment
Commencement Date (each, an “Anniversary Date”) and
may, on the basis of such review and by written notice to the
Executive, offer to extend the Employment Period through the day
before the third (3rd) anniversary of the relevant Anniversary
Date. In such event, the Employment Period shall be deemed extended
in the absence of objection from the Executive by written notice to
the Company given within ten (10) business days after his
receipt of the Company’s offer of extension.
(c) Except as otherwise expressly
provided in this Agreement, any reference in this Agreement to the
term “Remaining Unexpired Employment Period” as of any
date shall mean the period beginning on such date and ending on the
day before the third (3rd) anniversary of the Employment
Commencement Date or, if later, on the day before the third
(3rd) anniversary of the last Anniversary Date as of which the
Employment Period was extended pursuant to section 2(b).
(d) Nothing in this Agreement shall
be deemed to prohibit the Company from terminating the
Executive’s employment before the end of the Employment
Period with or without notice for any reason. This Agreement shall
determine the relative rights and obligations of the Company and
the Executive in the event of any such termination. In addition,
nothing in this Agreement shall require the termination of the
Executive’s employment at the expiration of the Employment
Period. Any continuation of the Executive’s employment beyond
the expiration of the Employment Period shall be on an
“at-will” basis unless the Company and the Executive
agree otherwise.
Section 3. Duties
.
The Executive shall serve as Chief
Executive Officer and President of the Company, having such power,
authority and responsibility and performing such duties as are
prescribed by or under the Company’s By-Laws and as are
customarily associated with such positions. The Executive shall
devote his full business time and attention (other than during
weekends, holidays, approved vacation periods, and periods of
illness or approved leaves of absence) to the business and affairs
of the Company and shall use his best efforts to advance their
respective best interests.
Section 4. Cash
Compensation .
In consideration for the services to
be rendered by the Executive hereunder, the Company shall pay to
him a salary at an initial annual rate of TWO HUNDRED THIRTEEN
THOUSAND FIVE HUNDRED FIFTY DOLLARS ($213,550), payable in
approximately equal installments in accordance with their
respective customary payroll practices for senior officers. The
Company’s Board of Directors shall review the
Executive’s annual rate of salary at such times during the
Employment Period as it deems appropriate, but not less frequently
than once every twelve (12) months, and may, at its
discretion, approve a salary increase. In addition to salary, the
Executive may receive other cash compensation from the Company for
services hereunder at such times, in such amounts and on such terms
and conditions as the Board of Directors of the Company may
determine.
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Section 5. Employee Benefit
Plans and Programs .
During the Employment Period, the
Executive shall be treated as an employee of the Company and shall
be entitled to participate in and receive benefits under any and
all qualified or non-qualified retirement, pension, savings,
profit-sharing or stock bonus plans, any and all group life, health
(including hospitalization, medical and major medical), dental,
accident and long-term disability insurance plans, and any other
employee benefit and compensation plans (including, but not limited
to, any incentive compensation plans or programs, stock option and
appreciation rights plans and restricted stock plans) as may from
time to time be maintained by, or cover employees of, the Company,
in accordance with the terms and conditions of such employee
benefit plans and programs and compensation plans and programs and
consistent with the Company’s customary practices.
Section 6. Indemnification and
Insurance .
(a) To the maximum extent permitted
under applicable law, during the Employment Period and for a period
of six years thereafter, the Company shall cause the Executive to
be covered by and named as an insured under any policy or contract
of insurance obtained by them to insure their directors and
officers against personal liability for acts or omissions in
connection with service as an officer or director of the Company or
the Bank or service in other capacities at their request. The
coverage provided to the Executive pursuant to this section 6 shall
be of the same scope and on the same terms and conditions as the
coverage (if any) provided to other officers or directors of the
Company.
(b) To the maximum extent permitted
under applicable law, during the Employment Period and for a period
of six years thereafter, the Company shall indemnify the Executive
against and hold him harmless from any costs, liabilities, losses
and exposures to the fullest extent and on the most favorable terms
and conditions that similar indemnification is offered to any
director or officer of the Company or any subsidiary or affiliate
thereof.
Section 7. Outside
Activities .
The Executive may serve as a member
of the boards of directors of such business, community and
charitable organizations as he may disclose to and as may be
approved by the Board of Directors of the Company (which approval
shall not be unreasonably withheld); provided, however, that such
service shall not materially interfere with the performance of his
duties under this Agreement nor shall it violate any applicable
laws or regulations. The Executive may also engage in personal
business and investment activities which do not materially
interfere with the performance of his duties hereunder; provided,
however, that such activities are not prohibited under any code of
conduct or investment or securities trading policy established by
the Company and generally applicable to all similarly situated
executives and that such activities are not prohibited by any
applicable laws or regulations.
Section 8. Working Facilities
and Expenses .
The Executive’s principal
place of employment shall be at the Company’s executive
offices at the address first above written, or at such other
location as the Company and the Executive may mutually agree upon.
The Company shall provide the Executive at his
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principal place of employment with a private
office, secretarial services and other support services and
facilities suitable to his positions with the Company and necessary
or appropriate in connection with the performance of his assigned
duties under this Agreement. The Company shall reimburse the
Executive for his ordinary and necessary business expenses,
including, without limitation, fees for memberships in such clubs
and organizations that are necessary and appropriate for business
purposes as mutually agreed by the Company and the Executive, and
his travel and entertainment expenses incurred in connection with
the performance of his duties under this Agreement, in each case
only if such expenses are presented and approved in accordance with
the Company’s business reimbursement policy then in
effect.
Section 9. Termination Due to
Death .
The Executive’s employment
with the Company shall terminate, automatically and without any
further action on the part of any party to this Agreement, on the
date of the Executive’s death. In such event:
(a) The Company shall pay to the
Executive’s estate his earned but unpaid compensation
(including, without limitation, salary and all other items which
constitute wages under applicable law) as of the date of his
termination of employment. This payment shall be made at the time
and in the manner prescribed by law applicable to the payment of
wages but in no event later than thirty (30) days after the
date of the Executive’s termination of employment.
(b) The Company shall provide the
benefits, if any, due to the Executive’s estate, surviving
dependents or his designated beneficiaries under the employee
benefit plans and programs and compensation plans and programs
maintained for the benefit of the officers and employees of the
Company. The time and manner of payment or other delivery of these
benefits and the recipients of such benefits shall be determined
according to the terms and conditions of the applicable plans and
programs.
The payments and benefits described
in sections 9(a) and (b) shall be referred to in this
Agreement as the “Standard Termination
Entitlements.”
Section 10. Termination Due to
Disability .
The Company may terminate the
Executive’s employment upon a determination, by vote of a
majority of the members of the Board of Directors of the Company,
acting in reliance on the written advice of a medical professional
acceptable to them, that the Executive is suffering from a physical
or mental impairment which, at the date of the determination, has
prevented the Executive from performing his assigned duties on a
substantially full-time basis for a period of at least one hundred
and eighty (180) days during the period of one (1) year
ending with the date of the determination or is likely to result in
death or prevent the Executive from performing his assigned duties
on a substantially full-time basis for a period of at least one
hundred and eighty (180) days during the period of one
(1) year beginning with the date of the determination. In such
event:
(a) The Company shall pay and
deliver to the Executive (or in the event of his death before
payment, to his estate and surviving dependents and beneficiaries,
as applicable) the Standard Termination Entitlements.
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(b) In addition to the Standard
Termination Entitlements, the Company shall continue to pay the
Executive his base salary, at the annual rate in effect for him
immediately prior to the termination of his employment, during a
period ending on the earliest of: (i) the expiration of one
hundred and eighty (180) days after the date of termination of
his employment; (ii) the date on which long-term disability
insurance benefits are first payable to him under any long-term
disability insurance plan covering employees of the Company (the
“LTD Eligibility Date”); (iii) the date of his
death; and (iv) the expiration of the Remaining Unexpired
Employment Period (the “Initial Continuation Period”).
If the end of the Initial Continuation Period is neither the LTD
Eligibility Date nor the date of his death, the Company shall
continue to pay the Executive his base salary, at an annual rate
equal to sixty percent (60%) of the annual rate in effect for
him immediately prior to the termination of his employment, during
an additional period ending on the earliest of the LTD Eligibility
Date, the date of his death and the expiration of the Remaining
Unexpired Employment Period.
A termination of employment due to disability
under this section 10 shall be effected by joint notice of
termination given to the Executive by the Company and shall take
effect on the later of the effective date of termination specified
in such notice or the date on which the notice of termination is
deemed given to the Executive.
Section 11. Discharge with
Cause .
(a) The Company may terminate the
Executive’s employment during the Employment Period, and such
termination shall be deemed to have occurred with
“Cause”, only if:
(i) The Board of Directors of the
Company, by majority vote of their entire membership, determine
that the Executive should be discharged 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, rule or regulation
(other than traffic violations or similar offenses) or final cease
and desist order, or any material breach of this Agreement;
and
(ii) at least forty-five
(45) days prior to the votes contemplated by section 11(a)(i),
the Company has provided the Executive with notice of its intent to
discharge the Executive for Cause, detailing with particularity the
facts and circumstances which are alleged to constitute Cause (the
“Notice of Intent to Discharge”); and
(iii) after the giving of the Notice
of Intent to Discharge and before the taking of the votes
contemplated by section 11(a)(i), the Executive (together with his
legal counsel, if he so desires) is afforded a reasonable
opportunity to make both written and oral presentations before the
Board of Directors of the Company for the purpose of refuting the
alleged grounds for Cause for his discharge; and
(iv) after the votes contemplated by
section 11(a)(i), the Company have furnished to the Executive a
notice of termination which shall specify the
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effective date of his termination of
employment (which shall in no event be earlier than the date on
which such notice is deemed given) and include a copy of a
resolution or resolutions adopted by the Board of Directors of the
Company, certified by its corporate secretary and signed by each
member of the Board of Directors voting in favor of adoption of the
resolution(s), authorizing the termination of the Executive’s
employment with Cause and stating with particularity the facts and
circumstances found to constitute Cause for his discharge (the
“Final Discharge Notice”).
(b) If the Executive is discharged
during the Employment Period with Cause, the Company shall pay and
provide to him (or, in the event of his death, to his estate, his
surviving beneficiaries and his dependents) the Standard
Termination Entitlements only. Following the giving of a Notice of
Intent to Discharge, the Company shall temporarily suspend the
Executive’s duties and authority and, in such event, shall
also suspend the payment of salary and other cash compensation, but
not the Executive’s participation in retirement, insurance
and other employee benefit plans. If the Executive is not
discharged, or is discharged without Cause, within forty-five
(45) days after the giving of a Notice of Intent to Discharge,
payments of salary and cash compensation shall resume, and all
payments withheld during the period of suspension shall be promptly
restored. If the Executive is discharged with Cause not later than
forty-five (45) days after the giving of the Notice of Intent
to Discharge, all payments withheld during the period of suspension
shall be deemed forfeited and shall not be included in the Standard
Termination Entitlements. If the Company does not give a Final
Discharge Notice to the Executive within ninety (90) days
after giving a Notice of Intent to Discharge, the Notice of Intent
to Discharge shall be deemed withdrawn and any future action to
discharge the Executive with Cause shall require the giving of a
new Notice of Intent to Discharge.
Section 12. Discharge without
Cause .
The Company may discharge the
Executive at any time during the Employment Period and, unless such
discharge constitutes a discharge with Cause:
(a) The Company shall pay and
deliver to the Executive (or in the event of his death before
payment, to his estate and surviving dependents and beneficiaries,
as applicable) the Standard Termination Entitlements.
(b) During the Remaining Unexpired
Employment Period, the Company shall provide for the Executive and
his dependents continued group life, health (including
hospitalization, medical and major medical), dental, accident and
long-term disability insurance benefits on substantially the same
terms and conditions (including any required premium-sharing
arrangements, co-payments and deductibles) in effect for similarly
situated employees of the Company. The coverage provided under this
section 12(b) may, at the election of the Company, be secondary to
the coverage provided as part of the Standard Termination
Entitlements and to any employer-paid coverage provided by a
subsequent employer or through Me
