EMPLOYMENT AGREEMENT
JOHN S. FITZGERALD
This
Agreement is made effective as of the 1st day of November,
2007 by and between Magyar Bancorp, Inc., a Delaware
corporation (the “Company”), with its principal
administrative office at 400 Somerset Street, New Brunswick,
New Jersey 08903, and John S. Fitzgerald
(“Executive”).
WHEREAS , Executive is currently employed as the Executive
Vice President and Chief Operating Officer of the Company and
Magyar Bank, a New Jersey chartered stock savings
bank and a wholly owned subsidiary of the Company (the
“Bank”); and
WHEREAS , in consideration of Executive’s
outstanding service to the Company and the Bank, the Company
desires to provide further incentive to Executive to achieve
corporate objectives and to remain in the employ of the Bank by
providing him with this employment agreement in place of the change
in control agreement previously entered into between the Company
and the Bank.
NOW, THEREFORE , in consideration of the premises and the
mutual covenants and conditions hereinafter set forth, the Company
and Executive hereby agree as follows:
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1.
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POSITION AND RESPONSIBILITIES
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During
the period of his employment hereunder, Executive agrees to
serve as Executive Vice President and Chief Operating Officer
of the Company and the Bank. The Executive shall
serve under the direction of the President and Chief Executive
Officer and the Board of Directors, and shall report directly
to the President and Chief Executive Officer. During said
period, Executive also agrees to serve, if elected, as an
officer and director of any subsidiary or affiliate of the
Company.
(a) The
period of Executive’s employment under this Agreement
shall begin as of the date first above written and shall
continue for thirty-six (36) full calendar months
thereafter. Commencing December 31, 2007, and
continuing December 31 st of
each year thereafter (the “Anniversary Date”),
this Agreement shall renew for an additional period such that
the remaining term shall be thirty-six months, unless written
notice of non-renewal (“Non-Renewal Notice”) is
provided to Executive at least thirty (30) days prior to any
such Anniversary Date, in which event this Agreement shall
terminate at the end of thirty-six (36) months following such
Anniversary Date. Prior to each notice period
for non-renewal, the disinterested members of the Board of
Directors of the Company (“Board”) will conduct a
comprehensive performance evaluation and review of Executive
for purposes of determining whether to provide Non-Renewal
Notice, and the results thereof shall be included in the
minutes of the Board’s meeting.
(b) During
the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods,
and reasonable leaves of absence, Executive shall faithfully
perform his duties hereunder including activities and services
related to the organization, operation and management of the
Company.
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3.
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COMPENSATION AND REIMBURSEMENT
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(a) The
compensation specified under this Agreement shall constitute
the salary and benefits paid for the position,
responsibilities and duties described in Sections 1 and
2. In consideration of the services to be rendered
by Executive hereunder, the Company and/or the Bank shall pay
Executive as compensation a salary of not less than One
Hundred Seventy-five Thousand dollars ($175,000) per year
(“Base Salary”). Such Base Salary shall
be payable bi-weekly, or in accordance with the Bank’s
normal payroll practices. During the period of this
Agreement, Executive’s Base Salary shall be reviewed at
least annually; the first such review will be made no later
than December 31 of each year during the term of this
Agreement. Such review shall be conducted by the
Board of Directors of the Company and/or the Bank (the
“Board”) (or a committee thereof), and the Board
may increase, but not decrease, Executive’s Base Salary
(any increase in 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
Company and/or its subsidiaries shall provide Executive at no
cost to Executive with all such other benefits as are provided
uniformly to permanent full-time employees of the Company
and/or its subsidiaries.
(b) The
Company and/or its subsidiaries 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
Company and/or its subsidiaries 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 applicable to all similarly situated
employees. 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) In
addition to the Base Salary provided for by Section 3(a), the
Company and/or its subsidiaries 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.
4. OUTSIDE
ACTIVITIES
Executive
may serve as a member of the board of directors of business,
community and charitable organizations subject to the approval
of 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.
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5.
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WORKING FACILITIES AND EXPENSES
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Executive’s
principal place of employment shall be the Company’s
principal executive offices. The Company shall
provide Executive, at his principal place of employment, with
a private office and other support services and facilities
suitable to his position with the Company and necessary or
appropriate in connection with the performance of his duties
under this Agreement. The Company and/or its
subsidiaries shall pay Executive a monthly automobile
allowance of no less than $400. The Company and/or its
subsidiaries 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 memberships in such clubs
(including the Forsgate Country Club) and organizations (such
as the Risk Management Association) that Executive and the
Board mutually agree are necessary and appropriate to further
the business of the Company, and travel and reasonable
entertainment expenses. Reimbursement of such
expenses shall be made upon presentation of an itemized
account of the expenses in such form as the Company and/or its
subsidiaries may reasonably require.
6. PAYMENTS
TO EXECUTIVE UPON AN EVENT OF TERMINATION
(a) The
provisions of this Section 6 shall apply upon the occurrence
of an Event of Termination (as herein defined) during
Executive’s term of employment under this
Agreement. As used in this Agreement, an
“Event of Termination” shall mean and include any
one or more of the following:
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(i)
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the
involuntary termination by the Company or the Bank of
Executive’s full-time employment hereunder for any reason
other than termination for Cause (as defined in Section 8 below),
or termination for Disability or Retirement (as defined in Section
7 below); or
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(ii) Executive’s
resignation from the Bank’s employ, upon
any
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(A)
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failure
to elect or reelect or to appoint or reappoint Executive as
Executive Vice President and Chief Operating Officer,
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(B)
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material
change in Executive’s functions, 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,
or
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(C)
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material
breach of this Agreement by the Company.
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Upon
the occurrence of any event described in clauses (ii) (A)
through (C) above (“Good Reason”), Executive shall
have the right to elect to voluntarily terminate his
employment under this Agreement, provided that, within 90 days
of the initial existence of the condition serving as the basis
for the voluntary termination for Good Reason, Executive gives
the Company written notice of the condition, and provided
further that the Company has at least 30 days to remedy the
condition.
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(iii)
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The
involuntary termination of Executive’s employment by the
Company or the Bank, at any time following a Change in Control
during the term of this Agreement. For these purposes, a
Change in Control 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 (collectively, the
“BHCA”) 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. Notwithstanding anything in this subsection to
the contrary, a Change in Control shall not be deemed to have
occurred upon the conversion of the Company’s mutual holding
company parent to stock form, or in connection with any
reorganization used to effect such a conversion.
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(b) Upon
the occurrence of an Event of Termination, as defined in
Section 6(a)(i) or (ii), on the Date of Termination, as
defined in Section 9(b), the Company and/or its subsidiaries
shall pay Executive, or, in the event of his death subsequent
to an Event of Termination, his beneficiary or beneficiaries,
or his estate, as the case may be, as severance pay or
liquidated damages, or both, an amount equal to two (2) times
Executive’s Base Salary. Upon the occurrence
of an Event of Termination, as defined in Section 6(a)(iii),
on the Date of Termination, the Company and/or its
subsidiaries shall pay Executive, or, in the event of his
death subsequent to the Event of Termination, his beneficiary
or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, a sum equal to
two (2) times the sum of (i) Executive’s Base Salary,
plus (ii) any earned and accrued but unpaid Bonus for the year
of Termination Payments hereunder shall be
made in a lump sum within thirty (30) days of the Date of
Termination, provided, however, if Executive is a
“Specified Employee” under Section 409A of the
Internal Revenue Code (“Code”), such payment shall
be made on the first day of the seventh full month) following
Executive’s “separation from service,” as
such term is defined in Code Section 409A.
(c) Upon
the occurrence of an Event of Termination, as defined in
Section 6(a)(i), 6(a)(ii) or 6(a)(iii), the Company will cause
to be continued, at Company’s sole expense, life
insurance coverage and non-taxable medical and dental
insurance coverage substantially identical to the coverage
maintained by the Company and/or the Bank for Executive prior
to his termination. Such coverage or payment shall
continue for twenty-four (24) months from the Date of
Termination and shall count as “COBRA”
coverage.
(d) Notwithstanding
the preceding paragraphs of this Section 6, in no event shall
the aggregate payments or benefits to be made or afforded to
the Executive under said paragraphs (the “Termination
Benefi
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