EMPLOYMENT AGREEMENT
As Amended and Restated
THIS AGREEMENT,
is entered into this 17th day of October 2005,
("Effective Date") by and between Peoples
Savings Bank,
Bordentown, New
Jersey
(the "Savings Bank") and Gary N. Pelehaty
(the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by the Savings
Bank
as the President and Chief Executive
Officer and is experienced in all phases of
the business of the Savings Bank; and
WHEREAS, the
Savings Bank desires to be ensured of the
Executive's
continued active participation in the
business of the Savings Bank; and
WHEREAS, in order to
induce the Executive
to remain in the
employ of
the Savings Bank and in consideration
of the Executive's
agreeing to remain
in
the employ of the Savings Bank, the parties previously entered into an
employment agreement dated May 14, 1998 ("Prior Agreement") to specify the
continuing employment relationship between
the Savings Bank and the Executive;
NOW THEREFORE,
in consideration of the promises and the mutual
agreements herein contained, the parties
hereby agree as follows:
1. Employment. The
Savings Bank hereby
employs the Executive
in the
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capacity of President and Chief Executive
Officer. The Executive
hereby accepts
said employment and agrees to render such
administrative and management services
to the Savings Bank and Farnsworth Bancorp, Inc. ("Parent") as are currently
rendered and as are customarily performed by persons situated in a similar
executive capacity. The Executive shall
promote the business of the Savings Bank
and Parent. The Executive's other duties
shall be such as the Board of Directors
for the Savings Bank (the "Board of
Directors" or "Board") may from time to time
reasonably direct, including normal duties
as an officer of the Savings Bank.
2. Term of Employment.
The term of employment of Executive under this
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Agreement shall be for the period
commencing on the
Effective Date and
ending
thirty-six (36) months thereafter
("Term"). Additionally, on, or before, each
annual anniversary date from the Effective Date, the
Term of employment
under
this Agreement shall be extended for up to
an additional period
beyond the then
effective expiration date upon a
determination
and resolution of the
Board of
Directors that the performance of the Executive has
met the requirements
and
standards of the Board, and that the Term of such
Agreement shall be
extended.
References herein to the Term of this
Agreement shall refer both to the initial
term and successive terms.
<PAGE>
3. Compensation, Benefits and Expenses.
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(a) Base Salary. The
Savings Bank shall
compensate and pay
the
Executive during the Term of this Agreement
a minimum base salary at the rate of
$187,000 per annum ("Base Salary"), payable in cash not less
frequently
than
monthly; provided, that the rate of such salary shall
be reviewed by the Board
of Directors not less often than annually,
and the Executive
shall be entitled
to receive increases at such percentages or
in such amounts as determined by the
Board of Directors. The base salary may not
be decreased without the Executive's
express written consent.
(b) Discretionary
Bonus. The Executive shall be entitled to
participate in an equitable manner with all
other senior management employees of
the Savings Bank in discretionary bonuses
that may be authorized and declared by
the Board of Directors to its senior
management executives from time to time. No
other compensation provided for in this Agreement
shall be deemed a substitute
for the Executive's right to participate in
such discretionary
bonuses when and
as declared by the Board.
(c) Participation in
Benefit and Retirement Plans. The Executive
shall be entitled to participate in and receive the
benefits of any plan of the
Savings Bank which may be or may become
applicable to senior management relating
to pension or other retirement benefit
plans, profit-sharing,
stock options or
incentive plans, or other plans,
benefits and
privileges given to employees and
executives of the Savings Bank, to the
extent commensurate
with his then duties
and responsibilities, as fixed by the Board
of Directors of the Savings Bank.
(d) Participation in
Medical Plans and Insurance Policies. The
Executive shall be entitled to participate in and receive the benefits of
any
plan or policy of the Savings Bank which may be or may become
applicable
to
senior management relating to life insurance,
short and long term
disability,
medical, dental, eye-care, prescription drugs or medical
reimbursement plans.
Additionally, Executive's dependent family shall be eligible
to participate in
medical and dental insurance plans sponsored by the
Savings Bank or Parent with
the cost of such premiums paid by the
Savings Bank.
(e) Vacations and Sick Leave. The Executive shall be entitled
to
paid annual vacation leave in accordance
with the policies as
established from
time to time by the Board of Directors, which shall in no event be less than
four weeks per annum. The Executive shall also be entitled to an annual sick
leave benefit as established by the Board
for senior management employees of the
Savings Bank. The Executive shall be
entitled to receive additional compensation
at the end of each calendar year based upon any vacation days that have been
accrued for such calendar year that have
not been utilized by the Executive. At
the discretion of the Board, accrued but unutilized sick leave
may also be paid
out as additional compensation at the end
of each year.
(f) Expenses. The
Savings Bank shall
reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
Executive in furtherance of, or
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<PAGE>
in connection with the business of the
Savings Bank,
including, but not by
way
of limitation, automobile and traveling expenses, and all reasonable
entertainment expenses, subject to such reasonable documentation and other
limitations as may be established by the
Board of Directors of the Savings Bank.
If such expenses are paid in the first
instance by the
Executive,
the Savings
Bank shall reimburse the Executive
therefor.
(g) Changes in
Benefits. The Savings Bank shall not make any
changes in such plans, benefits or privileges
previously
described in
Section
3(c), (d) and (e) which would adversely affect the Executive's rights or
benefits thereunder, unless such change occurs pursuant
to a program applicable
to all executive officers of the Savings Bank and does not result in a
proportionately greater adverse change in the rights of, or
benefits to, the
Executive as compared with any other executive officer of the Savings
Bank.
Nothing paid to Executive under any plan or arrangement
presently in effect
or
made available in the future shall be
deemed to be in lieu of the salary payable
to Executive pursuant to Section 3(a)
hereof.
4. Loyalty; Noncompetition.
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(a) The Executive shall devote his full time and attention to
the
performance of his employment under this Agreement. During the term of the
Executive's employment under this Agreement,
the Executive shall
not engage in
any business or activity contrary to the business affairs or interests of the
Savings Bank or Parent.
(b) Nothing
contained in this Section 4 shall be deemed to
prevent or limit the right of Executive to
invest in the capital
stock or other
securities of any business dissimilar from that of the Savings Bank or
Parent,
or, solely as a passive or minority
investor, in any business.
5. Standards. During
the term of this
Agreement, the
Executive shall
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perform his duties in accordance with such reasonable standards expected of
executives with comparable positions in comparable
organizations and as
may be
established from time to time by the Board
of Directors.
6. Termination and Termination Pay. The Executive's employment under
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this Agreement shall be terminated upon any
of the following occurrences:
(a) The death of the Executive during the term of this
Agreement,
in which event the Executive's estate shall be entitled to receive the
compensation due the Executive through the last day of the
calendar month in
which Executive's death shall have
occurred.
(b) The Board of Directors may terminate the Executive's
employment at any time, but any termination
by the Board of Directors other than
termination for Just Cause, shall not prejudice the Executive's right to
compensation or other benefits under the
Agreement. The
Executive shall have no
right to receive compensation or other
benefits for any period after termination
for Just Cause. The Board may within its
sole discretion, acting in good
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<PAGE>
faith, terminate the Executive for Just Cause and shall
notify such
Executive
accordingly. Termination for "Just Cause" shall
include termination
because of
the Executive's 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 material
breach of any provision of the
Agreement.
(c) Except as provided pursuant to Section 9 hereof, in the
event
Executive's employment under this Agreement is terminated by the Board of
Directors without Just Cause, the Savings
Bank shall be obligated to continue to
pay the Executive the salary provided
pursuant to Section 3(a) herein, up to the
date of termination of the remaining Term
of this Agreement, but in no event for
a period of less than twelve months, and the cost of Executive
obtaining all
health, life, disability, and other benefits which the Executive would be
eligible to participate in through such date based upon the
benefit levels
substantially equal to those being provided
Executive at the date of termination
of employment.
(d) The voluntary termination by the Executive during the term
of
this Agreement with the delivery of no less than
60 days written notice to the
Board of Directors, other than pursuant to Section 9(b), in which case the
Executive shal
