GERARD P. CUDDY AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS
AMENDED AND RESTATED AGREEMENT (the “Agreement”), made this 13th day of
July, 2007, by and between BENEFICIAL MUTUAL BANCORP, INC., a
federally chartered corporation (the “Company”), BENEFICIAL MUTUAL
SAVINGS BANK, a Pennsylvania chartered savings bank (the “Bank”), and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the “Executive”).
WHEREAS,
Executive and the Bank entered into an employment letter agreement dated October
18, 2006 (the “Letter Agreement”); and
WHEREAS,
the parties have determined that it is necessary and appropriate to amend and
restate the Letter Agreement in connection with the Company’s initial public
offering; 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.
Employment.
Executive shall be employed as
President and Chief Executive Officer of the Company and the Bank. Executive
shall perform all duties and shall have all powers which are commonly incident
to the offices of President and Chief Executive Officer or which, consistent
with those offices, are delegated to him by the Boards of Directors. (All
subsequent references herein to the Board shall be to the Board of the Bank,
unless otherwise indicated.)
2.
Location
and Facilities. Executive will be
furnished with the working facilities and staff customary for executive officers
with the title and duties set forth in Section 1 and as are necessary for him
to
perform his duties. The location of such facilities and staff shall be at the
principal administrative offices of the Company and the Bank, or at such other
site or sites customary for such offices.
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3.
Term.
a.
The term of this Agreement shall be (i) the initial term, consisting of the
period commencing on the date of this Agreement (the “Effective Date”) and
ending on the third anniversary of the Effective Date, plus (ii) any and all
extensions of the initial term made pursuant to this Section 3.
b.
Commencing on the first year anniversary date of this Agreement, and continuing
on each anniversary thereafter, the disinterested members of the Boards of
Directors of the Bank and the Company may extend the Agreement an additional
year such that the remaining term of the Agreement shall be thirty-six (36)
months, unless Executive elects not to extend the term of this Agreement by
giving written notice in accordance with Section 16 of this Agreement. The
Board
will review the Agreement and Executive’s performance annually prior to each
anniversary date for purposes of determining whether to extend the Agreement
and
the rationale and results thereof shall
be included in the minutes of the Board’s meeting. The Board
shall give notice to Executive as soon as possible after such review as to
whether the Agreement is to be extended.
4.
Base
Compensation.
a.
The Company and the Bank agree to pay Executive a base salary at the rate of
$425,000 per year, payable in accordance with customary payroll
practices.
b.
The Board shall review annually the rate of Executive’s base salary based upon
factors they deem relevant. The first such review shall occur no later than
December 31, 2007.
c.
In the absence of action by the Board, Executive shall continue to receive
salary at the annual rate specified on the Effective Date or, if another rate
has been established under the provisions of this Section 4, the rate last
properly established by action of the Board under the provisions of this Section
4.
5.
Bonuses.
Executive shall be entitled to
participate in discretionary bonuses or other incentive compensation programs
that the Company and the Bank may award from time to time to senior management
employees pursuant to bonus plans or otherwise; provided, however, that
Executive’s incentive compensation opportunity in each calendar year through
2009 shall not be less than the following: $75,000 (2007), $100,000 (2008)
and
$125,000 (2009). The determination of the amount payable to Executive as
incentive compensation, if any, shall be determined at the Board’s discretion or
pursuant to the terms of any incentive compensation plan adopted by the Board
and such amount, if any, shall be payable not later December 31 of each year
or
as specified in the applicable plan.
6.
Benefit
Plans. Executive shall be entitled to
participate in such employee welfare benefit plans, pension, profit sharing,
retirement and stock-based compensation plans and other programs and
arrangements as may be approved from time to time by the Company and the Bank
for the benefit of their employees on such terms as the Board of the Company
or
the Bank may specify.
7.
Vacation
and Leave.
a.
Executive shall be entitled to vacations and other leave in accordance with
policy for senior executives, or otherwise as approved by the Board, but, in
any
event, not less than four (4) weeks of paid vacation leave
annually.
b.
In addition to paid vacations and other leave, Executive shall be entitled,
without loss of pay, to absent himself voluntarily from the performance of
his
employment for such additional periods of time and for such valid and legitimate
reasons as the Board may, in its discretion, determine. Further, the Board
may
grant to Executive a leave or leaves of absence, with or without pay, at such
time or times and upon such terms and conditions as the Board in its discretion
may determine.
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8.
Expenses
and Reimbursements. Executive shall
be reimbursed for all reasonable out-of-pocket business expenses that he shall
incur in connection with his services under this Agreement upon substantiation
of such expenses in accordance with applicable policies of the Company and
the
Bank.
9.
Perquisites.
In connection with the
performance of his duties under this Agreement, the Bank shall provide Executive
with the following perquisites: (i) use of an automobile and payment of related
expenses including paid parking, (ii) the cost of Executive’s membership in the
Union League and initiation fees and other costs related to Executive’s
membership in the Merion Cricket Club, (iii) to the extent approved by the
Board, dues for membership in other organizations that support Executive’s
activities on behalf of the Bank, (iv) a laptop computer, cellphone and other
wireless devices of Executive’s choosing. To the extent required by applicable
law, the Bank shall report as income to Executive the value of his personal
use
of any perquisites.
10.
Termination
and Termination Pay. Executive’s
employment under this Agreement may be terminated in the following
circumstances:
a.
Death; Disability. Executive’s employment under this Agreement shall
terminate upon his death or Disability during the term of this Agreement, in
which event Executive or Executive’s estate shall be entitled to receive the
compensation due to Executive through the last day of the calendar month in
which his death or Disability occurred. For purposes of this Agreement,
“Disability” means a physical or mental infirmity that impairs Executive’s
ability to substantially perform his duties under this Agreement and that
results in Executive becoming eligible for long-term disability benefits under
any long-term disability plans of the Company and the Bank (or, if there are
no
such plans in effect, that impairs Executive’s ability to substantially perform
his duties under this Agreement for a period of one hundred eighty (180)
consecutive days). The Board shall determine whether or not Executive is and
continues to be permanently disabled for purposes of this Agreement in good
faith, based upon competent medical advice and other factors that they
reasonably believe to be relevant. As a condition to any benefits, the Board
may
require Executive to submit to such physical or mental evaluations and tests
as
it deems reasonably appropriate.
b.
Termination for Cause.
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i.
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The Board may, by written notice to Executive
in the
form and manner specified in this paragraph, immediately terminate
his
employment at any time, for “Cause.” Executive shall have no right to
receive compensation or other benefits for any period after termination
for Cause except for vested benefits. Termination for “Cause” shall mean
termination because of, in the good faith determination of the Board,
Executive’s:
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(1)
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Personal dishonesty;
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(2)
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Incompetence;
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(3)
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Willful misconduct;
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(4)
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Breach of fiduciary duty involving personal
profit;
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(5)
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Intentional failure to perform stated duties
under this
Agreement;
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(6)
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Willful violation of any law, rule or regulation
(other
than traffic violations or similar offenses) that reflects adversely
on
the reputation of the Company and the Bank, any felony conviction,
any
violation of law involving moral turpitude, or any violation of a
final
cease-and-desist order; or
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(7)
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Material breach by Executive of any provision
of this
Agreement.
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ii.
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Notwithstanding the foregoing, Executive shall
not be
deemed to have been terminated for Cause by the Company and the Bank
unless there shall have been delivered to Executive a copy of a resolution
duly adopted by the affirmative vote of a majority of the entire
membership of the Board at a meeting of such Board called and held
for the
purpose (after reasonable notice to Executive and an opportunity
for
Executive to be heard before the Board with counsel), of finding
that, in
the good faith opinion of the Board, Executive was guilty of the
conduct
described above and specifying the particulars
thereof.
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c.
Voluntary Termination by Executive. In addition to his other rights to
terminate under this Agreement, Executive may voluntarily terminate employment
during the term of this Agreement upon at least sixty (60) days prior written
notice to the Board, in which case Executive shall receive only his
compensation, vested rights and employee benefits up to the date of his
termination.
d.
Without Cause or With Good Reason.
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i.
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In addition to a termination pursuant to Sections
10(a)
through 10(c), the Board may, by written notice to Executive, immediately
terminate his employment at any time for a reason other than Cause
(a
termination “Without Cause”) and Executive may, by written notice to the
Board, immediately terminate this Agreement at any time within ninety
(90)
days following an event constituting “Good Reason,” as defined below (a
termination “With Good Reason”).
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ii.
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Subject to Section 11, in the event of a termination
under this Section 10(d), the Bank shall continue Executive’s base salary
(at the rate in effect on his termination date) for a period of twelve
(12) months from the effective date of termination. In addition,
for a
period of twelve (12) months following your termination date, the
Bank
shall (i) provide, at the Bank’s
expense,
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health insurance coverage for Executive and his
dependents and (ii) pay all membership dues and fees relating to
Executive’s membership in the Union League and the Merion Cricket
Club.
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iii.
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“Good Reason” shall exist if, without Executive’s
express written consent, there occurs, during the term of this Agreement,
a material reduction in Executive’s responsibilities or authority in
connection with his employment with the Company or the
Bank.
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11.
Termination
in Connection with a Change in
Control.
a.
For purposes of this Agreement, a “Change in Control” means any of the following
events:
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i.
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Merger: The Company or the Bank merges into
or
consolidates with another corporation, or merges another corporation
into
the Company or the Bank, and as a result less than a majority of
the
combined voting power of the resulting corporation immediately after
the
merger or consolidation is held by persons who were stockholders
of the
Company or the Bank immediately before the merger or
consolidation.
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ii.
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Acquisition of Significant Share Ownership: There
is filed, or required to be filed, a report on Schedule 13D or another
form or schedule (other than Schedule 13G) required under Sections
13(d)
or 14(d) of the Securities Exchange Act of 1934, if the schedule
discloses
that the filing person or persons acting in concert has or have become
the
beneficial owner of 25% or more of a class of the Company’s voting
securities, but this clause (b) shall not apply to beneficial ownership
of
Company voting shares held in a fiduciary capacity by an entity of
which
the Company directly or indirectly beneficially owns 50% or more
of its
outstanding voting securities.
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iii.
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Change in Board Composition: During any period of
two consecutive years, individuals who constitute the Company’s or the
Bank’s Board of Directors at the beginning of the two-year period cease
for any reason to constitute at least a majority of the Company’s or the
Bank’s Board of Directors; provided, however, that for purposes of this
clause (iii), each director who is first elected by the board (or
first
nominated by the board for election by the stockholders) by a vote
of at
least two-thirds (2/3) of the directors who were directors at the
beginning of the two-year period shall be deemed to have also been
a
director at the beginning of such period; or
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iv.
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Sale of Assets: The Company or the Bank sells to
a third party all or substantially all of its assets.
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Notwithstanding anything in this Agreement to
the
contrary, in no event shall the reorganization of the Bank from the
mutual
holding company form of organization to the full stock holding company
form of organization (including the elimination of the mutual holding
company) constitute a “Change in Control” for purposes of this
Agreement.
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b.
If, prior to November 13, 2009, (i) there occurs a Change in Control and
(ii)(A)the Company and the Bank terminate Executive’s employment Without Cause,
or (B) Executive voluntarily terminates his employment With Good Reason, the
Bank shall pay Executive an amount equal to his base salary (at the rate in
effect on his termination date) for the greater of (x) eighteen (18) months
or
(y) a period equal to the excess of thirty-six (36) months over the number
of
full months Executive was employed by the Bank from November 13, 2006 through
his termination date. Such payment shall be made in installments in accordance
with the Bank’s customary payroll practices. In addition, for a period of twelve
months following Executive’s termination date, the Bank shall (i) provide, at
the Bank’s expense, health insurance coverage for Executive and his dependents
and (ii) pay all membership dues and fees relating to Executive’s membership in
the Union League and the Merion Cricket Club. The benefits payable or provided
under this Section 11 shall be in lieu of, and not in addition to, any benefit
otherwise payable or provided under Section 10(d) of this Agreement in
connection with the Executive’s termination of employment in the circumstances
set forth therein.
12.
Indemnification
and Liability
Insurance.
a.
Indemnification. The Company and the Bank agree to indemnify Executive
(and his heirs, executors, and administrators), and to advance expenses related
thereto, to the fullest extent permitted under applicable law and regulations
against any and all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which
he
may be involved by reason of his having been a director or Executive of the
Company, the Bank or any of their subsidiaries (whether or not he continues
to
be a director or Executive at the time of incurring any such expenses or
liabilities) such expenses and liabilities to include, but not be limited to,
judgments, court costs, and attorneys’ fees and the costs of reasonable
settlements, such settlements to be approved by the Board, if such action is
brought against Executive in his capacity as an Executive or director of the
Company and the Bank or any of their subsidiaries. Indemnification for expenses
shall not extend to matters for which Executive has been terminated for Cause.
Nothing contained herein shall be deemed to provide indemnification prohibited
by applicable law or regulation. Notwithstanding anything herein to the
contrary, the obligations of this Section 13 shall survive the term of this
Agreement by a period of six (6) years.
b.
Insurance. During the period in which indemnification of
Executive is
required under this Section, the Company and the Bank shall provide Executive
(and his heirs, executors, and administrators) with coverage under a directors’
and officers’ liability policy at the expense of the Company and the Bank, at
least equivalent to such coverage provided to directors and senior executives
of
the Company and the Bank.
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13.
Limitation
of Benefits under Certain
Circumstances. If the payments and benefits pursuant to Section 11
of this Agreement, either alone or together with other payments and benefits
which Executive has the right to receive from the Company and the Bank, would
constitute a “parachute payment” under Section 280G of the Internal Revenue Code
of 1986, as amended (the “Code”), the payments and benefits pursuant to Section
11 shall be reduced or revised, in the manner determined by Executive, by the
amount, if any, which is the minimum necessary to result in no portion of the
payments and benefits under Section 11 being non-deductible to the Company
and
the Bank pursuant to Section 280G of the Code and subject to the excise tax
imposed under Section 4999 of the Code. The determination of any reduction
in
the payments and benefits to be made pursuant to Section 11 shall be based
upon
the opinion of the Company and the Bank’s independent public accountants and
paid for by the Company and the Bank. In the event that the Company, the Bank
and/or Executive do not agree with the opinion of such counsel, (i) the Company
and the Bank shall pay to Executive the maximum amount of payments and benefits
pursuant to Section 11, as selected by Executive, which such opinion indicates
there is a high probability do not result in any of such payments and benefits
being non-deductible to the Company and the Bank and subject to the imposition
of the excise tax imposed under Section 4999 of the Code and (ii) the Company
and the Bank may request, and Executive shall have the right to demand that
they
request, a ruling from the IRS as to whether the disputed payments and benefits
pursuant to Section 11 have such consequences. Any such request for a ruling
from the IRS shall be promptly prepared and filed by the Company and the Bank,
but in no event later than thirty (30) days from the date of the opinion of
counsel referred to above, and shall be subject to Executive’s approval prior to
filing, which shall not be unreasonably withheld. The Company, the Bank and
Executive agree to be bound by any ruling received from the IRS and to make
appropriate payments to each other to reflect any such rulings, together with
interest at the applicable federal rate provided for in Section 7872(f)(2)
of
the Code. Nothing contained herein shall result in a reduction of any payments
or benefits to which Executive may be entitled upon termination of employment
other than pursuant to Section 11 hereof, or a reduction in the payments and
benefits specified in Section 11 below zero.
14.
Successors
and Assigns.
a.
This Agreement shall inure to the benefit of and be binding upon any corporate
or other successor to the Company and the Bank which shall acquire, directly
or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Company and the
Bank.
b.
Since the Company and the Bank are contracting for the unique and personal
skills of Executive, Executive shall be precluded from assigning or delegating
his rights or duties hereunder without first obtaining the written consent
of
the Company and the Bank.
15.
No
Mitigation. Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement
by
seeking other employment or otherwise and no such payment shall be offset
or
reduced by the amount of any compensation or benefits provided to Executive
in
any subsequent employment.
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16.
Notices.
All notices,
requests, demands and other communications in connection with this Agreement
shall be made in writing and shall be deemed to have been given when delivered
by hand or 48 hours after mailing at any general or branch United States Post
Office, by registered or certified mail, postage prepaid, addressed to the
Company and/or the Bank at their principal business offices and to Executive
at
his home address as maintained in the records of the Company and the
Bank.
17.
No
Plan Created by this Agreement. Executive,
the Company and the Bank expressly declare and agree that this Agreement was
negotiated among them and that no provision or provisions of this Agreement
are
intended to, or shall be deemed to, create any plan for purposes of the Employee
Retirement Income Security Act or any other law or regulation, and each party
expressly waives any right to assert the contrary. Any assertion in any judicial
or administrative filing, hearing, or process that such a plan was so created
by
this Agreement shall be deemed a material breach of this Agreement by the party
making such an assertion.
18.
Amendments.
No amendments or additions to
this Agreement shall be binding unless made in writing and signed by all of
the
parties, except as herein otherwise specifically provided.
19.
Applicable
Law. Except to the extent
preempted by federal law, the laws of the Commonwealth of Pennsylvania shall
govern this Agreement in all respects, whether as to its validity, construction,
capacity, performance or otherwise.
20.
Severability.
The provisions of this
Agreement shall be deemed severable and the invalidity or unenforceability
of
any provision shall not affect the validity or enforceability of the other
provisions hereof.
21.
Headings.
Headings contained herein are for
convenience of reference only.
22.
Entire
Agreement. This Agreement, together
with any understanding or modifications thereof as agreed to in writing by
the
parties, shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, other than written agreements with respect
to specific plans, programs or arrangements described in Sections 5 and 6.
Notwithstanding anything herein to the contrary, Executive’s Confidentiality,
Non-Competition and Non-Solicitation Agreement with the Bank dated as of October
18, 2006 shall remain in full force and effect.
23.
Required
Provisions. In the event any of
other provisions of this Agreement are in conflict with the provisions of this
Section 23, this Section 23 shall prevail.
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a.
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The Bank’s board of directors may terminate Executive’s
employment at any time, but any termination by the Bank, other than
termination for Cause, shall not prejudice Executive’s right to
compensation or other benefits under this Agreement. Executive shall
not
have the right to receive compensation or other benefits for any
period
after termination for Cause.
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b.
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If Executive is suspended from office and/or
temporarily
prohibited from participating in the conduct of the Bank’s affairs by a
notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank’s obligations
under this Agreement shall be suspended as of the date of service,
unless
stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Bank may in its discretion: (i) pay Executive all
or part
of the compensation withheld while its contract obligations were
suspended; and (ii) reinstate (in whole or in part) any of the obligations
which were suspended.
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c.
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If Executive is removed and/or permanently prohibited
from participating in the conduct of the Bank’s affairs by an order issued
under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance
Act, 12
U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank under this
Agreement shall terminate as of the effective date of the order,
but
vested rights of the contracting parties shall not be
affected.
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d.
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If the Bank is in default as defined in Section
3(x)(1)
of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all
obligations of the Bank under this Agreement shall terminate as of
the
date of default, but this paragraph shall not affect any vested rights
of
the contracting parties.
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e.
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All obligations under this Agreement shall be
terminated, except to the extent determined that continuation of
the
contract is necessary for the continued operation of the Bank: (i)
by the
Director of the OTS (or his or her designee), at the time the Federal
Deposit Insurance Corporation (FDIC) enters into an agreement to
provide
assistance to or on behalf of the Bank under the authority contained
in
Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. §1823(c); or
(ii) by the Director of the OTS (or his or her designee) at the time
the
Director (or his designee) approves a supervisory merger to resolve
problems related to the operations of the Bank or when the Bank is
determined by the Director to be in an unsafe or unsound condition.
Any
rights of the parties that have already vested, however, shall not
be
affected by such action.
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f.
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Any payments made to Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359,
Golden Parachute and Indemnification
Payments.
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24.
Application of Section 409A. In the event that, as
of the date of Executive’s termination of employment, the stock of the company
is publicly traded on an established securities market, the commencement date
of
payment of any amount due Executive under Sections 10 or 11 shall be deferred
for a period of six (6) months to the extent such deferral is required under
Section 409A of the Code.
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IN
WITNESS WHEREOF, the parties hereto
have executed this Agreement on the date first set forth above.
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ATTEST:
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BENEFICIAL MUTUAL BANCORP,
INC.
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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By:
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Corporate Secretary
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For the Entire Board of Directors
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ATTEST:
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BENEFICIAL MUTUAL SAVINGS
BANK
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/s/
▇▇▇▇▇▇ ▇. Nise
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By:
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Corporate Secretary
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For the Entire Board of Directors
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WITNESS:
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EXECUTIVE
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/s/
▇▇▇▇ ▇▇▇▇▇▇▇
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/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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