SEVERANCE AGREEMENT
Agreement made this 1st day of January, 2001, by and between Nazareth
National Bank & Trust Co., a banking association organized under the laws of the
United States ("Bank") and S. Xxxx Xxxxxxx, an individual ("Employee").
BACKGROUND
Effective January 1, 2001 and subject to the terms of this Agreement, the
Bank will continue to employ Employee as President and Chief Executive Officer
of the Bank, and to perform such other duties as may be assigned to him by the
Board of Directors of the Bank. Employee agrees to serve the Bank in this
capacity on a full-time basis, and to perform such duties faithfully, diligently
and to the best of his ability. Employee further agrees to fully cooperate with
the officers and employees of the Bank to the best of his ability, and not to
engage in any outside for profit business deemed to be in conflict with general
commercial banking, employment or commercial activity without the prior written
consent of the Board of Directors of the Bank. The Bank and Employee wish to
provide for the payment of certain compensation and other benefits to Employee
upon the occurrence of certain events, all as more fully set forth below.
In consideration of the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, the parties agree as follows:
1. Term. This Agreement shall begin on January 1, 2001 and shall terminate
at the earliest of the following dates (the "Term"): (a) the date Employee dies
or becomes permanently disabled (i.e., upon his failure to render services of
the character which he had previously rendered to the Bank, because of his
physical or mental illness or other incapacity beyond his control for a
continuous period of six months or for shorter periods aggregating six months in
any twelve month period); (b) the date of termination of Employee's employment
with the Bank for cause (as hereinafter defined); (c) the date specified by
mutual agreement of the Bank and Employee; (d) subject to Section 2 hereof, the
date of termination by Employee of Employee's employment with the Bank by
resignation or otherwise; (e) December 31, 2001. If this Agreement expires on
December 31, 2001 pursuant to (e) of the foregoing sentence ("the Initial
Term"), it shall renew automatically for successive terms of up to one year
beginning on January 1 of the applicable succeeding year ("Successive Term(s)"),
provided neither of the parties has given written notice to the other party of
his or its intention not to renew at least two months prior December 31, 2001 or
December 31 of the applicable succeeding year. In the event that this Agreement
is renewed pursuant to the foregoing sentence, the Agreement shall terminate on
the earliest of the following dates: (i) a date listed in the (a) through (d) of
the first sentence of this paragraph; (ii) December 31 of the applicable
succeeding year. If Employee's employment with the Bank is terminated during the
Initial Term or any Successive Term (other than as set forth in Section 2
hereof), Employee shall have no rights or benefits under this Agreement except
to receive payment of base salary through the effective date of his termination.
For purposes of this Agreement, the term "cause" shall mean (i) conviction of
Employee for any felony, fraud or embezzlement or (ii) Employee's failure or
refusal to comply with the written policies or written directives of the Bank's
Board of Directors or Employee being guilty of misconduct in connection with the
performance of his duties for the Bank, provided Employee fails to cure such
non-compliance or misconduct within twenty (20) days after receiving written
notice from the Bank's Board of Directors specifying such non-compliance or
misconduct.
2. Termination. If during the Initial Term or any Successive Term of this
Agreement Employee's employment with the Bank is terminated as set forth below,
the Bank will pay the Employee the amount set forth in Section 3 hereof and
Employee shall be entitled to the benefits set forth in Section 4 hereof:
(a) the Bank terminates Employee's employment with the Bank without
cause; or
(b) Employee terminates his employment with the Bank: (i) for any
reason at any time within eighteen months after a "change in control" of
the Bank (as defined hereinafter), or (ii) due to the fact that, without
Employee's consent and whether or not a change of control of the Bank has
occurred, the nature and scope of Employee's duties and authority or his
responsibilities with the Bank or the surviving or acquiring person are
materially reduced to a level below that which he enjoys on the date
hereof, his then current base annual salary is reduced to a level below
that which he enjoys on the date hereof or at any time hereafter (whichever
may be greater), Employee's position or title with the Bank or the
surviving or acquiring person is materially reduced from his current
position or title with the Bank, or Employee's principal place of
employment with the Bank is changed to a location greater than fifty miles
from his current principal place of employment with the Bank, provided,
however, that for any termination by Employee under this clause (ii) the
Employee shall have first given the Bank written notice of his intention to
terminate his employment pursuant to this clause (ii), specifying the
reason(s) for such termination, and provided further, that the Bank shall
the Bank shall not have cured or remedied the reason(s) specified in such
notice prior to the expiration of twenty (20) days after receipt of such
written notice.
(c) For purposes of this Agreement, a "change in control" shall be
deemed to have occurred upon the happening of any of the following events:
(1) A change within a twelve month period in a majority of the
members of the Board of Directors of the Bank or its holding company,
First Colonial Group, Inc. (the "Holding Company");
(2) A change within a twelve month period in the holders of more
than 50% of the outstanding voting stock of the Bank or its Holding
Company; or
(3) Any other event deemed to constitute a "change in control" by
the Board of Directors of the Bank.
3. Termination Payments to Employee. Commencing not later than 30 days
after the date Employee's employment with the Bank is terminated pursuant any
event enumerated in subsection (a) or subsection (b) of Section 2 hereof (the
"Termination Date") and subject to Employee's compliance with Section 8 hereof,
the Bank shall pay compensation to Employee for a period of eighteen (18) months
following the Termination Date ("the Severance Period") at a per annum rate
equal to 100% of the amount of the Employee's Highest Annual Compensation during
the three calendar years ending prior to the Termination Date (the "Measurement
Period"). For purposes of this Agreement, the term "Highest Annual Compensation"
shall mean Employee's highest annual cash compensation during a calendar year
during the Measurement Period, excluding cash bonuses under the Bank's bonus
plans, if any, and excluding other fringe benefits. The Bank agrees that it will
make the payments due under Section 3 on the first day of each month following
the Termination Date in an amount equal to 1/12 of 100% of Employee's Highest
Annual Compensation. If Employee's employment with the Bank is terminated
pursuant to any event enumerated in subsection (a) or subsection (b) of Section
2 hereof, Employee shall have a duty to seek substantially equivalent
employment. The payments required by this Section 3 shall be reduced on a
dollar-for-dollar basis by any income or earnings received by Employee from any
other employer or by any income or earnings obtained from any other working
activity in which Employee may engage during the Severance Period. Employee
shall notify the Bank promptly of his receipt of any income or earnings during
the Severance Period.
4. Other Benefits. In addition to the compensation set forth in Section 3
hereof, Employee shall be entitled to the following benefits from the Bank in
the event that Employee's employment with the Bank is terminated pursuant to any
event enumerated in subsection (a) or subsection (b) of Section 2 hereof:
(a) for a period of one year following the Termination Date,
reimbursement for all reasonable expenses incurred by Employee in
connection with the search for new employment, including, without
limitation, those of a placement agency or service, and reimbursement for
all reasonable relocation expenses incurred by Employee in connection with
securing new employment; provided, however, in no event shall the Bank be
obligated to reimburse Employee in excess of 1/3 of his Highest Annual
Compensation for the sum of Employee's search and relocation expenses
hereunder.
(b) for the Severance Period, Employee shall be entitled to
participate in the following group programs of the Bank if such programs
are in effect at the Termination Date (or, if such participation is not
permitted by the terms of the group programs, through substantially
equivalent benefits), with the Bank paying for the Employee's continued
participation in such group programs at the same annual rate at which the
Bank was paying on the Termination Date: all medical, hospitalization, life
and disability group insurance benefits which existed at the Termination
date, except that should other subsequent employment be obtained by
Employee during the Severance Period, continuation of any medical,
hospitalization, life and disability group insurance benefits will be
offset by coverages provided through the Employee's subsequent employer.
(c) If permitted by the terms thereof, Employee will remain a
participant of the Bank's defined benefit pension plan.
5. Withholding. The Bank may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
6. Source of Payment. All payments provided under this Agreement shall be
paid by the Bank from such funds as the Board of Directors shall direct in its
sole and absolute discretion. No special or separate fund shall be required to
be established and Employee shall have no right, title or interest whatsoever in
or to any investment which the Bank may make to aid the Bank in meeting its
obligations hereunder. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be contrued to create a trust of any
kind or a fiduciary relationship between the Bank and Employee or any other
person.
7. (a) Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by Employee or his legal representatives without
the Bank's prior written consent.
(b) Attachment.Except as required by law, the right to receive payments
under this Agreement shall not be subject to anticipation, sale, encumbrance,
charge, levy, or similar process or assignment by operation of law.
8. Confidentiality and Non-Competition. All payments to Employee under
this Agreement shall be subject to Employee's compliance with the provisions of
this Section 8. If Employee fails to comply with such provisions, his right to
any future payments under this Agreement shall terminate and the Bank's
obligations under this Agreement to make such payments and provide such benefits
shall cease.
(a) Employee covenants and agrees that he will not, during the term of
his employment or at any time thereafter, except with the express prior
written consent of the Bank or pursuant to the lawful order of any judicial
or administrative agency of government, directly or indirectly, disclose,
communicate or divulge to any person, or use for the benefit of any person,
any knowledge or information with respect to the conduct or details of the
Banks' business which he, acting reasonably, believes or should believe to
be of a confidential nature and the disclosure of which not to be in the
Bank's interest.
(b) Employee covenants and agrees that he will not, during the term of
his employment or for a period of one year thereafter, except with the
express prior
written consent of the Bank, directly or indirectly, whether as employee,
owner, partner, consultant, agent, director, officer, shareholder or in any
other capacity, engage in or assist any person to engage in any act or
action which he, acting reasonably, believes or should believe would be
harmful or inimical to the interests of the Bank.
(c) Employee covenants and agrees that he will not, during the term of
his employment or for a period of one year thereafter, except with the
express prior written consent of the Bank, in any capacity (including, but
not limited to, owner, partner, shareholder, consultant, agent, employee,
officer, director or otherwise), directly or indirectly, for his own
account or for the benefit of any person, engage or participate in or
otherwise be connected with any commercial bank which has its principal
office in Lehigh, Northampton or Monroe Counties in Pennsylvania or Xxxxxx
County in New Jersey, except that the foregoing shall not prohibit Employee
from owning as a shareholder less than 1% of the outstanding stock of an
issuer whose stock is publicly traded.
(d) The parties agree that any breach by Employee of any of the
covenants or agreements contained in this Section 8 will result in
irreparable injury to the Bank for which money damages could not adequately
compensate the Bank and therefore, in the event of any such breach, the
Bank shall be entitled (in addition to any other rights and remedies which
it may have at law or in equity) to have an injunction issued by any
competent court enjoining and restraining Employee and/or any other person
involved therein from continuing such breach. The existence of any claim or
cause of action which Employee may have against the Bank or any other
person (other than a claim for the Bank's breach of this Agreement for
failure to make payments hereunder) shall not constitute a defense or bar
to the enforcement of such covenants.
(e) If any portion of the covenants or agreements contained in this
Section 8, or the application hereof, is construed to be invalid or
unenforceable, the other portions of such covenant(s) or agreement(s) or
the application thereof shall not be affected and shall be given full force
and effect without regard to the invalid or unenforceable portions to the
fullest extent possible. If any covenant or agreement in this Section 8 is
held unenforceable because of the geographic area covered, the duration
thereof, or the scope thereof, then the court making such determination
shall have the power to reduce the area and/or duration and/or limit the
scope thereof, and the covenant or agreement shall then be enforceable in
its reduced form.
(f) For purposes of this Section 8, the term "the Bank" shall include
the Bank, any successor to the Bank under Section 9 hereof, and all present
and future direct and indirect subsidiaries and affiliates of the Bank.
9. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Bank which acquires,
directly or indirectly, by merger, consolidation, purchase, or otherwise, all or
substantially all of the assets of the Bank, and shall otherwise inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns. Nothing in the Agreement
shall preclude the Bank from consolidating or merging into or with or
transferring all or substantially all of its assets to another person. In that
event, such other person shall assume this Agreement and all obligations of the
Bank hereunder. Upon such a consolidation, merger, or transfer of assets and
assumption, the term "the Bank" as used herein, shall mean such other person and
this Agreement shall continue in full force and effect.
10. Waivers Not to be Continued. Any waiver by a party of any breach of
this Agreement by another party shall not be construed as a continuing waiver or
as a consent to any subsequent breach by the other party.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepared, to the following address or to such other
address as either party may designate by like notice:
A. If to Employee, to:
S. Xxxx Xxxxxxx
0000 Xxxx Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxx 00000
B. If to the Bank, to:
Nazareth National Bank and Trust Co.
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.
12. Jurisdiction. Bank and Employee consent to the exclusive jurisdiction
or the courts or the Commonwealth of Pennsylvania and the United States District
Court for the Eastern District of Pennsylvania in any and all actions arising
hereunder and irrevocably consent to service of process as set forth in Section
11 hereof.
13. General Provisions.
(a) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof, and supersedes and replaces all prior
agreements between the parties. No amendment, waiver or termination of any of
the provisions hereof shall be effective unless in writing and signed by the
party against whom it is sought to be enforced. Any written amendment, waiver or
termination hereof executed by the Bank and Employee shall be binding upon them
and upon all other persons, without the necessity of securing the consent of any
other person and no person shall be deemed to be a third party beneficiary under
this Agreement. (
b) This Agreement shall not limit or infringe upon the right of the Bank to
terminate the employment of Employee at any time for any reason, nor upon the
right of Employee to terminate his employment with the Bank.
(c) The term "person" as used in this Agreement means a natural person,
joint venture, corporation, sole proprietorship, trust, estate, partnership,
cooperative, association, non-profit organization or any other legally
cognizable entity.
(d) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same Agreement.
(e) No failure on the part of any party hereto to exercise and no delay in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other rights, power or remedy.
(f) The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall in no way restrict or modify any of the
terms or provisions hereof. (g) This Agreement shall be governed and construed
and the legal relationships of the parties determined in accordance with the
laws of the Commonwealth of Pennsylvania applicable to contracts executed and to
be performed solely in the Commonwealth of Pennsylvania.
NAZARETH NATIONAL BANK & TRUST CO.
(Corporate Seal) By: _____________________________
ATTEST: ________________________
Witness:
_______________________ ____________________________(SEAL)
S. XXXX XXXXXXX
