EXHIBIT 10.1
AGREEMENT
THIS AGREEMENT ("Agreement") made as of the 1st day of
January, 1997, between PEOPLES FINANCIAL SERVICES CORP., a
Pennsylvania corporation ("Peoples"), and XXXX X. XXX (the
"Executive").
WITNESSETH:
WHEREAS, Peoples is engaged in the business of a bank
holding company and is the owner of all the issued and
outstanding capital stock of Peoples National Bank of Susquehanna
County (the "Bank"); and
WHEREAS, Peoples and the Executive desire to enter into
an agreement regarding, among other things, the continued
employment of the Executive by Peoples.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Employment. Peoples hereby employs the Executive,
and the Executive hereby accepts employment with Peoples, on the
terms and conditions set forth in this Agreement.
2. Duties of Executive. The Executive shall perform
and discharge well and faithfully such duties as an executive
officer of Peoples as may be assigned to the Executive from time
to time by the Board of Directors of Peoples. The Executive
shall be employed as President and Chief Executive Officer of
Peoples, and shall hold such additional titles as may be given to
him from time to time by the Board of Directors of Peoples, the
Bank, and any companies affiliated with Peoples. The Executive
shall devote his full time, attention and energies to the
business of Peoples and its affiliated companies and shall not,
during the Employment Period (as defined in Section 3 hereof), be
employed or involved in any other business activity, whether or
not such activity is pursued for gain, profit or other pecuniary
advantage; provided, however, that this Section 2 shall not be
construed as preventing the Executive from (a) investing the
Executive's personal assets, (b) acting as a member of the Board
of Directors of any other corporation or as a member of the Board
of Trustees of any other organization, provided no such
corporation or organization is a direct or indirect competitor of
Peoples or any of its affiliated companies, or (c) being involved
in any other activity with the prior approval of the Board of
Directors of Peoples. In the event of any reduction in title or
a reduction in the Executive's responsibilities or authority,
including such responsibilities and authority as the same may be
increased at any time during the term of this Agreement, or the
assignment to the Executive of duties inconsistent with the
Executive's status as President and Chief Executive Officer of
Peoples, then the Executive may resign at any time thereafter
during the term of this Agreement and prior to the occurrence of
a Change in Control, in which case Executive shall be entitled to
receive the amounts and benefits set forth in Section 7 hereof.
3. Term of Employment. The Executive's employment
under this Agreement shall be for a period (the "Employment
Period") commencing upon the date of this Agreement and ending at
the end of the term of this Agreement pursuant to Section 17
hereof, unless the Executive's employment sooner terminates in
accordance with Section 5 hereof or one of the following
provisions:
(a) The Executive's employment under this
Agreement may be terminated at any time during the Employment
Period for "Cause" (as herein defined), by action of the Board of
Directors of Peoples, upon giving notice of such termination to
the Executive at least fifteen (15) days prior to the date upon
which such termination shall take effect. As used in this
Agreement, "Cause" means any of the following events:
(i) the Executive is convicted of or enters
a plea of guilty or nolo contendere to a felony, a crime of
falsehood, or a crime involving fraud or moral turpitude, or
the actual incarceration of the Executive for a period of
forty-five (45) consecutive days;
(ii) the Executive willfully fails to follow
the lawful, good faith instructions of the Board of
Directors of Peoples after the Executive's receipt of
written notice of such instructions, other than a failure
resulting from the Executive's incapacity because of
physical or mental illness; or
(iii) any government regulatory agency
orders that Peoples terminate the employment of the
Executive or relieve him of his duties.
Notwithstanding the foregoing, the Executive's employment under
this Agreement shall not be deemed to have been terminated for
"Cause" under Section 3(a)(i) or 3(a)(ii) above if such
termination took place solely as a result of:
(i) questionable judgment on the part of the
Executive;
(ii) any act or omission believed by the
Executive, in good faith, to have been in, or not opposed
to, the best interests of Peoples or its affiliated
companies; or
(iii) any act or omission in respect of
which a determination could properly be made that the
Executive met the applicable standard of conduct prescribed
for indemnification or reimbursement or payment of expenses
under the Charter or Bylaws of Peoples (or its affiliates)
or the directors' and officers' liability insurance of
Peoples (or its affiliates), in each case as in effect at
the time of such act or omission.
If the Executive's employment is terminated under the provisions
of this Section 3(a), then all rights of the Executive under
Section 4 hereof shall cease as of the effective date of such
termination.
(b) The Executive's employment under this
Agreement may be terminated at any time during the Employment
Period without "Cause" (as defined in Section 3(a) hereof), by
action of the Board of Directors of Peoples, upon giving notice
of such termination to the Executive at least thirty (30) days
prior to the date upon which such termination shall take effect.
If the Executive's employment is terminated under the provisions
of this Section 3(b), then the Executive shall be entitled to
receive the compensation and benefits set forth in Section 6 or
Section 7 hereof, whichever shall be applicable.
(c) If the Executive retires or dies, the
Executive's employment under this Agreement shall be deemed
terminated as of the date of the Executive's retirement or death,
and all rights of the Executive under Section 4 hereof shall
cease as of the date of such termination. Any benefits
thereafter payable to the Executive shall be determined in
accordance with the retirement, insurance and benefit programs of
Peoples (and its affiliates) then in effect. Notwithstanding the
preceding two sentences, if the Executive dies after a Notice of
Termination (as defined in Section 5(a) of this Agreement) is
delivered by the Executive, he shall be entitled to the
termination benefits otherwise provided herein, and the
provisions of Section 16(b) shall apply.
(d) If the Executive is incapacitated by
accident, sickness, or otherwise so as to render the Executive
mentally or physically incapable of performing the services
required of the Executive under Section 2 of this Agreement for a
continuous period of six (6) months, then, upon the expiration of
such period or at any time thereafter, by action of the Board of
Directors of Peoples, the Executive's employment under this
Agreement may be terminated immediately upon giving the Executive
notice to that effect. If the Executive's employment is
terminated under the provisions of this Section 3(d), then all
rights of the Executive under Section 4 hereof shall cease as of
the last business day of the week in which such termination
occurs. Any benefits thereafter payable to the Executive shall
be determined in accordance with the retirement, insurance and
benefit programs of Peoples (and its affiliates) then in effect.
4. Employment Period Compensation.
(a) Salary. For services performed by the
Executive under this Agreement, Peoples shall pay (or cause to be
paid) to the Executive a salary, during the Employment Period, at
the rate of One Hundred Thousand Dollars ($100,000.00) per year,
payable at the same times as salaries are payable to other
executive employees of Peoples. Peoples may, from time to time,
increase the Executive's salary, and any and all such increases
shall be deemed to constitute amendments to this Section 4(a) to
reflect the increased amounts, effective as of the dates
established for such increases by the Board of Directors of
Peoples in the resolutions authorizing such increases.
(b) Bonus. For services performed by the
Executive under this Agreement, Peoples shall pay (or cause to be
paid) to the Executive a bonus, during the Employment Period, in
such amounts and at such times, annually, as is provided in such
executive incentive plan for the Executive as shall be approved
by the Board of Directors of Peoples and in effect from time to
time. In addition, Peoples may, from time to time, pay such
other bonus or bonuses to the Executive as Peoples, in its sole
discretion, deems appropriate. The payment of any such bonuses
shall not reduce or otherwise affect any other obligation of
Peoples to the Executive provided for in this Agreement.
(c) Other Benefits. Peoples will provide (or
cause to be provided) the Executive, during the Employment
Period, with insurance, vacation, pension, and other fringe
benefits in the aggregate not less favorable than those received
by other executive employees of Peoples or the Bank.
(d) Salary Deferral. The Executive may request
that the payment of any portion of his base salary for any
calendar year be deferred. Such request must be made in writing
to Peoples before the beginning of such calendar year and must
include the period of deferral requested by the Executive (the
"Deferral Period"). If the Board of Directors of Peoples
approves such request, the Executive shall be entitled to
receive, at the end of the Deferral Period, the deferred portion
of his base salary plus interest, which interest shall be
computed by reference to an annual interest rate determined each
year by the Board of Directors of Peoples. Any salary which is
deferred as described herein shall be credited to an account on
the books of Peoples established in the name of the Executive.
However, this account need not be funded, and Peoples shall not
be deemed to be a trustee for the Executive with respect to any
deferred salary. The liabilities of Peoples to the Executive
hereunder are those of a debtor pursuant to such contractual
obligations as are created by this Agreement. No liabilities of
Peoples which arise under this Section 4(d) shall be deemed to be
secured by any pledge or other encumbrance on any property of
Peoples. Peoples shall not be required to segregate any funds
representing such deferred salary, and nothing herein shall be
construed as providing for such segregation.
5. Resignation of the Executive for Good Reason.
(a) The Executive may resign for "Good Reason"
(as herein defined) during the three-year period following a
"Change in Control" (as defined in Section 5(b) hereof), as
hereinafter set forth. As used in this Agreement, "Good Reason"
means any of the following:
(i) any reduction in title or a reduction in
the Executive's responsibilities or authority with respect
to Peoples, including such responsibilities and authority as
the same may be increased at any time during the term of
this Agreement, or the assignment to the Executive of duties
inconsistent with the Executive's status as President and
Chief Executive Officer of Peoples;
(ii) any reassignment of the Executive which
requires the Executive to move his principal residence;
(iii) any removal of the Executive from
office or any adverse change in the terms and conditions of
the Executive's employment, except for any termination of
the Executive's employment under the provisions of
Section 3(a) hereof;
(iv) any reduction in the Executive's annual
base salary as in effect on the date hereof or as the same
may be increased from time to time;
(v) any failure of Peoples to provide the
Executive with benefits at least as favorable as those
enjoyed by the Executive under any of the pension, life
insurance, medical, health, accident, disability or other
employee benefit plans of Peoples (or any affiliated
company) in which the Executive participated at the time of
the Change in Control, or the taking of any action that
would materially reduce any of such benefits in effect at
the time of the Change in Control, unless such reduction is
part of a reduction applicable to all employees;
(vi) any failure to obtain a satisfactory
agreement from any successor to assume and agree to perform
under this Agreement, as contemplated in Section 16(a)
hereof;
(vii) any material change in the legal
relationship between Peoples and the Bank; or
(viii) any material breach of this Agreement
on the part of Peoples.
At the option of the Executive, exercisable by the Executive
within one hundred twenty (120) days after the occurrence of each
and every of the foregoing events of "Good Reason" (or within
ninety (90) days after the occurrence of a Change in Control if
such event occurs before such Change in Control), the Executive
may resign from employment under this Agreement by delivering a
notice in writing (the "Notice of Termination") to Peoples, and
the provisions of Section 6 hereof shall thereupon apply.
(b) As used in this Agreement, "Change in
Control" means a change of control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as enacted and in force
on the date hereof, whether or not Peoples is then subject to
such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have
occurred if:
(i) any "person" (including a group acting
in concert, as the term "person" is defined in Section 13(d)
of the Exchange Act, as enacted and in force on the date
hereof) becomes the "beneficial owner" (as that term is
defined in Rule 13d-3, as enacted and in force on the date
hereof, under the Exchange Act) of securities of Peoples
representing more than 19.9% of the combined voting power of
Peoples' securities then outstanding;
(ii) there occurs a merger, consolidation or
other business combination or reorganization to which
Peoples or the Bank is a party, whether or not approved in
advance by the Board of Directors of Peoples or the Bank (as
the case may be) in which the members of the Board of
Directors of Peoples or the Bank (as the case may be)
immediately preceding the consummation of such transaction
do not constitute a majority of the members of the Board of
Directors of the resulting corporation and of any parent
corporation thereof immediately after the consummation of
such transaction;
(iii) there occurs a sale, exchange,
transfer, or other disposition of substantially all of the
assets of Peoples or the Bank to another entity, which is
not approved in advance by the Board of Directors of
Peoples;
(iv) there occurs a contested proxy
solicitation of the stockholders of Peoples that results in
the contesting party obtaining the ability to elect
candidates to a majority of the positions on Peoples' Board
of Directors next up for election; or
(v) there occurs a tender offer for the
shares of voting securities of Peoples that results in the
tender offeror obtaining securities representing more than
19.9% of the combined voting power of Peoples' securities
then outstanding.
6. Rights in Event of Certain Termination of
Employment After Change in Control. In the event that Executive
resigns from employment for Good Reason following a Change in
Control, by delivery of a Notice of Termination to Peoples, or
Executive's employment is involuntarily terminated by Peoples
without Cause after a Change in Control, Peoples shall pay (or
cause to be paid) to the Executive in cash, within twenty (20)
days following termination, an amount equal to 2.99 times his
"base amount" (within the meaning of Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")),
calculated as though the occurrence of the Change in Control were
an event described in Code Section 280G(b)(2)(A)(i).
Notwithstanding the preceding sentence, in the event the lump sum
payment described in the preceding sentence, when added to all
other amounts or benefits provided to or on behalf of the
Executive in connection with his termination of employment, would
result in the imposition of an excise tax under Code Section
4999, such lump sum shall be reduced to the extent necessary to
avoid such imposition.
7. Rights in Event of Certain Termination of
Employment in Absence of Change in Control. In the event that
Executive's employment is involuntarily terminated by Peoples
without Cause and no Change in Control shall have occurred at the
date of such termination, Peoples shall pay (or cause to be paid)
to the Executive in cash, within twenty (20) days following
termination, an amount equal to 2.0 times the highest sum of
(i) his taxable federal compensation reported on Form W-2 during
each of the immediately preceding three (3) calendar years, and
(ii) all amounts excluded from such compensation during the
relevant calendar year by reason of Section 4(d) hereof, Code
Section 125, and Code Section 401(k). Notwithstanding the
preceding sentence, in the event the lump sum payment described
in the preceding sentence, when added to all other amounts or
benefits provided to or on behalf of the Executive in connection
with his termination of employment, would result in the
imposition of an excise tax under Code Section 4999, such lump
sum shall be reduced to the extent necessary to avoid such
imposition. Notwithstanding anything herein to the contrary,
this section shall apply to the resignation of Executive by
reason of the occurrence of an event, described in the last
sentence of Section 2 hereof, more than three (3) years following
a Change in Control.
8. Covenant Not to Compete.
(a) The Executive hereby acknowledges and
recognizes the highly competitive nature of the business of
Peoples and the Bank and accordingly agrees that, during and for
the applicable period set forth in Section 8(c) hereof, the
Executive shall not:
(i) Be engaged, directly or indirectly,
either for his own account or as agent, consultant,
employee, partner, officer, director, proprietor, investor
(except as an investor owning less than 5% of the stock of a
publicly owned company) or otherwise of any person, firm,
corporation, or enterprise engaged, in (1) the banking
(including bank holding company) or financial services
industry, or (2) any other activity in which Peoples or any
of its subsidiaries is engaged during the Employment Period,
in any county in which, at any time during the Employment
Period or at the date of termination of the Executive's
employment, a branch, office or other facility of Peoples or
any of its subsidiaries is located, or in any county
contiguous to such a county, including contiguous counties
located outside of the Commonwealth of Pennsylvania (the
"Non-Competition Area"); or
(ii) Provide financial or other assistance
to any person, firm, corporation, or enterprise engaged in
(1) the banking (including bank holding company) or
financial services industry, or (2) any other activity in
which Peoples or any of its subsidiaries is engaged during
the Employment Period, in the Non-Competition Area.
(b) It is expressly understood and agreed that,
although the Executive and Peoples consider the restrictions
contained in Section 8(a) hereof reasonable for the purpose of
preserving for Peoples and its subsidiaries their good will and
other proprietary rights, if a final judicial determination is
made by a court having jurisdiction that the time or territory or
any other restriction contained in Section 8(a) hereof is an
unreasonable or otherwise unenforceable restriction against the
Executive, the provisions of Section 8(a) hereof shall not be
rendered void but shall be deemed amended to apply as to such
maximum time and territory and to such other extent as such court
may judicially determine or indicate to be reasonable.
(c) The provisions of this Section 8 shall be
applicable commencing on the date of this Agreement and ending on
one of the following dates, as applicable:
(i) if the Executive's employment terminates
in accordance with the provisions of Section 3 (other than
Section 3(a)) or Section 17 hereof, the effective date of
termination of employment;
(ii) if the Executive's employment
terminates in accordance with the provisions of Section 3(a)
hereof or the Executive voluntarily terminates his
employment other than in accordance with the provisions of
Section 5 hereof (or the last sentence of Section 2 or
Section 7), the first anniversary date of the effective date
of termination of employment; or
(iii) if the Executive voluntarily
terminates his employment in accordance with the provisions
of Section 5 hereof (or the last sentence of Section 2 or
Section 7), the effective date of termination of employment.
9. Arbitration. Peoples and the Executive recognize
that in the event a dispute should arise between them concerning
the interpretation or implementation of this Agreement, lengthy
and expensive litigation will not afford a practical resolution
of the issues within a reasonable period of time. Consequently,
each party agrees that all disputes, disagreements and questions
of interpretation concerning this Agreement are to be submitted
for resolution to the American Arbitration Association (the
"Association") in Philadelphia, Pennsylvania. Peoples, or the
Executive, may initiate an arbitration proceeding at any time by
giving notice to the other in accordance with the rules of the
Association. The Association shall designate a single arbitrator
to conduct the proceeding, but Peoples, and the Executive, may,
as a matter of right, require the substitution of a different
arbitrator chosen by the Association. Each such right of
substitution may be exercised only once. The arbitrator shall
not be bound by the rules of evidence and procedure of the courts
of the Commonwealth of Pennsylvania but shall be bound by the
substantive law applicable to this Agreement. The decision of
the arbitrator, absent fraud, duress, incompetence or gross and
obvious error of fact, shall be final and binding upon the
parties and shall be enforceable in courts of proper
jurisdiction. Following written notice of a request for
arbitration, Peoples, and the Executive, shall be entitled to an
injunction restraining all further proceedings in any pending or
subsequently filed litigation concerning this Agreement, except
as otherwise provided herein. Notwithstanding the preceding
provisions of this section, in the event any such provision is in
conflict with a rule or policy of the Association, the
arbitration proceeding shall be governed by such rule or policy.
10. Legal Expenses. Peoples shall pay to the
Executive all reasonable legal fees and expenses incurred by the
Executive in seeking in good faith to obtain or enforce any right
or benefit provided by this Agreement, provided that any action
or proceeding is not summarily decided against the Executive.
11. Mitigation of Damages. The Executive shall not be
required to mitigate the amount of any payment provided for in
Section 6 or Section 7 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in
Section 6 or Section 7 be reduced by any compensation earned by
the Executive as the result of employment by another employer or
by reason of the Executive's receipt of or right to receive any
retirement or other benefits after the date of termination of
employment or otherwise; provided, however, that the payments
provided for in Section 6 or Section 7 shall be reduced by the
amount actually received by the Executive under any severance
policy of Peoples then in effect.
12. Notices. Any notice required or permitted to be
given under this Agreement shall be deemed properly given if in
writing and if mailed by registered or certified mail, postage
prepaid with return receipt requested, to the residence of the
Executive, in the case of notices to the Executive, and to the
principal office of Peoples, in the case of notices to Peoples.
13. Waiver. No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification,
or discharge is agreed to in writing and signed by the Executive
and an executive officer of Peoples specifically designated by
the Board of Directors of Peoples. No waiver by any party hereto
at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.
14. Assignment. This Agreement shall not be
assignable by either party hereto, except by Peoples to any
successor in interest to the business of Peoples.
15. Entire Agreement. This Agreement contains the
entire agreement of the parties relating to the subject matter of
this Agreement.
16. Successors, Binding Agreement.
(a) Peoples will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or
assets of Peoples to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Peoples
would be required to perform it if no such succession had taken
place. Failure by Peoples to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
constitute a breach of this Agreement and the provisions of
Section 6 hereof shall apply. As used in this Agreement,
"Peoples" shall mean Peoples as hereinbefore defined and any
successor to the respective business and/or assets of Peoples
which assumes and agrees to perform this Agreement by operation
of law or otherwise.
(b) This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs, distributees,
devisees, and legatees. If the Executive should die after a
Notice of Termination is delivered by the Executive and any
amounts would be payable to the Executive under this Agreement if
the Executive had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee, or, if there is
none, to the Executive's estate.
17. Termination.
(a) Unless the Executive's employment terminates
pursuant to the provisions of Section 3 or Section 5 hereof (or
the last sentence of Section 2 or Section 7), the term of this
Agreement shall:
(i) initially be a term commencing as of
January 1, 1997, and ending on December 31, 1999; and
(ii) be automatically extended to provide
for a three (3) year term, annually, on January 1, 1998, and
again on January 1 of each year thereafter, effective as of
such respective dates, unless either (1) Peoples or (2) the
Executive shall have given written notice of nonextension of
the term of this Agreement to the other at least ninety
(90) days before the date of any such extension.
(b) Any termination of the Executive's employment
under this Agreement or of this Agreement shall not affect the
provisions of Sections 6 or 7 hereof which shall survive any such
termination and remain in full force and effect in accordance
with their respective terms.
18. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
19. Applicable Law. This Agreement shall be governed
by and construed in accordance with the domestic laws (but not
the law of conflict of laws) of the Commonwealth of Pennsylvania.
20. Headings. The headings of the sections of this
Agreement are for convenience only and shall not control or
affect the meaning or construction or limit the scope or intent
of any of the provisions of this Agreement.
21. Termination of Prior Agreements. Upon the
execution and delivery of this Agreement by the parties hereto,
any prior agreement relating to the subject matter hereof shall
be automatically terminated and be of no further force or effect.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
PEOPLES FINANCIAL SERVICES CORP.
By_________________________________
(Executive/Senior) Vice President
(SEAL)
Attest:____________________________
(Assistant) Secretary
("Peoples")
Witness:
__________________________ _____________________________(SEAL)
Xxxx X. Xxx
("Executive")
