EXHIBIT 10.6
Execution Copy
12/18/01
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the18th day of December, 2001, among
STERLING FINANCIAL CORPORATION ("Corporation"), a Pennsylvania business
corporation having a place of business at 000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx 00000, BANK OF LANCASTER COUNTY, N.A. ("Bank"), a national banking
association having a place of business at, 000 Xxxxx Xxxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxx 00000 and J. XXXXX XXXXX, XX. ("Executive"), an
individual residing at 00 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, the Corporation is a registered financial holding company with
Bank of Lancaster County as one of its subsidiaries;
WHEREAS, Corporation and Bank desire to employ Executive to serve in
the capacity of President and Chief Operating Officer of Corporation as of
January 1, 2002, and as President and Chief Executive Officer of Corporation as
of May 1, 2002, under the terms and conditions set forth herein;
WHEREAS, Executive desires to accept employment with Corporation and
Bank on the terms and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. EMPLOYMENT. Corporation and Bank hereby employ Executive and Executive
hereby accepts employment with Corporation and Bank, under the terms
and conditions set forth in this Agreement.
2. DUTIES OF EMPLOYEE. Executive shall perform and discharge well and
faithfully such duties as an executive officer of Corporation and Bank
as may be assigned to Executive from time to time by the Board of
Directors of Corporation and the Chairman of the Corporation so long as
the assignment is consistent with the Executive's office and duties.
Executive shall be employed as President and Chief Operating Officer of
Corporation, effective January 1, 2002, and shall be promoted to
President and Chief Executive Officer of Corporation effective May 1,
2002, and shall hold such other titles as may be given to him from time
to time by the Board of Directors of Corporation. Executive shall
devote his full time, attention and energies to the business of
Corporation and its subsidiaries during the Employment Period (as
defined in Section 3 of this Agreement); provided, however, that this
Section 2 shall not be construed as preventing Executive from (a)
engaging in activities incident or necessary to personal investments so
long as such investment does not exceed 5% of the outstanding shares of
any publicly held company, (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
EXHIBIT 10.6
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organization, with the prior approval of the Board of Directors of
Corporation, or (c) being involved in any other activity with the prior
approval of the Board of Directors of Corporation. The Executive shall
not engage in any business or commercial activities, duties or pursuits
which compete with the business or commercial activities of Corporation
or its subsidiaries, nor may the Executive serve as a director or
officer or in any other capacity in a company which competes with
Corporation or its subsidiaries.
3. TERM OF AGREEMENT.
(a) This Agreement shall be for a three (3) year period (the
"Employment Period") beginning on January 1, 2002, and if not
previously terminated pursuant to the terms of this Agreement,
the Employment Period shall end three (3) years later;
provided however, that this Agreement will be automatically
renewed one year later on the first anniversary date of
January 1, 2002 (the "Renewal Date") for the three-year period
commencing on such date and ending three years later, unless
either party gives written notice of non-renewal to the other
party at least ninety (90) days prior to the Renewal Date (in
which case this Agreement will continue in effect for a term
ending two (2) years from the Renewal Date). If this Agreement
is renewed on the Renewal Date, it will be automatically
renewed on the first anniversary date of the Renewal Date and
each subsequent year (the "Annual Renewal Date") for a period
ending three years from each Annual Renewal Date, unless
either party gives written notice of non-renewal to the other
party at least ninety (90) days prior to an Annual Renewal (in
which case this Agreement will continue in effect for a term
ending two (2) years from the Annual Renewal Date immediately
following such notice).
(b) Notwithstanding the provisions of Section 3(a) of this
Agreement, this Agreement shall terminate automatically for
Cause (as defined herein) upon written notice from the Board
of Directors of Corporation to Executive. As used in this
Agreement, "Cause" shall mean any of the following:
(i) Executive's conviction of or plea of guilty or nolo
contendere to a felony, a crime of falsehood or a
crime involving moral turpitude, or the actual
incarceration of Executive for a period of forty-five
(45) consecutive days or more;
(ii) Executive's failure to follow the good faith lawful
instructions of the Board of Directors of Corporation
with respect to its operations, after written notice
from Corporation and a failure to cure such violation
within thirty (30) days of said written notice;
(iii) Executive's willful failure to substantially perform
Executive's duties to Corporation or its
subsidiaries, other than a failure resulting from
Executive's incapacity because of physical or mental
illness, as provided in Section 3 (d)
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of this Agreement, after written notice from
Corporation or Bank and a failure to cure such
violation within thirty (30) days of said written
notice;
(iv) Executive's intentional violation of the provisions
of this Agreement, after written notice from
Corporation and a failure to cure such violation
within thirty (30) days of said written notice;
(v) Dishonesty of the Executive in the performance of his
duties;
(vi) Executive's removal or prohibition from being an
institutional-affiliated party by a final order of an
appropriate federal banking agency pursuant to
Section 8(e) of the Federal Deposit Insurance Act or
by the Office of the Comptroller of the Currency
pursuant to national law;
(vii) Conduct on the part of the Executive which brings
public discredit to Corporation or its subsidiaries,
as determined by an affirmative vote of seventy
percent (70%) of the disinterested members of the
Boards of Directors of Corporation and Bank;
(viii) Executive's breach of fiduciary duty involving
personal profit.
(ix) Unlawful discrimination by the Executive, including
harassment against Corporation's or Corporation's
subsidiary's employees, customers, business
associates, contractors, or vendors, which could
result in liability to Corporation or one of its
subsidiaries; or
(x) Theft or material abuse by executive of Corporation's
property or the property of one of Corporation's
subsidiaries, or the property of Corporation's or
Bank's customers, employees, subsidiaries,
contractors, vendors, or business associates.
If this Agreement is terminated for Cause, all of Executive's
rights under this Agreement shall cease as of the effective
date of such termination.
(c) Notwithstanding the provisions of Section 3(a) of this
Agreement, this Agreement shall terminate automatically upon
Executive's voluntary termination of employment (other than in
accordance with Section 5 of this Agreement) for Good Reason.
The term "Good Reason" shall mean (i) the assignment of duties
and responsibilities inconsistent with Executive's status as
President and Chief Operating Officer of Corporation and,
after May 1, 2002, Chief Executive Officer of the Corporation,
(ii) a reassignment which requires Executive to move his
principal residence more than fifty (50) miles from the
location of Corporation's or Bank's principal executive office
immediately prior to this Agreement, (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
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provisions of Section 3(b) of this Agreement, (iv) any
reduction in the Executive's Annual Base Salary as in effect
on the date this Agreement is executed or as the same may be
increased from time to time, except such reductions that are
the result of a national financial depression, or national or
bank emergency, or (v) any failure of Corporation or Bank to
provide the Executive with benefits at least as favorable as
those enjoyed by the Executive during the Employment Period
under any of the pension or other qualified retirement, life
insurance, medical, health and accident, disability or other
employee plans of Corporation or Bank, or the taking of any
action that would materially reduce any such benefits, unless
such reduction is part of a reduction applicable to all
employees.
At the option of the Executive, exercisable by the Executive
within ninety (90) days after the occurrence of the event
constituting "Good Reason," the Executive may resign from
employment under this Agreement by a notice in writing (the
"Notice of Termination") delivered to Corporation and Bank and
the provisions of this Section 3(c) of this Agreement shall
thereupon apply.
If such termination occurs for Good Reason, then Corporation
or Bank shall pay Executive an amount equal to the remaining
balance of the Agreed Compensation otherwise due to the
Executive for the remainder of the then existing Employment
Period, which amount shall be payable in equal monthly
installments and shall be subject to federal, state and local
tax withholdings. In addition, for the remainder of the then
existing Employment Period, or until Executive secures
substantially similar benefits through other employment,
whichever shall first occur, Executive shall receive a
continuation of all life, disability, medical insurance and
other normal health and welfare benefits in effect with
respect to Executive during the two (2) years prior to his
termination of employment, or, if Corporation and Bank cannot
provide such benefits because Executive is no longer an
employee, a dollar amount equal to the cost to Executive of
obtaining such benefits (or substantially similar benefits).
If permitted under the terms of the plan, Executive may
continue to participate in all qualified and non-qualified
retirement benefit plans as if his employment had continued
through the remaining term of the Agreement. If Executive is
not eligible to continue to participate in qualified or
non-qualified retirement plans, Executive will receive a lump
sum cash payment equal to 29% of the payments to be received
for termination of this Agreement under this provision.
However, in the event that the payment described herein, 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 payments shall be retroactively
(if necessary) reduced to the extent necessary to avoid such
excise tax imposition. Upon written notice to Executive,
together with calculations of Corporation's independent
auditors, Executive shall remit to Corporation the amount of
the reduction plus such interest as may be necessary to avoid
the imposition of such excise tax. Notwithstanding the
foregoing or any other provision of this contract to the
contrary, if any portion of the amount herein payable to the
Executive is determined to be non-deductible, pursuant
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to the regulations promulgated under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), the
Corporation shall be required only to pay to Executive the
amount determined to be deductible under Section 280G.
(d) Notwithstanding the provisions of Section 3(a) of this
Agreement, this Agreement shall terminate automatically upon
Executive's Disability and Executive's rights under this
Agreement shall cease as of the date of such termination;
provided, however, that Executive shall nevertheless be
entitled to receive any benefits that may be available under
any disability plan of Corporation and Bank, until the
earliest of (i) Executive's return to employment, (ii) his
attainment of age 65, or (iii) his death. In addition,
Executive shall receive for such period a continuation of all
life, disability, medical insurance and other normal health
and welfare benefits in effect with respect to Executive
during the two (2) years prior to his disability, or, if
Corporation and Bank cannot provide such benefits because
Executive is no longer an employee, a dollar amount equal to
the cost to Executive of obtaining such benefits (or
substantially similar benefits). For purposes of this
Agreement, the Executive shall have a Disability if, as a
result of physical or mental injury or impairment, Executive
is unable to perform all of the essential job functions of his
position on a full time basis taking into account any
reasonable accommodation required by law, and without posting
a direct threat to himself and others, for a period of one
hundred eighty (180) days or more. The Executive shall have no
duty to mitigate any payment provided for in this Section 3(d)
by seeking other employment.
(e) Executive agrees that in the event his employment under this
Agreement is terminated, regardless of the reason for
termination, Executive shall resign as a director of
Corporation and Bank, or any affiliate or subsidiary thereof,
if he is then serving as a director of any of such entities.
(f) The term "Agreed Compensation" shall equal the sum of (A) the
Executive's highest Annual Base Salary under the Agreement,
and (B) the average of the Executive's annual bonuses with
respect to the three (3) calendar years immediately preceding
the Executive's termination; provided, however, that if the
Executive is terminated after January 1, 2003, but before
January 1, 2004, then Agreed Compensation shall equal the sum
of (A) the Executive's highest Annual Base Salary under the
Agreement and (B) the Executive's annual bonus for 2002. If
the Executive is terminated after January 1, 2004, but before
January 1, 2005, then Agreed Compensation shall equal the sum
of (A) the Executive's highest Annual Base Salary under the
Agreement and (B) the average of the Executive's annual
bonuses for 2002 and 2003.
4. EMPLOYMENT PERIOD COMPENSATION.
(a) Annual Base Salary. For services performed by Executive under
this Agreement, Corporation shall pay Executive an Annual Base
Salary during the Employment Period at the rate of Two Hundred
Seventy Thousand Dollars ($270,000.00) per year
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(subject to applicable withholdings and deductions) payable at
the same times as salaries are payable to other executive
employees of Corporation. Corporation may, from time to time,
increase Executive's Annual Base 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 date established for such increases by the Board of
Directors of Corporation or any committee of such Board in the
resolutions authorizing such increases.
(b) Bonus. For services performed by Executive under this
Agreement, Corporation may, from time to time, pay a bonus or
bonuses to Executive as Corporation, in its sole discretion,
deems appropriate. The payment of any such bonuses shall not
reduce or otherwise affect any other obligation of Corporation
or Bank to Executive provided for in this Agreement. Executive
is entitled to participate in the bonus programs available to
senior executives.
(c) Paid Time Off and/or Vacations. During the term of this
Agreement, Executive shall be entitled to paid time off in
accordance with the policies as established from time to time
by the Boards of Directors of Corporation and Bank for the
Corporation's and Bank's senior management.
(d) Automobile. During the term of this Agreement, Corporation and
Bank shall provide Executive with exclusive use of an
automobile mutually agreed upon by Corporation and Bank and
reasonably consistent with Executive's position. Corporation
and Bank shall be responsible and shall pay for all costs of
insurance coverage, repairs, maintenance and other operating
and incidental expenses, including license, fuel and oil.
Corporation and Bank shall provide Executive with a
replacement automobile at approximately the time Executive's
automobile reaches three (3) years of age or 50,000 miles,
whichever is first, and approximately every three (3) years or
50,000 miles thereafter, upon the same terms and conditions.
(e) Employee Benefit Plans. During the term of this Agreement,
Executive shall be entitled to participate in or receive the
benefits of any employee benefit plan currently in effect at
Corporation and Bank, subject to the terms of said plan, until
such time that the Boards of Directors of Corporation and Bank
authorize a change in such benefits. Corporation and Bank
shall not make any changes in such plans or benefits which
would adversely affect Executive's rights or benefits
thereunder, unless such change occurs pursuant to a program
applicable to all executive officers of Corporation and Bank
and does not result in a proportionately greater adverse
change in the rights of or benefits to Executive as compared
with any other executive officer of Corporation and 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 4(a) hereof.
(f) Business Expenses. During the term of this Agreement,
Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him, which
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are properly accounted for, in accordance with the policies
and procedures established by the Boards of Directors of
Corporation and Bank for their executive officers. Corporation
shall reimburse Executive for any and all initiation fees,
membership dues, assessments, and reasonable related business
expenses associated with the Executive's membership in a
mutually agreeable country club and the Xxxxxxxx Club of
Lancaster.
(g) Stock Options. Executive shall be entitled to participate in
the Corporation's stock option plans consistent with his
position as a member of Corporation's and Bank's senior
management. Upon a Change in Control (as defined in Section
5(b) of this Agreement), all options theretofore granted to
the Executive by the Corporation and not previously
exercisable shall become fully exercisable to the same extent
and in the same manner as if they had become exercisable by
passage of time or by virtue of the Corporation achieving
certain performance objectives in accordance with the relevant
provisions of any plan and any agreement.
5. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.
(a) If a Change in Control (as defined in Section 5(b) of this
Agreement) shall occur, then, at the option of Executive,
exercisable by Executive within three hundred sixty five (365)
days of the Change in Control, Executive may resign from
employment with Corporation and Bank (or, if involuntarily
terminated, give notice of intention to collect benefits under
this Agreement) by delivering a notice in writing (the "Notice
of Termination") to Corporation and Bank and the provisions of
Section 6 of this Agreement shall apply.
(b) As used in this Agreement, "Change in Control" shall mean the
occurrence of any of the following:
(i) (A) a merger, consolidation or division involving
Corporation or Bank, (B) a sale, exchange, transfer
or other disposition of substantially all of the
assets of Corporation or Bank, or (C) a purchase by
Corporation or Bank of substantially all of the
assets of another entity, unless (y) such merger,
consolidation, division, sale, exchange, transfer,
purchase or disposition is approved in advance by
seventy percent (70%) or more of the members of the
Board of Directors of Corporation or Bank (of the
entity affected by the transaction) who are not
interested in the transaction and (z) a majority of
the members of the Board of Directors of the legal
entity resulting from or existing after any such
transaction and of the Board of Directors of such
entity's parent corporation, if any, are former
members of the Board of Directors of Corporation or
Bank (of the entity affected by the transaction);
(ii) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act")), other than Corporation or Bank or
any "person" who on the date hereof is a director or
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officer of Corporation or Bank is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of
securities of Corporation or Bank representing
twenty-five (25%) percent or more of the combined
voting power of Corporation or Bank's then
outstanding securities; or
(iii) during any period of two (2) consecutive years during
the term of Executive's employment under this
Agreement, individuals who at the beginning of such
period constitute the Board of Directors of
Corporation or Bank cease for any reason to
constitute at least a majority thereof, unless the
election of each director who was not a director at
the beginning of such period has been approved in
advance by directors representing at least two-thirds
of the directors then in office who were directors at
the beginning of the period; or
(iv) any other change in control of Corporation and Bank
similar in effect to any of the foregoing.
6. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN
CONTROL.
(a) In the event that Executive delivers a Notice of Termination
(as defined in Section 5(a) of this Agreement) to Corporation
and Bank, Executive shall be entitled to receive the
compensation and benefits set forth below:
If, at the time of termination of Executive's employment, a
"Change in Control" (as defined in Section 5(b) of this
Agreement) has also occurred, Corporation and Bank shall pay
Executive a lump sum amount equal to and no greater than 2.99
times the Executive's Agreed Compensation as defined in
Section 3(f) of this Agreement (the payment of which shall be
subject to applicable taxes and withholdings). In addition,
for a period of three (3) years from the date of termination
of employment, or until Executive secures substantially
similar benefits through other employment, whichever shall
first occur, Executive shall receive a continuation of all
life, disability, medical insurance and other normal health
and welfare benefits in effect with respect to Executive
during the two (2) years prior to his termination of
employment, or, if Corporation and Bank cannot provide such
benefits because Executive is no longer an employee, a dollar
amount equal to the cost to Executive of obtaining such
benefits (or substantially similar benefits). If permitted
under the terms of the plan, Executive may continue to
participate in all qualified and non- qualified retirement
plans as if his employment had continued through the then
remaining term of the Agreement. If Executive is not eligible
to participate in non- qualified or qualified retirement
plans, Executive will receive a lump sum cash payment equal to
29% of the payments to be received for termination of the
Agreement under this provision. However, in the event the
payment described herein, 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
payments shall be retroactively (if
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necessary) reduced to the extent necessary to avoid such
excise tax imposition. Upon written notice to Executive,
together with calculations of Corporation's independent
auditors, Executive shall remit to Corporation the amount of
the reduction plus such interest as may be necessary to avoid
the imposition of such excise tax. Notwithstanding the
foregoing or any other provision of this contract to the
contrary, if any portion of the amount herein payable to the
Executive is determined to be non- deductible pursuant to the
regulations promulgated under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), the Corporation
shall be required only to pay to Executive the amount
determined to be deductible under Section 280G.
(b) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other
employment or otherwise. Unless otherwise agreed to in
writing, the amount of payment or the benefit provided for in
this Section 6 shall not be reduced by any compensation earned
by Executive as the result of employment by another employer
or by reason of Executive's receipt of or right to receive any
retirement or other benefits after the date of termination of
employment or otherwise.
7. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT ABSENT CAUSE.
(a) In the event that Executive's employment is involuntarily
terminated by Corporation and/or Bank without Cause, and in a
situation not addressed by the Change in Control provisions
set forth in Section 6 of this Agreement, Corporation and Bank
shall pay Executive an amount equal to 2.0 times the
Executive's Agreed Compensation or the remaining balance of
the Agreed Compensation otherwise due to the Executive for the
remainder of the then existing Employment Period, whichever is
greater, and shall be payable in equal monthly installments
and shall be subject to federal, state and local tax
withholdings. In addition, for the remainder of the then
existing Employment Period or until Executive secures
substantially similar benefits through other employment,
whichever shall first occur, Executive shall receive a
continuation of all life, disability, medical insurance and
other normal health and welfare benefits in effect with
respect to Executive during the two (2) years prior to his
termination of employment, or, if Corporation and Bank cannot
provide such benefits because Executive is no longer an
employee, a dollar amount equal to the cost to Executive of
obtaining such benefits (or substantially similar benefits).
In addition, if permitted pursuant to the terms of the plan,
Executive may continue to participate in all qualified and
non-qualified retirement benefits plans as if his employment
had continued through the then remaining term of the
Agreement. If Executive is not eligible to participate in
non-qualified or qualified retirement plans, Executive will
receive a lump sum cash payment equal to 29% of the payments
to be received for termination of the Agreement under this
provision. However, in the event the payment described herein,
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
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Code Section 4999, such payments shall be retroactively (if
necessary). However, in the event the payment described
herein, 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 payments shall be
retroactively (if necessary) reduced to the extent necessary
to avoid such excise tax imposition. Upon written notice to
Executive, together with calculations of Corporation's
independent auditors, Executive shall remit to Corporation the
amount of the reduction plus such interest as may be necessary
to avoid the imposition of such excise tax. Notwithstanding
the foregoing or any other provision of this contract to the
contrary, if any portion of the amount herein payable to the
Executive is determined to be non-deductible pursuant to the
regulations promulgated under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), the Corporation
shall be required only to pay to Executive the amount
determined to be deductible under Section 280G.
(b) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 7 by seeking other
employment or otherwise. Unless otherwise agreed to in
writing, the amount of payment or the benefit provided for in
this Section 7 shall not be reduced by any compensation earned
by Executive as the result of employment by another employer
or by reason of Executive's receipt of or right to receive any
retirement or other benefits after the date of termination of
employment or otherwise.
8. COVENANT NOT TO COMPETE.
(a) Executive hereby acknowledges and recognizes the highly
competitive nature of the business of Corporation and Bank and
accordingly agrees that, during and for the applicable period
set forth in Section 8(c) hereof, Executive shall not, except
as otherwise permitted in writing by the Corporation and the
Bank:
(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 financial or bank
holding company) or financial services industry, or
(2) any other activity in which Corporation or Bank
or any of their subsidiaries or affiliates, other
than Town and Country, Inc. and Equipment Finance,
Inc., are engaged during the Employment Period, and
remain so engaged at the end of the Employment
Period, in any county in which, at any time during
the Employment Period or on the date of termination
of the Executive's employment, Corporation, Bank or
any of their subsidiaries or affiliates conducted
business, or in any county contiguous to such a
county, including countries located outside of the
Commonwealth of Pennsylvania (the "Non-Competition
Area"); or
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(ii) provide financial or other assistance to any person,
firm, corporation, or enterprise engaged in (1) the
banking (including financial or bank holding company)
or financial services industry, or (2) any other
activity in which Corporation or Bank or any of their
subsidiaries or affiliates, other than Town and
Country, Inc. and Equipment Finance, Inc., are
engaged during the Employment Period, in the
Non-Competition Area; or
(iii) directly or indirectly contact, solicit or induce any
person, corporation or other entity who or which is a
customer or referral source of Corporation or any of
its subsidiaries or affiliates, on the Effective
Date; at any time during the Employment Period; or on
the effective date of termination of the Executive's
employment; or
(iv) directly or indirectly solicit, induce or encourage
any employee of Corporation or any of its
subsidiaries or affiliates, who is employed on the
Effective Date; at any time during the Employment
Period; or on the effective date of termination of
the Executive's employment, to leave the employ of
Corporation or any of its subsidiaries or affiliates
or to seek, obtain or accept employment with any
person other than Corporation or any of its
subsidiaries or affiliates.
(b) It is expressly understood and agreed that, although Executive
and Corporation and Bank consider the restrictions contained
in Section 8(a) and (c) of this Agreement reasonable for the
purpose of preserving for Corporation and Bank and their
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) and (c) of this
Agreement is an unreasonable or otherwise unenforceable
restriction against Executive, the provisions of Section 8(a)
and (c) of this Agreement 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 January 1, 2002 and ending on one of the
following dates, as applicable:
(i) if Executive's employment terminates in accordance
with the provisions of Section 3(c) of this Agreement
(relating to termination for Good Reason), the end of
the then existing Employment Period; or
(ii) if Executive's employment terminates in accordance
with the provisions of Section 3(b) of this Agreement
(relating to termination for Cause), the second
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 of this Agreement (relating to termination
from
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following Change in Control), the second anniversary
date of the effective date of termination of
employment; or
(iv) if the Executive's employment is involuntarily
terminated in accordance with the provisions of
Section 7 of this Agreement (relating to Termination
Absent Cause), the second anniversary date of the
effective date of termination of employment; or
(v) if the Executive voluntarily terminates his
employment without Good Reason and absent Change in
Control, the second anniversary date of the effective
date of termination of employment; or
(vi) if the Agreement expires by its terms in accordance
with the provisions of Section 3(a) and other than
for Cause, the second anniversary date of the
effective date of termination of employment.
9. UNAUTHORIZED DISCLOSURE. During the term of his employment hereunder,
or at any later time, the Executive shall not, without the written
consent of the Boards of Directors of Corporation and Bank or a person
authorized thereby, knowingly disclose to any person, other than an
employee of Corporation or Bank or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance
by the Executive of his duties as an executive of Corporation and Bank,
any material confidential information obtained by him while in the
employ of Corporation and Bank with respect to any of Corporation and
Bank's services, products, improvements, formulas, designs or styles,
processes, customers, customer lists, methods of business or any
business practices the disclosure of which could be or will be damaging
to Corporation or Bank; provided, however, that confidential
information shall not include any information known generally to the
public (other than as a result of unauthorized disclosure by the
Executive or any person with the assistance, consent or direction of
the Executive) or any information of a type not otherwise considered
confidential by persons engaged in the same business of a business
similar to that conducted by Corporation and Bank or any information
that must be disclosed as required by law.
10. WORK MADE FOR HIRE. Any work performed by the Executive under this
Agreement should be considered a "Work Made for Hire" as that phrase is
defined by the U.S. patent laws and shall be owned by and for the
express benefit of Corporation, Bank and their subsidiaries and
affiliates. In the event it should be established that such work does
not qualify as a Work Made for Hire, the Executive agrees to and does
hereby assign to Corporation, Bank and their affiliates and
subsidiaries, all of his rights, title, and/or interest in such work
product, including, but not limited to, all copyrights, patents,
trademarks, and proprietary rights.
11. RETURN OF COMPANY PROPERTY AND DOCUMENTS. The Executive agrees that, at
the time of termination of his employment, regardless of the reason for
termination, he will deliver to Corporation, Bank and their
subsidiaries and affiliates, any and all company property, including,
but not limited to, keys, security codes or passes, mobile telephones,
pagers,
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computers, devices, confidential information (as defined in this
Agreement), records, data, notes, reports, proposals, lists,
correspondence, specification, drawings, blueprints, sketches, software
programs, equipment, other documents or property, or reproductions of
any of the aforementioned items developed or obtained by the Executive
during the course of his employment.
12. LIABILITY INSURANCE. Corporation and Bank shall use their best efforts
to obtain insurance coverage for the Executive under an insurance
policy covering officers and directors of Corporation and Bank against
lawsuits, arbitrations or other legal or regulatory proceedings;
however, nothing herein shall be construed to require Corporation
and/or Bank to obtain such insurance, if the Board of Directors of the
Corporation and/or Bank determine that such coverage cannot be obtained
at a reasonable price.
13. NOTICES. Except as otherwise provided in this Agreement, 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 Executive's
residence, in the case of notices to Executive, and to the principal
executive offices of Corporation and Bank, in the case of notices to
Corporation and Bank.
14. 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 Executive and an executive officer
specifically designated by the Boards of Directors of Corporation. No
waiver by either 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.
15. ASSIGNMENT. This Agreement shall not be assignable by any party, except
by Corporation and Bank to any successor in interest to their
respective businesses.
16. ATTORNEY'S FEES AND COSTS. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees,
costs, and necessary disbursements in addition to any other relief that
may be proper.
17. INDEMNIFICATION. The Corporation and/or Bank will indemnify the
Executive, to the fullest extent permitted under Pennsylvania and
federal law, with respect to any threatened, pending or completed legal
or regulatory action, suit or proceeding brought against him by reason
of the fact that he is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another person or entity.
To the fullest extent permitted by Pennsylvania and federal law, the
Corporation will, in advance of final disposition, pay any and all
expenses incurred by the Executive in connection with any threatened,
pending or completed legal or regulatory action, suit or proceeding
with respect to which he may be entitled to indemnification hereunder.
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18. ENTIRE AGREEMENT. This Agreement supersedes any and all agreements,
either oral or in writing, between the parties with respect to the
employment of the Executive by the Bank and/or Corporation, including
the Change of Control Agreement dated August 4, 1999, and this
Agreement contains all the covenants and agreements between the parties
with respect to employment.
19. SUCCESSORS; BINDING AGREEMENT.
(a) Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation, or otherwise) to
all or substantially all of the businesses and/or assets of
Corporation and/or its subsidiaries to expressly assume and
agree to perform this Agreement in the same manner and to the
same extent that Corporation and Bank would be required to
perform it if no such succession had taken place. Failure by
Corporation 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 3 of
this Agreement shall apply.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, heirs, distributees, devisees and
legatees. If Executive should die after a Notice of
Termination is delivered by Executive, or following
termination of Executive's employment without Cause, and any
amounts would be payable to Executive under this Agreement if
Executive had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to
Executive's devisee, legatee, or other designee, or, if there
is no such designee, to Executive's estate.
20. ARBITRATION. Corporation, Bank and Executive recognize that in the
event a dispute should arise between them concerning the interpretation
or implementation of this Agreement, (except for any enforcement sought
with respect to Sections 8, 9, 10 or 11 of this Agreement which may be
litigated in court,) 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, in Philadelphia, Pennsylvania, to the
American Arbitration Association (the "Association") in accordance with
the Association's National Rules for the Resolution of Employment
Disputes or other applicable rules then in effect ("Rules").
Corporation, Bank or Executive may initiate an arbitration proceeding
at any time by giving notice to the other in accordance with the Rules.
Corporation and Bank and Executive may, as a matter of right, mutually
agree on the appointment of a particular arbitrator from the
Association's pool. 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,
Corporation, Bank and Executive shall be entitled to an injunction
restraining all further proceedings in any pending or subsequently
filed litigation concerning
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this Agreement, except as otherwise provided herein or any enforcement
sought with respect to Sections 8, 9 , 10 or 11.
21. NO MITIGATION OR OFFSET. The Executive will not be required to mitigate
the amount of any payment provided for in this Agreement by seeking
employment or otherwise; nor will any amounts or benefits payable or
provided hereunder be reduced in the event he does not secure
employment, except as otherwise provided herein.
22. 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.
23. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the domestic, internal laws of the Commonwealth of
Pennsylvania, without regard to its conflicts of laws principles.
24. HEADINGS. The section headings 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: STERLING FINANCIAL CORPORATION
/s/ Xxxxxx X. Xxxxxx By /s/ Xxxxx X. Xxxx
--------------------------- ---------------------------------------------
Secretary Vice Chairman of the Board of Directors
BANK OF LANCASTER COUNTY, N.A.
/s/ Xxxxxx X. Xxxxxx By /s/ Xxxxx X. Xxxx
-------------------------- ---------------------------------------------
Secretary Vice Chairman of the Board of Directors
WITNESS:
/s/ Xxxxxxxx X. Prime /s/ J. Xxxxx Xxxxx, Xx
--------------------------- ------------------------------------------------
J. Xxxxx Xxxxx, Xx.
"Executive"
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