EMPLOYMENT AGREEMENT
THIS
AGREEMENT entered into this 15th day of December 2009 (the “Effective Date”), by
and between Xxxxx X. Xxxxxxxx (the “Employee”), Xxxxx Bank (the “Bank”), and
Xxxxxxx Financial Corp. (the “Company”).
WHEREAS,
the Bank and the Company desire to employ the Executive as its President and
Chief Executive Officer commencing on January 1, 2010 under the terms and
conditions set forth herein; and
WHEREAS,
the Employee has heretofore been employed by the Bank as its Chief Financial
Officer and is experienced in all phases of the business of the Bank;
and
WHEREAS,
the Boards of Directors of the Bank and of the Company believe it is in their
mutual best interests to enter into this Agreement with the Employee in order to
assure continuity of management and to reinforce and encourage the continued
attention and dedication of the Employee to his assigned duties;
and
WHEREAS,
the parties desire by this writing to set forth the continuing employment
relationship of the Employee, the Bank and the Company.
NOW,
THEREFORE, it is AGREED as follows:
Description
of Duties: The
Executive shall serve as the President and Chief Executive Officer of the Bank
and the Company, reporting only to the Board of Directors of the Bank and the
Company; shall have supervision and control over, and responsibility for, the
general management and operation of the Bank and the Company; and shall have
such other powers and duties as may from time to time be prescribed by the Board
of Directors, provided that such duties are consistent with the Executive’s
position as the President and Chief Executive Officer in charge of the general
management of the Bank and the Company.
1. Defined
Terms
When used
anywhere in this Agreement, the following terms shall have the meaning set forth
herein.
(a) “Change in Control” shall
mean any one of the following events: (i) the acquisition of
ownership, holding or power to vote more than 25% of the Bank’s or the Company’s
voting stock, (ii) the acquisition of the ability to control the election of a
majority of the Bank’s or the Company’s directors, (iii) the acquisition of a
controlling influence over the management or policies of the Bank or the Company
by any person or by persons acting as a “group” (within the meaning of Section
13(d) of the Securities Exchange Act of 1934), or (iv) during any period of two
consecutive years, individuals (the “Continuing Directors”) who at the beginning
of such period constitute the Board of Directors of the Bank or the Company (the
“Existing Board”) cease for any reason to constitute at least two-thirds
thereof, provided that any individual whose election or nomination for election
as a member of the Existing Board was
approved
by a vote of at least two-thirds of the Continuing Directors then in office
shall be considered a Continuing Director. Notwithstanding the
foregoing, in the case of (i), (ii) and (iii) hereof, ownership or control of
the Bank by the Company itself shall not constitute a Change in
Control. For purposes of this paragraph only, the term “person”
refers to an individual or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization or
any other form of entity not specifically listed herein.
(b) “Code” shall mean the
Internal Revenue Code of 1986, as amended from time to time, and as interpreted
through applicable rulings and regulations in effect from time to
time.
(c) “Code §280G Maximum” shall
mean the product of 2.99 and the Executive’s “base amount” as defined in Code
§280G(b)(3).
(d) “Good Reason” shall mean any
of the following events, which has not been consented to in advance by the
Employee in writing: (I) the requirement that the Employee move his personal
residence, or perform his principal executive functions, more than sixty (60)
miles from his primary office as of the date of the Change in Control; (ii) a
material reduction in the Employee’s base compensation as in effect on the date
of the Change in Control or as the same may be increased from time to time;
(iii) the failure by the Bank or the Company to continue to provide the Employee
with compensation and benefits provided for on the date of the Change in
Control, as the same may be increased from time to time, or with benefits
substantially similar to those provided to him under any of the employee benefit
plans in which the Employee now or hereafter becomes a participant, or the
taking of any action by the Bank or the Company which would directly or
indirectly reduce any of such benefits or deprive the Employee of any material
fringe benefit enjoyed by him at the time of the Change in Control or within the
protected period; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his
position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction in
the Employee’s responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Bank or the
Company; or (vii) a material reduction in the secretarial or other
administrative support of the Employee. In addition, “Good Reasons”
shall mean an impairment of the Employee’s health to an extent that it makes
continued performance of his duties hereunder hazardous to his physical or
mental health.
(e) “Protected Period” shall mean
the period that begins on the date six months before a Change in Control and
ends on the later of the first annual anniversary of the Change in Control or
the expiration date of this Agreement.
2. Employment. The
Employee is employed as the President and Chief Executive Officer of the Bank
and of the Company. In each capacity, the Employee shall render such
administrative and management services for the Bank and the Company as are
currently rendered
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and as
are customarily performed by persons situated in a similar executive
capacity. The Employee shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the Bank and
the Company. The Employee’s other duties shall be such as the Boards
of Directors of the Bank and the Company may from time to time reasonably
direct, including normal duties as an officer of the Bank.
3. Base
Compensation. The Bank agrees to pay the Employee during the
term of this Agreement a salary at the rate of $180,000 per annum, payable in
cash not less frequently than monthly. The Board of Directors of the
Bank shall review, not less often than annually, the rate of the Employee’s
salary, and shall increase the employee’s base salary by no less than $5,000.00
per year. The Company hereby agrees that, in lieu of paying the
Employee a base salary during the term of this Agreement, it shall be jointly
and severally liable with the Bank for the payment of all amounts due under this
Agreement. Nevertheless, the Board of Directors of the Company may in
its discretion at any time during the term of this Agreement agree to pay the
Employee a base salary for the remaining term of this Agreement. If
the Board of Directors of the Company agrees to pay such salary, the Board shall
thereafter review, not less often than annually, the rate of the Employee’s
salary, and in its sole discretion may decide to increase his
salary.
Notwithstanding
the foregoing, following a Change in Control, the Boards of Directors of the
Bank and the Company shall continue to annually review the rate of the
Employee’s salary, and shall increase said rate of salary by a percentage which
is not less than the average annual percentage increase in salary that the
Employee received over the three calendar years immediately preceding the year
in which the Change in Control occurs.
4. Discretionary
Bonuses. The Employee shall participate in an equitable manner
with all other senior management employees of the Bank and in discretionary
bonuses that the Boards of Directors of the Bank and the Company may award from
time to time to their senior management employees. The Bank and the
Company shall pay any such discretionary bonuses to the Employee no later than
the two-and-one half (2½) months after the end of the calendar year in which
such bonus was awarded to the Employee. No other compensation
provided for in this Agreement shall be deemed a substitute for the
Employee’s right to participate in such discretionary
bonuses. Notwithstanding the foregoing, following a Change in
Control, the Employee shall receive discretionary bonuses that are made no less
frequently than, and in annual amounts not less than, the average annual
discretionary bonuses paid to the Employee during the three calendar years
immediately preceding the year in which the Change in Control
occurs.
5. Participation in Retirement,
Medical and Other Plans.
(a) During
the term of this Agreement, the Employee shall be eligible to participate in the
following benefit plans: group hospitalization, disability, health,
dental, sick leave, life insurance, travel and/or accident insurance,
retirement, pension, and/or other present or future qualified plans provided by
the Bank, generally which benefits, taken as a whole, must be at least as
favorable as those in effect on the Effective Date and the
Company.
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(b) The
Employee shall be eligible to participate in any fringe benefits which are or
may become available to the Bank’s and the Company’s senior management
employees, including for example: any stock option or incentive compensation
plans, and any other benefits which are commensurate with the
responsibilities and functions to be performed by the Employee under this
Agreement. The Employee shall be reimbursed for all reasonable
out-of-pocket business expenses which he shall incur in connection with his
services under this Agreement upon substantiation of such expenses in
accordance with the policies of the Bank and the
Company. Additionally, the Employee shall be entitled
to:
(1) Banking Industry
Functions. The Employee may devote reasonable time to
attending seminars and meetings sponsored by the Pennsylvania Bankers
Association, the American Bankers Association and other banking or educational
organizations at the expense of the Bank.
(2) Club
Membership. The Bank shall provide the Employee with
application fees, bond costs and annual dues in connection with his membership
in the Honesdale Golf Club and such other private clubs, social, civic and
community organizations that the Board of Directors of the Bank may reasonably
determine during the term of employment hereunder.
(3) Automobile. The
Executive shall be furnished a new executive quality automobile with insurance,
maintenance, fuel and all fees and costs paid by the Bank. Said car
to be replaced upon the sooner of three (3) years, 50,000 miles or excessive
maintenance costs.
(4) Other Perquisites and
Benefits. The Executive shall be entitled to receive such
other perquisites and fringe benefits as the Board of Directors of the Bank
reasonably deems appropriate in its sole discretion.
6. Term. The
Bank and the Company hereby employ the Employee, and the Employee hereby accepts
such employment under this Agreement, for the period commencing on the Effective
Date and ending thirty-six (36) months thereafter (or such earlier date as is
determined in accordance with Section 10 or 12). On each annual
anniversary date of the Effective Date, this Agreement shall automatically renew
for an additional 12 months unless either party has beforehand provided the
other party with written notice that this Agreement shall not
renew.
In the
event the Employee serves the full term of this Agreement, and the Bank does not
offer more than one year before the Agreement’s expiration date to renew this
Agreement upon substantially the same terms and conditions for an additional
three (3) year term, the Employee shall be entitled upon terminating employment
at any time on or after the expiration date to a severance allowance of twelve
(12) months of his then current base annual salary, plus such vested employee
benefits to which the Employee may be entitled when due and payable, and the
Bank shall have no further obligations to the Employee under this Agreement,
EXCEPT that in such event, the Bank shall provide, at the Employee’s request,
out-placement services to the Employee through Drake, Beam, and Xxxxx, New York,
New York, or such comparable out-placement service as the parties shall
select. The Bank’s costs for such services shall not exceed 17% of
the Employee’s then current base annual salary, and shall be payable only
through the
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end of
the second calendar year following the Employee’s termination of employment with
the Bank and the Company.
7. Loyalty; Noncompetition;
Nondisclosure.
(a) Loyalty. During
the period of his employment hereunder and except for illnesses, reasonable
vacation periods, and reasonable leaves of absence, the Employee shall devote
substantially all his full business time, attention, skill, and efforts to the
faithful performance of his duties hereunder; provided, however, from time to
time, Employee may serve on the boards of directors of, and hold any other
offices or positions in, companies or organizations, which will not present any
conflict of interest with the Bank, the Company or any of their subsidiaries or
affiliates or unfavorably affect the performance of Employee’s duties
pursuant to this Agreement, or will not violate any applicable statute or
regulation. “Full business time” is hereby defined as that
amount of time usually devoted to like companies by similarly situated executive
officers. Except with the prior written approval of the Board of
Directors of the Bank, the Executive shall not engage in any other business or
commercial activities, duties or pursuits, during the term of this
Agreement. Under no circumstances may the Employee engage in any
business or commercial activities, duties or pursuits which compete with the
business or commercial activities of the Bank nor may the Employee serve as a
director or officer or in any other capacity in a company or financial
institution which competes with the Bank. Investments and personal
activities not resulting in material compensation or a conflict of interest with
the Bank shall not be deemed a breach of the restrictions of this
paragraph. Participation in trade associations, charitable, civil or
similar not-for-profit, philanthropic or eleemosynary organizations, including
service as an officer or director, shall not be deemed a breach of this
Agreement, but the total amount of time spent by the Employee in such activities
during normal working hours shall be periodically reviewed by the Board of
Directors of the Bank.
(b) Noncompetition. The
Employee covenants and agrees as follows: the Employee shall not
directly or indirectly, within the marketing area of the Bank or the Company
(defined as Xxxxx County, Pennsylvania) or any future marketing area of the Bank
or the Company (defined as an area within fifty (50) miles of any branch office
located outside of Xxxxx County, Pennsylvania and begun during the Employee’s
employment under the terms of this Agreement), enter into or engage generally in
competition with the Bank or the Company either as a sole proprietor or as a
partner or joint venturer, or as a director, officer, shareholder (except as a
shareholder of less than five percent (5%) of the outstanding shares of a
corporation if Executive is not an employee, officer or director of such
corporation), employee or agent for any person, for a period of one (1) year
after the date of termination of his employment if (I) the Employee’s employment
is terminated for Just Cause pursuant to Section 10 of this Agreement, or (ii)
such termination is the result of a resignation by the Employee other than
pursuant to subsection 10(d)(2). The Employee agrees that any breach
of restrictions set forth in this paragraph shall result in irreparable injury
to the Bank and the Company and for which they shall have not adequate remedy at
law and the Bank and the Company shall be entitled to injunctive relief in order
to enforce the provisions hereof. In the event that this paragraph
shall be determined by any court of competent jurisdiction to be unenforceable
in part by reason of it
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being too
great a period of time or covering too great a geographical area, it shall be in
full force and effect as to that period of time or geographical area determined
to be reasonable by the court.
(c) Unauthorized
Disclosure. At no time during the period of his employment
hereunder and thereafter, shall the Employee, without the written consent of the
Boards of Directors of the Bank or a person authorized thereby, knowingly
disclose to any person, other than an employee of the Bank or the Company or a
person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by the Employee of his duties as an executive of the Bank
or the Company, any material confidential information obtained by him while in
the employ of the Bank or the Company with respect to any of the Bank’s or the
Company’s services, products, improvements, formulas, designs or styles,
processes, customers, methods of distribution of any business practices the
disclosure of which he knows will be materially damaging to the Bank or the
Company; 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 Employee) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by the Bank and the Bank.
(d) Nothing
contained in this Section shall be deemed to prevent or limit the Employee’s
right to invest in the capital stock or other securities of any business
dissimilar from that of the Bank or the Company, or, solely as a passive or
minority investor, in any business.
8. Standards. The
Employee shall perform his duties under this Agreement in accordance with such
reasonable standards as the Boards of Directors of the Bank and the Company may
establish from time to time. The Bank and the Company will provide
Employee with the working facilities and staff customary for similar executives
and necessary for him to perform his duties.
9. Vacation and Sick
Leave. At such reasonable times as the Board shall in its
discretion permit, the Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under
this Agreement, all such voluntary absences to count as vacation time, provided
that:
(a) The
Employee shall be entitled to an annual vacation in accordance with the policies
that the Board periodically establishes for senior management employees of the
Bank, but not less than four weeks in any calendar year (pro-rated in any
calendar year during which the Employee is employed hereunder for less than the
entire calendar year in accordance with the number of days in such year which he
is so employed).
(b) The
Employee shall not receive any additional compensation from the Bank or the
Company on account of his failure to take a vacation or sick leave, and the
Employee shall not accumulate unused vacation from one fiscal year to the next,
except in either case to the extent authorized by the Board.
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(c) In
addition to the aforesaid paid vacations, the Employee shall be entitled without
loss of pay, to absent himself voluntarily from the performance of his
employment with the Bank and the Company for such additional periods of time and
for such valid and legitimate reasons as the Board may in its discretion
determine. Further, the Boards of Directors of the Bank and the
Company may grant to the Employee a leave or leaves of absence, with or without
pay, at such time or times and upon such terms and conditions as such Boards in
their discretion may determine.
(d) In
addition, the Employee shall be entitled to an annual sick leave benefit as
established by the Board of Directors of the Bank and the Company.
10. Termination and Termination
Pay. Subject to Sections 12 and 21 hereof, the Employee’s
employment hereunder may be terminated under the following
circumstances:
(a) Death. The
Employee’s employment under this Agreement shall terminate upon his death during
the term of this Agreement, in which event the Employee’s estate shall be
entitled to receive the compensation due the Employee through the last day of
the calendar month in which his death occurred, which shall be paid to the
Employee’s estate no later than two-and-one half (2½) months after the end of
the calendar year of the Employee’s death.
(b) Disability. The
Bank and the Company may terminate the Employee’s employment if the Employee
becomes totally and permanently disabled. The Employee shall be
deemed totally and permanently disabled if he becomes unable to perform a
substantial portion of his duties under this Agreement and a physician selected
by Bank determines such inability will continue for a period of six (6) months
or more and is likely to be permanent and the Employee qualifies to receive
total disability benefits under Bank’s disability insurance
plan. Such termination shall be without prejudice to any right the
Employee may have to receive benefits under any long-term disability insurance
plan maintained by Bank or the Company.
(c) Just Cause. The
Board may, by written notice to the Employee, immediately terminate his
employment at any time, for Just Cause. The Employee shall have
no right to receive compensation or other benefits for any period after
termination for Just Cause. For the purposes of this Agreement, the
Bank shall have “Just Cause” to terminate the Employee’s employment hereunder
upon:
(1) the
willful failure by the Employee to substantially perform his material duties
hereunder other than any such failure resulting from the Employee’s incompetence
or incapacity due to physical or mental illness; or
(2) conviction
of a felony; or
(3) the
willful violation by the Employee of the provisions of this Agreement;
or
(4) the
willful violation by the Employee of material Bank or Company policy as formally
expressed by the Board of Directors of the Company or the Bank;
or
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(5) the
violation of state or federal banking, tax or financial laws, regulations or
rules in his own conduct or in the operation of the Bank or the Company, the
result of which is materially adverse to the Bank or the Company;
or
None of
the above which are capable of being cured shall be grounds for termination
until Bank and the Company give notice thereof to the Employee and the Employee
fails to cure such failure or violation within thirty (30) days of said notice,
or if said failure or violation cannot be cured within thirty (30) days, within
a reasonable time thereafter if the Employee is diligently attempting to cure
the failure or violation. No act, or failure to act, on the Employee’s part
shall be considered “willful” unless he has acted, or failed to act, with an
absence of good faith and without a reasonable belief that his action or failure
to act was in the best interest of the Bank and the Company.
Bank and
the Company may terminate this Agreement without notice and opportunity to cure
upon receipt of a final written directive or order of any governmental body or
entity having jurisdiction over the Bank or the Company requiring termination or
removal of the Employee from the positions referenced in Section 2 of this
Agreement.
(d) Without Just Cause; Constructive
Discharge. (1) The Boards of Directors of the Bank and the
Company may, by written notice to the Employee, immediately terminate his
employment at any time for a reason other than Just Cause, in which event
the Employee shall be entitled to receive the following compensation and
benefits (unless such termination occurs during the Protected Period in which
event the benefits and compensation provided for in Section 12 shall apply): (I)
the salary provided pursuant to Section 3 hereof, up to the later of the
expiration date of this Agreement (including any renewal term) of this Agreement
and the date that is 12 months after the employee’s last day of employment, and
(ii) long-term disability and such medical benefits as are available to the
Employee under the provisions of COBRA for eighteen (18) months. All
amounts payable to the Employee shall be paid in one lump sum within ten (10)
days of such termination.
(2) The
Employee shall be entitled to receive the compensation and benefits payable
under subsection 10(d)(1) hereof in the event that the Employee voluntarily
terminates employment within 90 days of an event that constitutes Good Reason
(unless such voluntary termination occurs during the Protected Period, in which
event the benefits and compensation provided for in Section 12 shall
apply).
(e) Termination or Suspension Under
Federal Law. (1) If the Employee is removed and/or
permanently prohibited from participating in the conduct of the Bank’s affairs
by an order issued under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit
Insurance Act (“FDIA”) (12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the
Bank under this Agreement shall terminate, as of the effective date of the
order, but vested rights of the parties shall not be affected.
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(2) If
the Bank is in default (as defined in Section 3(x)(1) of FDIA), all obligations
of the Bank under this Agreement shall terminate as of the date of default;
however, this Paragraph shall not affect the vested rights of the
parties.
(3) If
a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C.
1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits the Employee from
participating in the conduct of the Bank’s affairs, the Bank’s obligations under
this Agreement shall be suspended as of the date of such service, unless stayed
by appropriate proceedings. If the charges in the notice are
dismissed, the Bank may in its discretion (I) pay the Employee all or part of
the compensation withheld while its contract obligations were suspended, and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(f) Voluntary Termination by
Employee. Subject to Section 12(a)(ii) hereof, the Employee
may voluntarily terminate employment with the Bank during the term of this
Agreement, upon at least ninety (90) days’ prior written notice to the Board of
Directors, in which case the Employee shall receive only his compensation,
vested rights and employee benefits up to the date of his termination (unless
such termination occurs pursuant to Section 10(d)(2) hereof or within the
Protected Period, in which event the benefits and compensation provided for in
Sections 10(d) or 12, as applicable, shall apply).
11. No
Mitigation. The Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent
employment.
12. Change in Control Severance
Payments.
(a) Trigger Events. In
lieu of the severance benefits provided under Section 10, the Employee shall be
entitled to collect the severance benefits set forth in Subsection (b) hereof in
the event that (i) the Employee voluntarily terminates employment either for any
reason within the 30-day period beginning on the date of a Change in Control,
(ii) the Employee voluntarily terminates employment within 90 days of an event
that both occurs during the Protected Period and constitutes Good Reason, or
(iii) the Bank or the Company or their successor(s) in interest terminate the
Employee’s employment without his written consent and for any reason other than
Just Cause during the Protected Period.
(b) Amount of Severance
Benefit. If the Employee becomes entitled to collect severance
benefits pursuant to Section 12(a) hereof, the Bank shall pay the
Employee:
(i) a
severance benefit equal to the Code §280G maximum, and
(ii) pay
for long-term disability and provide such medical benefits as are available to
the Employee under the provisions of COBRA, for eighteen (18) months (or such
longer period, up to 24 months, if COBRA is amended).
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Subject
to Section 21 hereof, said sum shall be paid in one lump sum within ten (10)
days of the later of the date of the Change in Control and the Employee’s last
day of employment with the Bank or the Company.
(c) Funding of Grantor Trust upon Change
in Control. Not later than ten business days after a Change in
Control, the Bank shall (I) establish a grantor trust (the “Trust”) that is
designed in accordance with Revenue Procedure 92-64 and has a trustee
independent of the Bank and the Company, (ii) deposit in said Trust an amount
equal to the Code §280G Maximum, unless the Employee has previously provided a
written release of any claims under this Agreement, and (iii) provide the
trustee of the Trust with a written direction to hold said amount and any
investment return thereon in a segregated account for the benefit of the
Employee, and to follow the procedures set forth in the next paragraph as to the
payment of such amounts from the Trust. Upon the earlier of the
Trust’s final payment of all amounts due under the following paragraph or the
date 15 months after the Change in Control, the trustee of the Trust shall pay
to the Bank the entire balance remaining in the segregated account maintained
for the benefit of the Employee. The Employee shall thereafter have
no further interest in the Trust.
During
the 15-consecutive month period after a Change in Control, the Employee may
provide the trustee of the Trust with a written notice requesting that the
trustee pay to the Employee an amount designated in the notice as being payable
pursuant to this Agreement. Within three business days after
receiving said notice, the trustee of the Trust shall send a copy of the notice
to the Bank via overnight and registered mail return receipt
requested. On the tenth (10th) business day after mailing said notice
to the Bank, the trustee of the Trust shall pay the Employee the amount
designated therein in immediately available funds, unless prior thereto the Bank
provides the trustee with a written notice directing the trustee to withhold
such payment. In the latter event, the trustee shall submit the
dispute to non-appealable binding arbitration for a determination of the amount
payable to the Employee pursuant to this Agreement, and the costs of such
arbitration shall be paid by the Bank. The trustee shall choose the
arbitrator to settle the dispute, and such arbitrator shall be bound by the
rules of the American Arbitration Association in making his
determination. The parties and the trustee shall be bound by the
results of the arbitration and, within 3 days of the determination by the
arbitrator, the trustee shall pay from the Trust the amounts required to be paid
to the Employee and/or the Bank, and in no event shall the trustee be liable to
either party for making the payments as determined by the
arbitrator.
Upon the
earlier of (I) any payment from the Trust to the Employee, or (ii) the date
fifteen (15) months after the later of the Change in Control and the date on
which the Bank makes the deposit referred to in the first paragraph of this
subsection 11(d), the trustee of the Trust shall pay to the Bank the entire
balance remaining in the segregated account maintained for the benefit of the
Employee. The Employee shall thereafter have no further interest in
the Trust pursuant to this Agreement.
(d) Indemnification. The
Bank shall indemnify and hold the Executive harmless from any and all loss,
expense or liability that he may incur due to his services for the Company
(including any liability he may ever incur under Code § 4999, or a successor, as
the result of benefits he collects pursuant to Sections 10 or 12, provided that,
subject to Section 21 hereof,
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any such
payments are made to the Employee within two-and-one half (2½) months after the
later occurs of (i) the end of the calendar year in which the Employee’s
employment with the Bank and the Company is terminated, and (ii) the date on
which the Executive incurs the loss, expense, or liability that entitles him to
payments hereunder.
13. Indemnification. The
Bank and the Company agree that their respective Bylaws shall continue to
provide for indemnification of directors, officers, employees and agents of the
Bank and the Company, including the Employee during the full term of this
Agreement, and to at all times provide adequate insurance for such
purposes.
14. Additional
Offices. The Employee agrees to serve without additional
compensation, if elected or appointed thereto, as an officer in one or more
offices or as a director of any subsidiary of the Company or the Bank; provided,
however, the Employee shall not be required to serve in such additional offices
or as a director of any subsidiary, if such service would expose him, as an
individual, to adverse financial conditions.
15. Reimbursement of Employee
for Enforcement Proceedings. In the event that any dispute
arises between the Employee and the Bank as to the terms or interpretation of
this Agreement, whether instituted by formal legal proceedings or
otherwise, including any action that the Employee takes to defend against any
action taken by the Bank or the Company, the Employee shall be reimbursed for
all costs and expenses, including reasonable attorneys’ fees, arising from
such dispute, proceedings or actions, provided that the Employee obtains either
a written settlement or a final judgment by a court of competent jurisdiction
substantially in his favor. Such reimbursement shall be paid
within ten (10) days of Employee’s furnishing to the Bank written evidence,
which may be in the form, among other things, of a canceled check or receipt, of
any costs or expenses incurred by the Employee.
16. Federal Income Tax
Withholding. The Bank and the Company may withhold all federal
and state income or other taxes from any benefit payable under this Agreement as
shall be required pursuant to any law or government regulation or
ruling.
17. Successors and
Assigns.
(a) Bank and
Company. This Agreement shall not be assignable by the Bank
and the Company, provided that this Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Bank and the Company
which shall acquire, directly or indirectly, by merger, consolidation, purchase
or otherwise, all or substantially all of the assets or stock of the
Bank.
(b) Employee. Since
the Bank and the Company are contracting for the unique and personal skills of
the Employee, the Employee shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of the
Bank and the Company; provided, however, that nothing in this paragraph shall
preclude (i) the Employee from designating a beneficiary to receive any benefit
payable hereunder upon his death, or (ii)
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the
executors, administrators, or other legal representatives of the Employee or his
estate from assigning any rights hereunder to the person or persons entitled
thereunto.
(c) Attachment. Except
as required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to exclusion, attachment, levy or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void and of no
effect.
18. Amendments. No
amendments or additions to this Agreement shall be binding unless made in
writing and signed by all of the parties, except as herein otherwise
specifically provided.
19. Applicable
Law. Except to the extent preempted by Federal law, the laws
of the Commonwealth of Pennsylvania shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or
otherwise.
20. Severability. The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
21. Tax Liabilities and Code
Section 409A. The Employee is solely responsible for the
satisfaction of any tax liability, including any taxes and penalties that may
arise under Sections 409A of the Code (“Section 409A”), that may result from any
payments or benefits that the Employee receives pursuant to this
Agreement. Any such payments or benefits shall be subject to
reduction for any applicable employment or withholding taxes. Neither
the Bank nor the Company shall have any obligation to pay, mitigate, or protect
the Employee from any such tax liabilities. However, if the Bank or
the Company determines in good faith in either of their sole discretion that the
Employee is a key employee of a public company as defined in Section 416(i) of
the Code (disregarding Section 416(i)(5)) at the time of his termination of
employment, the Bank and the Company shall suspend paying the Employee any cash
amounts that he is entitled to receive pursuant to Sections 6, 10, or 12 above
during the six-month period following termination of the Employee’s employment
(the “409A Suspension Period”), unless the Bank and the Company reasonably
determine that paying such amounts in accordance with Sections 6, 10, or 12 will
not result in the Employee’s liability for additional tax under Section
409A. As soon as reasonably practical after the end of the 409A
Suspension Period, the Employee shall receive a lump sum payment in cash for an
amount equal to any cash payments that the Bank and the Company do not make
during the 409A Suspension Period. Thereafter, the Employee will
receive any remaining payments pursuant to Sections 6, 10 or 12 in accordance
with the terms of those Sections (as if there had not been any suspension of
payments).
22. Entire
Agreement. This Agreement, together with any
understanding or modifications thereof as agreed to in writing by the
parties, shall constitute the entire agreement between the parties
hereto.
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IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first hereinabove written.
|
ATTEST:
|
XXXXX
BANK
|
||
| /s/ Xxxxx X. Xxxx |
By
|
/s/ Xxxxxxx X. Xxxxx, Xx. | |
|
Assistant
Secretary
|
Its:
President and Chief Executive Officer
|
||
|
XXXXXXX
FINANCIAL CORP.
|
|||
| /s/ Xxxxx X. Xxxx |
By
|
/s/ Xxxxxxx X. Xxxxx, Xx. | |
|
Assistant
Secretary
|
Its:
President and Chief Executive Officer
|
||
|
WITNESS:
|
EMPLOYEE
|
||
| /s/ Xxxxx X. Xxxxxx | /s/ Xxxxx X. Xxxxxxxx | ||
|
Xxxxx
X. Xxxxxxxx
|
|||
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