Exhibit 10.18
SEVERANCE AGREEMENT
Agreement made this 22nd day of September 1997, by and between Nazareth
National Bank and Trust Company, a banking association organized under the laws
of the United States ("Bank") and Xxxxx X. Xxxxxxxxx, an individual
("Employee").
BACKGROUND
Employee is currently employed by the Bank in the position of Executive
Vice President and Chief Lending Officer. In consideration of Employee's past,
present and future services to the Bank, the Bank desires to provide for the
payment of certain compensation and other benefits to Employee upon the
occurrence of certain events, all as more fully set forth below.
In consideration of the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, the parties agree as follows:
1. Term. This Agreement shall continue for a period beginning on the day
hereof and ending on the earliest of the following dates (the "Term"): (a) the
date Employee dies or becomes permanently disabled (i.e., upon his failure to
render services of the character which he had previously rendered to the Bank,
because of his physical or mental illness or other incapacity beyond his control
for a continuous period of six months or for shorter periods aggregating six
months in any twelve month period); (b) termination of Employee's employment
with the Bank for cause (as hereinafter defined); (c) mutual agreement of the
Bank and Employee; (d) subject to Section 2 hereof, termination by Employee of
Employee's employment with the Bank by resignation or otherwise; or (e) December
31, 2000. In the event the Employee's employment with the Bank is terminated
during the Term other than as set forth in Section 2 hereof, the Employee shall
have no rights or benefits under this Agreement, but shall be entitled to any
other rights or benefits to which he or she might otherwise be entitled to. For
purposes of this Agreement, the term "cause" shall mean (i) conviction of
Employee for any felony, fraud or embezzlement or (ii) Employee failing or
refusing to comply with the written policies or directives of the Bank's Board
of Directors or the Employee being guilty of misconduct in connection with the
performance of his duties for the Bank and the Employee fails to cure such
non-compliance or misconduct within twenty days after receiving written notice
from the Bank's Board of Directors specifying such non-compliance or misconduct.
2. Termination. If during the Term hereof, the Employee's employment with
the Bank is terminated as set forth below, the Bank will pay to Employee the
amount set forth in Section 3 hereof and Employee shall be entitled to the
benefits set forth in Section 4 hereof:
(a) the Bank terminates Employee's employment with the Bank without cause;
or
(b) the Employee terminates Employee's employment with the Bank due to the
fact that the nature and scope of Employee's duties and authority or his
responsibilities with the Bank or the surviving or acquiring person are
materially reduced to a level below that which he enjoys on the date hereof, his
then current base annual salary is materially reduced to a level below that
which he enjoys on the date hereof, the fringe benefits which the Bank provides
Employee on the date hereof are materially reduced, Employee's position or title
with the Bank or the surviving or acquiring person is materially reduced from
his current position or title with the Bank, or without Employee's consent,
Employee's principal place of employment with the Bank is changed to a location
greater than eighty miles from his current principal place of employment with
the Bank, provided, however, that for any termination by Employee under this
clause (b) the Employee shall have first given Bank ten (10) days written notice
of his intention to termination his employment pursuant to this clause (ii),
specifying the reason(s) for such termination, and provided further, that the
Bank shall not have cured or remedied the reason(s) specified in such notice
prior to the expiration of ten (10) days after receipt of such written notice.
3. Termination Payments to Employee. Commencing not later than 30 days
after the date Employee's employment with the Bank is terminated pursuant to
Section 2 hereof (the "Termination Date") and subject to Employee's compliance
with Section 8 hereof, the Bank shall pay compensation to Employee for a one
year period following the Termination Date (the "Compensation Period") at a per
annum rate equal to 100% of Employee's "base annual salary" on the Termination
Date. For purposes of this Agreement, the term "base annual salary" shall mean
the Employee's annual compensation rate on the Termination Date exclusive of
cash bonuses and payments under the Bank's Annual Incentive Bonus Plan. The Bank
agrees that it will make the payments due under this Section 3 on the first day
of each month following the Termination Date in an amount equal to 1/12 of 100%
of Employee's base annual salary on the Termination Date. Such payments to
Employee shall be reduced each month by the sum of the following:
(a) by the amount of any pension or annuity benefits Employee receives
under the Bank's Defined Benefit Pension Plan as the same shall be amended from
time to time, if Employee had retired at age 65 (regardless of when he actually
retired) and had elected the single life annuity benefit (regardless of the
benefit he actually elected), and (b)in the event Employee commences employment
within the Compensation Period, by the amount of base annual salary to which he
is then entitled by virtue of his new employment. The intent of this paragraph
is that the sum of payments made under this Section 3 in any year, when added to
payments received under the Bank's Defined Benefit Pension Plan and base annual
salary received by virtue of other employment, will not exceed the Employee's
base annual salary on the Termination Date. The Employee covenants and agrees
that upon the termination of the Employee's employment with the Bank, the
Employee shall use his best efforts to secure new employment.
4. Other Benefits. In addition to the compensation set forth in Section 3
hereof, Employee shall be entitled to the following benefits from the Bank:
(a) for a period of one year following the Termination Date, reimbursement
for all reasonable expenses incurred by Employee in connection with the search
for new employment, including, without limitation, those of a placement agency
or service; provided, however, in no event shall the Bank be obligated to
reimburse Employee hereunder in excess of 1/3 of his base annual salary on the
Termination Date.
(b) for a period of one year following the Termination Date, reimbursement
for all reasonable relocation expenses incurred by Employee in connection with
securing new employment; provided, however, in no event shall the Bank be
obligated to reimburse Employee hereunder in excess of 1/3 of his base annual
salary on the Termination Date.
(c) for a period of one year following the Termination Date, Employee shall
be entitled to participate in the following programs of the Bank:
(i) All medical, hospitalization and life insurance benefits shall be
continued for the Compensation Period except that should subsequent
employment be accepted during the Compensation Period, continuation of any
medical, hospitalization and life insurance benefits will be offset by
coverages provided through the Employee's subsequent employer.
(ii) If permitted under the terms thereof, Employee will remain a
participant under the Bank's Defined Benefit Pension Plan, however,
benefits will be actuarially reduced based upon the number of years
remaining until Employee's normal retirement date had he remained an
employee of the Bank.
5. Withholding. The Bank may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
6. Source of Payment. All payments provided under this Agreement shall be
paid in cash from the general funds of the Bank. No special or separate fund
shall be required to be established by the Bank and the Employee shall have no
right, title or interest whatsoever in or to any investment which the Bank may
make to aid the Bank in meeting its obligations hereunder. Nothing contained in
this Agreement, and no action taken pursuant to its provisions, shall create or
be construed to create a trust of any kind or a fiduciary relationship between
the Bank and Employee or any other person.
7. (a) Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by Employee or his legal representatives without
the Bank's prior written consent.
(b) Attachment. Except as required by law, the right to receive payments
under this Agreement shall not be subject of anticipation, sale, encumbrance,
charge, levy, or similar process or assignment by operation of law.
8. Confidentiality and Non-Competition. All payments to Employee under this
Agreement shall be subject to Employee's compliance with the provisions of this
Section 8. If Employee fails to comply with such provisions, his right to any
future payments under this Agreement shall terminate and the Bank's obligations
under this Agreement to make such payments and provide such benefits shall
cease.
(a) Employee covenants and agrees that he will not, during the term of his
employment and at any time thereafter, except with the express prior written
consent of the Bank or pursuant to the lawful order of any judicial or
administrative agency of government, directly or indirectly, disclose,
communicate or divulge to any person, or use for the benefit of any person, any
knowledge or information with respect to the conduct or details of the Bank's
business which he, acting reasonably, believes or should believe to be of a
confidential nature and the disclosure of which not to be in the Bank's
interest.
(b) Employee covenants and agrees that he will not, during the term of his
employment and for a period of one year thereafter, except with the express
prior written consent of the Bank, directly or indirectly, whether as employee,
employer, owner, partner, consultant, agent, director, officer, shareholder or
in any other capacity, engage in or assist any person to engage in any act or
action which he, acting reasonably, believes or should believe would be harmful
or inimical to the interests of the Bank.
(c) Employee covenants and agrees that he will not, during the term of his
employment and for a period of one year thereafter, except with the express
prior written consent of the Bank, in any capacity (including, but not limited
to, owner, partner, shareholder, consultant, agent, employee, employer, officer,
director or otherwise), directly or indirectly, for his own account or for the
benefit of any person, engage or participate in or otherwise be connected with
any commercial bank which has its principal office in either Northampton or
Lehigh Counties, Pennsylvania or Xxxxxx County, New Jersey except that the
foregoing shall not prohibit Employee from owning as a shareholder less than l%
of the outstanding stock of an issuer whose stock is publicly traded.
(d) The parties agree that any breach by Employee of any of the covenants
or agreements contained in this Section 8 will result in irreparable injury to
the Bank for which money damages could not adequately compensate the Bank and
therefore, in the event of any such breach, the Bank shall be entitled (in
addition to any other rights and remedies which it may have at law or in equity)
to have an injunction issued by any competent court enjoining and
restraining Employee and/or any other person involved therein from continuing
such breach. The existence of any claim or cause of action which Employee may
have against the Bank or any other person (other than a claim for the Bank's
breach of this Agreement for failure to make payments hereunder) shall not
constitute a defense or bar to the enforcement of such covenants. In the event
of an alleged breach by Employee of any of the covenants or agreements contained
in this Section 8, the Bank shall continue any and all of the payments due
Employee under this Agreement until such time as a court shall enter a final and
unappealable order finding such a breach; provided, however, that the foregoing
shall not preclude a court from ordering Employee to repay such payments made to
him for the period after the breach is determined to have occurred or from
ordering that payments hereunder be permanently terminated in the event of a
material and willful breach.
(e) If any portion of the covenants or agreements contained in this Section
8, or the application thereof, is construed to be invalid or unenforceable, the
other portions of such covenant(s) or agreement(s) or the application thereof
shall not be affected and shall be given full force and effect without regard to
the invalid or unenforceable portions to the fullest extent possible. If any
covenant or agreement in this Section 8 is held unenforceable because of the
area covered, the duration thereof, or the scope thereof, then the court making
such deter mination shall have the power to reduce the area and/or duration
and/or limit the scope thereof, and the covenant or agreement shall then be
enforceable in its reduced form.
(f) For purposes of this Section 8, the term "the Bank" shall include the
Bank, any successor to the Bank under Section 9 hereof, and all present and
future direct and indirect subsidiaries and affiliates of the Bank.
9. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Bank which may acquire,
directly or indirectly, by merger, consolidation, purchase, or otherwise, all or
substantially all of the assets of the Bank, and shall otherwise inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns. Nothing in the Agreement
shall preclude the Bank from consolidating or merging into or with or
transferring all or substantially all of its assets to another person. In that
event, such other person shall assume this Agreement and all obligations of the
Bank hereunder. Upon such a consolidation, merger, or transfer of assets and
assumption, the term "the Bank" as used herein, shall mean such other person and
this Agreement shall continue in full force and effect.
10. Waivers Not to be Continued. Any waiver by a party of any breach of
this Agreement by another party shall not be construed as a continuing waiver or
as a consent to any subsequent breach by the other party.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice:
If to Employee, to:
Xxxxx X. Xxxxxxxxx
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
If to the Bank, to:
Nazareth National Bank and Trust Company
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Board of Directors
and to such other or additional person or persons as either party shall
have designated to the other party in writing by like notice.
12. Applicable Law; Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the substantive laws of the
Commonwealth of Pennsylvania with respect to contracts executed in and to be
wholly performed therein. Bank and Employee consent to the exclusive
jurisdiction of the Court of Common Pleas, Northampton County, Commonwealth of
Pennsylvania and the United States District Court for the Eastern District of
Pennsylvania in any and all actions arising hereunder and irrevoc ably consent
to service of process as set forth in Section 11 hereof.
13. General Provisions.
(a) This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof, and supersedes and replaces all prior
agreements between the parties. No amendment, waiver or termination of any of
the provisions hereof shall be effective unless in writing and signed by the
party against whom it is sought to be enforced. Any written amendment, waiver or
termination hereof executed by the Bank and Employee shall be binding upon them
and upon all other persons, without the necessity of securing the consent of any
other person and no person shall be deemed to be a third party beneficiary under
this Agreement.
(b) This Agreement shall not limit or infringe upon the right of the Bank
to terminate the employment of Employee at any time for any reason, nor upon the
right of Employee to terminate his employment with the Bank.
(c) The term "person" as used in this Agreement means a natural person,
joint venture, corporation, sole proprietorship, trust, estate, partnership,
cooperative, association, non-profit organization or any other legally
cognizable entity.
(d) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same Agreement.
(e) No failure on the part of any party hereto to exercise and no delay in
exercising any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other rights, power or remedy.
(f) The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall in no way restrict or modify any of the
terms or provisions hereof. (g) Nothing contained herein shall be construed to
require the Bank to violate applicable law, including, but not limited to,
applicable banking laws and regulations, and all obligations of the Bank under
this Agreement shall be deemed to be qualified accordingly.
ATTEST: NAZARETH NATIONAL BANK AND
TRUST COMPANY
By:/s/ Xxxxxx X. Files By:/s/ S. Xxxx Xxxxxxx
, Secretary S. Xxxx Xxxxxxx, President
Witness:
/s/ Xxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxxxxx (SEAL)
Xxxxx X. Xxxxxxxxx
