EXHIBIT 99.1
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made as of this 19th day of November, 2004, among
ACNB Acquisition LLC ("ACNB-A"), a Maryland limited liability company and Xxxxx
Xxxxxxx ("Executive"), an adult individual residing in Maryland, but this
Agreement shall not become effective until the date identified in Section 3(a)
of this Agreement and unless the conditions identified in Section 3(a) occur.
WHEREAS, as a condition to ACNB Corporation ("ACNB"), ACNB-A's and
Xxxxxxx Insurance Group's ("RIG") entry into the Stock Purchase Agreement by
which ACNB-A shall acquire the shares of RIG and to induce such entry,
Executive, an adult individual and officer, shareholder, or employee of RIG is
entering this Employment Agreement with ACNB-A.
WHEREAS, ACNB-A desires to employ Executive to serve in the capacity of
President of ACNB-A under the terms and conditions set forth herein;
WHEREAS, Executive desires to accept employment with ACNB-A on the
terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. EMPLOYMENT. ACNB-A, hereby, offers to employ Executive and Executive,
hereby, accepts employment with ACNB-A, 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 ACNB-A as may be
assigned to Executive from time to time by the Board of Directors of
ACNB-A, so long as the assignment is consistent with Executive's office
and duties. Executive shall be employed as President of ACNB-A, and shall
hold other titles that may be given to him from time to time by the Board
of Directors of ACNB-A. Executive shall devote his full time, attention,
and energies to the business of ACNB-A during the Employment Period (as
defined in Section 3 of this Agreement). Executive shall not engage in any
business or commercial activities, duties, or pursuits that compete with
the business or commercial activities of ACNB-A or ACNB, or any of their
subsidiaries or affiliates. Executive shall not serve as a director,
officer, or in any other capacity in a company which competes with ACNB-A
or ACNB or any of their subsidiaries or affiliates.
3. TERM OF AGREEMENT.
(a) This initial term of this Agreement shall be for a three (3) year
period (the "Employment Period"), beginning on the Effective Date as
set forth in Section 2.2 of the Stock Purchase Agreement (the
"Effective Date"), and if not previously terminated pursuant to the
terms of this Agreement.. If the Stock Purchase Agreement is
terminated pursuant to its terms, the parties hereto shall have no
further obligations under this Agreement and this Agreement shall be
null and void. This Agreement shall be subject to automatic renewal
for successive one (1) year periods, subject to the terms and
conditions set forth in this Agreement, unless either party notifies
the other in writing at least ninety (90) days prior to termination
of the then current term of the party's desire to terminate this
Agreement.
(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 ACNB-A to
Executive. As used in this Agreement, "Cause" shall mean any of the
following:
(i) the willful failure by Executive to substantially perform his
duties under this Agreement (other than a failure resulting
from Executive's incapacity because of physical or mental
illness, as provided in this Agreement) which failure results
in monetary or other injury to ACNB-A or ACNB and Executive
fails to cure such failure within fifteen (15) days following
written notice therof by the Board of Directors of ACNB;
(ii) the willful engaging by Executive in misconduct injurious to
ACNB-A or ACNB or any of their subsidiaries or affiliates,
after notice from ACNB-A;
(iii) the willful violation by Executive of the provisions of this
Agreement;
(iv) the dishonesty of Executive in the performance of his duties;
(v) the breach of Executive's fiduciary duty involving personal
profit;
(vi) the violation of any material law, rule or regulation
applicable to ACNB-A or ACNB, or any final cease and desist
order issued by an applicable regulatory agency;
(vii) conduct on the part of Executive that brings public discredit
to ACNB-A, ACNB, or any of their subsidiaries or affiliates
or that is clearly contrary to the best interests of ACNB-A,
ACNB, or any of their subsidiaries or affiliates, as
determined by a vote of two-thirds of the directors of the
Board of Directors of ACNB-A
(viii) unlawful discrimination by Executive, including harassment
against ACNB-A or ACNB's employees, customers, business
associates, contractors, or vendors that could result in
liability to ACNB-A or ACNB;
(ix) theft or material abuse by Executive of ACNB-A or ACNB's
property or the property of ACNB-A or ACNB's customers,
employees, contractors, vendors, or business associates;
(x) willful failure of Executive to follow the good faith lawful
instructions of the Board of Directors of ACNB-A with respect
to its operations;
(xi) the written direction or recommendation of an applicable
regulatory agency to remove Executive from his position with
ACNB-A or ACNB, as identified herein;
(xii) any final removal or prohibition order that is issued by an
applicable regulatory agency, which Executive is subject;
(xiii) Executive's conviction of or plea of guilty or nolo
contendere to a felony, crime of falsehood or a crime
involving moral turpitude, or the actual incarceration of
Executive;
(xiv) any act of fraud or misappropriation;
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(xv) intentional misrepresentation of a material fact, or
intentional omission of information necessary to make the
information supplied not materially misleading, in an
application or other information provided by Executive to
ACNB-A, ACNB, or any representative of ACNB-A, ACNB in
connection with Executive's employment with ACNB-A or ACNB; or
(xvi) the existence of any material conflict between the interests
of ACNB-A, ACNB and Executive that is not disclosed in writing
by Executive to ACNB-A and ACNB and approved in writing by the
Board of Directors of ACNB-A and, after notice from ACNB-A, a
failure to cure such conflict within ten (10) days of said
notice.
The Executive shall not be deemed to have been terminated, demoted
or had his salary or benefits reduced for Cause unless and until he
shall have received a written notice of such from the Board,
accompanied by a resolution duly adopted by the affirmative vote of
a majority of the entire Board at a meeting called and held for such
purpose (after reasonable notice to the Executive and a reasonable
opportunity for the Executive to make oral and written presentations
to the members of the Board, on his own behalf or through a
representative, who may be his legal counsel, to refute the grounds
for the proposed determination) finding that in the good faith
opinion of the Board grounds exist for such action. Provided
however, that (i) at the discretion of the Board, the effective date
of termination, demotion or reduction of salary or benefits may
relate back to the date of the written notice; and (ii) the Board
may during the period of time beginning with the written notice
contemplated in this section, until affirmative vote of a majority
or the entire Board, place the Executive on suspension with pay
without such action being deemed to be a termination, demotion or
reduction of salary or benefits.
(c) Notwithstanding the provisions of Section 3(a) of this Agreement,
this Agreement and all of ACNB-A's compensation and employment
obligations under this Agreement shall terminate automatically upon
Executive's voluntary termination of employment other than for Good
Reason (as defined in Section 3(d) of this Agreement).
(d) Notwithstanding the provisions of Section 3(a) of this Agreement,
Executive may terminate his employment under this Agreement for Good
Reason. The term "Good Reason" shall mean any of the following: (1)
removal of Executive from the position indicated in Section 2 of
this Agreement, except as a result of his regulatory removal and/or
in connection with termination of Executive's employment for Cause;
(2) any reduction in Executive's Annual Base Salary as set forth in
Section 4(a) of this Agreement 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 when
a reduction has been implemented by the Board of Directors of
ACNB-A's senior management; (3) the assignment of duties and
responsibilities to Executive inconsistent with the positions
indicated in Section 2 of this Agreement, and, after notice from
Executive, a failure to cure the breach within thirty (30) days of
said notice, except if such assignment is directed by a regulatory
authority in writing; (4) a requirement that Executive relocate his
residence more than fifty (50) miles from the location of his
primary residence at the time that this Agreement is executed; or
(5) any material breach of this Agreement by ACNB-A and, after
notice from Executive, a failure to cure the breach within thirty
(30) days of said notice. If Executive terminates his employment for
Good Reason, then he may give notice of intention to collect
benefits under this Agreement by delivering a notice in writing (the
"Notice of Termination") to ACNB-A and the provisions of Section 5
of this Agreement shall apply.
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(e) Notwithstanding the provisions of Section 3(a) of this Agreement,
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, taking into account any reasonable accommodation
required by law, without posing a direct threat to himself or
others, for a period up to ninety (90) days, then all obligations of
and, after notice from Executive, a failure to cure the breach
within thirty (30) days of said notice to pay Executive an Annual
Base Salary as set forth in Section 4(a) of this Agreement shall be
suspended. Any paid time off, sick leave, or short term disability
pay that Executive may be entitled to receive, pursuant to an
established disability plan or program of ACNB-A shall be considered
part of the compensation Executive shall receive while disabled and
shall not be in addition to the compensation received by Executive
under this Agreement. Notwithstanding any other provisions of this
Agreement, Executive agrees that should he remain unable to perform
all of the essential functions of his position, taking into account
any reasonable accommodation required by law, without posing a
direct threat to himself or others, for a period greater than ninety
(90) days, ACNB-A will suffer an undue hardship by continuing
Executive in his position. Upon this event, all compensation and
employment obligations of ACNB-A under this Agreement shall cease
(with the exception of Executive's rights under ACNB-A's then
existing short term and/or long term disability plans, if any), and
this Agreement shall terminate.
(f) 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 ACNB-A, ACNB and any
affiliate or subsidiary thereof, if he is then serving as a director
of any such entities.
4. EMPLOYMENT PERIOD COMPENSATION.
(a) ANNUAL BASE SALARY. For services performed by Executive under this
Agreement, ACNB-A shall pay Executive an Annual Base Salary during
the Employment Period at the rate of Two Hundred Thousand Dollars
($200,000) per year (subject to applicable withholdings and
deductions), payable at the same times as salaries are payable to
other executive employees of ACNB-A. ACNB-A may increase Executive's
Annual Base Salary, from time to time, 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 ACNB-A
or any committee of such Board in the resolutions authorizing such
increases.
(b) BONUS. Executive shall receive an annual incentive compensation
bonus for each year that this Agreement is in effect subject to the
pre-tax profit objectives provided on Schedule [X] attached hereto.
The annual bonus will be paid no later than March 15 of each
respective year and will be equal to five (5%) percent of the actual
pre-tax profits earned by RIG during the immediately preceding
calendar year, provided that the actual pre-tax profits earned are
equal or exceed the pre-tax profit objectives on the attached
Schedule [X].
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The Executive and ACNB-A agree that, during the initial term of this
Agreement, the pre-tax profit objective on Schedule [X] is intended
to represent an amount equal to 90% of the Pro-forma Projected
Pre-tax Income from Operations of RIG and Armor on a combined basis,
attached as Schedule [Y], for the respective years. For purposes of
calculating the actual pre-tax profits earned by RIG in each year of
the initial term of this Agreement, the calculation will conform to
the accounting practices as reflected in the pro-forma financial
statements included as Schedule [Y]. The Executive and ACNB-A
further agree that any insurance acquisitions, subsequent to RIG's
entry into the Stock Purchase Agreement, made by RIG, ACNB-A or
ACNB, or any affiliate of ACNB, will cause such Schedule X to be
adjusted, in accordance with the accounting practices as reflected
in the pro-forma financial statements included as Schedule [Y],
proportionately upwards by the percentage of the revenue increase
that each respective acquisition increases the pro-forma financial
statements.
Subsequent to the initial term, and to any successive terms, of this
Agreement, the Executive and the Board of Directors of ACNB-A, shall
jointly establish and approve an annual operating budget for ACNB-A,
including a pre-tax profit objective for purposes of the bonus
calculation under this Agreement.
(c) PAID TIME OFF AND/OR VACATIONS. During the term of this Agreement,
Executive shall be entitled to paid time off and/or vacation in
accordance with the policies as established from time to time by the
Board of Directors of ACNB-A for ACNB-A's senior management. For
purposes of any paid time off or vacation policies of ACNB-A that
may apply to Executive, Executive shall receive credit for his years
of service with RIG/ACNB-A. However, Executive shall not be entitled
to receive any additional compensation from ACNB-A for failure to
take paid time off and/or vacation, nor shall Executive be able to
accumulate unused paid time off and/or vacation time from one year
to the next, except to the extent authorized by the Boards of
Directors of ACNB-A.
(d) 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 ACNB-A, subject to the
terms of said plan, until such time that the Board of Directors of
ACNB-A authorizes a change in such benefits. . 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) of this Agreement.
(e) BUSINESS EXPENSES. During the term of this Agreement, Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him, which are properly accounted for, in
accordance with the policies and procedures established by the Board
of Directors of ACNB-A for ACNB-A's executive officers.
(f) KEY MAN INSURANCE. In the event ACNB-A purchases Key Man Insurance
on the life of the Executive, the Executive hereby consents to said
purchase and agrees that ACNB-A has an insurable interest in any
such policy.
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5. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT.
(a) In the event that Executive's employment is involuntarily terminated
by ACNB-A without Cause or Executive delivers Notice of Termination
as provided in Section 3(d) of this Agreement after terminating his
employment for Good Reason, ACNB-A shall pay Executive the lesser of
the amount equal to one (1) times the Annual Base Salary (the
payment of which shall be subject to applicable taxes and
withholdings), which would be payable in twelve (12) equal
installments, or the amount equal to the remaining balance of the
Employment Period, as defined by this Agreement, which would be
payable over the remaining term of the Agreement. Executive only
becomes entitled to receive these payments if he executes a General
Release in favor of ACNB-A, ACNB and their subsidiaries and
affiliates. However, in the event the payments described herein,
when added to all other amounts or benefits provided to or on behalf
of Executive in connection with his termination of employment, would
result in the imposition of an excise tax under Section 4999 of the
Internal Revenue Code of 1986, as amended, 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 ACNB-A or ACNB's independent auditors,
Executive shall remit to ACNB-A 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 Executive is determined to be non-deductible pursuant to
the regulations promulgated under Section 280G of the Internal
Revenue Code of 1986, as amended, ACNB-A 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 5 of this Agreement by seeking
other employment or otherwise. Unless otherwise agreed to in
writing, the amount of payment or the benefit provided for in this
Section 5 of this Agreement shall not be reduced by any compensation
earned by Executive 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.
6. COVENANT NOT TO COMPETE.
(a) Executive hereby acknowledges and recognizes the highly competitive
nature of the business of ACNB-A and ACNB, and accordingly, agrees
that, during and for the applicable period set forth in Section 6(c)
hereof, Executive shall not, except as otherwise permitted in
writing by the Board of Directors of ACNB-A:
(i) be engaged, directly or indirectly, either for his own account
or as agent, consultant, employee, partner, officer, director,
proprietor, investor (except as a passive investor owning less
than three percent (3%) of the equity or holding less than
three percent (3%) of a debt instrument in an entity) or
otherwise by any person, firm, corporation or enterprise
engaged in the sale or brokerage of insurance products
including but not limited to health insurance products,
underwriting stop loss insurance plans for self-insured
medical plans, casualty insurance, motor vehicle insurance,
workers compensation insurance, business or individual
casualty insurance, life insurance (term, whole life or any
other form of life insurance), income protection insurance,
mutual funds, wealth management, employee benefit plans;
providing consulting services to employers regarding any of
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the above referenced products, or banking (including
financial, bank or thrift holding company). On the Effective
Date, at anytime during the Employment Period, or on the
Effective Date of Executive's termination, Executive shall not
engage in any of the aforementioned activities in the State of
Maryland, and Adams, Franklin, York, Cumberland, and Dauphin
Counties in the Commonwealth of Pennsylvania); or
(ii) provide financial (except as a passive investor owning less
than three percent (3%) of the equity or holding less than
three percent (3%) of a debt instrument in an entity) or other
assistance to any person, firm, corporation, or enterprise
engaged in the sale or brokerage of insurance products
including but not limited to health insurance products,
underwriting stop loss insurance plans for self-insured
medical plans, casualty insurance, motor vehicle insurance,
workers compensation insurance, business or individual
casualty insurance, life insurance (term, whole life or any
other form of life insurance), income protection insurance,
mutual funds, wealth management, employee benefit plans;
providing consulting services to employers regarding any of
the above referenced products, or banking (including
financial, bank or thrift holding company); or
(iii) directly or indirectly contact, solicit or induce any person,
corporation, or other entity who or that is a customer or
referral source of ACNB-A, ACNB or any of their subsidiaries
or affiliates to become a customer or referral source for any
person or entity other than ACNB-A, ACNB or their subsidiaries
or affiliates, on the Effective Date; at any time during the
Employment Period; or on the effective date of termination of
Executive's employment; or
(iv) directly or indirectly solicit, induce or encourage any
employee of ACNB-A, ACNB, or any of their 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 Executive's employment, to leave the employ of
ACNB-A, ACNB or any of their subsidiaries or affiliates, or to
seek, obtain or accept employment with any person other than
ACNB-A, ACNB or any of their subsidiaries or affiliates.
(b) It is expressly understood and agreed that, although Executive and
ACNB-A, consider the restrictions contained in Sections 6(a)(i),
(ii), (iii) and (iv) of this Agreement to be reasonable for the
purpose of preserving for ACNB-A, ACNB and their subsidiaries and
affiliates, 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 Sections
6(a)(i), (ii), (iii) and (iv) of this Agreement is an unreasonable
or otherwise unenforceable restriction against Executive, the
provisions of Sections 6(a)(i), (ii), (iii) and (iv) 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 6 shall be applicable commencing on
the Effective Date and ending three (3) year following the end of
the Employment Period as defined in this Agreement, regardless of
the reason for termination.
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(d) Executive acknowledges that his breach of any of the restrictions
set forth in this Agreement in Sections 6, 7 and 9 will result in
irreparable injury which is not compensable in damages or other
legal remedies, and ACNB-A or its successor may seek to obtain
injunctive relief against the breach, or threatened breach of this
Agreement, and/or specific performance and damages, as well as other
legal and equitable remedies including attorney's fees which may be
available and to which ACNB-A or its successors may be entitled. The
right to equitable relief shall include, without limitation, the
right to both preliminary and permanent injunctions against any
breach or threatened breach and specific performance for the
provisions of this Agreement, and in such case, Executive shall
raise no objection, and hereby waives any objection, to the form of
relief prayed for in any such proceeding. ACNB-A or its successor
shall not be required to post a bond or similar assurance should
ACNB-A or its successor bring any action for equitable relief in
order to enforce this Agreement.
7. UNAUTHORIZED DISCLOSURE. During the term of his employment hereunder, or
at any later time, Executive shall not, without the written consent of the
Boards of Directors of ACNB-A, ACNB or a person authorized by those
Boards, knowingly disclose to any person, other than an employee of
ACNB-A, ACNB or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by Executive of his duties
as an executive of ACNB-A, any material confidential information obtained
by him while in the employ of ACNB-A, ACNB with respect to any of the
services, products, improvements, formulas, designs or styles, processes,
customers, customer lists, methods of business or any business practices
of ACNB-A, ACNB, or any of their subsidiaries or affiliates, the
disclosure of which could be or will be damaging to ACNB-A, ACNB or any of
their subsidiaries or affiliates; provided, however, that confidential
information shall not include any information known generally to the
public (other than as a result of unauthorized disclosure by Executive or
any person with the assistance, consent or direction of Executive) 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
ACNB-A, ACNB or any information that must be disclosed as required by law.
8. WORK MADE FOR HIRE. Any work performed by 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
ACNB-A, ACNB and their subsidiaries and affiliates. In the event it should
be established that such work does not qualify as a Work Made for Hire,
Executive agrees to and does hereby assign to ACNB-A, ACNB 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.
9. RETURN OF COMPANY PROPERTY AND DOCUMENTS. Executive agrees that, at the
time of termination of his employment, regardless of the reason for
termination, he will deliver to ACNB-A, ACNB and their subsidiaries and
affiliates, any and all company property, including, but not limited to,
keys, security codes or passes, mobile telephones, pagers, computers,
devices, confidential information (as defined in this Agreement), records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, software programs, equipment, other
documents or property, or reproductions of any of the aforementioned items
developed or obtained by Executive during the course of his employment.
10. LIABILITY INSURANCE. As required under Section 16.11 of the Stock Purchase
Agreement, The RIG Shareholder shall obtain and maintain an errors and
omissions insurance "tail coverage" policy for three years after the
Effective Time, as defined in Section 2.2 of the Stock Purchase Agreement,
that will include the directors and officers of RIG.
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11. 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, as follows:
If to Executive: Xx. Xxxxx X. Xxxxxxx, President
0000 X. Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
If to ACNB-A:
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12. 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 ACNB-A. No waiver by any party to
this Agreement, at any time, of any breach by another party to this
Agreement, 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.
13 ASSIGNMENT. This Agreement shall be assignable by ACNB-A to its successors
and affiliates, and further Executive expressly without limitation agrees
to the assignment of the covenants contained in Sections 6, 7 and 9 by
ACNB-A or its successors.
14. ATTORNEY'S FEES AND COSTS. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, each party shall bear
his or its own attorney's fees, costs, and expenses incurred in connection
with the litigation, unless mandated by statute.
15. INDEMNIFICATION. ACNB-A will indemnify Executive as required by Maryland
law and as provided by the Operating Agreement of ACNB-A, 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 ACNB-A, or is or was serving at
the request of ACNB-A as a director, officer, employee or agent of another
person or entity.
16. ENTIRE AGREEMENT. This Agreement supersedes any and all agreements, either
oral or in writing, between the parties with respect to the employment of
Executive by ACNB-A and this Agreement contains all the covenants and
agreements between the parties with respect to employment.
17. BINDING AGREEMENT. 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.
18. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland, without regard to its
conflicts of law principles.
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19. ARBITRATION. ACNB-A 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 6, 7, 8 or 9, 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 Baltimore Maryland,
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"). ACNB-A or
Executive may initiate an arbitration proceeding at any time by giving
notice to the other in accordance with the Rules. ACNB-A 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
State of Maryland 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,
ACNB-A and Executive shall be entitled to an injunction restraining all
further proceedings in any pending or subsequently filed litigation
concerning this Agreement, except as otherwise provided herein or any
enforcement sought with respect to Sections 6, 7, 8 or 9.
22. NO MITIGATION OR OFFSET. 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.
23. 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.
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: ACNB ACQUISITION, LLC
By: /S/ XXXX XXXXXXXX By: /s/ XXXXXX X. XXXXXX
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WITNESS: XXXXX XXXXXXX
By: /s/ XXXXXXX XXXXXXX By: /s/ XXXXX XXXXXXX
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Schedule Y
Pro-forma Projected Pre-tax Income From Operations
RIG and Armor Combined
(Dollars in Thousands)
Trailing
12 Months Projected
3/31/2004 Year 1 Year 2 Year 3 Year 4 Year 5
Revenues:
Commercial Property/Casualty 1,672 1,854 2,004 2,147 2,275 2,406
Personal Property/Casualty 1,312 1,794 1,910 2,036 2,163 2,294
Life & Annuities 121 133 142 154 170 185
Total Commissions - 12 21 23 25 27
Contigent Income 3,105 3,793 4,077 4,360 4,633 4,912
Interest & Other Income 261 222 259 280 301 322
Total Revenues 7 10 12 15 18 21
3,373 4,024 4,347 4,655 4,952 5,256
Expenses
President's Salary - 200 208 216 225 234
President's Bonus - 33 36 39 42 45
Producer Compensation 1024 795 824 914 796 884
CSR and Admin. Compensation 941 803 846 885 896 899
Total Compensation 1965 1831 1914 2055 1958 2061
Payroll Taxes & Benefits 123 316 330 356 334 352
Advertising & Promotion 15 39 42 44 47 49
Automobile Expense - - - - - -
Allowance for Doubtful Accounts 1 4 4 4 5 5
Data Processing 55 77 82 87 91 96
Depreciation & Amortization 59 60 64 67 71 74
Dues & Subscriptions 2 2 3 3 3 3
Education & Meetings 11 15 16 17 18 19
Insurance 33 40 42 45 47 50
Liceses & Taxes 7 21 23 24 26 27
Rent, RE taxes & Utilities 98 90 93 96 100 103
Office Supplies 30 36 36 38 41 43
Outside Services 10 6 7 7 7 8
Postage 24 48 45 46 47 48
Accounting & Legal 14 10 11 11 12 13
Repairs & Maintenance 12 15 16 17 18 19
Telephone 61 58 63 68 72 77
Travel & Entertainment 18 23 24 26 28 30
Merger Related (Intang.Amort.)* 32 380 380 380 380 380
Charitable Contributions 3 - - - - -
Interest Expense 54 - - - - -
Other Direct 19 21 22 23 24 25
Total Expenses 2648 3092 3215 3415 3328 3481
Pretax Operating Earnings 725 932 1,133 1,240 1,623 1,775
Income Taxes 13 416 490 530 672 728
Net Operating Earnings 712 516 642 710 952 1047
Schedule X
Pre-tax Profit Objectives
(Dollars in Thousands)
Year 1 Year 2 Year 3
------ --------- ------
Pre-tax Profit Objective $ 839 $1,020 $1,116
