AGREEMENT
Exhibit
10.15
AGREEMENT
THIS
AGREEMENT ("Agreement"), with an effective date of November 30, 2009, is entered
into by and between PEOPLES FINANCIAL SERVICES CORP., a Pennsylvania corporation
("Peoples"), Peoples National Bank (the “Bank”) and XXXX X. XXXXX (the
"Executive").
WITNESSETH:
WHEREAS,
Peoples is engaged in the business of a bank holding company and is the owner of
all the issued and outstanding capital stock of the Bank; and
WHEREAS,
Peoples, the Bank and the Executive desire to enter into an agreement regarding,
among other things, the employment of the Executive by Peoples.
AGREEMENT:
NOW,
THEREFORE, the parties hereto, intending to be legally bound hereby, agree as
follows:
1.Employment. Peoples hereby employs the Executive,
and the Executive hereby accepts employment with Peoples, on the terms and
conditions set forth in this Agreement.
2.Duties of
Executive. The Executive
shall perform and discharge well and faithfully such duties as an executive
officer of Peoples and the Bank as may be assigned to the Executive from time to
time by the Board of Directors of Peoples. The Executive shall be employed as
President and Chief Executive Officer of Peoples and the Bank, and shall hold
such additional titles as may be given to him from time to time by the Board of
Directors of Peoples, the Bank, and any companies affiliated with Peoples. The
Executive shall devote his full time, attention and energies to the business of
Peoples and its affiliated companies and shall not, during the Employment Period
(as defined in Section 3 hereof), be employed or involved in any other business
activity, whether or not such activity is pursued for gain, profit or other
pecuniary advantage; provided, however, that this Section 2 shall not be
construed as preventing the Executive from (a) investing the Executive's
personal assets, (b) acting as a member of the Board of Directors of any other
corporation or as a member of the Board of Trustees of any other organization,
provided no such corporation or organization is a direct or indirect competitor
of Peoples or any of its affiliated companies, or (c) being involved in any
other activity with the prior approval of the Board of Directors of Peoples. In
the event of any reduction in title or a reduction in the Executive's
responsibilities or authority, including such responsibilities and authority as
the same may be increased at any time during the term of this Agreement, a
material breach by Peoples or the Bank of this Agreement, or the assignment to
the Executive of duties inconsistent with the Executive's status as President
and Chief Executive Officer of Peoples, then the Executive may resign at any
time thereafter during the term of this Agreement and prior to the occurrence of
a Change in Control, in which case Executive shall be entitled to receive the
amounts and benefits set forth in Section 7 hereof. If a Change in
Control occurs, executive may resign his employment in accordance with Sections
5 hereof.
3.Term of
Employment. The
Executive's employment under this Agreement shall be for a period (the
"Employment Period") commencing upon the date of this Agreement and ending at
the end of the term of this Agreement pursuant to Section 17 hereof, unless the
Executive's employment sooner terminates in accordance with Section 5 hereof or
one of the following provisions:
(a)The Executive's employment under this
Agreement may be terminated at any time during the Employment Period for "Cause"
(as herein defined), by action of the Board of Directors of Peoples. As used in
this Agreement, "Cause" means any of the following events:
(i)the Executive is convicted of or enters
a plea of guilty or nolo contendere to a felony, a crime of falsehood, or a
crime involving fraud or moral turpitude, or the actual incarceration of the
Executive for a period of seven (7) consecutive days;
(ii)the Executive willfully fails to follow
the lawful, good faith instructions of the Board of Directors of Peoples after
the Executive's receipt of written notice of such instructions, other than a
failure resulting from the Executive's incapacity because of physical or mental
illness; or
(iii)any government regulatory agency orders
that Peoples terminate the employment of the Executive or relieve him of his
duties.
Notwithstanding
the foregoing, the Executive's employment under this Agreement shall not be
deemed to have been terminated for "Cause" under Section 3(a)(i) or 3(a)(ii)
above if such termination took place solely as a result of:
(i)questionable judgment on the part of
the Executive;
(ii)any act or omission believed by the
Executive, in good faith, to have been in, or not opposed to, the best interests
of Peoples or its affiliated companies; or
(iii)any act or omission in respect of which
a determination could properly be made that the Executive met the applicable
standard of conduct prescribed for indemnification or reimbursement or payment
of expenses under the Charter or Bylaws of Peoples (or its affiliates) or the
directors' and officers' liability insurance of Peoples (or its affiliates), in
each case as in effect at the time of such act or omission.
If the
Executive's employment is terminated under the provisions of this Section 3(a),
then all rights of the Executive under Section 4 hereof shall cease as of the
effective date of such termination.
(b)The Executive's employment under this
Agreement may be terminated at any time during the Employment Period without
"Cause" (as defined in Section 3(a) hereof), by action of the Board of Directors
of Peoples, upon giving notice of such termination to the Executive at least
thirty (30) days prior to the date upon which such termination shall take
effect. If the Executive's employment is terminated under the provisions of this
Section 3(b), then the Executive shall be entitled to receive the compensation
and benefits set forth in Section 6 or Section 7 hereof, whichever shall be
applicable. A decision by Peoples to not extend this Agreement as set
forth in Section 17(a)(ii) of this Agreement shall constitute a termination
without “Cause.”
(c)If the Executive retires or dies, the
Executive's employment under this Agreement shall be deemed terminated as of the
date of the Executive's retirement or death, and all rights of the Executive
under Section 4 hereof shall cease as of the date of such termination. Any
benefits thereafter payable to the Executive shall be determined in accordance
with the retirement, insurance and benefit programs of Peoples (and its
affiliates) then in effect. Notwithstanding the preceding two sentences, if the
Executive dies after a Notice of Termination (as defined in Section 5(a) hereof)
is delivered by the Executive, he shall be entitled to the termination benefits
otherwise provided herein, and the provisions of Section 16(b) hereof shall
apply.
(d)If the Executive becomes disabled,
within the meaning of Section 409A of the Internal Revenue Code of 1986, and the
regulations thereunder and, as a result thereof is incapable of performing the
services required of the Executive under Section 2 of this Agreement for a
continuous period of six (6) months, then, upon the expiration of such period or
at any time thereafter, by action of the Board of Directors of Peoples, the
Executive's employment under this Agreement may be terminated immediately upon
giving the Executive notice to that effect. If the Executive's employment is
terminated under the provisions of this Section 3(d), then all rights of the
Executive under Section 4 hereof shall cease as of the last business day of the
week in which such termination occurs. Any benefits thereafter payable to the
Executive shall be determined in accordance with the retirement, insurance and
benefit programs of Peoples (and its affiliates) then in
effect.
4.Employment
Period Compensation.
(a)Salary. For services performed by the
Executive under this Agreement, Peoples shall pay (or cause to be paid) to the
Executive a salary, during the Employment Period, at the rate of One Hundred
Eighty Thousand Dollars ($180,000.00) per year, payable at the same times as
salaries are payable to other executive employees of Peoples. Peoples
shall increase Executive’s salary effective January 1, 2011 and January 1, 2012
at a minimum rate of six percent (6%). After January 1, 2012, Peoples
may, from time to time, increase the Executive's salary, as Peoples deems
appropriate. Any and all such increases shall be deemed to constitute
amendments to this Section 4(a) to reflect the increased amounts, effective as
of the dates established for such increases by the Board of Directors of Peoples
in the resolutions authorizing such increases.
(b)Bonus. For services performed by the
Executive under this Agreement, Peoples shall pay (or cause to be paid) to the
Executive a bonus, during the Employment Period, in such amounts and at such
times, annually, as is provided in such executive incentive plan for the
Executive as shall be approved by the Board of Directors of Peoples and in
effect from time to time and which shall be based on the goals and objectives
set forth in Peoples’ strategic plan. The bonus will be an amount up to
twenty-five percent (25%) of Executive’s salary. In addition, Peoples
may, from time to time, pay such other bonus or bonuses to the Executive as
Peoples, in its sole discretion, deems appropriate. The payment of any such
bonuses shall not reduce or otherwise affect any other obligation of Peoples to
the Executive provided for in this Agreement.
(c)Automobile. During the term of this
Agreement, Peoples shall provide the Executive with an automobile allowance in
the amount of $1,000 per month. Peoples also shall pay or reimburse the
Executive for the cost of gasoline incurred for business use of the
automobile.
(d) Country Club
Dues. During the term of this Agreement, Peoples shall pay or
reimburse Executive for annual dues associated with a golf membership at a
country club of Executive’s choosing.
(e) Relocation
Expenses. Peoples will reimburse Executive up to a maximum of $5,000
for expenses incurred by Executive in connection with his relocation to assume
his position under this Agreement.
(f) Supplemental
Executive Retirement Plan. At least annually, Peoples and Executive
shall meet and discuss Peoples providing Executive with a Supplemental Executive
Retirement Plan (“SERP”). Part of the discussion and consideration
shall be terms to provide for accelerated vesting of benefits in the event of a
Change in Control or a termination without Cause, consistent with the
definitions of these terms in this Agreement.
(g)Other Benefits. Peoples will provide
(or cause to be provided) the Executive, during the Employment Period, with
insurance, paid time off, pension, and other fringe benefits in the aggregate
not less favorable than those received by other executive employees of Peoples
or the Bank, provided, however, that immediately upon hire, Executive shall be
eligible for group health insurance benefits and the greater of four (4) weeks
of paid time off or his paid time off entitlement under the policies and
practices of Peoples or the Bank. In addition, 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 the Bank, subject to the
terms of such plans as to eligibility and vesting.
5.Resignation
of the Executive for Good Reason.
(a)The Executive may resign for "Good
Reason" (as herein defined) during the two-year period following a "Change in
Control" (as defined in Section 5(b) hereof), as hereinafter set forth. As used
in this Agreement, "Good Reason" means any of the following:
(i)any reduction in title or a reduction
in the Executive's responsibilities or authority with respect to Peoples or the
Bank, including such responsibilities and authority as the same may be increased
at any time during the term of this Agreement, or the assignment to the
Executive of duties inconsistent with the Executive's status as President and
Chief Executive Officer of Peoples and the Bank;
(ii)any reassignment of the Executive which
requires the Executive to move his principal residence;
(iii)any removal of the Executive from
office or any adverse change in the terms and conditions of the Executive's
employment, except for any termination of the Executive's employment under the
provisions of Section 3(a) hereof;
(iv)any reduction in the Executive's annual
base salary as in effect on the date hereof or as the same may be increased from
time to time;
(v)any failure of Peoples to provide the
Executive with benefits at least as favorable as those enjoyed by the Executive
under any of the pension, life insurance, medical, health, accident, disability
or other employee benefit plans of Peoples (or any affiliated company) in which
the Executive participated at the time of the Change in Control, or the taking
of any action that would materially reduce any of such benefits in effect at the
time of the Change in Control, unless such reduction is part of a reduction
applicable to all employees;
(vi)any failure to obtain a satisfactory
agreement from any successor to assume and agree to perform under this
Agreement, as contemplated in Section 16(a) hereof;
(vii)any material change in the legal
relationship between Peoples and the Bank; or
(viii)any material breach of this Agreement
on the part of Peoples or the Bank.
At the
option of the Executive, exercisable by the Executive within one hundred twenty
(120) days after the occurrence of each and every of the foregoing events of
"Good Reason" (or within ninety (90) days after the occurrence of a Change in
Control if such event occurs before such Change in Control), the Executive may
resign from employment under this Agreement by delivering a notice in writing
(the "Notice of Termination") to Peoples, and the provisions of Section 6 hereof
shall thereupon apply.
(b)As used in this Agreement, "Change in
Control" of Peoples or the Bank shall mean a change in the ownership or
effective control applicable to the Peoples or the Bank as described in Section
409A(a)(2)(A)(V) of the Internal Revenue Code of 1986, as amended (or any
successor provision thereto) and the regulations thereunder.
6.Rights in
Event of Certain Termination of Employment After Change in Control. In the event that Executive resigns
from employment for Good Reason following a Change in Control, by delivery of a
Notice of Termination to Peoples, or Executive's employment is involuntarily
terminated by Peoples without Cause after a Change in Control, Peoples shall pay
(or cause to be paid) to the Executive in cash, within twenty (20) days
following termination, an amount equal to 2.99 times his "base amount" (within
the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986, as
amended (the "Code")), calculated as though the occurrence of the Change in
Control were an event described in Code Section 280G(b)(2)(A)(i). In addition,
Executive shall be entitled to continuation of group health insurance benefits,
at the same level enjoyed by Executive immediately preceding the Change in
Control, for one (1) year following termination of employment. If
Peoples or the Bank is unable to continue group health insurance benefits for
Executive because of his termination of employment, then Executive shall be
provided, at Peoples and the Bank’s effort and expense, with substantially
similar benefits. Notwithstanding the preceding sentence, in the
event the lump sum payment described in the preceding sentence, when added to
all other amounts or benefits provided to or on behalf of the Executive in
connection with his termination of employment, would result in the imposition of
an excise tax under Code Section 4999, such lump sum shall be reduced to the
extent necessary to avoid such imposition.
7.Rights in
Event of Certain Termination of Employment in Absence of Change in
Control. In the event that
Executive's employment is involuntarily terminated by Peoples without Cause or
Executive resigns from employment for Good Reason and no Change in Control shall
have occurred at the date of such termination or resignation, Peoples shall pay
(or cause to be paid) to the Executive in cash, within twenty (20) days
following termination or resignation, an amount equal to 2.0 times the highest
sum of the following: (i) his taxable federal compensation reported
on Form W-2 during each of the immediately preceding three (3) calendar years,
and (ii) all amounts excluded from such compensation during the relevant
calendar year by reason of Section 4(d) hereof, Code Section 125, and Code
Section 401(k). In addition, Executive shall be entitled to continuation of
group health insurance benefits, at the same level enjoyed by Executive
immediately preceding the Change in Control, for one (1) year following
termination of Executive’s employment. If Peoples or the Bank is
unable to continue group health insurance benefits for Executive because of his
termination of employment, then Executive shall be provided, at Peoples and the
Bank’s effort and expense, with substantially similar
benefits.
8.Covenant
Not to Compete.
(a)The Executive hereby acknowledges and
recognizes the highly competitive nature of the business of Peoples and the Bank
and accordingly agrees that, during and for the applicable period set forth in
Section 8(c) hereof, the Executive shall not:
(i)Be engaged, directly or indirectly,
either for his own account or as agent, consultant, employee, partner, officer,
director, proprietor, investor (except as an investor owning less than 5% of the
stock of a publicly owned company) or otherwise of any person, firm,
corporation, or enterprise engaged, in (1) the banking (including bank holding
company) or financial services industry, or (2) any other activity in which
Peoples or any of its subsidiaries is engaged during the Employment Period, in
any county in which, at any time during the Employment Period or at the date of
termination of the Executive's employment, a branch, office or other facility of
Peoples or any of its subsidiaries is located, , including counties located
outside of the Commonwealth of Pennsylvania (the "Non-Competition Area");
or
(ii) Provide
financial or other assistance to any person, firm, corporation, or enterprise
engaged in (1) the banking (including bank holding company) or financial
services industry, or (2) any other activity in which Peoples or any of its
subsidiaries is engaged during the Employment Period, in the Non-Competition
Area.
(b)It is expressly understood and agreed
that, although the Executive and Peoples consider the restrictions contained in
Section 8(a) hereof reasonable for the purpose of preserving for Peoples and its
subsidiaries their good will and other proprietary rights, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in Section 8(a) hereof is an unreasonable or
otherwise unenforceable restriction against the Executive, the provisions of
Section 8(a) hereof shall not be rendered void but shall be deemed amended to
apply as to such maximum time and territory and to such other extent as such
court may judicially determine or indicate to be reasonable.
(c)The provisions of this Section 8 shall
be applicable commencing on the date of this Agreement and ending on one of the
following dates, as applicable:
(i) if
the Executive's employment terminates in accordance with the provisions of
Section 3 (other than Section 3(a)) or Section 17 hereof, the effective date of
termination of employment;
(ii) if
the Executive's employment terminates in accordance with the provisions of
Section 3(a) hereof or the Executive voluntarily terminates his employment,
other than in accordance with the provisions of Section 5 hereof, the last
sentence of Section 2 or Section 7, the first anniversary date of the effective
date of termination of employment; or
(iii) if
the Executive voluntarily terminates his employment in accordance with the
provisions of Section 5 hereof, the last sentence of Section 2 or Section 7, the
effective date of termination of employment.
9.Arbitration. Peoples, the Bank and the Executive
recognize that in the event a dispute should arise between them concerning the
interpretation or implementation of this Agreement, lengthy and expensive
litigation will not afford a practical resolution of the issues within a
reasonable period of time. Consequently, each party agrees that all disputes,
disagreements and questions of interpretation concerning this Agreement are to
be submitted for resolution to the American Arbitration Association (the
"Association") in Scranton, Pennsylvania. Peoples, or the Executive, may
initiate an arbitration proceeding at any time by giving notice to the other in
accordance with the rules of the Association. The Association shall designate a
single arbitrator to conduct the proceeding, but Peoples, and the Executive,
may, as a matter of right, require the substitution of a different arbitrator
chosen by the Association. Each such right of substitution may be exercised only
once. The arbitrator shall not be bound by the rules of evidence and procedure
of the courts of the Commonwealth of Pennsylvania but shall be bound by the
substantive law applicable to this Agreement. The decision of the arbitrator,
absent fraud, duress, incompetence or gross and obvious error of fact, shall be
final and binding upon the parties and shall be enforceable in courts of proper
jurisdiction. Following written notice of a request for arbitration, Peoples,
and the Executive, shall be entitled to an injunction restraining all further
proceedings in any pending or subsequently filed litigation concerning this
Agreement, except as otherwise provided herein. Notwithstanding the preceding
provisions of this section, in the event any such provision is in conflict with
a rule or policy of the Association, the arbitration proceeding shall be
governed by such rule or policy.
00.Xxxxx
Expenses. Peoples shall
pay to the Executive all reasonable legal fees and expenses, including, without
limitation, all fees and expenses incurred by Executive in connection with any
arbitration that occurs in accordance with Section 9 of this Agreement, incurred
by the Executive in seeking in good faith to obtain or enforce any right or
benefit provided by this Agreement, provided that any action or proceeding is
not decided against the Executive.
11.Mitigation
of Damages. The Executive
shall not be required to mitigate the amount of any payment provided for in
Section 6 or Section 7 hereof by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in Section 6 or Section
7 be reduced by any compensation earned by the Executive as the result of
employment by another employer or by reason of the Executive's receipt of or
right to receive any retirement or other benefits after the date of termination
of employment or otherwise; provided, however, that the payments provided for in
Section 6 or Section 7 shall be reduced by the amount actually received by the
Executive under any severance policy of Peoples or the Bank then in
effect.
12.Notices. Any notice required or permitted to
be given under this Agreement shall be deemed properly given if in writing and
if mailed by registered or certified mail, postage prepaid with return receipt
requested, to the residence of the Executive, in the case of notices to the
Executive, and to the principal office of Peoples, in the case of notices to
Peoples and the Bank.
13.Waiver. No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification, or discharge
is agreed to in writing and signed by the Executive and an executive officer of
Peoples specifically designated by the Board of Directors of Peoples. No waiver
by any party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
14.Assignment. This Agreement shall not be
assignable by either party hereto, except by Peoples to any successor in
interest to the business of Peoples and the Bank.
15.Entire
Agreement. This Agreement
contains the entire agreement of the parties relating to the subject matter of
this Agreement.
16.Successors,
Binding Agreement.
(a)Peoples will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business and/or assets of Peoples to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that Peoples would be required to perform it if no such
succession had taken place. Failure by Peoples to obtain such assumption and
agreement prior to the effectiveness of any such succession shall constitute a
breach of this Agreement and the provisions of Section 6 hereof shall apply. As
used in this Agreement, "Peoples" shall mean Peoples as hereinbefore defined and
any successor to the respective business and/or assets of Peoples which assumes
and agrees to perform this Agreement by operation of law or
otherwise.
(b)This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs, distributees, devisees, and
legatees. If the Executive should die after a Notice of Termination is delivered
by the Executive and any amounts would be payable to the Executive under this
Agreement if the Executive had continued to live, all such amounts shall be paid
in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee, or, if there is none, to the Executive's
estate.
17.Termination.
(a)Unless the Executive's employment
terminates pursuant to the provisions of Section 3 or Section 5 hereof (or the
last sentence of Section 2 or Section 7 hereof), the term of this Agreement
shall:
(i)initially be a three (3) year term
commencing as of November 30, 2009, and ending on December 31, 2012;
and
(ii)be automatically extended by one year
on January 1, 2011, and again on January 1 of each year thereafter, to provide
for a three (3) year term, annually, effective as of such respective dates,
unless either (1) Peoples or (2) the Executive shall have given written notice
of non-extension of the term of this Agreement to the other at least ninety (90)
days before the date of any such extension.
(b)Any termination of the Executive's
employment under this Agreement or of this Agreement shall not affect the
provisions of Sections 6 or 7 hereof which shall survive any such termination
and remain in full force and effect in accordance with their respective
terms.
18.Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
19.Applicable
Law. This Agreement shall
be governed by and construed in accordance with the domestic laws (but not the
law of conflict of laws) of the Commonwealth of
Pennsylvania.
20.Headings. The headings of the sections of this
Agreement are for convenience only and shall not control or affect the meaning
or construction or limit the scope or intent of any of the provisions of this
Agreement.
21.Termination
of Prior Agreements. Upon
the execution and delivery of this Agreement by the parties hereto, any prior
agreement relating to the subject matter hereof shall be automatically
terminated and be of no further force or effect.
22.409A Safe
Harbor. Notwithstanding
anything in this Agreement to the contrary, in no event shall Peoples be
obligated to commence payment or distribution to the Executive of any amount
that constitutes nonqualified deferred compensation within the meaning of
Internal Revenue Code Section 409A (“CODE SECTION 409A”) earlier that the
earliest permissible date under Code Section 409A that such amount could be paid
without additional taxes or interest being imposed under Code Section 409A.
Peoples, the Bank and the Executive agree that they will execute any and all
amendments to this Agreement as they mutually agree in good faith may be
necessary to ensure compliance with the distribution provisions of Code Section
409A and to cause any and all amounts due under this Agreement, the payment or
distribution of which is delayed pursuant to Code Section 409A, to be paid or
distributed in a single sum payment at the earliest permissible date under Code
Section 409A. Notwithstanding anything in this Agreement to the
contrary, in the event Executive is determined to be a Specified Employee, as
that term is defined in Code Section 409A, payments to such Specified Employer
under Sections 6 or 7, other than payments qualifying as short term deferrals or
an exempt separation pay arrangement under Code Section 409A, shall not begin
earlier than the first day of the seventh month after the date of
termination. For purposes of the foregoing, the date upon which a
determination is made as to the Specified Employee status of the Executive, the
Identification Date (as defined in Code Section 409A) shall be December
31.
IN
WITNESS WHEREOF, the parties, intending to be legally bound, have executed this
Agreement as of the day and year first above written.
|
WITNESS
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______________________________
By: ___________________________
WITNESS PEOPLES NATIONAL
BANK
_____________________________
By: ___________________________
WITNESS
_____________________________ ______________________________
Xxxx X. Xxxxx
