CHANGE IN CONTROL AGREEMENT
Exhibit
10.1
THIS CHANGE IN CONTROL AGREEMENT
(“Agreement”) is entered into as of the 1st day of
March, 2010, by and among CITIZENS & NORTHERN
CORPORATION, a Pennsylvania corporation (the “Corporation”), CITIZENS & NORTHERN BANK,
a Pennsylvania bank (the “Bank”), and XXXXXXX X. XXXXXXXXX, XX., an
employee of the Corporation and/or the Bank and/or of a subsidiary of either
(the “Employee”). The Corporation and the Bank are collectively
referred to herein as the “Employer.”
WHEREAS, the Employer wishes to assure
itself of the continuity of the Employee’s services in the event of any actual
change in control of the Corporation; and
WHEREAS, the Employer and the Employee
accordingly desire to enter into this Agreement on the terms and conditions set
forth below;
NOW, THEREFORE, in consideration of the
premises and mutual covenants set forth herein, it is hereby agreed by and
between the parties as follows:
1. Term
of Agreement. The “Term” of this Agreement shall commence on
the date hereof and shall continue through December 31, 2010; provided, however, that on
such date and on each December 31 thereafter, the Term of this Agreement shall
automatically be extended for one additional year unless, not later than the
preceding January 1 either party shall have given written notice to the other
that such party does not wish to extend the Term; and provided, however, that if
a Change in Control (as defined in Section 3 below) shall have occurred during
the original or any extended Term of this Agreement, the Term of this Agreement
shall continue for a period of twenty-four (24) calendar months commencing with
the calendar month in which such Change in Control occurs and shall end upon the
expiration of such 24 month period.
2. Employment
After a Change in Control. If the Employee is in the employ of
the Bank on the date of a Change in Control, the Bank hereby agrees to continue
the Employee in its employ for the period commencing on the date of the Change
in Control and ending on the last day of the Term of this Agreement (the
“Employment Period”). During the Employment Period, the Employee
shall hold such position with the Bank and exercise such authority and perform
such employment duties as are commensurate with the Employee’s position,
authority and duties immediately prior to the Change in Control. The
Employee agrees that during the Employment Period the Employee shall devote full
business time exclusively to the Employee’s duties and perform such duties
faithfully and efficiently; provided, however, that
nothing in this Agreement shall prevent either (i) the Employee from
voluntarily resigning from employment upon at least sixty (60) days’ written
notice to the Bank under circumstances which do not constitute a Termination (as
defined below in Section 5), or (ii) the Bank terminating
the Employee for “Cause” as defined in Section 5 hereof or for any other reason
or no reason.
3. Change
in Control. For purposes of this Agreement, a “Change in
Control” means the happening of any of the following: the merger of
the Corporation into, or the consolidation of the Corporation with, another
entity; the sale or other disposition of all or substantially all of the
Corporation’s assets; or the liquidation of the Corporation; provided, however, that a
Change in Control shall not
be deemed to have occurred by reason of a transaction, or a substantially
concurrent or otherwise related series of transactions, upon the completion of
which 50 percent or more of the beneficial ownership of the voting power of the
Corporation (or of the surviving corporation or corporation directly or
indirectly controlling the Corporation) is held by (i) employee benefit plans of
the Corporation ; or (ii) an “Affiliate” of the Corporation (as defined in the
Securities Exchange Act of 1934, as amended).
4. Compensation
During the Employment Period. During the Employment Period,
the Employee shall be compensated as follows:
a. The
Employee shall receive compensation which is not less than compensation paid by
the Employer to the Employee immediately prior to the Employment Period;
and
b. The
Employee shall be eligible to participate in the Employer employee benefit plans
which are not materially less favorable to the Employee than the Employer
employee benefit plans in which the Employee participated in immediately prior
to the Employment Period.
5. Termination. For
purposes of this Agreement, the term “Termination” shall mean termination of the
employment of the Employee during the Employment Period either (i) by the Employer,
for any reason other than
death, Disability (as defined below), or Cause (as described below),
or (ii) by resignation
of the Employee upon the occurrence of one or more of the following
events:
a. A
significant change in the nature or scope of the Employee’s authorities or
duties from those described in Section 2 above, a breach of any of the
provisions of Section 4 above, or the breach by the Employer of any other
provision of this Agreement;
b. The
relocation of the Employee’s office to a location more than 35 miles from the location
of the Employee’s office immediately prior to the Employment
Period;
c. A
reasonable determination by the Employee that, as a result of a Change in
Control and a change in circumstances thereafter significantly affecting the
nature and scope of Employee’s authorities and duties from those described in
Section 2 above, the Employee is unable to exercise the authorities, powers,
functions or duties associated with the Employee’s position as contemplated by
Section 2 above; or
d. The
failure of the Corporation to obtain a satisfactory agreement from any successor
to assume and agree to perform this Agreement as contemplated in Section 15
below.
The date of the Employee’s Termination
under this Section 5 shall be the date specified by the Employee or the Employer, as the case
may be, in a written notice to the other party complying with the requirements
of Section 11 below. For purposes of this Agreement, the Employee
shall be considered to have a “Disability” during the period in which the
Employee is unable, by reason of a medically determinable physical or mental
impairment, to engage in the material and substantial duties of the Employee’s
regular occupation, which condition is expected to be permanent. For
purposes of this Agreement, the term “Cause” means, in the reasonable judgment
of the Board of Directors of the Employer, (i) the willful and continued failure
by the Employee to substantially perform the Employee’s duties with the Employer
after written notification by the Employer, or (ii) the willful engaging by the
Employee in conduct which is demonstrably injurious to the Employer, monetarily
or otherwise, or (iii) the engaging by the Employee in egregious misconduct
involving moral turpitude. For purposes of this Agreement, no act, or
failure to act, on the Employee’s part shall be deemed “willful” unless done, or
omitted to be done, by the Employee not in good faith and without reasonable
belief that such action was in the best interest of the Employer.
6. Severance
Payments. In the event of a Termination described in
Section 5 above, in lieu of the amounts otherwise payable under Section 4 above,
the Employee shall be entitled to receive (i) Employer-paid COBRA premiums
(relating to the Employee’s group medical insurance continuation premiums) for a
period of eighteen (18) months after the date of
Termination, and (ii) a lump sum payment in cash no later than thirty (30)
business days after the date of Termination equal to the sum
of:
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a.
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the
Employee’s unpaid salary, accrued vacation pay and unreimbursed business
expenses through and including the date of Termination;
and
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b.
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an
amount equal to one times the Employee’s base salary in effect immediately
prior to the date of Termination.
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7. Excess
Parachute Payment Limitation. Notwithstanding any other
provision of this Agreement, if the sum of the payments to the Employee
described in this Agreement and in any other agreement, program, or plan between
the Employee and the Employer (or an affiliate of the Employer) attributable to
the same Change in Control constitute “excess parachute payments” (as defined in
Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (“Code”)),
the Employer shall reduce the amounts otherwise payable to the Employee under
this Agreement so that the Employee’s total “parachute payment” (as defined in
Code Section 280G(b)(2)(A)) under this Agreement and any other agreements,
programs, or plans shall be One Thousand Dollars ($1,000) less than the amount
that would be an “excess parachute payment.”
8. Withholding. All
payments to the Employee under this Agreement will be subject to all applicable
withholding of state and federal taxes.
9. Confidentiality
and Non-Solicitation. The Employee agrees that:
a. Except
as may be required by the lawful order of a court or agency of competent
jurisdiction, or except to the extent that the Employee has express
authorization from the Employer, the Employee agrees to keep secret and
confidential all non-public information concerning the Employer (or any entity
controlled by the Employer) which was acquired by or disclosed to the Employee
during the course of the Employee’s employment with the Employer (or any entity
controlled by the Employer), and not to disclose the same, either directly or
indirectly, to any other person, firm or business entity or to use it in any
way.
b. While
the Employee is employed by the Employer (or any entity controlled by the
Employer) and for a period of twelve (12) months after the date of the
Employee’s Termination or other termination of employment with the Employer, the
Employee covenants and agrees that Employee will not, whether for Employee or
for any other person, business, partnership, association, firm, company or
corporation, initiate contact with, solicit, divert or take away any of the
customers (entities or individuals from which the Employer or any entity
controlled by the Employer receives payment for services) of the Employer (or
any entity controlled by the Employer) or employees of the Employer (or any
entity controlled by the Employer) in existence from time to time during
Employee’s employment with the Employer (or any entity controlled by the
Employer) and at the time of such initiation, solicitation or
diversion.
10. Mitigation
and Set-Off. The Employee shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise. The Employer shall not be entitled to set
off against the amounts payable to the Employee under this Agreement any amounts
earned by the Employee in other employment after termination of employment with
the Employer, or any amounts which might have been earned by the Employee in
other employment had he sought such other employment.
11. Notices. Any
notice of Termination of the Employee’s employment by the Employer or the
Employee for any reason under Section 5 above shall be upon no less than fifteen
(15) days’ and no greater than forty-five (45) days’ advance written notice to
the other party. Any notices, requests, demand and other
communications provided for by this Agreement shall be sufficient if in writing
and if sent by registered or certified mail to the Employee at the last address
the Employee has filed in writing with the Employer or, in the case of the
Employer, to the attention of the Secretary of the Employer, at its principal
executive offices.
12. Non-Alienation. The
Employee shall not have any right to pledge, hypothecate, anticipate or in any
way create a lien upon any amounts provided under this Agreement; and no amounts
payable hereunder shall be assignable in anticipation of payment either by
voluntary or involuntary acts, or by operation of law. Nothing in
this Section 12 shall limit the Employee’s rights or powers to dispose of the
Employee’s property by Last Will and Testament or limit any rights or powers
which the Employee’s executor or administrator would otherwise
have. This Agreement shall inure to the benefit of and be enforceable
by the Employee’s personal or legal representatives, executors, administrators,
successors, heirs, designees, devisees, and legatees. If the Employee
should die while any amount is still payable to the Employee hereunder had the
Employee continued to live, all such amounts shall be paid in accordance with
the terms of this Agreement to the Employee’s designees, devisees, or legatee,
or if there are none, to the Employee’s estate.
13. Governing
Law. The provisions of this Agreement shall be construed in
accordance with the laws of the Commonwealth of Pennsylvania, without
application of conflict of laws provisions thereunder.
14. Amendment. This
Agreement may be amended or canceled by mutual agreement of the parties in
writing without the consent of any other person and, except as specifically
provided in Section 15 hereto, so long as the Employee lives, no person, other
than the parties hereto, shall have any rights under or interest in this
Agreement or the subject matter hereof.
15. Successors
to the Employer. This Agreement shall be binding upon and
inure to the benefit of the Employer and any successor of the
Employer. The Employer shall 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 the Employer to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Employer would be required to perform it if no succession had
taken place.
16. Employment
Status. Nothing herein contained shall be deemed to create an
employment agreement between the Employer and the Employee, providing for the
employment of the Employee by the Employer for any fixed period of
time. The Employee’s employment with the Employer is terminable at
will by the Employer or the Employee, and each shall have the right to terminate
the Employee’s employment with the Employer at any time, with or without Cause,
subject to (i) the notice provisions of this Agreement, and (ii) the Employer’s
obligation to provide severance payments if and as required by Section
6. Upon a termination of the Employee’s employment prior to the date
of a Change in Control, there shall be no rights of the Employee under this
Agreement.
17. Severability. In
the event that any provision or portion of this Agreement shall be determined to
be invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.
18. Survival. Notwithstanding
any other provision of this Agreement to the contrary, Sections 9 and 15 shall
survive the termination of this Agreement and the termination of the Employee’s
employment with the Employer.
19. Counterparts. This
Agreement may be executed in two or more counterparts, any one of which shall be
deemed the original without reference to the others.
20. TARP
LETTER AGREEMENT. Notwithstanding anything herein to the
contrary, the Letter Agreement, dated January 28, 2009, between Employee and the
Corporation, which among other things, prohibits the payment to Employee of any
“golden parachute payment” within the meaning of the Emergency Economic
Stabilization Act of 2008 and applicable regulations thereto until the
Corporation repurchases 100% of its senior preferred stock from the U.S.
Department of Treasury, shall remain in full force and effect until it
terminates by its terms.
IN WITNESS WHEREOF, the Employee and
the Employer have executed this Agreement as of the day and year first above
written, but on the dates indicated below each.
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EMPLOYEE:
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Signature:
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/s/ Xxxxxxx X. Xxxxxxxxx,
Xx.
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Printed
Name:
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XXXXXXX X. XXXXXXXXX,
XX.
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Address:
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Date:
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March 1, 2010
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CORPORATION:
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CITIZENS
& NORTHERN CORPORATION
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By:
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/s/ Xxx X.
Xxxxxx
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Title:
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Chair, Compensation
Committee
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Date:
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March 1,
2010
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BANK:
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CITIZENS
& NORTHERN BANK
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By:
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/s/ Xxx X.
Xxxxxx
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Title:
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Chair, Compensation
Committee
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Date:
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March 1,
2010
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