CHANGE OF CONTROL SEVERANCE AGREEMENT
Exhibit 10 — Change of Control Severance Agreement dated November 7, 2005 between Juniata Valley Financial
Corp. and The Juniata Valley Bank and XxXxx X. XxXxxx.
Corp. and The Juniata Valley Bank and XxXxx X. XxXxxx.
THIS CHANGE OF CONTROL SEVERANCE AGREEMENT is entered into this 7th day of November 2005,
between JUNIATA VALLEY FINANCIAL CORP., a Pennsylvania business corporation having its principal
place of business in Mifflintown, Pennsylvania, and THE JUNIATA VALLEY BANK, a state-chartered bank
located in Juniata, Pennsylvania (collectively, the “Bank”), and XXXXX X. XXXXXX, an individual
residing at 0000 Xxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 (the “Employee”).
WHEREAS, the Employee has substantial knowledge, ability and experience which are beneficial
to the successful operation of the Bank; and
WHEREAS, the Employee has recently accepted the position of Chief Financial Officer at Bank
(“CFO”); and
WHEREAS, the Bank desires to secure for itself the benefit of the Employee’s knowledge,
ability and experience and be assured of the Employee’s active participation in the business
operations of the Bank; and
WHEREAS, Employee will acquire and use extensive knowledge and information about the Bank’s
operations, much of which is confidential and proprietary in nature; and
WHEREAS, the Bank wishes to protect its confidential and proprietary information as well as
its general business interests; and
WHEREAS, the Employee and the Bank wish to enter into this Agreement in order to protect the
confidential and proprietary interests of the Bank and to induce the Employee to become actively
involved in the business operations of the Bank by providing the Employee with the opportunity to
receive benefits under this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and intending to be
legally bound, the parties agree as follows:
1. SEVERANCE BENEFIT. In consideration for agreeing to be bound hereunder, the Employee will
become eligible to receive the benefit provided in this Agreement. The benefit payable under this
Agreement is triggered upon termination of Employee’s employment upon the occurrence of any of the
events set forth in Section 2 hereof following a Change of Control as defined in section 6. (b) of
this Agreement. The severance benefit will be equal to that amount which, when reduced to its
present value (determined by using a discount rate equal to one hundred twenty(120%) percent of the
applicable federal rate, as determined under Section 1274(d) of the Internal Revenue Code of 1986,
as amended, compounded semiannually) equals 2.95 times Employee’s Average Annual Compensation. For
purposes of this Section, Employee’s Average Annual Compensation, shall be the average of
Employee’s annual compensation payable by the Bank and includible in Employee’s gross income for
the five (5) most recent taxable years (or such shorter period as Employee has been employed by
Bank, if less than five years) ending before the date on which Employee’s employment with the Bank
was terminated.
The benefit shall be in the form of a lump sum payment and shall be made no later than thirty
(30) days following the effective date of the termination.
In the event Employee should breach Employee’s obligations under this Agreement at any time,
the Bank’s obligation under this Section shall terminate immediately.
2. TERMINATION OF EMPLOYMENT. If a Change of Control shall occur and if thereafter, at any
time, there shall be:
(a) Any involuntary termination of Employee’s employment (other than for Cause);
(b) Any reduction in Employee’s title, responsibilities or authority, including such
title, responsibilities or authority as such may be increased from time to time;
(c) Any reduction in Employee’s salary in effect immediately prior to a Change of
Control, or any failure to provide Employee with benefits at least as favorable as those
enjoyed by Employee under any of the
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pension, life insurance, medical, health and accident, disability or other employee plans of
the Bank in which Employee participated immediately prior to a Change of Control, or the
taking of any action that would materially reduce any of such compensation or benefits in
effect at the time of the Change of Control, unless such reduction relates to a reduction
applicable to all employees generally;
(d) Any reassignment of Employee beyond a forty-five (45) minute commute by automobile
from Mifflintown, Pennsylvania; or
(e) Any requirement that Employee travel in performance of her duties on behalf of the
Bank for a greater period of time during any year than was required of Employee during the
year preceding the year in which the Change of Control occurred;
then, at the option of Employee, exercisable by Employee within one hundred eighty (180) days of
the occurrence of any of the foregoing events, the Employee may resign from employment (or, if
involuntarily terminated, give notice of intention to collect the benefit hereunder) by delivering
a notice in writing (the “Notice of Termination”) to the Bank.
3. DURATION OF AGREEMENT. This Agreement shall remain in effect only while the Employee is
the CFO or in a higher ranking position (as determined by the Board of Directors) of the Bank.
4. UNAUTHORIZED DISCLOSURE. During the term of this Agreement or at any later time, the
Employee shall not, without the written consent of the Bank, disclose to any person (including an
employee of the Bank or a Subsidiary), other than a person to whom disclosure is reasonably
necessary or appropriate or required in connection with the performance by the Employee of her
duties as an Employee of the Bank, any material confidential information obtained by her while in
the employ of the Bank or any Subsidiary with respect to any of the services, products,
improvements, formulas, designs or styles, processes, customers, methods of distribution or
business practices, the disclosure of which reasonably would be expected to materially damage the
Bank; provided, however, that for purposes of this Agreement, confidential information shall not
include any information known generally to the public (other than as a result of unauthorized
disclosure by the Employee) or any information of a type not otherwise considered confidential by
persons engaged in the same business or a business similar to that conducted by the Bank.
5. RESTRICTIVE COVENANTS. Except as otherwise provided below, upon termination of her
employment with the Bank (or a Subsidiary), regardless of the circumstances or reasons for such
termination, the Employee covenants and agrees as follows:
(a) NONCOMPETITION. Upon any termination of employment of Employee which
results in the payment of the Severance Compensation referred to in Paragraph 1,
Employee shall not directly or indirectly enter into or engage in the banking
business, either as an individual, or as a partner or joint venturer, or as an
employee, agent, officer, or director of another banking institution, for a period
of two (2) years after such termination, which would involve the performance by
Employee of active duties in the geographical area within a forty (40) mile radius
of Mifflintown, Pennsylvania. The existence of any material claim or cause of
action of the Employee against the Bank, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Bank of this
covenant. The Employee acknowledges and agrees that enforcement of this covenant
not to compete will not prevent her from earning a livelihood and that any breach of
the restrictions set forth in this paragraph will result in irreparable injury to
the Bank for which it shall have no adequate remedy at law, and that, therefore, the
Bank shall be entitled to injunctive relief in order to enforce the provisions
hereof. In the event that this paragraph shaft be determined by any court of
competent jurisdiction to be unenforceable in part by reason of it being too great a
period of time or covering too great a geographical area, it shall be in full force
and effect as to that period of time or geographical area determined to be
reasonable by the court.
(b) RETURN OF MATERIALS. Upon termination of employment with the Bank for any
reason, including a termination of employment in conjunction with a Change of
Control, the Employee shall immediately deliver to the Bank all correspondence,
manuals, letters, notes, notebooks, reports and any other documents and tangible
items containing or constituting confidential information about the Bank maintained
at her office and shall promptly deliver all said materials held by her at other
locations.
(c) NONSOLICITATION OF EMPLOYEES. The Employee shall not entice or solicit,
directly or indirectly, any other Employees or key management personnel of the Bank
to leave
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the employ of the Bank or its Subsidiaries to work with the Employee or any entity
with which the Employee has affiliated for a period of one year following the
Employee’s termination of employment with the Bank for any reason, including a
termination of employment in conjunction with a Change of Control.
(d) NONSOLICITATION OF CUSTOMERS. The Employee shall not entice or solicit,
directly or indirectly, any client or customer of the Bank or any Subsidiary for a
period of one year following the Employee’s termination of employment with the Bank
for any reason, including a termination of employment in conjunction with a Change
of Control.
(e) REMEDY. The Employee acknowledges and agrees that any breach of the
restrictions set forth in Sections 4 and 5 shall be deemed a material breach of this
Agreement and will result in irreparable injury to the Bank for which it shall have
no meaningful remedy in law and the Bank shall be entitled to injunctive relief in
order to enforce provisions hereof. Upon obtaining such injunction, the Bank shall
be entitled to pursue reimbursement from the Employee and/or the Employee’s employer
of costs incurred in securing a qualified replacement for any employee enticed away
from the Bank by the Employee. Further, the Bank shall be entitled to set off
against or obtain reimbursement from the Employee of any payments owed or made to
the Employee by the Bank hereunder.
6. DEFINITIONS.
(a ) SUBSIDIARY. For purposes of this Agreement, the term “Subsidiary” shall
mean any bank, Bank or other entity of which the Bank owns, directly or indirectly
through one or more Subsidiaries, a majority of each class of equity security having
ordinary voting power in an election of directors.
(b) CHANGE OF CONTROL. For purposes of this Agreement, the term “Change of
Control” shall mean:
| i) | An acquisition by any “person” or “group” (as those terms are defined or used in Section 13(d) of the Exchange Act) of “beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act, specifically, including the signing of a definitive agreement to acquire securities of JUVF) of securities of Juniata Valley Financial Corp. (“JUVF”) representing 24.99% or more of the voting power of JUVF’s securities then outstanding; | ||
| ii) | A merger, consolidation or other reorganization of Bank, except where the resulting entity is controlled, directly or indirectly, by JUVF; | ||
| iii) | A merger, consolidation or other reorganization of JUVF, except where shareholders of JUVF immediately prior to consummation of any such transaction continue to hold at least a majority of the voting power of the outstanding voting securities of the legal entity resulting from or existing after any transaction and a majority of the members of the Board of Directors of the legal entity resulting from or existing after any such transaction are former members of JUVF’s Board of Directors; | ||
| iv) | A sale, exchange, transfer or other disposition of substantially all of the assets of JUVF to another entity, or a corporate division involving JUVF; or | ||
| v) | A contested proxy solicitation of the shareholders of JUVF that results in the contesting party obtaining the ability to cast 25% or more of the votes entitled to be cast in an election of directors of JUVF. |
(c) TERMINATION FOR CAUSE. For purposes of this Agreement, Employee’s “Termination
for Cause” shall mean that Employee is terminated for any of the following reasons:
| i) | Negligent or willful failure or the continuing inability to perform duties and functions reasonably assigned to Employee by the Board of Directors, which neglect or failure is not corrected within thirty (30) days following receipt of written notice of default; | ||
| ii) | The commission or a criminal act against the Bank by Employee; |
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| iii) | Default by the Employee in the performance of her obligations under this Agreement, which default is not corrected within thirty (30) days following receipt of written notice of default. |
7. NOTICE. For the purposes of this Agreement, notices and all other communications shall be
in writing and shall be deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
| If to the Employee: | XxXxx X. XxXxxx | |||||
| 0000 Xxxxx Xxxx | ||||||
| Xxxxxxxxxx, XX 00000 | ||||||
| If to the Bank: | Juniata Valley Financial Corp. and | |||||
| The Juniata Valley Bank | ||||||
| X.X. Xxx 00 | ||||||
| Xxxxxxxxxxx, XX 00000 | ||||||
or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notices of change of address shall be effective only upon actual receipt.
8. BINDING EFFECT. This Agreement shall inure to the benefit of and be binding upon the
Employee and her heirs and personal representatives, and the Bank and any successor to the Bank.
9. ENFORCEMENT OF SEPARATE PROVISIONS. Should any provision of this Agreement be ruled
unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.
10. AMENDMENT. Except as otherwise provided herein, this Agreement may be amended or canceled
only by mutual agreement of the parties in writing without the consent of any other person. This
Agreement may be amended to enhance the benefits available to the Employee hereunder at any time,
provided the Employee consents in writing to any such amendment.
11. ARBITRATION. In the event that any disagreement or dispute shall arise between the
parties concerning this Agreement, the issue(s) will be submitted to binding arbitration in the
City of Harrisburg, PA pursuant to the rules of the American Arbitration Association. Any award
entered shall be final and binding upon the parties hereto and judgment upon the award may be
entered in any court having jurisdiction thereof. Attorneys’ fees and administrative court costs
incurred in connection with such actions shall be paid by the Bank.
12. EMPLOYMENT. Nothing contained herein shall be construed as conferring upon the Employee
the right to continue in the employ of the Bank.
13. PAYMENT OF MONEY DUE DECEASED EMPLOYEE. If the Employee dies prior the payment of any
moneys that may be due her from the Bank under this Agreement as of the date of death, such moneys
shall be paid to the executor, administrator, or other personal representative of the Employee’s
estate.
14. LAW GOVERNING. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.
15. CAPTIONS; PRONOUNS. All captions are for convenience only and do not form a substantive
part of this Agreement. All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the person or persons may
require.
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| Attest: | JUNIATA VALLEY FINANCIAL | |||
| CORP. | ||||
/s/ Xxxxxx X. Xxxxxxx
|
By: | /s/ Xxxxxxx X. Xxxxxxxxx | ||
Xxxxxx X. Xxxxxxx
|
Xxxxxxx X. Xxxxxxxxx | |||
| Attest: | THE JUNIATA VALLEY BANK | |||
/s/ Xxxxxx X. Xxxxxxx
|
By: | /s/ Xxxxxxx X. Xxxxxxxxx | ||
Xxxxxx X. Xxxxxxx
|
Xxxxxxx X. Xxxxxxxxx | |||
Witness:
|
EMPLOYEE: | |
/s/ Xxxx Xxxxxxxx
|
/s/ XxXxx X. XxXxxx | |
Xxxx Xxxxxxxx
|
XxXxx X. XxXxxx |
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