EXHIBIT 10.03
CHANGE IN CONTROL AGREEMENT BETWEEN
XXXXXX X. XXXXXXXX AND COMM BANCORP, INC. DATED SEPTEMBER 16, 1998
AGREEMENT
This Agreement (the "Agreement") is entered into as of
September 16, 1998, by and between COMM BANCORP, INC., a
Pennsylvania business corporation ("Bancorp"), and XXXXXX X.
XXXXXXXX (the "Executive").
WHEREAS, the Board of Directors of Bancorp believes that it
is in the best interests of Bancorp that it seek to assure the
continued services of Executive, undiminished by any actual or
perceived threat to continued employment, both currently and, in
the event of any Change in control of Bancorp, for a reasonable
period thereafter; and
WHEREAS, should Bancorp receive any proposal from a third
person concerning a possible business combination with, or
acquisition of equity securities of Bancorp, the Board believes
it imperative that Bancorp and the Board be able to rely upon
Executive to continue in his position, and that Bancorp be able
to receive and rely upon his advice, if it so requests, as to the
best interests of Bancorp and its shareholders without concern
that he might be distracted by the personal uncertainties and
risks created by such a proposal; and
WHEREAS, should Bancorp receive any such proposals, in
addition to Executive's regular duties, he may be called upon to
assist in the assessment of such proposals, advise management and
the Board as to whether such proposals would be in the best
interests of Bancorp and its shareholders, and to take such other
actions as the Board might determine to be appropriate; and
WHEREAS, Executive wishes to continue to serve in his present
capacity, but desires assurance that in the event of a Change in
Control, he will have a reasonable degree of financial security;
NOW, THEREFORE, to assure Bancorp that it will have the
continued dedication of Executive and the availability of his
advice and counsel notwithstanding the possibility, threat or
occurrence of a Change in Control of Bancorp, and to induce
Executive to remain in the employ of Bancorp, and for other good
and valuable consideration, Bancorp and Executive, intending to
be legally bound hereby, agree as follows:
1. From the date hereof until the expiration of the 24-month
period referred to in Paragraph 2 below, the parties hereto
agree as follows.
A. Prior to the prospect of any Change in Control of Bancorp,
Executive's employment may be terminated by Bancorp for
any cause, including disability. In that event, Executive
shall have no rights under this Agreement but shall be
entitled to any benefits normally provided by Bancorp
under such circumstances.
B. If there is a Change in Control of Bancorp, and Executive
is terminated without Cause of Constructively Terminated
from the employ of Bancorp (or its successor) while this
Agreement is in effect, then, in order to protect
Executive against the possible consequences of any Change
in Control of Bancorp and thereby to induce Executive to
serve as a key employee of Bancorp, he shall be entitled
to the termination benefits granted herein.
C. Executive shall not, without the consent of Bancorp,
terminate employment without giving at least 45 days prior
written notice, which shall briefly describe the
circumstances constituting a Constructive Termination, if
any.
2. If a Change in Control of Bancorp occurs, and Executive is
terminated without Cause or Constructively Terminated from
the employ of Bancorp (or its successor) during the 24 months
following such a Change in Control, then Executive shall be
paid and provided each of the following.
A. Within five business days after the date of any such
termination of employment, Bancorp (or its successor)
shall pay a Executive an amount equal to two (2) times
his highest annual base salary rate during the five year
period ending on the date of such termination. This
amount may be paid in a lump-sum or in twenty four (24)
equal monthly installments as Bancorp (or its successor)
may, in their sole discretion, decide.
B. Executive and his dependents shall continue to be covered
until 24 months after the date of such termination by all
health benefit programs of Bancorp (or its successor) in
type and amount at least equivalent to that provided to
Executive and his dependents by Bancorp immediately prior
to the Change in Control, at a cost to Executive not
exceeding the cost of equivalent coverage to senior
management employees of Bancorp. If participation in one
or more of such programs is not possible under the terms
thereof, Bancorp (or its successor) will provide
substantially identical benefits outside the programs.
The rights of Executive and his dependents to
continuation of health benefit coverage pursuant to
Section 4980B of the Internal Revenue Code of 1986, as
amended (the "Code") (or any successor section) shall
commence 24 months after termination of Executive's
employment. Bancorp's (or its successor's) obligation to
continue the above insurance coverage shall end should
Executive and his dependents acquire substantially
similar benefits as an incident of employment (or
reemployment) or if provided to Executive and his
dependents from any other source.
C. If all or any portion of the amounts payable to Executive
under this Agreement, either alone or together with other
payments which Executive has the right to receive from
Bancorp, constitute "excess parachute payments" within
the meaning of Section 280G of the Code that are subject
to the excise tax imposed by Section 4999 of the Code (or
any successor sections), Bancorp (and its successor)
shall increase the amounts payable hereunder to the
extent necessary to place Executive in the same after-tax
position as he would have been in had no such excise tax
been imposed on the payments hereunder. The
determination of the amount of any such excise taxes
shall be made by the independent accounting firm employed
by Bancorp (or its successor) immediately prior to the
Change in Control.
If at a later date it is determined (pursuant to
final regulations or published rulings of the IRS,
assessment by the Internal Revenue Service or otherwise)
that the amount of excise taxes payable by Executive is
greater than the amount initially so determined, then
Bancorp (or its successor) shall pay Executive an amount
equal to the sum of (i) such additional excise taxes,
plus (ii) any interest, fines and penalties with respect
to such additional excise taxes, plus (iii) the amount
necessary to reimburse Executive for any income, excise
or other taxes payable by Executive with respect to the
amounts specified in (i) and (ii) above and the
reimbursement provided by this clause (iii).
D. Executive shall continue to be indemnified under
Bancorp's Amended Articles of Incorporation and Bylaws
and covered, for at least six years following such Change
of Control, by directors' and officers' liability
insurance and fiduciary liability insurance policies that
are the same as, or provide coverage at least equivalent
to, those Bancorp carries at the date of the Change in
Control.
3. As used herein, the following terms shall have the meanings
indicated.
A. "Change in Control" shall mean
(i) acquisition of ownership (whether directly,
indirectly, beneficially or of record) of 25% or
more of the voting power of all outstanding stock
of Bancorp by any person (including, without
limitation, a corporation, trust, partnership,
joint venture, or individual) (a "Person") or by
any group of Persons who have agreed to act
together for the purpose of acquiring, holding,
voting, or disposing of such shares;
(ii) merger or consolidation of Bancorp in which the
stockholders of Bancorp before such merger or
consolidation do not, as a result of the merger or
consolidation, own at least 50% of the outstanding
voting power of the surviving entity following such
merger or consolidation;
(iii) nomination and election of 50% or more of the
members of the Board of Directors of Bancorp
without the recommendation of the Board; or
(iv) disposition by Bancorp of its banking subsidiary,
"Change in Control" shall not include acquisition
of Bancorp stock by a qualified employee benefit
plan, or action by the members of the Board of
Directors when acting as the Board of Directors.
B. "Cause" shall mean (i) Executive's conviction of a
felony, (ii) wilful misconduct that is substantially
detrimental to the business of Bancorp, or (iii) absence
from full time service to Bancorp as a result of physical
or mental illness for six consecutive months, in each
case determined by vote of not less than a majority of
the directors of Bancorp then in office, after reasonable
notice to Executive and an opportunity for him to be
heard before a meeting of the Board of Directors, held
upon reasonable notice to all directors.
C. "Constructive Termination" shall mean a resignation by
Executive due to any diminution or adverse change in the
circumstances of his employment (as determined by him in
good faith), including, without limitation, his reporting
relationships, job description, duties, responsibilities,
compensation, perquisites, office or location of
employment.
4. The specific arrangements referred to above are not intended
to exclude Executive's participation in any other benefits
available to executive personnel of Bancorp (or its
successor).
5. This Agreement shall be binding upon and shall inure to the
benefit of the respective successors, assigns, legal
representatives and heirs of the parties hereto.
6. If, with respect to any failure by Bancorp (or its successor)
to comply with any of the terms of this Agreement, Executive
engages legal counsel or institutes any negotiations or
institutes or responds to legal action to assert or defend
the validity of, enforce his rights under, or recover damages
for breach of the same, Bancorp (or its successor) shall pay
or reimburse, within five business days of receipt of each
written request therefore, his actual expenses for attorneys
fees and disbursements, together with such additional
payments, if any, as may be necessary so that the net after-
tax payments to Executive equal such fees and disbursements.
This Paragraph 6 shall apply whether or not Executive
prevails, and Bancorp consents irrevocably to engagement by
Executive of any attorney of his choice, notwithstanding any
existing or prior attorney-client relationship between
Bancorp and such attorney.
7. Any controversy or claim arising out of or relating to this
Agreement, or any breach hereof, shall be settled by
arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association, any judgement
on the award rendered by the arbiter may be entered in any
court having jurisdiction thereof.
8. In the event any amount due hereunder is improperly
withheld, then Bancorp (or its successor) agrees to pay
interest on said amount at an annual rate of 10%, or the
time weighted average prime rate in effect at Community Bank
and Trust Company, whichever is greater, for the period
between the date said amount is due and the date said amount
is paid.
9. This Agreement shall in all respects be subject to, governed
by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.
10. Except for required tax withholding, Bancorp's (or its
successor's) obligation to pay Executive the compensation
and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which
Bancorp (or its successor) may have against him or anyone
else. All amounts payable by Bancorp (or its successor)
hereunder shall be paid without notice or demand, except as
expressly provided otherwise. Each and every payment made
hereunder by Bancorp (or its successor) shall be final and
Bancorp (or its successor) will not seek to recover all or
any part of such payment from Executive or from whosoever
may be entitled thereto, for any reason whatsoever.
Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under
any provision of this Agreement, and the obtaining of any
such other employment shall in no event effect any reduction
of Bancorp's (or its successor's) obligations to make the
payments and arrangements required to be made under this
Agreement.
11. Executive shall retain in confidence any confidential
information known to him concerning Bancorp (or its
successor) and its respective businesses so long as such
information is not publicly disclosed.
12. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such
prohibition or unenforceability without invalidating or
affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any
other jurisdiction.
13. This Agreement may be terminated by the Board of Directors
of Bancorp upon 12 months prior written notice to Executive;
except that this Agreement shall not be terminated, (i)
during the 24 months following a Change in Control or (ii)
during any period of time when Bancorp has or should have
knowledge that any Person has taken steps reasonably
calculated to effect a Change in Control until, in the
opinion of the Board, such Person has abandoned or
terminated efforts to effect a Change in Control.
14. Bancorp shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of
Bancorp, by agreement in form and substance satisfactory to
Executive, expressly to assume and agree to perform all
obligations of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of
the day and year first above written.
ATTEST: COMM BANCORP, INC.
/s/ Xxxx X. Xxxxxx By:/s/ Xxxxxxx X. Xxxxxx, Xx.
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Xxxx X. Xxxxxx, Secretary Xxxxxxx X. Xxxxxx, Xx.
Chairman of the Board
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
