EXHIBIT 10E
Copy of the LA Bank, N.A. Salary Continuation Agreement, dated March 11, 1997,
between the Bank and Xxxxxx X. Xxxxxx, CPA, Vice President and Treasurer of the
Bancorp and Executive Vice President and Chief Financial Officer of the Bank,
relating to the supplemental executive retirement plan of the Bank.
LA BANK, N.A.
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this 11 day of March, 1997, by and between the LA
BANK, N.A., a national banking association located in Lake Ariel, Pennsylvania
(the "Company") and XXXXXX XXXXXX (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the
Executive. The Company will pay the benefits from its general assets.
AGREEMENT
The Executive and the Company agree as follows:
Article 1
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words
and phrases shall have the meanings specified:
1.1.1 "Change of Control" means the transfer of 51% or more of the
Company's outstanding voting common stock followed within twelve (12)
months by the Executive's Termination of Employment for reasons other
than death, disability or retirement.
1.1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.1.3 "Disability" means the Executive suffering a sickness, accident
or injury which, in the judgment of a physician satisfactory to the
Company, prevents the Executive from performing substantially all of
the Executive's normal duties for the Company. As a condition to any
benefits, the Company may require the Executive to submit to such
physical or mental evaluations and tests as the Company's Board of
Directors deems appropriate.
1.1.4 "Early Termination" means the Termination of Employment before
Normal Retirement Age for reasons other than death, Disability,
Termination for Cause or following a Change of Control.
1.1.5 "Early Termination Date" means the month, day and year in which
Early Termination occurs.
1.1.6 "Normal Retirement Age" means the Executive's 62nd birthday.
1.1.7 "Normal Retirement Date" means the later of the Normal
Retirement Age or Termination of Employment.
1.1.8 "Plan Year" means a twelve-month period commencing on March 11
and ending on March 10 of each year. The initial Plan Year shall
commence on the effective date of this Agreement.
1.1.9 "Projected Accrued Benefit" means the Company's accumulated
accrued liability for the Executive's targeted normal retirement
benefit under Section 2.1. For each year, the annual benefits are
estimated using the interest method of accounting, an 8% interest
rate, monthly benefit payments and monthly compounding.
1.1.10 "Termination for Cause" See Section 5.2.
1.1.11 "Termination of Employment" means that the Executive ceases to
be employed by the Company for any reason whatsoever other than by
reason of a leave of absence which is approved by the Company. For
purposes of this Agreement, if there is a dispute over the employment
status of the Executive or the date of the Executive's Termination of
Employment, the Company shall have the sole and absolute right to
decide the dispute.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. Upon Termination of Employment on or
after the Normal Retirement Age for reasons other than death, the
Company shall pay to the Executive the benefit described in this
Section 2.1.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
$103,000. The Company may increase the annual benefit under this
Section 2.1 at the sole and absolute discretion of the Company's Board
of Directors. Any increase in the annual benefit shall require the
recalculation of all the amounts on Schedules A and B attached hereto.
The annual benefit amounts of Schedules A and B are calculated by
amortizing the Projected Accrued Benefit, using the interest method of
accounting, an 8% discount rate, monthly compounding and monthly
payments.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the Executive in 12 equal monthly installments payable on the first
day of each month commencing with the month following the Executive's
Normal Retirement Date and continuing for 179 additional months.
2.1.3 Benefit Increases. Commencing on the first anniversary of the
first benefit payment, and continuing on each subsequent anniversary,
the Company's Board of Directors, in its sole discretion, may increase
the benefit.
2.2 Early Termination Benefit. Upon Early Termination, the Company
shall pay to the Executive the benefit described in this Section 2.2.
2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is
the benefit amount set forth in Schedule A, Column C for the Plan Year
ending immediately prior to the Early Termination Date.
2.2.2 Payment of Benefit. The Company shall pay the annual benefit to
the Executive in 12 equal monthly installments payable on the first
day of each month commencing with the month following the Normal
Retirement Date and continuing for 179 additional months.
2.2.3 Benefit Increases. Benefit payments may be increased as provided
in Section 2.1.3.
2.3 Disability Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, the Company shall pay to
the Executive the benefit described in this Section 2.3.
2.3.1 Amount of Benefit. The lump sum benefit under this Section 2.3
is the Accrued Benefit set forth in Schedule A, Column B, for the Plan
Year ending immediately prior to the date in which Termination of
Employment occurs.
2.3.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in a lump sum within 60 days after the date of the
Executive's Termination of Employment.
2.3.3 Benefit Increases. Benefit payments may be increased as provided
in Section 2.1.3.
2.4 Change of Control Benefit. Upon a Change of Control, the Company
shall pay to the Executive the benefit described in this Section 2.4
in lieu of any other benefit under this Agreement.
2.4.1 Amount of Benefit. The annual benefit is the annual benefit
amount set forth in Schedule A, Column C, for the Plan Year ending
immediately prior to the Plan Year in which the Change of Control
occurred.
2.4.2 Payment of Benefit. The Company shall pay the annual benefit
amount to the Executive in 12 equal monthly installments payable on
the first day of each month commencing with the month following the
Normal Retirement Age and continuing for 179 additional months.
2.4.3 Benefit Increases. Benefit payments may be increased as provided
in Section 2.1.3
Article 3
Death Benefits
3.1 Death During Active Service. If the Executive dies while in the
active service of the Company, the Company shall pay to the
Executive's beneficiary the benefit described in this Section 3.1.
3.1.1 Amount of Benefit. The annual benefit under this Section 3.1 is
the Normal Retirement Benefit amount described in Section 2.1.1.
3.1.2 Payment of Benefit. The Company shall pay the annual benefit to
the beneficiary in 12 equal monthly installments payable on the first
day of each month commencing with the month following the Executive's
death and continuing for 179 additional months.
3.2 Death During Benefit Period. If the Executive dies after the
benefit payments have commenced under this Agreement but before
receiving all such payments, the Company shall pay the remaining
benefits to the Executive's beneficiary at the same time and in the
same amounts they would have been paid to the Executive had the
Executive survived.
3.3 Death Following Termination of Employment But Before Benefits
Commence. If the Executive is entitled to benefit payments under this
Agreement, but dies prior to receiving said benefit payments, the
Company shall pay the Executive's beneficiary the benefit described in
this Section 3.3.
3.3.1 Amount of Benefit. The annual benefit under this Section 3.3 is
the benefit amount that would have been paid to the Executive pursuant
to Schedule B, Column C, for the Plan Year ending immediately prior to
the Plan Year in which death occurred.
3.3.2 Payment of Benefit. The Company shall pay the annual benefit
amount to the beneficiary in 12 equal monthly installments payable on
the first day of each month commencing with the month following the
Executive's date of death and continuing for 179 additional months.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a
beneficiary by filing a written designation with the Company. The
Executive may revoke or modify the designation at any time by filing a
new designation. However, designations will only be effective if
signed by the Executive and accepted by the Company during the
Executive's lifetime. The Executive's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the
Executive, or if the Executive names a spouse as beneficiary and the
marriage is subsequently dissolved. If the Executive dies without a
valid beneficiary designation, all payments shall be made to the
Executive's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a
person declared incapacitated, or to a person incapable of handling
the disposition of his or her property, the Company may pay such
benefit to the guardian, legal representative or person having the
care or custody of such minor, incapacitated person or incapable
person. The Company may require proof of incapacity, minority or
guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from
all liability with respect to such benefit.
Article 5
General Limitations
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement:
5.1 Excess Parachute Payment. To the extent the benefit would be an
excess parachute payment under Section 280G of the Code.
5.2 Termination for Cause. If the Company terminates the Executive's
employment for:
5.2.1 Gross negligence or gross neglect of duties;
5.2.2 Commission of a felony or of a gross misdemeanor involving moral
turpitude; or
5.2.3 Fraud, dishonesty or willful violation of any law or significant
Company policy committed in connection with the Executive's employment
and resulting in a material adverse effect on the Company.
5.3 Competition After Termination of Employment. No benefits shall be
payable if the Executive, without the prior written consent of the
Company, engages in, becomes interested in, directly or indirectly, as
a sole proprietor, as a partner in a partnership, or as a substantial
shareholder in a corporation, or becomes associated with, in the
capacity of employee, director, officer, principal, agent, trustee or
in any other capacity whatsoever, any enterprise conducted in the
trading area (a twenty-five mile radius) of Xxxxx 000, Xxxx Xxxxx, XX
00000, 000 X. Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000 or both, and which
enterprise is, or may deemed to be, competitive with any business
carried on by the Company as of the date of termination of the
Executive's employment or his retirement. This section shall not apply
following a Change of Control.
5.4 Suicide or Misstatement. No benefits shall be payable if the
Executive commits suicide within two years after the date of this
Agreement, or if the Executive has made any material misstatement of
fact on any application for life insurance purchased by the Company.
Article 6
Claims and Review Procedures
6.1 Claims Procedure. The Company shall notify the Executive or the
Executive's beneficiary in writing, within ninety (90) days of his or her
written application for benefits, of his or her eligibility or noneligibility
for benefits under the Agreement. If the Company determines that the Executive
or the Executive's beneficiary is not eligible for benefits or full benefits,
the notice shall set forth (1) the specific reasons for such denial, (2) a
specific reference to the provisions of the Agreement on which the denial is
based, (3) a description of any additional information or material necessary for
the claimant to perfect his or her claim, and a description of why it is needed,
and (4) an explanation of the Agreement's claims review procedure and other
appropriate information as to the steps to be taken if the Executive or the
Executive's beneficiary wishes to have the claim reviewed. If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the Executive or the Executive's
beneficiary of the special circumstances and the date by which a decision is
expected to be made, and may extend the time for up to an additional ninety-day
period.
6.2 Review Procedure. If the Executive or the Executive's beneficiary is
determined by the Company not to be eligible for benefits, or if the Executive
or the Executive's beneficiary believes that he or she is entitled to greater or
different benefits, the Executive or the Executive's beneficiary shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons which the
Executive or the Executive's beneficiary believes entitle him or her to benefits
or to greater or different benefits. Within sixty (60) days after receipt by the
Company of the petition, the Company shall afford the Executive or the
Executive's beneficiary (and counsel, if any) an opportunity to present his or
her position to the Company orally or in writing, and the Executive or the
Executive's beneficiary (or counsel) shall have the right to review th pertinent
documents. The Company shall notify the Executive or the Executive's beneficiary
of its decision in writing within the sixty-day period, stating specifically the
basis of its decision, written in a manner calculated to be understood by the
Executive or the Executive's beneficiary and the specific provisions of the
Agreement on which the decision is based. If, because of the need for a hearing,
the sixty-day period is not sufficient, the decision may be deferred for up to
another sixty-day period at the election of the Company, but notice of this
deferral shall be given to the Executive or the Executive's beneficiary.
Article 7
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees.
8.2 No Guarantee of Employment. This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain
an employee of the Company, nor does it interfere with the Company's
right to discharge the Executive. It also does not require the
Executive to remain an employee nor interfere with the Executive's
right to terminate employment at any time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this
Agreement.
8.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of Pennsylvania, except to the
extent preempted by the laws of the United States of America.
8.6 Unfunded Arrangement. The Executive and beneficiary are general
unsecured creditors of the Company for the payment of benefits under
this Agreement. The benefits represent the mere promise by the Company
to pay such benefits. The rights to benefits are not subject in any
manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors. Any
insurance on the Executive's life is a general asset of the Company to
which the Executive and beneficiary have no preferred or secured
claim.
8.7 Recovery of Estate Taxes. If the Executive's gross estate for
federal estate tax purposes includes any amount determined by
reference to and on account of this Agreement, and if the beneficiary
is other than the Executive's estate, then the Executive's estate
shall be entitled to recover from the beneficiary receiving such
benefit under the terms of the Agreement, an amount by which the total
estate tax due by the Executive's estate, exceeds the total estate tax
which would have been payable if the value of such benefit had not
been included in the Executive's gross estate. If there is more than
one person receiving such benefit, the right of recovery shall be
against each such person. In the event the beneficiary has a liability
hereunder, the beneficiary may petition the Company for a lump sum
payment in an amount not to exceed the beneficiary's liability
hereunder.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof.
No rights are granted to the Executive by virtue of this Agreement
other than those specifically set forth herein.
8.9 Administration. The Company shall have powers which are necessary
to administer this Agreement, including but not limited to:
8.9.1 Interpreting the provisions of the Agreement;
8.9.2 Establishing and revising the method of accounting for the
Agreement;
8.9.3 Maintaining a record of benefit payments; and
8.9.4 Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
LA BANK, N.A.
/s/ Xxxxxx Xxxxxx By /s/ Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxxx
