TERMINATION AGREEMENT
EXHIBIT
10.14
THIS AGREEMENT ("Agreement")
made as of this 23rd day
of October 2009, by and between PEOPLES FINANCIAL SERVICES
CORP., a Pennsylvania corporation ("Peoples") and XXXXXXXXX XXXXXX
(“Xxxxxx”).
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 Peoples National Bank (the "Bank");
and
WHEREAS, Xxxxxx is presently
serving as Treasurer of Peoples and Vice President and Controller of the Bank;
and
WHEREAS, Peoples considers the
continued services of Xxxxxx to be in the best interests of Peoples and its
shareholders and desires to induce Xxxxxx to remain in the employ of the Bank on
an impartial and objective basis in the event of a change in control of
Peoples.
AGREEMENT
NOW, THEREFORE, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Term of
Agreement.
(a) The
term of this Agreement shall:
(i) initially
be a term commencing as of October 23, 2009, and ending on October 23, 2010;
and
(ii) be
automatically extended to provide for a two (2) year term, annually, on October
23, 2010, and again on October 23 of each year thereafter, effective as of such
respective dates, unless either Peoples or Xxxxxx shall have given written
notice of nonextension of the term of this Agreement to the other at least
ninety (90) days before the date of any such extension.
(b) Notwithstanding
the provisions of Section 1(a) of this Agreement, this Agreement shall terminate
automatically upon termination by Peoples of Xxxxxx'x employment for
Cause. As used in this Agreement, "Cause" shall mean the
following:
(i) Xxxxxx
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 Xxxxxx for a period of forty-five (45) consecutive
days;
(ii) Xxxxxx
willfully fails to follow the lawful, good faith instructions of the Board of
Directors of Peoples after Xxxxxx'x receipt of written notice of such
instructions, other than a failure resulting from Xxxxxx'x incapacity because of
physical or mental illness; or
(iii) any
government regulatory agency orders that Peoples terminate the employment of
Xxxxxx or relieve him of his duties.
Notwithstanding
the foregoing, Xxxxxx'x employment under this Agreement shall not be deemed to
have been terminated for "Cause" under Clause (i) or (ii) above if such
termination took place solely as a result of:
(i) questionable
judgment on the part of Xxxxxx;
(ii) any
act or omission believed by Xxxxxx, 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
Xxxxxx 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
Xxxxxx'x employment is terminated for Cause, Xxxxxx'x rights under this
Agreement shall cease as of the effective date of such termination.
(c) Notwithstanding
the provisions of Section 1(a) of this Agreement, this Agreement shall terminate
automatically upon termination of Xxxxxx'x employment as a result of Xxxxxx'x
voluntary termination (other than in accordance with Section 2 of this
Agreement), retirement at Xxxxxx'x election, or death, and Xxxxxx'x rights under
this Agreement shall cease as of the date of such voluntary termination,
retirement at Xxxxxx'x election, or death; provided, however, that if Xxxxxx
dies after a Notice of Termination (as defined in Section 2(a) of this
Agreement) is delivered by Xxxxxx, the provisions of Section 11(b) of this
Agreement shall apply.
(d) Notwithstanding
the provisions of Section 1(a) of this Agreement, this Agreement shall terminate
automatically upon termination of Xxxxxx'x employment as a result of Xxxxxx'x
disability and Xxxxxx'x rights under this Agreement shall cease as of the date
of such termination. For purposes of this Agreement, "disability"
shall mean Xxxxxx'x incapacitation by accident, sickness, or otherwise that
renders Xxxxxx mentally or physically incapable of performing the services
therefore required of Xxxxxx for a continuous period of six (6)
months.
2. Termination Following Change
in Control.
(a) If
a Change in Control (as defined in Section 2(b) of this Agreement) shall occur
and if thereafter, at any time during the term of this Agreement, Xxxxxx shall
be involuntarily terminated or there shall be:
(i) any
reduction in title or a reduction in Xxxxxx'x 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 Xxxxxx of duties inconsistent with Xxxxxx'x prior status as
Treasurer of Peoples or as a Vice President and Controller of the
Bank;
(ii) any
reassignment of Xxxxxx which requires Xxxxxx to move his principal
residence;
(iii) any
removal of Xxxxxx from office or any adverse change in the terms and conditions
of Xxxxxx'x employment, except for any termination of Xxxxxx'x employment under
the provisions of Section 1(b) hereof;
(iv) any
reduction in Xxxxxx'x 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 Xxxxxx with benefits at least as favorable as
those enjoyed by Xxxxxx under any of the pension, life insurance, medical,
health, accident, disability or other employee benefit plans of Peoples (or any
affiliated company) in which Xxxxxx 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 11(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;
then, at
the option of Xxxxxx, exercisable by Xxxxxx within one hundred twenty (120) days
of the occurrence of each and every of the foregoing enumerated events, Xxxxxx
may resign from employment with Peoples (or, if involuntarily terminated, give
notice of intention to collect benefits under this Agreement) by delivering a
notice in writing (the "Notice of Termination") to Peoples, and the provisions
of Section 3 of this Agreement shall apply.
(b) As
used in this Agreement, "Change in Control" means a change of control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as enacted and in force on the date
hereof, whether or not Peoples is then subject to such reporting requirement;
provided, however, that, without limitation, such a Change in Control shall be
deemed to have occurred if:
(i) any
"person" (including a group acting in concert, as the term "person" is defined
in Section 13(d) of the Exchange Act, as enacted and in force on the date
hereof) becomes the "beneficial owner" (as that term is defined in Rule 13d-3,
as enacted and in force on the date hereof, under the Exchange Act) of
securities of Peoples representing more than 19.9% of the combined voting power
of Peoples' securities then outstanding;
(ii) there
occurs a merger, consolidation or other business combination or reorganization
to which Peoples or the Bank is a party, whether or not approved in advance by
the Board of Directors of Peoples or the Bank (as the case may be) in which the
members of the Board of Directors of Peoples or the Bank (as the case may be)
immediately preceding the consummation of such transaction do not constitute a
majority of the members of the Board of Directors of the resulting corporation
and of any parent corporation thereof immediately after the consummation of such
transaction;
(iii) there
occurs a sale, exchange, transfer, or other disposition of substantially all of
the assets of Peoples or the Bank to another entity, which is not approved in
advance by the Board of Directors of Peoples;
(iv) there
occurs a contested proxy solicitation of the stockholders of Peoples that
results in the contesting party obtaining the ability to elect candidates to a
majority of the positions on Peoples' Board of Directors next up for election;
or
(v) there
occurs a tender offer for the shares of voting securities of Peoples that
results in the tender offeror obtaining securities representing more than 19.9%
of the combined voting power of Peoples' securities then
outstanding.
3. Rights in Event of Certain
Termination of Employment After Change in Control. In the
event that Xxxxxx resigns from employment in accordance with the provisions of
Section 2(a), or Xxxxxx'x employment is terminated by Peoples without Cause
after a Change in Control, Peoples shall pay (or cause to be paid) to Xxxxxx in
cash, within twenty (20) days following termination, an amount equal to 2.00
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)(1).
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 Xxxxxx 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.
4. Legal
Expenses. Peoples shall pay to Xxxxxx all legal fees and
expenses incurred by Xxxxxx in seeking in good faith to obtain or enforce any
right or benefit provided by the Agreement, provided that any action or
proceeding is not summarily decided against Xxxxxx.
5. Arbitration. Peoples
and Xxxxxx 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 Xxxxxx, 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 Xxxxxx, 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 Xxxxxx, shall be entitled to an injunction restraining all further
proceedings in any pending or subsequently filed litigation concerning this
Agreement. 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.
6. Mitigation of
Damages. Xxxxxx shall not be required to mitigate the amount
of any payment provided for in Section 3 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in
Section 3 be reduced by any compensation earned by Xxxxxx as the result of
employment by another employer or by reason of Xxxxxx'x 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 3 shall be reduced by the amount actually received by Xxxxxx under any
severance policy of Peoples then in effect.
7. 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 Xxxxxx, in
the case of notices to Xxxxxx, and to the principal office of Peoples, in the
case of notices to Peoples.
8. 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 Xxxxxx
and an executive officer of Peoples specifically designated by the Board of
Directors of Peoples. No waiver by either 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.
9. Assignment. This
Agreement shall not be assignable by either party, except by Peoples to any
successor in interest to the business of Peoples.
10. Entire
Agreement. This Agreement contains the entire agreement of the
parties relating to the subject matter of this Agreement.
11. 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 3 of
this Agreement shall apply. As used in this Agreement, "Peoples"
shall mean Peoples as hereinbefore defined and any successor to the respective
businesses 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 Xxxxxx'x personal
or legal representatives, executors, administrators, heirs, distributees,
devisees, and legatees. If Xxxxxx should die after a Notice of
Termination is delivered by Xxxxxx and any amounts would be payable to Xxxxxx
under this Agreement if Xxxxxx had continued to live, all such amounts shall be
paid in accordance with the terms of this Agreement to Xxxxxx'x devisee,
legatee, or other designee, or, if there is none, to Xxxxxx'x
estate.
12. 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.
13. 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.
14. 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.
15. 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.
16. 409A Safe
Harbor. Notwithstanding anything in this Agreement to the
contrary, in no event shall Peoples be obligated to commence payment or
distribution to Xxxxxx 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 and Xxxxxx 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.
IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above
written.
By:
President
(SEAL)
Attest:
Secretary
Witness: XXXXXX
Xxxxxxxxx
Xxxxxx
