SEVERANCE AGREEMENT
Agreement made this 16th day of August, 2001, by and between Nazareth
National Bank and Trust Company, a banking association organized under the laws
of the United States ("Bank") and Xxxxx X. Xxxxxx, an individual ("Employee").
BACKGROUND
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Effective August 16, 2001 and subject to the terms of this Agreement,
the Bank will continue to employ Employee in the position of Executive Vice
President Branch Administration and Marketing, and to perform such other duties
as may be assigned to him by the President of the Bank. Employee agrees to serve
the Bank in this capacity on a full-time basis, faithfully, diligently and to
the best of his ability. Employee further agrees to fully cooperate with the
officers and employees of the Bank to the best of his ability, and not to engage
in any outside for profit business deemed to be in conflict with general
commercial banking, employment or commercial activity without the prior written
consent of the President of the Bank. The Bank and Employee wish to provide for
the payment of certain compensation and other benefits to Employee upon the
occurrence of certain events, all as more fully set forth below.
In consideration of the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, the parties agree as
follows:
1. Term. This Agreement shall begin on August 16, 2001 and shall
terminate at the earliest of the following dates (the "Term"): (a) the date
Employee dies or becomes permanently disabled (i.e., upon his failure to render
services of the character which he had previously rendered to the Bank, because
of his physical or mental illness
or other incapacity beyond his control for a continuous period of six months or
for shorter periods aggregating six months in any twelve month period); (b) the
date of termination of Employee's employment with the Bank for cause (as
hereinafter defined); (c) the date specified by mutual agreement of the Bank and
Employee; (d) subject to Section 2 hereof, the date of termination by Employee
of Employee's employment with the Bank by resignation or otherwise; or (e)
December 31, 2001. If this Agreement expires on December 31, 2001 pursuant to
(e) of the foregoing sentence ("the Initial Term"), it shall renew automatically
for successive terms of up to one year beginning on January 1 of the applicable
succeeding year ("Successive Term(s)"), provided neither of the parties has
given written notice to the other party of his or its intention not to renew at
least two months prior to December 31, 2001 or December 31 of the applicable
succeeding year. In the event that this Agreement is renewed pursuant to the
foregoing sentence, the Agreement shall terminate on the earliest of the
following dates: (i) a date listed in the (a) through (d) of the first sentence
of this paragraph; (ii) December 31 of the applicable succeeding year. If
Employee's employment with the Bank is terminated during the Initial Term or any
Successive Term (other than as set forth in Section 2 hereof), Employee shall
have no rights or benefits under this Agreement except to receive payment of
base salary through the effective date of his termination. For purposes of this
Agreement, the term "cause" shall mean (i) conviction of Employee for any
felony, fraud or embezzlement or (ii) Employee's failure or refusal to comply
with the written policies or written directives of the Bank's Board of Directors
or Employee being guilty of misconduct in connection with the performance of his
duties for the Bank, provided Employee fails to cure such non-compliance or
misconduct within twenty (20)
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days after receiving written notice from the Bank's Board of Directors
specifying such non-compliance or misconduct.
2. Termination. If during the Initial Term or any Successive Term
hereof, the Employee's employment with the Bank is terminated as set forth
below, the Bank will pay to Employee the amount set forth in Section 3 hereof
and Employee shall be entitled to the benefits set forth in Section 4 hereof:
(a) the Bank terminates Employee's employment with the Bank
without cause; or
(b) Employee terminates his employment with the Bank: (i) for any
reason at any time within eighteen months after a "change in control" of the
Bank (as defined hereinafter), or (ii) due to the fact that, without Employee's
consent and whether or not a change of control of the Bank has occurred, the
nature and scope of Employee's duties and authority or his responsibilities with
the Bank or the surviving or acquiring person are materially reduced to a level
below that which he enjoys on the date hereof, his then current base annual
salary is reduced to a level below that which he enjoys on the date hereof or at
any time hereafter (whichever may be greater), Employee's position or title with
the Bank or the surviving or acquiring person is materially reduced from his
current position or title with the Bank, or, without Employee's consent,
Employee's principal place of employment with the Bank is changed to a location
greater than fifty miles from his current principal place of employment with the
Bank, provided, however, that for any termination by Employee under this clause
(ii) the Employee shall have first given the Bank written notice of his
intention to terminate his employment pursuant to this clause (ii), specifying
the
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reason(s) for such termination, and provided further, that the Bank shall not
have cured or remedied the reason(s) specified in such notice prior to the
expiration of twenty (20) days after receipt of such written notice.
(c) For purposes of this Agreement, a "change in control" shall
be deemed to have occurred upon the happening of any of the following events:
(1) A change within a twelve month period in a majority of
the members of the Board of Directors of the Bank or its holding company, First
Colonial Group, Inc. (the "Holding Company");
(2) A change within a twelve month period in the holders of
more than 50% of the outstanding voting stock of the Bank or its Holding
Company; or
(3) Any other event deemed to constitute a "change in
control" by the Board of Directors of the Bank.
3. Termination Payments to Employee. Commencing not later than 30 days
after the date Employee's employment with the Bank is terminated pursuant to any
event enumerated in subsection (a) or subsection (b) of Section 2 hereof (the
"Termination Date") and subject to Employee's compliance with Section 8 hereof,
the Bank shall pay compensation to Employee for a one year period following the
Termination Date (the "Severance Period") at a per annum rate equal to 100% of
Employee's "base annual salary" on the Termination Date. For purposes of this
Agreement, the term "base annual salary" shall mean the Employee's annual
compensation rate on the Termination Date exclusive of cash bonuses and payments
under the Bank's bonus plan(s), if any. The Bank agrees that it will make the
payments due under this Section 3 on the first day of each month following the
Termination Date
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in an amount equal to 1/12 of 100% of Employee's base annual salary on the
Termination Date. If Employee's employment with the Bank is terminated pursuant
to any event enumerated in subsection (a) or subsection (b) of Section 2 hereof,
Employee shall have a duty to seek substantially equivalent employment. The
payments required by this Section 3 shall be reduced on a dollar-for-dollar
basis by any income or earnings received by Employee from any other employer or
by any income or earnings obtained from any other working activity in which
Employee may engage during the Severance Period. Employee shall notify the Bank
promptly of his receipt of any income or earnings during the Severance Period.
4. Other Benefits. In addition to the compensation set forth in
Section 3 hereof, Employee shall be entitled to the following benefits from the
Bank in the event that Employee's employment with the Bank is terminated
pursuant to any event enumerated in subsection (a) or subsection (b) of Section
2 hereof:
(a) for the Severance Period, reimbursement for all reasonable
expenses incurred by Employee in connection with the search for new employment,
including, without limitation, those of a placement agency or service, and
reimbursement for all reasonable relocation expenses incurred by Employee in
connection with securing new employment; provided, however, in no event shall
the Bank be obligated to reimburse Employee in excess of 1/3 of his base annual
salary on the Termination Date for the sum of Employee's search and relocation
expenses hereunder.
(b) for the Severance Period, Employee shall be entitled to
participate in the following group programs of the Bank if such programs are in
effect at the
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Termination Date (or, if such participation is not permitted by the terms of the
group programs, through substantially equivalent benefits), with the Bank paying
for the Employee's continued participation in such group programs at the same
annual rate at which the Bank was paying on the Termination Date: all medical,
hospitalization, life and disability group insurance benefits which existed at
the Termination date, except that should other subsequent employment be obtained
by Employee during the Severance Period, continuation of any medical,
hospitalization, life and disability group insurance benefits will be offset by
coverages provided through the Employee's subsequent employer.
5. Withholding. The Bank may withhold from any benefits payable under
this Agreement all federal, state, city or other taxes as shall be required
pursuant to any law or governmental regulation or ruling.
6. Source of Payment. All payments provided under this Agreement shall
be paid by the Bank from such funds as the President shall direct. No special or
separate fund shall be required to be established and Employee shall have no
right, title or interest whatsoever in or to any investment which the Bank may
make to aid the Bank in meeting its obligations hereunder. Nothing contained in
this Agreement, and no action taken pursuant to its provisions, shall create or
be construed to create a trust of any kind or a fiduciary relationship between
the Bank and Employee or any other person.
7. (a) Nonassignability. Neither this Agreement nor any right or
interest hereunder shall be assignable by Employee or his legal representatives
without the Bank's prior written consent.
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(b) Attachment. Except as required by law, the right to receive
payments under this Agreement shall not be subject of anticipation, sale,
encumbrance, charge, levy, or similar process or assignment by operation of law.
8. Confidentiality and Non-Competition. All payments to Employee under
this Agreement shall be subject to Employee's compliance with the provisions of
this Section 8. If Employee fails to comply with such provisions, his right to
any future payments under this Agreement shall terminate and the Bank's
obligations under this Agreement to make such payments and provide such benefits
shall cease.
(a) Employee covenants and agrees that he will not, during the
term of his employment and at any time thereafter, except with the express prior
written consent of the Bank or pursuant to the lawful order of any judicial or
administrative agency of government, directly or indirectly, disclose,
communicate or divulge to any person, or use for the benefit of any person, any
knowledge or information with respect to the conduct or details of the Bank's
business which he, acting reasonably, believes or should believe to be of a
confidential nature and the disclosure of which not to be in the Bank's
interest.
(b) Employee covenants and agrees that he will not, during the
term of his employment and for a period of one year thereafter, except with the
express prior written consent of the Bank, directly or indirectly, whether as
employee, employer, owner, partner, consultant, agent, director, officer,
shareholder or in any other capacity, engage in or assist any person to engage
in any act or action which he, acting reasonably, believes or should believe
would be harmful or inimical to the interests of the Bank.
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(c) Employee covenants and agrees that he will not, during the
term of his employment and for a period of one year thereafter, except with the
express prior written consent of the Bank, in any capacity (including, but not
limited to, owner, partner, shareholder, consultant, agent, employee, employer,
officer, director or otherwise), directly or indirectly, for his own account or
for the benefit of any person, engage or participate in or otherwise be
connected with any commercial bank which has its principal office in either
Northampton, Lehigh or Monroe Counties, Pennsylvania or Xxxxxx County, New
Jersey except that the foregoing shall not prohibit Employee from owning as a
shareholder less than 1% of the outstanding stock of an issuer whose stock is
publicly traded.
(d) The parties agree that any breach by Employee of any of the
covenants or agreements contained in this Section 8 will result in irreparable
injury to the Bank for which money damages could not adequately compensate the
Bank and therefore, in the event of any such breach, the Bank shall be entitled
(in addition to any other rights and remedies which it may have at law or in
equity) to have an injunction issued by any competent court enjoining and
restraining Employee and/or any other person involved therein from continuing
such breach. The existence of any claim or cause of action which Employee may
have against the Bank or any other person (other than a claim for the Bank's
breach of this Agreement for failure to make payments hereunder) shall not
constitute a defense or bar to the enforcement of such covenants.
(e) If any portion of the covenants or agreements contained in
this Section 8, or the application thereof, is construed to be invalid or
unenforceable, the other portions of such covenant(s) or agreement(s) or the
application thereof shall not
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be affected and shall be given full force and effect without regard to the
invalid or unenforceable portions to the fullest extent possible. If any
covenant or agreement in this Section 8 is held unenforceable because of the
area covered, the duration thereof, or the scope thereof, then the court making
such determination shall have the power to reduce the area and/or duration
and/or limit the scope thereof, and the covenant or agreement shall then be
enforceable in its reduced form.
(f) For purposes of this Section 8, the term "the Bank" shall
include the Bank, any successor to the Bank under Section 9 hereof, and all
present and future direct and indirect subsidiaries and affiliates of the Bank.
9. Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon any corporate or other successor of the Bank which may
acquire, directly or indirectly, by merger, consolidation, purchase, or
otherwise, all or substantially all of the assets of the Bank, and shall
otherwise inure to the benefit of and be binding upon the parties hereto and
their respective heirs, executors, administrators, successors and assigns.
Nothing in the Agreement shall preclude the Bank from consolidating or merging
into or with or transferring all or substantially all of its assets to another
person. In that event, such other person shall assume this Agreement and all
obligations of the Bank hereunder. Upon such a consolidation, merger, or
transfer of assets and assumption, the term "the Bank" as used herein, shall
mean such other person and this Agreement shall continue in full force and
effect.
10. Waivers Not to be Continued. Any waiver by a party of any breach
of this Agreement by another party shall not be construed as a continuing waiver
or as a consent to any subsequent breach by the other party.
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11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice:
If to Employee, to:
Xx. Xxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
If to the Bank, to:
Nazareth National Bank and Trust Company
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Board of Directors
and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.
12. Applicable Law; Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the substantive laws of the
Commonwealth of Pennsylvania with respect to contracts executed in and to be
wholly performed therein. Bank and Employee consent to the exclusive
jurisdiction of the Court of Common Pleas, Northampton County, Commonwealth of
Pennsylvania and the United States District Court for the Eastern District of
Pennsylvania in any and all actions arising hereunder and irrevocably consent to
service of process as set forth in Section 11 hereof.
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13. General Provisions.
(a) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof, and supersedes and replaces
all prior agreements between the parties. No amendment, waiver or termination of
any of the provisions hereof shall be effective unless in writing and signed by
the party against whom it is sought to be enforced. Any written amendment,
waiver or termination hereof executed by the Bank and Employee shall be binding
upon them and upon all other persons, without the necessity of securing the
consent of any other person and no person shall be deemed to be a third party
beneficiary under this Agreement.
(b) This Agreement shall not limit or infringe upon the right of
the Bank to terminate the employment of Employee at any time for any reason, nor
upon the right of Employee to terminate his employment with the Bank.
(c) The term "person" as used in this Agreement means a natural
person, joint venture, corporation, sole proprietorship, trust, estate,
partnership, cooperative, association, non-profit organization or any other
legally cognizable entity.
(d) This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same Agreement.
(e) No failure on the part of any party hereto to exercise and no
delay in exercising any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other rights, power or remedy.
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(f) The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.
(g) Nothing contained herein shall be construed to require the
Bank to violate applicable law, including, but not limited to, applicable
banking laws and regulations, and all obligations of the Bank under this
Agreement shall be deemed to be qualified accordingly.
ATTEST: NAZARETH NATIONAL BANK AND
TRUST COMPANY
By: _________________________ By:____________________________
S. Xxxx Xxxxxxx, President
Witness:
__________________________ _________________________(SEAL)
Xxxxx X. Xxxxxx
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