EXHIBIT 99(d)
EMPLOYMENT AGREEMENT
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AGREEMENT made this day of October, 1997, by and between COMMUNITY
BANKS, INC., a Pennsylvania corporation, ("Community"), THE PEOPLES STATE BANK,
a Pennsylvania state chartered banking institution ("Peoples") and XXXXXXX X.
XXXXXXX, an adult individual (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently employed by Peoples, as Peoples' Chief
Lending Officer, pursuant to a certain Employment Agreement between Peoples and
Executive, dated May 2, 1994; and
WHEREAS, Community and Peoples have entered into a certain Agreement and
Plan of Reorganization of even date (the "Merger Agreement") whereby Peoples
will be merged with and into PSB Interim Bank, a Pennsylvania state chartered
banking institution, as of the Effective Date of the Merger (as defined therein)
and, upon the Effective Date of the Merger, PSB Interim Bank shall change its
name to The Peoples State Bank; and
WHEREAS, as of the Effective Date of the Merger, Peoples will be a wholly-
owned subsidiary of Community; and
WHEREAS, for purposes of the Agreement, Community and Peoples are referred
to collectively as the "Company."
WHEREAS, the Company wishes to employ Executive and Executive wishes to be
employed by Company, as an Executive Vice President and the Chief Lending
Officer of Peoples, upon the terms set forth below, as of the Effective Date of
the Merger; and
NOW, THEREFORE, in consideration of the agreements hereinafter contained,
and intending to be legally bound hereby, the parties agree as follows:
a. Length of Employment. Company agrees to employ Executive for a
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rolling term of two (2) years commencing on the Effective Date of the Merger.
On each anniversary date of the Effective Date of the Merger, the term of this
Agreement shall automatically renew and extend for an additional one (1) year
period unless either party shall have provided notice of its intent not to renew
within sixty (60) days prior to such anniversary date. Upon the date of any
Change in Control (as defined in Paragraph 8) should occur, the term of this
Agreement shall automatically renew and be extended for two (2) years from such
date.
b. Position and Responsibilities. During the course of his
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employment, Executive shall (i) perform the duties and responsibilities of an
Executive Vice President of Company and Chief Lending Officer of Peoples, (ii)
perform such other senior management duties and responsibilities as the Board of
Directors and CEO may direct, and (iii) shall be afforded the title and
privileges associated with being at least an Executive Vice President of the
Company.
c. Performance of Responsibilities, Loyalty.
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i. Executive shall devote his full time to the performance of
his responsibilities hereunder. Executive shall at all times faithfully,
industriously and to the best of his abilities perform all duties necessary
to carry out his responsibilities.
ii. Throughout the term hereof, Executive shall not at any time
or place, either directly or indirectly engage in any business or activity
in competition with or adverse to the interests of Company.
d. Compensation.
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i. During the initial calendar year of the term of this
Agreement, Company shall pay to Executive a base salary of not less than
$90,000.00. During successive calendar years, the Company may, in its
discretion, adjust the base salary; provided that it shall at no point be
reduced below the initial base salary. This salary shall be paid in
regular, substantially equal installments in accordance with the regular
payroll practices of the Company, less any and all applicable deductions
for taxes, medical benefits, etc.
ii. In addition to base salary, during the term of this
Agreement, Company shall provide Executive with an automobile, including
all related maintenance, repairs, insurance and other costs. In lieu of
providing Executive with an automobile, Company may provide Executive with
a reasonable allowance on a monthly basis, which allowance shall cover
Executive's costs associated with an automobile, including without
limitation, lease or installment payments, maintenance, repairs, insurance
and other costs.
e. Benefits.
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i. Executive shall receive employee benefits from Company no
less favorable than the employee benefits he received as an employee of
Peoples and, in addition, shall be eligible to participate in all
employee benefit plans generally available to executive officers of
Company, including without limitation, health and dental insurance plans,
group life insurance plans, retirement plans, incentive compensation
plans, supplemental executive retirement plans and stock option, grant or
appreciation rights plans. The participation of Executive in each benefit
plan described in this paragraph shall be subject to the terms of the
applicable plan and to procedures generally applicable to Company officers;
provided, however, that Executive shall receive credit for years of service
with Peoples for vesting purposes only. Nothing in this paragraph shall
obligate the Company to offer any such plans.
ii. Executive shall be provided holiday pay, personal days, sick
leave, short-term disability and long-term disability in accordance with
Company policy for officers of similar position per forming similar
duties. Executive shall be entitled to at least four (4) weeks paid
vacation each calendar year.
iii. The Company shall pay the reasonable costs of Executive
attending continuing education seminars and banking conventions and
meetings.
f. Relocation. Company shall not, without the prior consent of
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Executive, transfer or relocate the office in which Executive performs the bulk
of his duties to any location more than thirty (30) miles from East Berlin,
Pennsylvania without an increase in duties and responsibilities and commensurate
compensation. In the event Executive is so transferred or relocated, Company
shall pay all reasonable out-of-pocket expenses incurred by Executive in
connection with such relocation. Company shall not require Executive to move
from his residence.
g. Termination of Employment. This Agreement may be terminated
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during the term hereof as follows:
i. (1) At any time by mutual agreement of Executive and
Company.
(2) If this Agreement is terminated pursuant to subparagraph
(a)(1) of this Paragraph 7, neither party shall have further obligation or
liability to the other hereunder, except that Executive shall be entitled
to accrued and unpaid salary.
ii. (1) By Company, at any time for Cause. "Cause" shall
include Executive's personal dishonesty, willful misconduct, breach of
fiduciary duty involving personal profit, incompetence, intentional failure
to perform stated duties, willful violation of any law, rule or regulation
(other than traffic violations or offenses not involving moral turpitude),
final cease and desist order of any government agency having jurisdiction
over Company, or material breach of this Agreement, following Company's
notice thereof to Executive and Executive's failure to cure same within
thirty (30) days of such notice.
(2) If this Agreement is terminated pursuant to subparagraph
(b)(1) of this Paragraph 7, Company shall have no further obligation or
liability to Executive hereunder, except that Executive shall be entitled
to accrued and unpaid salary.
iii. (1) Automatically, if Executive is removed and/or
permanently prohibited from participating in the conduct of Company's
affairs by an order issued by an appropriate regulatory agency under
Section 8(e) of the Federal Deposit Insurance Act, as amended, or any
similar state or federal law.
(2) If this Agreement is terminated pursuant to subparagraph
(c)(1) of this Paragraph 7, Company shall have no further obligation or
liability hereunder, except that Executive shall be entitled to accrued and
unpaid salary.
iv. (1) By Company at any time, if in its sole judgment and
discretion the continued employment of Executive would no longer be
beneficial or desirable.
(2) In the event that Executive's employment is terminated
pursuant to this subparagraph (d)(1) of this Paragraph 7, Executive shall
not be obligated to perform any services on behalf of Company and Company
shall be obligated to continue Executive's salary and those benefits set
forth in Paragraph 5(a) hereof for the remaining term of this Agreement;
provided, however, that in no event shall this provision obligate Company
to make any further increase to Executive's salary above his salary on the
date of such termination, or continue Executive's participation in any
incentive compensation plan, or stock option, grant or appreciation rights
plan, or any similar incentive based compensation plan.
(3) Notwithstanding the provisions of subparagraph (d)(2) of
this Paragraph, in the event that Executive's employment is terminated
pursuant to subparagraph (d)(1) of this Paragraph 7 subsequent to a Change
in Control, or the Company shall breach any provision of this Agreement
subsequent to a Change in Control, Executive may elect, which election may
be made in Executive's sole discretion, to receive from Company a single
payment upon such termination amounting to any salary to which Executive
would be entitled pursuant to subparagraph (d)(2), such single payment
being in lieu of the payments and benefits set forth in subparagraph
(d)(2). As used in this paragraph, "Change in Control" shall have the
meaning defined in Paragraph 8 hereof.
v. (1) By Executive upon a Change in Control.
(2) In the event that Executive terminates his employment
pursuant to subparagraph (e)(i) of this Paragraph 7, Executive may elect,
which election may be made in Executive's sole discretion, to receive from
Company a single payment upon such termination amounting to any salary to
which Executive would be entitled pursuant to subparagraph (d)(2) of this
Paragraph 7, such single payment being in lieu of the payments and benefits
set forth in subparagraph (d)(2) of this Paragraph 7.
vi. By Executive at any time, upon thirty (30) days prior notice
to Company; provided, however, that if this Agreement shall be terminated
pursuant to this subparagraph (f) of this
Paragraph 7, Company shall not be further obligated or liable under this
Agreement, except for the payment of accrued and unpaid salary.
h. Definition of Change of Control. For purposes of this Agreement,
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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, as enacted and in
force on the date hereof) of "beneficial ownership" (within the meaning of
Rule 13d-3 under the Exchange Act, as enacted and in force on the date
hereof) of securities of Company representing 24.99% or more of the
combined voting power of Company's securities then outstanding;
ii. A merger, consolidation or other reorganization of Company,
except where the resulting entity is controlled, directly or indirectly, by
Company;
iii. A merger, consolidation or other reorganization of Company,
except where shareholders of Company immediately prior to consummation of
any such transaction continue to hold as 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 a
transaction are former members of Company's Board of Directors;
iv. A sale, exchange, transfer or other disposition of
substantially all of the assets of Company to another entity, except to an
entity controlled, directly or indirectly, by Company or a corporate
division involving Company;
v. A contested proxy solicitation of Company's shareholders
that results in the contesting party obtaining the ability to cast twenty-
five percent (25%) or more of the votes entitled to be cast in an election
of directors of Company.
vi. During any period of two (2) consecutive years during the
term of this Agreement and any renewal hereof, individuals who at the
beginning of such period constitute the Board of Directors of Company cease
for any reason (other than for health, disability or other medical
incapacity or voluntary retirement) to constitute at least a majority
thereof.
vii. The termination of employment of the Chief Executive Officer
of Company, other than for Cause pursuant to Section 6(c) or voluntary
termination under Section 6(e) of a certain Employment Agreement between
Xxxxx X. Xxxxxxxxxxxx and Company, of even date, during the period
commencing on the Effective Date of the Merger and ending two (2) years
thereafter.
i. Suspension. If Executive is suspended and/or temporarily
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prohibited from participating in the conduct of the Company's affairs by a
notice served in accordance with law by an appropriate regulatory agency, the
Company's obligations under this Agreement shall be suspended as of the date of
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, Company shall (i) pay Executive all of the compensation withheld
while its contract obligations were suspended and (ii) reinstate any of its
obligations which were suspended.
j. Death or Disability. In the event that Executive is rendered
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unable to complete the terms of this Agreement due to death or disability
continuing in excess of ninety (90) days, this Agreement shall be terminated and
Company shall have no further liability, obligations or responsibilities
hereunder except as set forth in Paragraph 5(b) hereof.
k. Covenant Not to Compete. In the event Executive terminates his
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employment with Company pursuant to Paragraph 7(f), he agrees that, for a period
of one (1) year following such termination, he shall
not (i) solicit any Company employees or officers to leave Company to accept
employment by Executive or his new employer; and (ii) solicit or encourage any
Company customers to cease doing business with the Company and/or to transfer
any or all of their business relationships to any institution which Executive
may found or to Executive's new employer.
l. Entire Agreement. As of the Effective Date of the Merger, this
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Agreement and a certain Salary Continuation Agreement between Executive and
Peoples shall constitute the entire agreement between the parties and no prior
promises, agreements or warranties, verbal or written, shall be of any force
unless embodied herein. No modification of this Agreement shall be of any force
or effect unless reduced to writing and signed by both parties. As of the
Effective Date of the Merger, the existing Employment Agreement between Peoples
and Executive shall be terminated, with no further rights or obligations
thereunder due to or from either party, and this Agreement shall supersede same.
m. Miscellaneous.
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i. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective heirs, successors and
assigns.
ii. This Agreement shall not be modified or changed in any way
except by a written agreement signed by the parties hereto.
iii. No waiver by any party hereto of any provision of this
Agreement shall be deemed a waiver of said provision or any other
provisions of this Agreement.
iv. This Agreement shall be interpreted, construed and governed
in accordance with the laws of the Commonwealth of Pennsylvania. 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.
IN WITNESS WHEREOF, the parties have set their hands and seals.
ATTEST: COMMUNITY BANKS, INC.
___________________________ By:__________________________________
THE PEOPLES STATE BANK
___________________________ By:__________________________________
WITNESS: EXECUTIVE:
___________________________ __________________________________
Xxxxxxx X. Xxxxxxx
