EXHIBIT 10.4
Change in Control Agreement
dated as of June 17, 1999,between
Xxxxxxx X. Xxxx and Union National Financial Corporation.
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT is made as of this 17th day of June, 1999,
between Union National Community Bank, a Pennsylvania commercial
bank (the "Bank"), and Xxxxxxx X. Xxxx, an adult individual (the
"Executive"), collectively (the "Parties") and, individually,
sometimes referred to herein as a ("Party").
WHEREAS, the Executive has been employed by the Bank as
Senior Vice President of Retail Banking since August 3, 1998; and
WHEREAS, the purpose of this Agreement is to define certain
severance benefits that will be paid by the Bank in the event of
a Change of Control (as defined herein). This Agreement is not
intended to affect, nor does it affect, the terms of the
Executive's employment at will, in the absence of a Change of
Control (as defined herein) of the Bank. Accordingly, although
this Agreement will be a binding legal obligation of the Bank
upon its execution, the Agreement will become operative only upon
a Change of Control, as defined below.
NOW THEREFORE, in consideration of the Executive's service to
the Bank and of the mutual covenants, undertakings and agreements
set forth herein and intending to be legally bound hereby, the
Parties agree as follows:
1. TERM. The term of the Agreement shall be effective as
of August 3, 1998, and shall continue until either Party gives
the other written notice of termination of employment, with or
without cause. Provided, however, that during the period of time
between the execution of an agreement to effect a Change of
Control (as defined herein) and the actual Date of Change of
Control (as defined herein) termination of the Executive's
employment by the Bank shall only be "For Cause."
For Cause shall be defined, for purposes of this section as
the occurrence of one of the following: (1) the willful failure
by the Executive to substantially perform his duties hereunder,
after notice from the Bank and a failure to cure such violation
within twenty (20) days of said notice; (2) the willful engaging
by the Executive in misconduct injurious to the Bank; (3) the
dishonesty or gross negligence of the Executive in the
performance of his duties; (4) the breach of Executive's
fiduciary duty involving personal profit; (5) the violation of
any law, rule or regulation governing banks or bank officers or
any final cease and desist order issued by a bank regulatory
authority any of which materially jeopardizes the business of the
Bank; or (6) conduct on the part of Executive which brings public
discredit to the Bank.
If, during the period of time between the execution of an
agreement to effect a Change of Control(as defined herein) and
the actual Date of the Change of Control (as defined herein),
Executive's employment is terminated For Cause (as defined
herein), all rights of the Executive under this Agreement shall
cease as of the effective date of such termination, except that
Executive (i) shall be entitled to receive accrued salary through
the date of such termination and (ii) shall be entitled to
receive the payments and benefits to which he is then entitled
under the employee benefit plans of the Employer or any affiliate
thereof as of the date of such termination.
2. DEFINITION OF CHANGE OF CONTROL. For purposes of this
Agreement, the term "Change of Control" shall mean a change of
control (other than one occurring by reason of an acquisition of
the Bank by Executive) of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation
14A or any successor rule or regulation promulgated under the
Securities Exchange Act of 1934, as amended (the "Act"); provided
that, without limiting the foregoing, a Change of Control shall
be deemed to have occurred if:
(a) a merger or consolidation of the Bank or purchase
of substantially all of the Bank's assets by
another "person" or group of "persons" (as such
term is defined or used in Sections 3, 13(d), and
14(d) of the Act) and, as a result of such merger,
consolidation or sale of assets, less than a
majority of the outstanding voting stock of the
surviving, resulting or purchasing person is
owned, immediately after the transaction, by the
holders of the voting stock of the Bank before
the transaction;
(b) any "person" as defined above, other than the
Bank, the Executive or any "person" who on the
date hereof is a director or officer of the Bank,
is or becomes the "beneficial owner" (as defined
in Rule 13d-3 and Rule 13d-5, or any successor
rule or regulation, promulgated under the Act),
directly or indirectly, of securities of the Bank
which represent twenty-five percent (25%) or more
of the combined voting power of the securities of
the Bank, then outstanding; or
(c) during any period of two consecutive years during
the term of this Agreement and any extension
thereof, individuals who at the beginning of such
period constitute the Board of Directors of the
Bank cease for any reason to constitute at least
two-thirds thereof, unless the election of each
director who was not a director at the beginning
of such period has been approved in advance by
directors representing at least two-thirds of the
directors then in office who were directors at the
beginning of the period.
3. DEFINITION OF DATE OF CHANGE OF CONTROL. For purposes
of this Agreement, the "Date of Change of Control" shall be
defined as the first date upon which the events delineated in
Subsections (a), (b) and (c) of Section 2 are consummated or
occur.
4. PAYMENTS UPON TERMINATION. If a Change of Control (as
defined herein) occurs, then the Executive shall be entitled to
receive a payment of twenty-one (21) months of his then current
Annual Direct Salary minus applicable withholdings and paid on a
biweekly basis on regular bank pay days, beginning on the
earliest of the following events:
(a) If, between the execution of an agreement to
effect a Change of Control (as defined herein) and
the actual Date of a Change of Control (as defined
herein) the Executive's employment with the Bank
is terminated, other than For Cause (as defined
herein);
(b) If the Executive is not offered employment by the
acquiring person or entity as of the Date of
Change of Control (as defined herein) in a
position having equivalent responsibilities,
authority, compensation and benefits as he
received immediately prior to the Change of
Control (as defined herein);
(c) If, between the Date of the Change of Control (as
defined herein) and six (6) months after the Date
of Change of Control (as defined herein), the
Executive is terminated from employment, for any
reason whatsoever, other than For Cause, by the
acquiring person or entity; or
(d) If, between three (3) and (6) months after the
Date of Change of Control (as defined herein), the
Executive terminates his employment with the
acquiring person or entity.
If at the end of six (6) months after the Date of the Change of
Control (as defined herein), none of the events described above
in Subsections (a), (b), (c) or (d) of this Section have
occurred, then the Executive shall no longer be entitled to
receive the Payments Upon Termination set forth in this Section,
and the Agreement shall thereafter be null and void.
Annual Direct Salary shall be defined herein as the fixed,
gross, base annual salary paid to the Executive at such time as
the Bank customarily pays its other senior officers and shall not
include any benefits, bonuses, incentives or other compensation.
5. COVENANT NOT TO COMPETE.
(a) Executive hereby acknowledges and recognizes the
highly competitive nature of the business of
Corporation and Bank and accordingly agrees that,
during and for the first twelve (12) months of the
applicable payment period set forth in Section 4
hereof, Executive shall not:
(i) be engaged, directly or indirectly, either
for his own account or as agent, consultant,
employee, partner, officer, director,
proprietor, investor (except as an investor
owning less than 5% of the stock of a
publicly owned company) or otherwise of any
person, firm, corporation or enterprise
engaged in (1) the banking (including bank
holding company) or financial services
industry, or (2) any other activity in which
Corporation or Bank or any of their
subsidiaries are engaged during the
Employment Period, and remain so engaged at
the end of the Employment Period, in any
area in which, at any time during the
Employment Period or at the date of
termination of the Executive's employment,
is within twenty (20) miles of any branch
location, office or other facility of
Corporation or Bank or any of their
subsidiaries, unless Executive exclusively
performs all such activity outside of said
twenty (20) mile area (the "Non-Competition
Area"); or
(ii) provide financial or other assistance to
any person, firm, corporation, or to
enterprise engaged in (1) the banking to
(including bank holding company) or to
financial services industry, or (2) any to
other activity in which Corporation or to
Bank or any of their subsidiaries are to
engaged during the Employment Period, in to
the Non-Competition Area; or
(iii) if employed in a capacity provided in (i)
or (ii), solicit current customers, during
the term of this Agreement, of
Corporation, Bank or any Corporation
subsidiary in the Non-Competition Area; or
(iv) solicit employees of Corporation, Bank or
any Corporation subsidiary who are employed
during the term of this Agreement.
(b) It is expressly understood and agreed that,
although Executive and Corporation and Bank
consider the restrictions contained in Section
5(a) hereof reasonable for the purpose of
preserving for Corporation and Bank and their
subsidiaries their good will and other proprietary
rights, if a final judicial determination is made
by a court having jurisdiction that the time or
territory or any other restriction contained in
Section 5(a) hereof is an unreasonable or
otherwise unenforceable restriction against
Executive, the provisions of Section 5(a) hereof
shall not be rendered void but shall be deemed
amended to apply as to such maximum time and
territory and to such other extent as such court
may judicially determine or indicate to be
reasonable.
(c) The provisions of this Section 5 shall be
applicable commencing on the date of this
Agreement and ending on the second anniversary
date of the effective date of termination of
Executive's employment.
6. NOTICE. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive: Xxxxxxx X. Xxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
If to the Bank: Xx. Xxxx X. Xxxxxx
President and CEO
Union National Community Bank
X.X. Xxx 000
Xx. Xxx, XX 00000-0000
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
7. SUCCESSORS. This Agreement shall inure to the benefit
of and be binding upon the Executive, his personal
representatives, heirs or assigns, and any of their successors or
assigns, provided, however, that the Executive may not commute,
anticipate, encumber, dispose or assign any payment herein except
as specifically set forth in paragraph 9 herein.
8. SEVERABILITY. If any provision of this Agreement is
declared unenforceable for any reason, the remaining provisions
of this Agreement shall be unaffected thereby and shall remain in
full force and effect.
9. AMENDMENT. This Agreement may be amended or canceled
only by mutual agreement of the parties in writing.
10. PAYMENT OF MONEY DUE DECEASED EXECUTIVE. In the event
of Executive's death, any monies that may be due him from the
Bank under this Agreement as of the date of death or thereafter
shall be paid to the person designated by him in writing for this
purpose, or, in the absence of any such designation, to his
estate.
11. NO GUARANTEE OF EMPLOYMENT. Nothing in this Agreement
shall constitute or give rise to any guarantee or contract of
employment of the Executive by the Bank, and shall not give the
Executive any right to be employed by or retained in the employ
of the Bank in any position or capacity.
12. LIMITATION OF DAMAGES FOR BREACH OF AGREEMENT. In the
event of a breach of this Agreement by either the Bank or the
Executive, each hereby waives to the fullest extent permitted by
law the right to assert any claim against the others for punitive
or exemplary damages. In no event shall any party be entitled to
the recovery of attorney's fees or costs.
13. LAW GOVERNING. This Agreement shall be governed by
and construed in accordance with the laws of the state of
Pennsylvania.
14. ENTIRE AGREEMENT. This Agreement supersedes any and
all prior agreements, either oral or in writing, between the
parties with respect to payments upon termination after a Change
of Control, and this Agreement contains all the covenants and
agreements between the parties with respect to same.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Agreement to be duly
executed in their respective names and, in the case of the Bank,
by its authorized representatives the day and year above
mentioned.
ATTEST: UNION NATIONAL COMMUNITY BANK
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxxx
_____________________ __________________
Xxxx X. Xxxxxx, President and
CEO
WITNESS:
/s/ Xxxxxx Xxxxxxx /s/ Xxxxxxx X. Xxxx
__________________ ___________________
Xxxxxxx X. Xxxx
