AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.7
AMENDMENT
TO EMPLOYMENT AGREEMENT
TO EMPLOYMENT AGREEMENT
AGREEMENT made the 24th day of January, 2008, by and between AMERISERV FINANCIAL,
INC., a Pennsylvania corporation (the “Company”), and XXXXX X. XXXXXXXX, an individual (the
“Executive”).
WITNESSETH:
WHEREAS, the parties entered into an agreement dated January 16, 2004, relating, among other
things, to the Executive’s employment by the Company (the “Employment Agreement”); and
WHEREAS, the parties desire to amend the Employment Agreement to comply with section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”), by executing this document (the
“Amendment”), effective as of January 1, 2005.
NOW, THEREFORE, the parties, intending to be legally bound hereby, further agree as follows,
effective January 1, 2005:
1. Section 3(a) of the Employment Agreement is amended and restated to read as follows—
(a) If there is a Change in Control (defined below) and following such
Change of Control one of the following events occurs:
(i) there is an involuntary termination of the Executive by the
Company other than for Cause as defined in Section 4 of this Agreement
(“Involuntary Termination”);
(ii) there is a reduction in the Executive’s title,
responsibilities, including reporting responsibilities, or authority,
including such title, responsibilities, or authority as such may have
been increased from time to time during the term of this Agreement,
which results in a material negative change to the Executive in the
employment relationship;
(iii) the Company assigns to the Executive duties inconsistent with
the Executive’s office as such duties existed on the day immediately
prior to the date of a Change in Control, which results in a material
negative change to the Executive in the employment relationship;
(iv) there is a material reduction in the Executive’s annual base
salary in effect on the day immediately prior to the date of the Change
in Control;
(v) there is a termination of the Executive’s participation, on
substantially similar terms, in any incentive compensation or bonus
plans of the Company in which the Executive participated immediately
prior to the Change in Control, or any change or amendment to any of the
substantive provisions of any of such plans which would materially
decrease the potential benefits to the Executive under any of such
plans;
(vi) the Company fails to provide the Executive with benefits at
least as favorable as those enjoyed by the Executive under any pension,
life insurance,
medical, health and accident, disability or other employee plans of the
Company in which the Executive participated immediately prior to the
Change in Control, or the Company takes any action that would materially
reduce any of such benefits in effect at the time of the Change in
Control, unless such reduction relates to a reduction in benefits
applicable to all employees generally; or
(vii) there is a breach of any provision of this Agreement by the
Company, which breach shall not have been cured by the Company within
thirty (30) days of the Company’s receipt from the Executive or his
agent of written notice specifying in reasonable detail the nature of
the Company’s breach;
then the Executive may collect the compensation and benefits described
in this Section as follows:
1. If the Executive is terminated pursuant to an Involuntary
Termination, the Executive shall collect benefits under this
Section without any further action by the Executive.
2. If any of the events described in Sections 3(a)(ii) through
(vii) occur, then at the option of the Executive, exercisable by
him within ninety (90) days of the occurrence of such event(s),
Executive may collect benefits under this Section by delivering
thirty (30) days prior written notice to the Company of
Executive’s decision to resign from his employment with the
Company (effective thirty (30) days after the date of notice or
such earlier time as the Company may determine) and of
Executive’s decision to collect benefits under this Section
(“Notice”), provided, however, that the Company shall be given
thirty (30) days from the date it receives Notice to remedy any
such event(s). Notwithstanding the foregoing, any amounts
payable upon termination by the Executive upon the occurrence of
any of the events described in Sections 3(a)(ii) through (vii)
shall be paid only if the Executive actually terminates
employment within two (2) years following the initial existence
of such event(s).
| 2. | Section 3(b)(i) of the Employment Agreement is amended and restated to read as follows— |
(i) The Company shall pay to the Executive an amount equal to the
product of (A) 2.99 multiplied by (B) the quotient obtained by dividing
the sum of the Executive’s combined salary and bonuses in the three
calendar years (or such lesser whole number of calendar years that the
Executive was employed by the Company) preceding the date of the
Executive’s Involuntary Termination or the month preceding the
Executive’s delivery of Notice (whichever is applicable) by three (or
such lesser whole number of calendar years that the Executive was
employed by the Company). Such payment shall be made as a lump sum
within thirty (30) days of the date of termination and shall be
discounted to present value (using the interest rate provided in Code
Section 1274(b)(2)(B)) for the thirty-six (36) month period commencing
on the first day of the calendar month following the month in which the
Involuntary Termination occurred or the month in which the Executive’s
resignation pursuant to the Notice was effective (whichever is
applicable); and
| 3. | Section 3(b)(ii) of the Employment Agreement is amended and restated to read as follows— |
(ii) In addition, the Executive shall (A) be entitled to a lump sum cash
payment, payable within thirty (30) days of the date of the Executive’s
Involuntary Termination or the date in which the Executive’s resignation
pursuant to the Notice is effective, equal to the excess of (i) the
aggregate retirement benefits he would have received under the terms of
each tax-qualified and non-qualified plan of the Company as in effect
immediately prior to the Executive’s date of termination (a) as if he
continued to be employed for three (3) more years, and (b) had he
received (on a pro rated basis, as appropriate) the greater of (I) the
highest compensation taken into account under each such plan with
respect to one of the three (3) years immediately preceding the year in
which the date of termination occurs, or (II) his annualized base
compensation in effect immediately prior to the date of termination (or
prior to any reduction which entitled him to terminate his employment
under Section 3(a)(iv)), over (ii) the retirement benefits he actually
receives under such plans; and (B) from the date of the Executive’s
Involuntary Termination or the date on which an Event occurred
(whichever is applicable) through and including the last day of the
thirty-six (36) month period thereafter, be provided with life,
disability, and medical insurance benefits at levels equivalent to the
highest levels in effect for the Executive during any one of the three
(3) calendar years preceding the year in which the Involuntary
Termination or the date on which an Event occurred; and
| 4. | The following sentence is added to the end of Section 3(b) of the Employment Agreement— |
To the extent it is determined that any benefits under Section
3(b)(ii)(B) are taxable to the Executive, they are intended to
constitute payments made upon an involuntary termination from service
and payable pursuant to Treas. Reg. §1.409A-1(b)(9)(iii), to the maximum
extent permitted by said provision and to the extent the payment of such
taxable benefits would exceed the specified time period under Treas.
Reg. §1.409A-1(b)(9)(iii), Executive shall be paid, within 30 days of
the date of termination, a lump sum amount in cash equal to the present
value (determined based upon 120% of the then prevailing monthly
short-term applicable federal rate) of the Company’s cost, as of the
date of termination, of otherwise providing such benefit beyond the
specified time period under Treas. Reg. §1.409A-1(b)(9)(iii).
| 5. | The second paragraph on page 7 of the Employment Agreement is amended and restated to read as follows— |
In the event the Executive is ineligible to continue participation in
any of the Company’s life, disability or medical insurance plans or
programs, the Company shall, in lieu of such participation, pay the
Executive a lump sum cash payment equal to the after-tax cost to the
Executive to obtain such benefits, within 30 days of the date of the
Executive’s Involuntary Termination or the date in which the Executive’s
resignation pursuant to the Notice is effective (whichever is
applicable).
| 6. | Section 3(d) of the Employment Agreement is deleted in its entirety and Section 3(e) is renumbered accordingly. |
| 7. | A new Section 3(e) is added to the Employment Agreement, reading as follows— |
(e) Notwithstanding the foregoing, and anything herein to the contrary,
the receipt of any benefits under this Agreement as a result of a
termination of employment shall be subject to satisfaction of the
condition precedent that the Executive undergo a “separation from
service” within the meaning of Treas. Reg. § 1.409A-1(h) or any
successor thereto.
| 8. | Section 6(a) of the Employment Agreement is amended and restated to read as follows— |
(a) In the event that the Executive is notified by the Company that his
employment is going to be terminated hereunder, other than for Cause and
absent a Change in Control as defined in Section 3(c) of this Agreement
and absent a prior termination as described in Section 3(d) of this
Agreement, then:
(i) if the Executive is terminated by the Company, other than for
Cause, prior to the third anniversary of the Effective Date, the
Company shall pay to the Executive, within thirty (30) days of
the date of termination, a lump sum payment in an amount equal to
the sum of:
(A) the present value (using the interest rate provided in
Code Section 1274(b)(2)(B)) of the Executive’s base salary
in effect as of the date of termination for the period
commencing as of the first day of the first month next
following the date of termination and continuing through
the fifth anniversary of the Effective Date; and
(B) the present value (using the interest rate provided in
Code Section 1274(b)(2)(B)) of 100% of the cost to the
Company, under the applicable health benefit plans of the
Company, for providing health benefits to the Executive,
his spouse and eligible dependents, if any, for the period
commencing as of the first day of the first month next
following the date of termination and continuing through
the fifth anniversary of the Effective Date, at the cost in
effect as of the date of termination (less the Executive’s
portion of the cost for the active plans); or
(ii) if the Executive is terminated by the Company, other than
for Cause, after the third anniversary of the Effective Date, the
Company shall pay to the Executive, within thirty (30) days of
the date of termination, a lump sum payment in an amount equal to
the sum of:
(A) the present value (using the interest rate provided in
Code Section 1274(b)(2)(B)) of the Executive’s base salary
in effect as of the date of termination for the period
commencing as of the first day of the first month next
following the date of termination and continuing for
twenty-four (24) months thereafter; and
(B) the present value (using the interest rate provided in
Code Section 1274(b)(2)(B)) of 100% of the cost to the
Company, under the applicable health benefit plans of the
Company, for providing
health benefits to the Executive, his spouse and eligible
dependents, if any, for the period commencing as of the
first day of the first month next following the date of
termination and continuing for twenty-four (24) months
thereafter, at the cost in effect as of the date of
termination (less the Executive’s portion of the cost for
the active plans).
The Company’s obligation to make the payments described in this Section
6, is conditioned on the execution by the Executive of an Agreement and
Release substantially in the form of Exhibit B attached hereto, or as
revised by the Company if required to conform to changes in the law or
regulations after the execution of this Agreement and thereafter does
not revoke such Agreement and Release in the manner permitted under
Section 19 of such Agreement and Release. Severance pay described in
this Section 6 will be subject to legally required withholding and
payroll taxes.
IN WITNESS WHEREOF, the Parties have executed this Amendment, or caused it to
be executed, on January 24, 2008.
| AMERISERV FINANCIAL, INC. | ||
| By: /s/ Xxxxx X. Xxxx Date: January 24, 2008 |
[CORPORATE SEAL]
|
Attest: | /s/ Xxxxxx X. Xxxxxxxx Date: January 24, 2008 |
| /s/ Xxxxx X. Xxxxxxxx Xxxxx X. Xxxxxxxx |
||
| Date: January 24, 2008 |
