Exhibit 10(x)
Employment Agreement between Boston Service
Company, Inc., t/a Xxxx Financial Service Corp.
and Xxxxxxx X. Xxxxxx, dated February 1, 2000
EMPLOYMENT AGREEMENT
AGREEMENT made this 1st day of February, 2000, by and between Boston
Service Company, Inc., t/a Xxxx Financial Services Corporation, a New Jersey
corporation (the "Company"), and Xxxxxxx X. Xxxxxx, an adult individual whose
principal residence is at 00 Xxxxxxxxx Xxxxx, Xxxxxx Xxxx, XX 00000 (the
"Executive").
Background
Executive currently serves as one of the principal executive officers of
the Company. Company, all of the shareholders of the Company and Susquehanna
Bancshares, Inc. ("Susquehanna") have heretofore entered into a Share Exchange
Agreement dated November 17, 1999 (the "Share Exchange Agreement"), pursuant to
which Susquehanna has agreed to acquire all of the issued and outstanding shares
of capital stock of the Company in accordance with the terms and provisions set
forth therein. In connection with the Share Exchange Agreement, and in
consideration therefore, the Company desires to induce the Executive to remain
in the Company's employment, and the Executive hereby agrees to accept
continuation of employment with the Company, on the terms and subject to the
conditions hereinafter set forth.
1. Position. The Company hereby agrees to continue the Executive's
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employment, and the Executive hereby agrees to continue employment with the
Company, as President and Chief Executive Officer of the Company.
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2. Duties.
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2.1 The Executive agrees to assume such duties and responsibilities
(i) as may be consistent with the position of President and Chief Executive
Officer of the Company, and (ii) as may be assigned to the Executive by the
Board of Directors or by the by-laws of the Company, from time to time, and
which shall also be consistent with the position of President and Chief
Executive Officer of the Company and shall not interfere with Executive's duties
and responsibilities as President and Chief Executive Officer of the Company. No
change in the duties of the Executive shall in any way diminish the compensation
payable to him pursuant to the provisions of paragraph 4 hereof.
2.2 The Executive agrees to devote his skill, attention, energies and
best efforts to the performance of his duties under this Agreement consistent
with practices and policies established from time to time by the Company, and
shall not, during the term of this Agreement, actively engage in any other
business activity; provided, however, that the Executive may serve on the boards
of directors or trustees of (i) the entities listed on Schedule 2.2 attached
hereto, consistent with past practice, and so long as such activities do not
significantly interfere with the performance of Executive's responsibilities
under this Agreement and (ii) other civil, social or business organizations as a
member if (a) the Executive gives the Company's Board of Directors written
notice of his intent to serve on any such board and the Company's Board of
Directors does not object, and (b) such service does not interfere with the
Executive's ability to discharge his duties and responsibilities to the Company
hereunder. Notwithstanding anything herein to the contrary, the Executive shall
terminate any such service on any other board upon reasonable request by the
Company.
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3. Period of Employment. Unless terminated earlier pursuant to
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subparagraph 7.4, 10.1 or 10.2 hereof, the period of employment (the "Period of
Employment") shall be ten (10) years from the date hereof.
4. Compensation. For all services rendered by the Executive under
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this Agreement, the Company shall pay to the Executive compensation as provided
below:
4.1 Base Salary. Commencing on the date hereof and continuing
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during the Period of Employment, the Company shall pay the Executive an annual
base salary of $250,000 (less any withholding as required by law). Such base
salary shall be paid in equal installments for pay periods established by the
Company's standard payroll procedures applicable to all employees.
4.2 Bonus. The Company shall pay to the Executive annual bonus
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compensation calculated in accordance with the formula set forth in Schedule 4.2
attached hereto and made a part hereof.
4.3 Annual Review. The Compensation Committee of Susquehanna, or
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its nominee, shall perform an annual review of this Agreement and the
Executive's performance with the Company. The results of such review shall be
reported to the Company and to the Executive and shall be memorialized in the
minutes of the meetings of the Company's Board of Directors.
5. Executive Expenses. Subject to such general executive expense account
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policies as the Company may from time to time adopt, the Company will pay or
reimburse the Executive upon presentation of vouchers or invoices for reasonable
expenses incurred by the Executive in the performance of his duties in carrying
out the terms and provisions of this Agreement,
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including, without limitation, expenses for such items as entertainment, travel,
meals, hotel and similar items. In the event that any reimbursed expenses are
disallowed by the Internal Revenue Service as deductions to the Company, the
Executive shall retain such reimbursed expense amounts which the Executive shall
treat and report as additional compensation and which the Company may treat as
deductible salary expense.
The Company also shall provide the Executive during his employment under
this Agreement with the full time use of a car selected by the Executive and
comparable to the car available at present, and shall provide automobile
insurance and reimburse gasoline expenses consistent with past practice. Such
car shall be selected and maintained in accordance with the Company's general
policy on cars for managers having need of a car for business use, and
consistent with past practice shall be replaced at the request of the Executive
once during every twelve-month period.
6. Vacations. Executive will be entitled to no less than four (4) weeks
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of paid vacation annually, to be taken at times reasonably convenient to the
Company.
7. Benefits.
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7.1 The Executive shall be entitled to group term life insurance
insuring the Executive's life during the term of employment, disability
insurance coverage, and accidental death and dismemberment benefits, including
death benefit, in such amounts and in such coverage as shall be consistent with
the insurance coverage programs available to other salaried executives of the
Company, as a subsidiary of Susquehanna, as the same may change from time to
time. The Executive shall designate the beneficiary of such policy and benefits.
7.2 The Executive shall be entitled to major medical and health
insurance
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coverage for the Executive and his immediate family on such terms, in such
amounts and in such coverage as shall be consistent with the insurance coverage
programs available to other salaried executives of the Company generally, as a
subsidiary of Susquehanna, as the same may change from time to time. Such
insurance shall contain no exclusions for pre-existing conditions.
7.3 The Executive shall be entitled to participate in the pension and
profit sharing plans of the Company in such amounts and under such terms as
shall be consistent with the programs available to other salaried executives of
the Company, as a subsidiary of Susquehanna, as the same may change from time to
time.
7.4 If the Executive becomes and continues to be permanently disabled,
such disability to be defined as the Executive's inability, as a result of
illness, incapacity, disease or calamity to perform a substantial part of his
reasonable duties as set forth herein, with no reasonable expectation that the
Executive will be able to resume the performance of his reasonable duties, the
Company shall continue to pay to the Executive the base salary set forth in
paragraph 4, above, and, except as otherwise provided in this paragraph, all
other benefits as set forth in this Agreement for a period of no less than six
(6) months following the commencement of such permanent disability. Any
provision of this Agreement notwithstanding, the Executive shall be conclusively
deemed to be permanently disabled if he is physically or mentally unable to
perform his duties or a substantial part thereof for a period of six consecutive
months. The Executive shall have no right to earn any bonus compensation during
such period of time. At the end of such six-month period, if such permanent
disability continues, this Agreement shall terminate at the option of the
Company in its sole discretion and the Company shall have no further obligation
to the Executive under this Agreement other than in connection with such
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benefits as may be available under such disability insurance programs and other
programs as may be provided at that time pursuant to subparagraphs 7.1 and 7.2
hereof.
7.5 Except for incentive compensation (which shall be governed
exclusively by subparagraph 4.2 of this Agreement), to the extent such benefits
are not specifically described or duplicated hereinabove in this paragraph 7,
the Executive shall also be entitled to participate, when eligible (as and to
the extent of any other eligible executive of the Company), in any and all
thrift, profit sharing, benefit and pension and similar plans, now or hereafter
maintained by the Company and offered by the Company to its salaried, non-union
executives generally; provided, however, that in the Company's discretion the
Executive shall be entitled to participate in any stock option or bonus plans
maintained or offered by the Company or Susquehanna.
8. Confidential Information. During the Period of Employment, and at any
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time thereafter, the Executive shall not, without the consent of the Board of
Directors of the Company, disclose to any person, firm or corporation any
customer lists, trade secrets, reports, correspondence, mailing lists, manuals,
advertising brochures, sample contracts, price lists, employee lists,
prospective employee lists, letters, records or any other confidential
information relating to the business of the Company or any Affiliate (as defined
in subparagraph 17.2 hereof) of the Company.
9. Property Rights. Executive agrees that all literary work, copyrightable
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material or other proprietary information or materials developed by the
Executive during the term of this Agreement and relating to, or capable of being
used or adopted for use in, the business of the Company shall inure to and be
the property of the Company and must be promptly disclosed to the Company. Both
during employment by the Company and thereafter, the Executive shall, at the
expense of the Company, execute such documents and do such things
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as the Company reasonably may request to enable the Company or its nominee (i)
to apply for copyright or other intellectual property right protection in the
United States, Canada and elsewhere for any literary work or proprietary
information hereinabove referred in this paragraph or (ii) to be vested with any
such copyright or other such protection in the United States, Canada and
elsewhere.
10. Termination.
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10.1 This Agreement may be terminated at any time upon action of the
Executive by not less than two (2) months notice to the Company. The Executive
agrees in the event of termination under this subparagraph to cooperate, advise
and consult the Company as needed to assist in the transition of the Executive's
replacement during such two (2) month period and thereafter for a period of four
(4) months during reasonable times and under reasonable circumstances, and the
Company agrees to compensate the Executive consistent with the terms of this
Agreement during such time period.
10.2 This Agreement shall only be terminated by the Company for cause,
which shall include, and be limited to: (a) the Executive's personal dishonesty;
(b) the Executive's incompetence; (c) the Executive's willful misconduct; (d)
the Executive's breach of fiduciary duty involving personal profit; (e) the
Executive's intentional failure to perform stated duties; (f) the Executive's
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses); (g) the issuance of a final cease-and-desist order by a
state or federal agency having jurisdiction over the Company or any entity which
controls the Company to the extent such cease-and-desist order requires the
termination of the Executive; or (h) a material breach by the Executive of any
provision of this Agreement. Any termination by the Company, under this
subparagraph 10.2 shall result in the immediate termination of Executive's
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employment under this Agreement.
10.3 If this Agreement is terminated under subparagraphs 10.1 or 10.2
hereof, the Company shall be obligated to pay the Executive his base salary to
the date of such termination, plus any other benefits to be provided to the
Executive following termination of this Agreement pursuant to paragraph 7 above.
10.4 Upon termination of employment hereunder, the Executive shall not
malign, criticize or otherwise disparage the Company, Susquehanna or their
respective officers, directors or Affiliates.
11. Records. Upon the termination of employment hereunder, the Executive
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shall deliver to the Company all correspondence, reports, customer lists, office
keys, manuals, advertising brochures, sample contracts, price lists, employee
lists, prospective employee lists, mailing lists, letters, records and any and
all other documents pertaining to or containing information relative to the
business of the Company, and the Executive shall not remove any of such records
either during the course of employment or upon the termination thereof.
The Executive understands that in the event of a violation of the
provisions of this paragraph 11, the Company shall have the right to seek
injunctive relief, in addition to any other existing rights provided herein or
by operation of law, without the requirement of posting bond. The remedies
provided in this paragraph 11 shall be in addition to any legal or equitable
remedies existing between the Executive and the Company, and shall not be
construed as a limitation upon, or as alternative or in lieu of, such remedies.
12. Prohibited Assignment. The Executive shall have no right to exchange,
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convert, encumber or dispose of the rights to receive the benefits or payments
under this Agreement,
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which payments, benefits and rights thereto are expressly declared to be
non-assignable and non-transferable.
13. Indemnification. To the extent permitted by law, the Company shall
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indemnify the Executive and hold him harmless from all liability and claims,
whether meritorious or not, including the cost of defense thereof (including
reasonable attorneys' fees) which have arisen or accrued or which hereafter may
arise or accrue and are based upon any act or omission which the Executive has
taken or committed or hereafter may take or commit on behalf of or in connection
with the Company in his official capacity, so long as the following conditions
are met with respect to such claim or liability: (a) if within the scope of
responsibility of the Executive, such action was taken in the exercise of
reasonable business judgment or (b) if not within the scope of the Executive's
responsibility, (i) at the time of such act or omission the Board of Directors
of the Company had knowledge of the facts or circumstances pursuant to which
such act was taken or such omission occurred and (ii) no written objection to
such act or omission was duly made by the Board of Directors and provided to the
Executive; provided, however, that in no event shall the Company indemnify the
Executive for any breach by the Executive of the Share Exchange Agreement or any
act or omission by the Executive in connection with the same.
Actions taken by the Executive which are covered by this Agreement
specifically include (by way of illustration), but are not limited to, (a) the
payment of any salary, bonus or other compensation to any officer, director, or
employee, (b) the reimbursement or payment of any expenses incurred by any such
officer, director or employee, (c) the making or retention of any investments
(including, without limitation, loans) by the Company, or (d) injury claims
against
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the Company or the Executive based on negligence or other alleged tortious
actions and which arise in connection with the conduct of the Company's
business.
The Executive shall indemnify the Company and hold it harmless from all
liability and claims, including the cost of the defense thereof (including
reasonable attorneys' fees) which have arisen or accrued or which hereafter may
arise or accrue and are based upon acts taken without the consent or approval of
the Board of Directors of the Company and which represent the Executive's
deliberate malfeasance or gross negligence.
14. Non-Competition. During the term of employment hereunder, and in the
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event the Executive's employment is terminated pursuant to subparagraphs 10.1 or
10.2 hereof, then for a five (5) year period thereafter, the Executive will not
directly for himself or any third party, become engaged in any business or
activity which is directly in competition with any services or financial
products sold by, or any business or activity engaged in by, the Company,
Susquehanna or any of their Affiliates including, without limitation, any
business or activity engaged in by any leasing company or any federally or state
chartered bank, savings bank, savings and loan association, trust company and/or
credit union, and/or any services or financial products sold by such entities,
including, without limitation, the taking and accepting of deposits, the
provision of trust services, the making of loans and/or the extension of credit,
brokering loans and/or leases and the provision of insurance and investment
services, within the states of New York, Pennsylvania, New Jersey, Delaware,
Maryland or Virginia. This provision shall not restrict the Executive from
owning or investing in publicly traded securities of financial institutions, so
long as his aggregate holdings in any financial institution do not exceed ten
percent (10%) of the outstanding capital stock of such institution.
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During the period of employment hereunder, and for a period of five (5)
years thereafter no matter the reason of termination, the Executive will not
solicit any person who was a customer of the Company during the period of the
Executive's employment hereunder, or solicit potential customers who are or were
identified through leads developed during the course of employment with the
Company, or otherwise divert or attempt to divert any existing business of
Company.
The Executive will not, either during the period of employment hereunder or
for a period of five (5) years thereafter directly for himself or any third
party, solicit, induce, recruit or cause another person in the employment of the
Company or any of its Affiliates to terminate his employment for the purposes of
joining, associating, or becoming employed with any business or activity which
is in competition with any services or financial products sold, or any business
or activity engaged in, by the Company, or any business or activity in which the
Executive has an interest.
The Executive understands that in the event of a violation of any provision
of this Agreement, the Company shall have the right to seek injunctive relief,
in addition to any other existing rights provided in this Agreement or by
operation of law, without the requirement of posting bond. The remedies provided
in this section shall be in addition to any legal or equitable remedies existing
at law or provided for in any other agreement between the Executive or the
Company, and shall not be construed as a limitation upon, or as an alternative
or in lieu of, any such remedies. If any provisions of this Agreement shall be
held invalid for any reason whatsoever, the remaining provisions shall not be
affected thereby.
15. Survival. Notwithstanding anything to the contrary in this Agreement,
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the parties
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agree that the Executive's obligations under paragraphs 8, 9, 11, 13 and 14 of
this Agreement will continue despite the expiration of the term of this
Agreement or its termination.
16. Preemptive Considerations. Notwithstanding anything to the contrary
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set forth herein:
16.1 If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Company's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1818(e)(3) and (g)(1)), 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, the
Company may in its discretion (i) pay the Executive all or part of the
compensation withheld while this Agreement's obligations were suspended,
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended.
16.2 If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Company's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1818(e)(4) or (g)(1)), all obligations of the Company under the
contract shall terminate as of the effective date of the order, but vested
rights of the parties shall not be affected.
16.3 If the Company is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act), all obligations under this Agreement
shall terminate as of the date of default, but this subparagraph 16.3 shall
not affect any vested rights of the parties.
17. Miscellaneous.
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17.1 Assignment. This Agreement (including, without limitation,
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paragraph 14
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hereof relating to non-competition) shall be binding upon the parties hereto,
the heirs and legal representatives of the Executive and the successors and
assigns of the Company. If the Company is merged with or into any other company
or other entity, by operation of law, or otherwise, or if the Company sells all
or substantially all of its stock or assets to any other company or other
entity, the surviving or successor entity shall assume all obligations of the
Company arising after such merger or sale under this Agreement and shall be
assigned the benefits of the Company under this Agreement; and all references to
the "Company" in this Agreement shall be deemed to refer to such surviving or
successor entity.
17.2 Definitions. The term "Company" shall mean the Company as
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hereinbefore defined or any entity succeeding to substantially all of the assets
and business of the Company. The term "Affiliate" shall mean with respect to the
Company, persons or entities controlling controlled by or under common control
with the Company.
17.3 Notices. Any notice required, permitted or intended to be given
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under this Agreement shall be in writing and shall be deemed to have been given
only if delivered personally or sent by registered or certified mail, return
receipt requested, postage prepaid to such party at its address set forth below
or such other address as such party may specify by notice to the other party
hereto.
If to the Company, to:
Boston Service Company, Inc.
(t/a Xxxx Financial Service Corporation)
Xxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Director
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With copies to:
Susquehanna Bancshares, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President and Chief Executive Officer
If to the Executive, to:
Xxxxxxx X. Xxxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
With copies to:
Xxxxxxxx & Scatchard, P.A.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Xx. Esq.
17.4 Entire Agreement. This Agreement constitutes the entire agreement
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between the parties in connection with the subject matter hereof, supersedes any
and all prior agreements or understandings between the parties and may only be
changed by agreements in writing between the parties.
17.5 Construction. This Agreement shall be construed and enforced in
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accordance with the laws of the Commonwealth of Pennsylvania.
17.6 Section Headings. The section headings herein have been inserted
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for convenience of reference only and shall in no way modify or restrict any of
the terms or provisions hereof.
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IN WITNESS WHEREOF, and intending to be legally bound, the parties have
executed this Agreement the day and year first above written.
BOSTON SERVICE COMPANY, INC.
Witness: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
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Witness: /s/ Xxxxxxx X. Xxxxx, Xx. /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
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Schedule 2.2
1. Xxxx & Company
2. Auto Lenders' Liquidation Center, Inc.
3. MTW Realty LLC
4. Xxxxxxx Xxxxx
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Schedule 4.2
Provided that the Executive is employed with the Company on the date the bonus
is to be paid to the Executive, the Executive shall receive an annual bonus
based upon the following formula:
(A - B) divided by 0.6* x 50% = Annual Bonus
A= the sum of: (a) the Company's net income (as determined in
accordance with GAAP) for the Applicable Calendar Year, plus (b) Originated
Loans and Leases multiplied by 30 basis points* for the Applicable Calendar Year
(using a daily average), plus (c) any average annual cumulative cash federal tax
savings provided by the Company that could not be used by the Company which
benefits Susquehanna times the average one year U.S. Treasury rate for the
Applicable Calendar Year determined by the beginning of the year rate and each
of the four quarter-end rates for that year divided by five, then multiply that
result by 0.6*, minus (d) the amount of all Risk Based Assets in excess of 10x
the Company's Risk Based Capital x 1.2%.
B= the Susquehanna common stock earnings per share target for the
Applicable Calendar Year as determined by Susquehanna management in January of
the Applicable Calendar Year, multiplied by the aggregate number of SBI Shares**
exchanged for all of the issued and outstanding shares of BSC Shares** in
accordance with the Share Exchange Agreement***
As used herein, the following capitalized terms shall have the following
meanings:
Applicable Calendar Year shall mean the year in which the bonus is
earned (i.e., the bonus calculated in 2001 shall be earned in 2000).
Originated Loans and Leases shall mean loan and lease net finance
receivables approved by Susquehanna financial institutions and
originated and serviced by BSC.
Risk Based Assets and Risk Based Capital shall be calculated in
accordance with the Board of Governors of the Federal Reserve System's
regulatory risk based capital rules for Susquehanna and determined
based upon the average of the beginning of the year and each of the
four quarter-ends for the Applicable Calendar Year.
For each calendar year, Susquehanna shall determine the amount of the annual
bonus, if any, to be paid to the Executive based upon the above formula. The
annual bonus, if any, shall be paid
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* To be adjusted if change in tax rate occurs.
** As defined in the Share Exchange Agreement.
*** To be adjusted for subsequent stock splits, reverse stock splits,
dividends, reclassifications or other similar changes to Susquehanna common
stock.
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to the Executive within 45 days after year-end (unless there is a dispute
regarding the same, in which event the payment of such bonus shall be extended
as provided below).
Within 30 days of the end of the applicable year, Susquehanna shall submit to
the Executive the determination of the annual bonus and shall provide the
Executive with access to all work papers used in the determination and the
preparation of the same. Susquehanna's determination of the annual bonus shall
become final and binding upon the parties unless within five (5) business days
following its submittal to the Executive, the Executive shall notify Susquehanna
in writing that he objects thereto. If the Executive shall so object,
Susquehanna and the Executive shall negotiate in good faith to resolve any
differences. If within 20 days following such notice by the Executive to
Susquehanna (the "Negotiation Period") any of such differences have not been
resolved (the "Disputed Matters"), then except as provided below, such Disputed
Matters shall be submitted to arbitration in Harrisburg, Pennsylvania, unless
the parties agree in writing to extend the Negotiation Period in an attempt to
negotiate a settlement of such Disputed Matters. The arbitrator (the
"Arbitrator") shall be PriceWaterhouseCoopers LLP, except that if
PriceWaterhouseCoopers LLP is unwilling or unable to be the Arbitrator, then the
Arbitrator shall be any nationally recognized accounting firm mutually agreed to
by Susquehanna and the Executive. The Arbitrator shall consider only the
Disputed Matters, and the arbitration shall be conducted in accordance with the
rules of the American Arbitration Association then effect. The Arbitrator shall
act promptly to resolve all Disputed Matters and its decision with respect to
all Disputed Matters shall be final and binding upon the parties hereto and
shall not be appealable to any court. The Arbitrator shall render an opinion in
writing setting forth the basis of its decision on the Disputed Matters. The
costs and expenses of the Arbitrator shall be borne by the non-prevailing party.
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