EXHIBIT 10.11
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of this 1st day of December, 2000, among
STERLING FINANCIAL CORPORATION ("Corporation"), a Pennsylvania business
corporation having a place of business at 000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx 00000, BANK OF LANCASTER, N.A., a national banking association
having a place of business at 000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx 00000 ("Bank"), and XXXXXXX X. XXXXXXX ("Executive"), an individual
residing at 000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxx 00000.
WITNESSETH:
WHEREAS, the Corporation is a registered bank holding company;
WHEREAS, the Bank is a subsidiary of the Corporation;
WHEREAS, Corporation and Bank desire to presently employ Executive to
serve in the capacity of Executive Vice President and Managing Director of Trust
and Investment for Corporation and Bank;
WHEREAS, Corporation and Bank commit to create a separate affiliate
trust entity as expeditiously as possible; and
WHEREAS, Corporation and Bank intend to employ Executive as President
and CEO of the affiliate trust entity once created; and
WHEREAS, Executive desires to accept employment with Corporation and
Bank on the terms and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. EMPLOYMENT. Corporation and Bank hereby employ Executive and Executive
hereby accepts employment with Corporation and Bank, under the terms
and conditions set forth in this Agreement. As consideration for this
Agreement, Executive hereby agrees to release Corporation and Bank of
any obligations, duties or responsibilities, and Executive agrees to
relinquish any and all rights, including but not limited to any
payments, compensation or sums of money he may otherwise be entitled,
or he may have, under the Change in Control Agreement executed by
Corporation, Bank and Executive on or about July 12, 1999.
2. DUTIES OF EMPLOYEE. Executive shall perform and discharge well and
faithfully such duties as an executive officer of Corporation and Bank
as may be assigned to Executive from time to time by the Board of
Directors of Corporation and Bank and the Chairman and President of the
Corporation and Bank, so long as the assignment is consistent with the
Executive's office and duties. Executive shall be employed as Executive
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President and Managing Director of Trust and Investments for
Corporation and Bank, and shall hold such other titles as may be given
to him from time to time by the Board of Directors of Corporation and
Bank. Executive shall devote his full time, attention and energies to
the business of Corporation and Bank during the Employment Period (as
defined in Section 3 of this Agreement); provided, however, that this
Section 2 shall not be construed as preventing Executive from (a)
engaging in activities incident or necessary to personal investments so
long as such investment does not exceed 5% of the outstanding shares of
any publicly held company, (b) acting as a member of the Board of
Directors of any other corporation or as a member of the Board of
Trustees of any other organization, with the prior approval of the
Board of Directors of Corporation and Bank, or (c) being involved in
any other activity with the prior approval of the Board of Directors of
Corporation and Bank. The Executive shall not engage in any business or
commercial activities, duties or pursuits which compete with the
business or commercial activities of Corporation or Bank, nor may the
Executive serve as a director or officer or in any other capacity in a
company which competes with Corporation or Bank.
3. TERM OF AGREEMENT.
(a) This Agreement shall be for a three (3) year period (the
"Employment Period") beginning on the date first mentioned
above, and if not previously terminated pursuant to the terms
of this Agreement, the Employment Period shall end three (3)
years later. The Employment Period shall be automatically
extended on the third anniversary date of the commencement of
the Employment Period (the "Renewal Date") for a period ending
one (1) year from the Renewal Date unless either party shall
give written notice of non-renewal to the other party at least
thirty (30) days prior to the Renewal Date, in which event
this Agreement shall terminate at the end of the Employment
Period. If this Agreement is renewed on the Renewal Date, it
will be automatically renewed on the first anniversary date of
the Renewal Date (the "Annual Renewal Date") and each
subsequent Annual Renewal Date for a period of one (1) year
unless either party gives written notice of non-renewal to the
other party at least thirty (30) days prior to an Annual
Renewal Date, in which case this Agreement shall terminate on
that Annual Renewal Date.
(b) Notwithstanding the provisions of Section 3(a) of this
Agreement, this Agreement shall terminate automatically for
Cause (as defined herein) upon written notice from the Board
of Directors of Corporation or Bank to Executive. As used in
this Agreement, "Cause" shall mean any of the following:
(i) Executive's conviction of or plea of guilty or nolo
contendere to a felony, a crime of falsehood or a
crime involving moral turpitude, or the actual
incarceration of Executive for a period of forty-five
(45) consecutive days or more;
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(ii) Executive's failure to follow the lawful instructions
of the Board of Directors of Corporation or Bank with
respect to its operations, after written notice from
Corporation or Bank and a failure to cure such
violation within thirty (30) days of said written
notice;
(iii) Executive's failure to substantially perform
Executive's duties to Corporation or Bank, other than
a failure resulting from Executive's incapacity
because of physical or mental illness, as provided in
subsection (d) of this Section 3, after written
notice from Corporation or Bank and a failure to cure
such violation within thirty (30) days of said
written notice;
(iv) Executive's intentional violation of the provisions
of this Agreement;
(v) dishonesty or gross negligence of the Executive in
the performance of his duties;
(vi) Executive's removal or prohibition from being an
institutional-affiliated party by a final order of an
appropriate federal banking agency pursuant to
Section 8(e) of the Federal Deposit Insurance Act or
by the Office of the Comptroller of the Currency
pursuant to national law;
(vii) conduct on the part of the Executive as determined by
an affirmative vote of seventy percent (70%) of the
disinterested members of the Board of Directors of
Corporation and Bank which brings public discredit to
Corporation or Bank; or
(viii) Executive's breach of fiduciary duty involving
personal profit.
(ix) Executive's 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;
(x) Executive's unlawful discrimination, including
harassment, against Corporation's employees,
customers, business associates, contractors or
visitors;
(xi) Executive's theft or abuse of Corporation's property
or the property of Corporation's customers,
employees, contractors, vendors or business
associates; or
(xii) the direction or recommendation of a state or federal
bank regulatory authority to remove Executive from
his positions with Corporation or Bank as identified
herein.
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If this Agreement is terminated for Cause, all of Executive's
rights under this Agreement shall cease as of the effective
date of such termination and Corporation and Bank shall have
no further obligations to Executive.
(c) Notwithstanding the provisions of Section 3(a) of this
Agreement, this Agreement shall terminate automatically upon
Executive's voluntary termination of employment (other than in
accordance with Section 5 of this Agreement) for Good Reason.
The term "Good Reason" shall mean (i) the assignment of duties
and responsibilities to Executive inconsistent with his
position; (ii) a reassignment of Executive to a principal
office which is more than thirty (30) miles from the
Executive's principal office in Lancaster County; (iii) any
removal of the Executive from his position or any adverse
change in the terms and conditions of the Executive's
employment, except for any termination of the Executive's
employment under the provisions of Section 3(b) hereof; (iv)
any reduction in the Executive's Annual Base Salary as in
effect immediately prior to this Agreement or as the same may
be increased from time to time, except such reductions that
are the result of a national financial depression, or national
or bank emergency; or (v) any failure of Corporation and Bank
to provide the Executive with benefits at least as favorable
as those enjoyed by the Executive during the Employment Period
under any of the pension, life insurance, medical, health and
accident, disability or other employee plans of Corporation
and Bank, or the taking of any action that would materially
reduce any of such benefits, unless such reduction is part of
a reduction applicable to all employees.
If such termination occurs for Good Reason, then Corporation
or Bank shall pay Executive an amount equal to two times
Agreed Compensation, which amount shall be payable in equal
monthly installments and shall be subject to federal, state
and local tax withholdings. In addition, for the remainder of
the then existing Employment Period, or until Executive
secures substantially similar benefits through other
employment, whichever shall first occur, Executive shall
receive a continuation of all life, disability, medical
insurance and other normal health and welfare benefits in
effect with respect to Executive during the two (2) years
prior to his termination of employment, or, if Corporation and
Bank cannot provide such benefits because Executive is no
longer an employee, a dollar amount equal to the cost to
Executive of obtaining substantially similar benefits. In lieu
of continued pension, welfare and other benefits, Executive
may elect to receive a one-time lump sum cash payment equal to
25% of the payments to be received for termination of the
Agreement under this provision. Said lump sum shall be payable
within thirty (30) days following the date of termination and
shall be subject to federal, state and local tax withholdings.
Notwithstanding any other provisions of this Agreement or any
other agreement or plan of Corporation or Bank, in the event
the payments described herein, when added to all other amounts
or benefits provided to or on behalf of the Executive in
connection with his termination of employment, would result in
the imposition of an excise tax
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under Code Section 4999, such payments shall be retroactively
(if necessary) reduced to the extent necessary to avoid such
excise tax imposition. Upon written notice to Executive,
together with calculations of Corporation's independent
auditors, Executive shall remit to Corporation the amount of
the reduction plus such interest as may be necessary to avoid
the imposition of such excise tax. Notwithstanding the
foregoing or any other provision of this contract to the
contrary, if any portion of the amount herein payable to the
Executive is determined to be non-deductible pursuant to the
regulations promulgated under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), the Corporation
shall be required only to pay to Executive the amount
determined to be deductible under Section 280G.
At the option of the Executive, exercisable by the Executive
within ninety (90) days after the occurrence of the event
constituting "Good Reason," the Executive may resign from
employment under this Agreement by a notice in writing (the
"Notice of Termination") delivered to Corporation and Bank and
the provisions of this Section 3(c) hereof shall thereupon
apply.
(d) Notwithstanding any other provisions of Section 3 of this
Agreement, this Agreement shall terminate automatically upon
Executive's Disability and Executive's rights under this
Agreement shall cease as of the date of such termination;
provided, however, that Executive shall nevertheless be
entitled to receive any benefits that may be available under
any disability plan of Corporation and Bank, until the
earliest of (i) Executive's return to employment, (ii) his
attainment of age 65, or (iii) his death. In addition,
Executive shall receive for such period a continuation of all
life, disability, medical insurance and other normal health
and welfare benefits in effect with respect to Executive
during the two (2) years prior to his disability, or, if
Corporation and Bank cannot provide such benefits because
Executive is no longer an employee, a dollar amount equal to
the cost to Executive of obtaining such benefits (or
substantially similar benefits). For purposes of this
Agreement, the Executive shall have a Disability if, as a
result of physical or mental injury or impairment, Executive
is unable to perform all of the essential job functions of his
position on a full time basis with or without a reasonable
accommodation and without posing a direct threat to himself
and others, for a period of one hundred eighty (180)
consecutive days or more. The Executive shall have no duty to
mitigate any payment provided for in this Section 3(d) by
seeking other employment.
(e) Notwithstanding any other provisions of Section 3 of this
Agreement, this Agreement shall terminate automatically upon
Executive's death and Executive's rights under this Agreement
shall cease as of the date of such termination.
(f) Executive agrees that in the event his employment under this
Agreement is terminated, Executive shall resign as a director
of Corporation and Bank, or any affiliate or subsidiary
thereof, if he is then serving as a director of any of such
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entities.
(g) In the event that this Agreement is not renewed by Corporation
and Bank in accordance with Subsection (a) of Section 3 of
this Agreement, then Corporation and Bank shall pay Executive,
within thirty (30) days following termination of the Agreement
and upon the receipt of a mutually agreed release, an amount
equal to 1.0 times the Executive's Agreed Compensation.
(h) The term "Agreed Compensation" shall mean an amount equal to
the average annual compensation (including, without
limitation, Annual Base Salary and bonuses) payable by
Corporation and Bank to Executive and includable by Executive
in gross income for the most recent five (5) taxable years, or
such shorter period as Executive shall have been employed by
Corporation and Bank, ending, if a Change in Control (as
defined in subsection (b) of Section 5 of this Agreement)
occurs, before the date on which the Change of Control
occurred.
1. EMPLOYMENT PERIOD COMPENSATION.
(a) Annual Base Salary. For services performed by Executive under
this Agreement, Corporation or Bank shall initially pay
Executive an Annual Base Salary at the rate of One Hundred
Thirteen Thousand Dollars ($113,000) per year (subject to
applicable withholdings and deductions) payable at the same
times as salaries are payable to other executive employees of
Corporation or Bank. After Executive's review in March 2001,
Corporation or Bank shall increase his Annual Base Salary to
One Hundred Twenty-Five Thousand Dollars ($125,000) per year.
Following said increase, Corporation or Bank may, from time to
time, increase Executive's Annual Base Salary. Any and all
such increases shall be deemed to constitute amendments to
this Section 4(a) to reflect the increased amounts, effective
as of the date established for such increases by the Board of
Directors of Corporation or Bank or any committee of such
Board in the resolutions authorizing such increases.
(b) Bonus. For services performed by Executive under this
Agreement, Corporation or Bank may, from time to time, pay a
bonus or bonuses to Executive as Corporation or Bank, in its
sole discretion, deems appropriate. The payment of any such
bonuses shall not reduce or otherwise affect any other
obligation of Corporation or Bank to Executive provided for in
this Agreement. Executive is entitled to participate in the
bonus programs available to senior executives.
(c) Paid Time Off and/or Vacations. During the term of this
Agreement, Executive shall be entitled to paid time off and/or
vacation in accordance with the policies as established from
time to time by the Boards of Directors of Corporation and
Bank for the Corporation's and Bank's senior management.
However, Executive shall not be entitled to receive any
additional compensation from Corporation and Bank
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for failure to take paid time off and/or vacation, nor shall
Executive be able to accumulate unused paid time off and/or
vacation time from one year to the next, except to the extent
authorized by the Boards of Directors of Corporation and Bank.
(d) Employee Benefit Plans. During the term of this Agreement,
Executive shall be entitled to participate in or receive the
benefits of any employee benefit plan currently in effect at
Corporation and Bank, subject to the terms of said plan, until
such time that the Boards of Directors of Corporation or Bank
authorize a change in such benefits. Nothing paid to Executive
under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of the
salary payable to Executive pursuant to Section 4(a) hereof.
(e) Business Expenses. During the term of this Agreement,
Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him, which are
properly accounted for, in accordance with the policies and
procedures established by the Boards of Directors of
Corporation or Bank for their executive officers. Corporation
or Bank shall reimburse Executive for any and all dues and
reasonable related business expenses associated with the
Executive's membership in Lancaster Country Club.
(f) Stock Options. Executive shall be entitled to participate in
the Corporation's stock option plans consistent with his
position as a member of Corporation's and Bank's senior
management. Upon a Change in Control (as defined in Section
5(b) of this Agreement), all options theretofore granted to
the Executive by the Corporation and not previously
exercisable shall become fully exercisable to the same extent
and in the same manner as if they had become exercisable by
passage of time or by virtue of the Corporation achieving
certain performance objectives in accordance with the relevant
provisions of any plan and any agreement.
2. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL.
(a) If a Change in Control (as defined in Section 5(b) of this
Agreement) shall occur and if subsequently during the term of
this Agreement, there shall be:
(i) any involuntary termination of the Executive (other
than for the reasons set forth in Sections 3(b) or
(3d) of this Agreement); or
(ii) any reduction in Executive's title, responsibility
(including reporting responsibility) or authority as
in effect immediately prior to the Change in Control
(as defined in Section 5(b) of this Agreement);
provided, however, that Executive may be assigned to
a position with a reasonably similar title,
responsibility and authority if Executive's actual or
targeted compensation in such new position is not
less than Executive's actual and
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targeted compensation immediately prior to the Change
in Control (as defined in Section 5(b) of this
Agreement); or
(iii) the assignment to Executive of duties inconsistent
with his position immediately prior to the Change in
Control (as defined in Section 5(b) of this
Agreement), except for an assignment of duties
consistent with a position permitted in Section
5(a)(ii) of this Agreement; or
(iv) a reduction in Executive's Annual Base Salary in
effect immediately prior to the Change in Control (as
defined in Section 5(b) of this Agreement); or
(v) reassignment of Executive to a principal office which
is more than 30 miles from Executive's principal
office in Lancaster, Pennsylvania; or
(vi) the failure to provide Executive with welfare,
pension, incentive compensation, fringe and other
benefits to which he was entitled immediately prior
to the Change in Control (as defined in Section 5(b)
of this Agreement), unless such failure occurs by
reason of a reduction or change in such benefits for
employees generally or similarly situated executive
employees of the corporation which is the acquiring,
resulting or successor corporation in the Change in
Control (or an affiliate thereof); or
(vii) any material breach of this Agreement by the
acquiring, resulting or successor corporation in the
Change in Control which is not cured within thirty
(30) days after receipt of written notice of such
breach from Executive,
then, at the option of Executive, exercisable by Executive
within ninety (90) days of the occurrence of any of the
foregoing events, Executive may resign from employment with
Corporation and Bank by delivering a notice in writing
("Notice of Termination") to Corporation and Bank, whereupon
Executive will become entitled to the payments described in
Section 6. In the case of a termination described in Section
5(a)(i) of this Agreement, Executive shall confirm his
involuntary termination, in writing, within ninety (90) days
of the date of such termination, and such confirmation will be
deemed a Notice of Termination.
(b) As used in this Agreement, "Change in Control" shall mean the
occurrence of any of the following:
(i) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities and Exchange Act of
1934 (the "Exchange Act")), other than the Employers,
a subsidiary of the Employers, an employee benefit
plan of the Employers or a subsidiary of the
Employers (including a related trust), becomes the
beneficial owner (as determined pursuant to Rule
13d-3 under
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the Exchange Act), directly or indirectly, of
securities of the Employers representing more than
20% of the combined voting power of the Employers'
then outstanding securities;
(ii) the occurrence of, or execution of an agreement
providing for, a sale of all or substantially all of
the assets of the Employers to an entity which is not
a direct or indirect subsidiary of Employers;
(iii) the occurrence of, or execution of an agreement
providing for, a reorganization, merger,
consolidation or similar transaction involving the
Employers, unless (A) the shareholders of the
Corporation immediately prior to the consummation of
any such transaction will initially own securities
representing a majority of the voting power of the
surviving or resulting corporation, and (B) the
directors of the Employers immediately prior to the
consummation of such transaction will initially
represent a majority of the directors of the
surviving or resulting corporation; or
(iv) any other event which is at any time irrevocably
designated as a "Change in Control" for purposes of
this Agreement by resolution adopted by a majority of
the then non-employee directors of the Employers.
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3. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN
CONTROL.
(a) In the event that Executive validly and timely delivers a
Notice of Termination (as defined in Section 5(a) of this
Agreement) to Corporation and Bank, Executive shall be
entitled to receive the following compensation and benefits:
If, at the time of termination of Executive's employment, a
Change in Control (as defined in Section 5(b) of this
Agreement) has also occurred, Corporation and Bank shall pay
Executive an amount equal to two (2) and one-half times the
Agreed Compensation (as defined in Section 3(h) of this
Agreement) in either (i) thirty (30) equal monthly
installments or (ii) a lump sum equal to the present value of
the amounts payable under this subsection, said payments
commencing within thirty (30) days after Executive's
termination of employment. For purposes of the preceding
sentence, present value will be determined by using the
short-term applicable federal rate under Section 1274 of the
Internal Revenue Code of 1986, as amended (the "Code") in
effect on the date of termination of employment. In lieu of
continued pension, welfare and other benefits, a one-time lump
sum cash payment equal to 25% of the payments to be received
for termination of the Agreement under this provision shall be
paid to Executive within thirty (30) days following the date
of termination of Executive's employment. Notwithstanding any
other provision of this Agreement or any other agreement or
plan of Corporation or Bank, in the event the payment
described herein, when added to all other amounts or benefits
provided to or on behalf of the Executive in connection with
his termination of employment, would result in the imposition
of an excise tax under Code Section 4999, such payments shall
be retroactively (if necessary) reduced to the extent
necessary to avoid such excise tax imposition. Upon written
notice to Executive, together with calculations of
Corporation's independent auditors, Executive shall remit to
Corporation the amount of the reduction plus such interest as
may be necessary to avoid the imposition of such excise tax.
Notwithstanding the foregoing or any other provision of this
contract to the contrary, if any portion of the amount herein
payable to the Executive is determined to be non-deductible
pursuant to the regulations promulgated under Section 280G of
the Code, the Corporation shall be required only to pay to
Executive the amount determined to be deductible under Section
280G.
(b) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other
employment or otherwise. Unless otherwise agreed to in
writing, the amount of payment or the benefit provided for in
this Section 6 shall not be reduced by any compensation earned
by Executive as the result of employment by another employer
or by reason of Executive's receipt of or right to receive any
retirement or other benefits after the date of termination of
employment or otherwise.
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4. RIGHTS IN EVENT OF TERMINATION OF EMPLOYMENT ABSENT CHANGE IN CONTROL.
(a) In the event that Executive's employment is involuntarily
terminated by Corporation and/or Bank without Cause and no
Change in Control (as defined in Section 5(b) of this
Agreement) shall have occurred at the date of such
termination, Corporation and Bank shall pay Executive an
amount equal to 2.0 times the Agreed Compensation (as defined
in subsection (h) of Section 3 of this Agreement) or the
remaining balance of the Agreed Compensation otherwise due to
the Executive for the remainder of the then existing
Employment Period, whichever is greater, and shall be payable
in equal monthly installments and shall be subject to federal,
state and local tax withholdings. In addition, for the
remainder of the then existing Employment Period or until
Executive secures substantially similar benefits through other
employment, whichever shall first occur, Executive shall
receive a continuation of all life, disability, medical
insurance and other normal health and welfare benefits in
effect with respect to Executive during the two (2) years
prior to his termination of employment, or, if Corporation and
Bank cannot provide such benefits because Executive is no
longer an employee, a dollar amount equal to the cost to
Executive of obtaining such benefits (or substantially similar
benefits). In lieu of continued pension, welfare and other
benefits, Executive may elect to receive a lump sum cash
payment equal to 25% of the payments to be received for
termination of the Agreement under this provision.
Notwithstanding any other provisions in this Agreement or any
other agreements or plans of Corporation or Bank, in the event
the payment described herein, when added to all other amounts
or benefits provided to or on behalf of the Executive in
connection with his termination of employment, would result in
the imposition of an excise tax under Code Section 4999, such
payments shall be retroactively (if necessary) reduced to the
extent necessary to avoid such excise tax imposition. Upon
written notice to Executive, together with calculations of
Corporation's independent auditors, Executive shall remit to
Corporation the amount of the reduction plus such interest as
may be necessary to avoid the imposition of such excise tax.
Notwithstanding the foregoing or any other provision of this
contract to the contrary, if any portion of the amount herein
payable to the Executive is determined to be non-deductible
pursuant to the regulations promulgated under Section 280G of
the Code, the Corporation shall be required only to pay to
Executive the amount determined to be deductible under Section
280G.
(b) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 7 by seeking other
employment or otherwise. Unless otherwise agreed to in
writing, the amount of payment or the benefit provided for in
this Section 7 shall not be reduced by any compensation earned
by Executive as the result of employment by another employer
or by reason of Executive's receipt of or right to receive any
retirement or other benefits after the date of termination of
employment or otherwise.
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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 applicable period
set forth in Section 8(c) hereof, Executive shall not, except
as otherwise permitted in writing by the Corporation and the
Bank:
(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 county in which, at any
time during the Employment Period or at the date of
termination of the Executive's employment,
Corporation or Bank or any of their subsidiaries
operated their businesses, or any county contiguous
to any county in which Corporation or Bank or any of
their subsidiaries operated their businesses (the
"Non-Competition Area"); or
(ii) provide financial or other assistance to 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, in the
Non-Competition Area; or
(iii) 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 the Non-Competition
Area, directly or indirectly contact, solicit or
induce any person, corporation or other entity who or
which is a customer or referral source of
Corporation, Bank or any of their subsidiaries during
the term of Executive's employment or at the date of
termination of Executive's employment; or
(iv) directly or indirectly solicit, induce or encourage
any employee of Corporation, Bank or any of their
subsidiaries, who is employed during the term of
Executive's employment or at the date of termination
of Executive's employment, to leave the employ of
Corporation or Bank or to seek,
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obtain or accept employment with any person or entity
other than Corporation or Bank.
(b) It is expressly understood and agreed that, although Executive
and Corporation and Bank consider the restrictions contained
in Section 8(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 8(a) hereof is an unreasonable or otherwise
unenforceable restriction against Executive, the provisions of
Section 8(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 8 shall be applicable
commencing on the date of this Agreement and ending on one of
the following dates, as applicable:
(i) if Executive's employment terminates in accordance
with the provisions of Section 3(c) of this Agreement
(relating to termination by Executive for Good
Reason), the second anniversary date of the effective
date of termination of employment; or
(ii) if Executive's employment terminates in accordance
with the provisions of Section 3(b) of this Agreement
(relating to termination for Cause), the second
anniversary date of the effective date of termination
of employment; or
(iii) if the Executive voluntarily terminates his
employment in accordance with the provisions of
Section 5 hereof (relating to termination following
Change in Control), the second anniversary date of
the effective date of termination of employment; or
(iv) if the Executive's employment is involuntarily
terminated in accordance with the provisions of
Section 7 hereof, the second anniversary date of the
effective date of termination of employment;
(v) if the Agreement is not renewed by Corporation, Bank
or Executive in accordance with the provisions of
Section 3(a) and other than for Cause, the second
anniversary date of the effective date of termination
of employment.
6. UNAUTHORIZED DISCLOSURE. During the term of his employment hereunder,
or at any later time, Executive shall not, without the written consent
of the Boards of Directors of Corporation and Bank or a person
authorized thereby, knowingly disclose to any person, other than an
employee of Corporation or Bank or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance
by Executive of
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his duties as an executive of Corporation and Bank, any material
confidential information obtained by him while in the employ of
Corporation and Bank with respect to any of Corporation and Bank's
services, products, improvements, formulas, designs or styles,
processes, customers, methods of business or any business practices the
disclosure of which could be or will be damaging to Corporation or
Bank; provided, however, that confidential information shall not
include any information known generally to the public (other than as a
result of unauthorized disclosure by the Executive or any person with
the assistance, consent or direction of the Executive) or any
information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that conducted by
Corporation and Bank or any information that must be disclosed as
required by law.
10. LIABILITY INSURANCE. Corporation and Bank shall use their best efforts
to obtain insurance coverage for the Executive under an insurance
policy covering officers and directors of Corporation and Bank against
lawsuits, arbitrations or other legal or regulatory proceedings;
however, nothing herein shall be construed to require Corporation
and/or Bank to obtain such insurance, if the Board of Directors of the
Corporation and/or Bank determine that such coverage cannot be obtained
at a reasonable price.
11. NOTICES. For the purposes of this Agreement, notices and all other
communications provided for in this 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. Xxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
If to the Corporation: Xxxx X. Xxxxxx, Chairman and President
STERLING FINANCIAL CORPORATION
000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
If to the Bank: Xxxx X. Xxxxxx, Chairman and President
BANK OF LANCASTER, N.A.
000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
12. WAIVER. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to
in writing and signed by Executive and an executive officer
specifically designated by the Boards of Directors of Corporation and
Bank. No waiver by any party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision
of this Agreement to
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be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. ASSIGNMENT. This Agreement shall not be assignable by any party, except
by Corporation and Bank to any successor in interest to their
respective businesses.
14. ATTORNEY'S FEES AND COSTS. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees,
costs, and necessary disbursements in addition to any other relief that
may be proper.
15. INDEMNIFICATION. The Corporation will indemnify the Executive, to the
fullest extent permitted under Pennsylvania and federal law, with
respect to any threatened, pending or completed legal or regulatory
action, suit or proceeding brought against him by reason of the fact
that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as
a director, officer, employee or agent of another person or entity. To
the fullest extent permitted by Pennsylvania and federal law, the
Corporation will, in advance of final disposition, pay any and all
expenses incurred by the Executive in connection with any threatened,
pending or completed legal or regulatory action, suit or proceeding
with respect to which he may be entitled to indemnification hereunder.
16. ENTIRE AGREEMENT. This Agreement supersedes any and all agreements,
either oral or in writing, between the parties with respect to the
employment of the Executive by the Bank and/or Corporation, including,
without limitation, the Change in Control Agreement executed by
Corporation, Bank and Executive on or about July 12, 1999, and this
Agreement contains all the covenants and agreements between the parties
with respect to employment.
17. SUCCESSORS; BINDING AGREEMENT.
(a) Corporation and Bank will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the businesses
and/or assets of Corporation and Bank to expressly assume and
agree to perform this Agreement in the same manner and to the
same extent that Corporation and Bank would be required to
perform it if no such succession had taken place. Failure by
Corporation and Bank to obtain such assumption and agreement
prior to the effectiveness of any such succession shall
constitute a breach of this Agreement.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, heirs, distributees, devisees and
legatees. If Executive should die while any amounts would be
payable to Executive under this Agreement if Executive had
continued to live, all such amounts shall be paid in
accordance with the terms of this Agreement to Executive's
devisee, legatee, or other designee, or, if there is no such
designee, to
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Executive's estate.
18. ARBITRATION. Corporation, Bank and Executive recognize that in the
event a dispute should arise between them concerning the interpretation
or implementation of this Agreement, lengthy and expensive litigation
will not afford a practical resolution of the issues within a
reasonable period of time. Consequently, each party agrees that all
disputes, disagreements and questions of interpretation concerning this
Agreement are to be submitted for resolution, in Philadelphia,
Pennsylvania, to the American Arbitration Association (the
"Association") in accordance with the Association's National Rules for
the Resolution of Employment Disputes or other applicable rules then in
effect ("Rules"). Corporation, Bank or Executive may initiate an
arbitration proceeding at any time by giving notice to the other in
accordance with the Rules. Corporation and Bank and Executive may, as a
matter of right, mutually agree on the appointment of a particular
arbitrator from the Association's pool. The arbitrator shall not be
bound by the rules of evidence and procedure of the courts of the
Commonwealth of Pennsylvania but shall be bound by the substantive law
applicable to this Agreement. The decision of the arbitrator, absent
fraud, duress, incompetence or gross and obvious error of fact, shall
be final and binding upon the parties and shall be enforceable in
courts of proper jurisdiction. Following written notice of a request
for arbitration, Corporation, Bank and Executive shall be entitled to
an injunction restraining all further proceedings in any pending or
subsequently filed litigation concerning this Agreement, except as
otherwise provided herein.
19. NO MITIGATION OR OFFSET. The Executive will not be required to mitigate
the amount of any payment provided for in this Agreement by seeking
employment or otherwise; nor will any amounts or benefits payable or
provided hereunder be reduced in the event he does not secure
employment, except as otherwise provided herein.
20. VALIDITY. 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.
21. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the domestic, internal laws of the Commonwealth of
Pennsylvania, without regard to its conflicts of laws principles.
22. HEADINGS. The section headings of this Agreement are for convenience
only and shall not control or affect the meaning or construction or
limit the scope or intent of any of the provisions of this Agreement.
23. NUMBER. Words used herein in the singular will be construed as being
used in the plural, as the context requires, and vice versa.
24. REFERENCES TO CORPORATION AND BANK. All references to Corporation or
Bank shall be
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deemed to include a reference to Corporation and/or Bank, individually
or collectively, as appropriate in the relevant context.
25. EFFECTIVE DATE; TERMINATION OF PRIOR AGREEMENT. This Agreement shall
become effective immediately upon the executive and delivery of this
Agreement by the parties hereto. Upon the execution and delivery of
this Agreement, any prior agreement relating to the subject matter
hereof, including, without limitation, the Change in Control Agreement
executed by Corporation, Bank and Executive on or about July 12, 1999,
shall be deemed automatically terminated and be of no further force or
affect.
26. WITHHOLDING FOR TAXES. All amounts and benefits paid or provided
hereunder shall be subject to withholding for taxes as required by law
or as designated herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: STERLING FINANCIAL CORPORATION
/s/ J. Xxxxx Xxxxx, Xx. By /s/ Xxxx X. Xxxxxx
--------------------------- ------------------------------------------
Assistant Secretary Xxxx X. Xxxxxx, Chairman and President
ATTEST: BANK OF LANCASTER COUNTY, N.A.
/s/ J. Xxxxx Xxxxx, Xx. By /s/ Xxxx X. Xxxxxx
--------------------------- ------------------------------------------
Assistant Secretary Xxxx X. Xxxxxx, Chairman and President
WITNESS:
/s/ Xxxx X. Xxxx By /s/ Xxxxxxx X. Xxxxxxx
--------------------------- ------------------------------------------
Xxxxxxx X. Xxxxxxx, Executive
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