KEY EXECUTIVE MANAGEMENT
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT is made on the 1st day of April, 2008, between MID PENN
BANCORP, INC. (the "Corporation"), a Pennsylvania corporation with its principal
office at 000 Xxxxx Xxxxxx, Xxxxxxxxxxx, XX, and XXXXX X. XXXXXXXXXXXX (the
"Executive"), residing at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx.
WHEREAS, the Executive has substantial knowledge, ability and
experience which are beneficial to the successful operation of the Corporation;
and
WHEREAS, the Corporation desires to secure for itself the benefit of
the Executive's knowledge, ability and experience and be assured of the
Executive's continued active participation in the business operations of the
Corporation; and
WHEREAS, the Executive has acquired and uses and will continue to
acquire and use extensive knowledge and information about the Corporation's
operations, much of which is confidential and proprietary in nature; and
WHEREAS, the Corporation wishes to protect its confidential and
proprietary information as well as its general business interest; and
WHEREAS, the Executive and the corporation wish to enter into this
Agreement in order to protect the confidential and proprietary interests of the
Corporation and to induce the Executive to remain actively involved in the
business operations of the Corporation by providing the Executive with the
opportunity to receive benefits in the event of his termination of employment in
conjunction with a Change of Control (as defined herein).
NOW THEREFORE, in consideration of the mutual covenant and agreement
set forth herein and intending to be legally bound thereby, the parties agree as
follows:
1. DEFINITIONS. The following definitions shall apply in this
Agreement:
(a) "Annual Salary" shall be the stated annual base cash
compensation payable to the Executive by the corporation without regard to any
elective deferral salary reduction plan or program of the Corporation.
(b) "Board of Directors" shall mean the Board of Directors of
the Corporation, as constituted from time to time.
(c) "Cause" shall be (i) the willful failure by the Executive
to substantially perform his duties other than any such failure resulting from
the Executive's incapacity due to physical or mental illness, (ii) the willful
engaging by the Executive in gross misconduct materially injurious to the
Corporation or a Subsidiary, (iii) the willful violation by the Executive of the
provisions of Section 3 hereof, (iv) the gross negligence of the Executive in
the performance of his duties (v) receipt of a final written directive or order
of any governmental body or entity having jurisdiction over the Corporation or
any of its Subsidiaries requiring termination or removal of the Executive. The
determination of the existence of Cause shall be made in the reasonable judgment
of the office of the Chief Executive Officer (or its successor).
(d) "Change of Control" shall be defined in Section 7 of this
Agreement
(e) "Code" shall mean the Internal Revenue code of 1986, as
amended.
(f) "Good Reason" shall mean (i) within the period beginning
on the date of the Change of Control {as defined in Section 7(g)} and ending on
the date that is twenty-four (24) months following the later of (A) the date of
the Change of Control or (B) in the case of a Change of Control described in
Sections 7(c) or (d), the date on which the transaction resulting in the Change
of Control was consummated, there is a reduction in the Executive's Annual
Salary or his total cash compensation opportunities or benefits (except any
reductions in compensation which may be applied broadly among all executives
because of adverse financial conditions for the Corporation or as part of a
restructuring of the Corporations's executive compensation program) or the
Executive's position is eliminated and he is not offered a comparable position
within thirty (30) days following the effective date of the elimination of the
position, or the Executive terminates employment due to a lessening of job
responsibilities, lessening of reporting responsibility or an unacceptable
relocation (defined as more than 25 miles from the Executive's prior work site),
or (ii) the Executive terminates employment for any reason during the thirty
(30)-day period beginning on the later of (A) the date that is twelve (12)
months following the date of the Change of Control (as defined in Section 7
(g)), or (B) in the case of a change of Control described in Sections 7(c) or
(d), the date that is twelve (12) months following the date on which the
transaction resulting in the Change of Control was consummated.
(g) "Key Executive Management" are the individuals listed in
Exhibit A hereto.
(h) "Subsidiary"shall mean any bank, corporation or other
entity of which the Corporation owns, directly or indirectly through one or more
Subsidiaries, a majority of each class of equity security having ordinary voting
power in an election of directors.
2. DURATION OF AGREEMENT. This Agreement shall remain in effect only
while the Executive is a Key Executive; provided, however, that if the Executive
ceases to be a Key Executive as the result of a Change of Control, the
Corporation and the Executive shall be obligated to abide by the terms of this
Agreement.
3. UNAUTHORIZED DISCLOSURE. During the term of this Agreement or at any
time, the Executive shall not, without the written consent of a duly authorized
executive officer of the Corporation, disclose to any person (including an
employee of the Corporation or a Subsidiary), other than a person to whom
disclosure is reasonably necessary or appropriate in connection with the
performance by the Executive of his duties as an executive of the Corporation,
any material confidential information obtained by him while in the employ of the
Corporation or any Subsidiary or operating unit with respect to any of the
services, products, improvements, formulas, designs or styles, processes,
customers, methods of distribution or business practices, the disclosure of
which reasonably would be expected to materially damage the Corporation;
provided, however, that for purposes of this Agreement, 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 information of a type
not otherwise considered confidential by persons engaged in the same business or
a business similar to that conducted by the Corporation.
4. RESTRICTIVE COVENANTS. Upon termination of his employment with the
Corporation (or a Subsidiary), the Executive covenants and agrees as follows:
(a) NONCOMPETITION. If the termination is in conjunction with
a Change of Control as described in Section 7 the Executive shall not, directly
or indirectly, within the marketing area of the Corporation and its Subsidiaries
(defined as all area within 25 miles of any existing office or branch location
the Corporation has established an active and material market presence) enter
into or engage generally in direct or indirect competition with the Corporation
in the business of banking or any banking or trust related business, either
directly or indirectly as an individual on his own or as a partner or joint
venturer, or as a director, officer, shareholder (except as an incidental
shareholder), employee or agent for any person, for a period of one year after
the date of termination of his employment. The existence of any material claim
or cause of action of the Executive against the Corporation, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation of this covenant. The Executive acknowledges and
agrees that enforcement of this covenant not to compete will not prevent him
from earning a livelihood and that any breach of the restrictions set forth in
this paragraph will result in irreparable injury to the Corporation for which it
shall have no adequate remedy at law, and that therefore the Corporation shall
be entitled to injunctive relief in order to enforce the provisions hereof. In
the event that this paragraph shall be determined by any court of competent
jurisdiction to be unenforceable in part by reason of it being too great a
period of time or covering too great a geographical area, it shall be in full
force and effect as to that period of time or geographical area determined to be
reasonable by the Court.
(b) RETURN OF MATERIALS. Upon termination of employment with
the Corporation for any reason, including a termination of employment in
conjunction with a Change of Control as described in Section 7, the Executive
shall immediately deliver to the Corporation all correspondence, manuals,
letters, notes, notebooks, reports and any other documents and tangible items
containing or constitution confidential information about the Corporation
maintained at his office and shall promptly deliver all said materials held by
him at other locations.
P
(c) NONSOLICITATION OF EMPLOYEES. The Executive shall not
entice or solicit, directly or indirectly, any other executives or key
management personnel of the Corporation to leave the employ of the Corporation
of its Subsidiaries to work with the Executive or any entity with which the
Executive has affiliated for a period of one year following the Executive's
termination of employment with the Corporation for any reason, including a
termination of employment in conjunction with a Change of Control as described
in Section 5(c).
(d) NONSOLICITATION OF CUSTOMERS. The Executive shall not
entice or solicit, directly or indirectly, any client or customer of the
Corporation of any Subsidiary for a period of one year following the Executive's
termination of employment with the Corporation for any reason, including a
termination of employment in conjunction with a Change of Control as described
in Section 5(c).
(e) REMEDY. The Executive acknowledges and agrees that any
breach of the restrictions set forth in Sections 3 and 4 will result in
irreparable injury to the Corporation for which it shall have no meaningful
remedy in law and the Corporation shall be entitled to injunctive relief in
order to enforce provisions hereof. Upon obtaining such injunction, the
Corporation shall be entitled to pursue reimbursement from the Executive and/or
the Executive's employer of costs incurred in securing a qualified replacement
for any employee enticed away from the Corporation by the Executive. Further,
the Corporation shall be entitled to set off against or obtain reimbursement
from the Executive of any payments owed or made to the Executive by the
Corporation hereunder.
5. PAYMENTS UPON TERMINATION OF EMPLOYMENT.
(a) The Executive shall be entitled to the benefits described
in Section 5(c) only in the event that his employment with the Corporation is
terminated in conjunction with a Change of Control as described in Section 7.
(b) If the Executive's employment is terminated by the
Corporation for Cause or if the Executive terminates his employment other than
for Good Reason, the Executive shall not be entitled to the benefits set forth
in Section 5(c).
(c) If the Executive's employment is terminated by the
Corporation other than for Cause within the period beginning on the date of the
Change of Control (as defined in Section 7(g) and ending on the date that is
twenty-four (24) months following the later of (i) the date of the Change of
Control or (ii) in the case of a Change of Control described in Sections 7(c) or
(d), the date on which the transaction resulting in the Change of Control was
consummated, or if the Executive terminates his employment for Good Reason, then
the Corporation shall make a lump-sum cash payment to the Executive equal to two
(2) times his highest Annual Salary during the three-calendar-year period ending
before the effective date of the termination. The lump sum payment shall be made
no later than thirty (30) days following the effective date of the termination.
In such event, the Corporation shall also maintain in full force and effect at
its sole cost and expense (and the Executive shall remain a participant in), for
a minimum period of twelve (12) months following the termination the medical and
health and accident plans and life and disability insurances. If Executive's
participation in medical and health and accident plan and life and disability
insurances is barred, the Corporation shall use its best efforts to obtain and
pay for, on Executive's behalf, individual insurance plans, policies or programs
which provide to Executive health, medical and accident, life and disability
insurance coverage which is equivalent to the insurance coverage to which
Executive was entitled prior to the date of termination.
6. DAMAGES FOR BREACH OF CONTRACT. In the event of a breach of this
Agreement by either the Corporation or Executive resulting in damages to either
party, that party may recover from the party breaching the Agreement any and all
damages that may be sustained.
7. DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement,
"Change of Control" shall mean the occurrence of any one of the following
events:
(a) The Corporation acquires actual knowledge that any Person
(other than the Corporation, and Subsidiary of the Corporation, any employee
benefit plan of the Corporation or any of its Subsidiaries or any entity holding
securities for or pursuant to the terms of any such plan) has acquired the
Beneficial Ownership, directly or indirectly, of securities of the Corporation
entitling such Person to a majority of the voting power of the voting Stock.
(b) A majority of the board of Directors shall consist of
persons other than (i) persons who were members of the Board of Directors on the
date first written above, or (ii) persons (A) whose nomination or election as
directors of the Corporation was approved by at least two-thirds of the then
members of the board of directors {excluding any director referred to in clause
(B) of this paragraph} who either were directors of the Corporation on the date
first above written or whose nomination or election as a director was so
approved and (B) who are not nominees or representatives of (1) any Person
having Beneficial Ownership, directly or indirectly, of securities of the
Corporation entitling such Person to 10% or more of the voting power of the
Corporation's Voting Stock or (2) any "participant," as defined in rule 14a-11
under the Securities Exchange Act of 1934 or any successor rule, in any actual
or threatened solicitation (other than a solicitation by the Corporation)
subject to Rule 14a-11 or any successor rule relating to the election or removal
of any directors of the corporation;
(c) The Corporation and/or Subsidiary of the Corporation shall
be a party to any merger, consolidation, division, share exchange, transfer of
assets or any other transaction or series of related transactions outside the
ordinary course of business (A "Business Combination") as a result of which the
shareholders of the Corporation immediately prior to such Business Combination
(excluding any party, other than the Corporation or a Subsidiary, to the
Business Combination or any Affiliate or Associate of any such party) shall not
hold immediately following such transaction a majority of the voting power of
the Voting Stock of a Person or Persons immediately thereafter holding, directly
or indirectly through Subsidiaries, assets of the Corporation and its
consolidated subsidiaries immediately prior to the business Combination
constituting at least sixty-five percent (65%) of Total Assets: or
(d) If the entity which is the actual employer of the
Executive hereunder (the "Employer Company") is other than the Corporation,
either (i) the Employer company shall cease to be a Subsidiary of the
Corporation or (ii) the Employer company and/or any Subsidiary of the employer
Company shall be a party to any Business Combination as a result of which the
Corporation shall not hold immediately following such transaction a majority of
the voting power of the voting Stock of a Person or Persons immediately
thereafter holding, directly or indirectly through Subsidiaries, assets of the
Employer Company and its consolidated subsidiaries immediately prior to the
Business Combination constituting at least seventy-five percent (75%) of the
Employer company's Total Assets.
(e) In the case of a Change of Control defined in Section
7(c), hereof, following such Change of Control the term "Corporation" as used
herein shall mean the Person which following such Change of Control holds the
largest percentage of Corporation's Total Assets, including for this purpose
Total Assets which are held by such Person directly or indirectly through one or
more Subsidiaries. The Corporation shall not enter into any transaction
involving such a Change of Control unless at or prior to the consummation
thereof such Person assumes the obligations of the corporation hereunder.
(f) For purposes of this Section 7, "Person," "Affiliate,"
"Associate," " "Voting Stock" and "Total Assets" shall have the definitions
contained in, and "Beneficial Ownership" shall be determined as provided in the
corporation's Articles of Incorporation, in effect on the date first written
above.
(g) For purposes of Sections 7(a) and (b), the date of the
"Change of Control" is the date on which the Change of Control occurs. For
purposes of Sections 8 7(c) and (d), the date of the "Change of Control" is the
date on which the transaction resulting in a Change of Control is first
evidenced in writing and executed by an authorized office of the Corporation
and/or Subsidiary including, without limitation, any letter of intent, sale or
purchase agreement and/or agreement of merger, or, in the case of a series of
Business Combination transactions resulting in a change of Control, the date the
earliest of such transactions is first evidenced in writing and executed by an
authorized office of the Corporation and//or Subsidiary.
8. NOTICE. For the purposes of this Agreement, notices and all other
communications 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: XXXXX X. XXXXXXXXXXXX
0000 XXXXX XXXXXX XXXXXX
XXXXXXXXXX, XX 00000-0000
If to the Corporation: MID PENN BANCORP, INC.
000 XXXXX XXXXXX
XXXXXXXXXXX, XX 00000
ATTENTION: CHIEF EXECUTIVE OFFICER
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon actual receipt.
9. BINDING EFFECT. This Agreement shall inure to the benefit of and be
finding upon the Executive and his heirs and personal representatives, and the
Corporation and any successor to the Corporation.
10. ENFORCEMENT OF SEPARATE PROVISIONS.Should any provision of this
Agreement be ruled unenforceable for any reason, the remaining provisions of
this Agreement shall be unaffected thereby and shall remain in full force and
effect.
11. AMENDMENT. Except as otherwise provided herein, this Agreement may
be amended or canceled only by mutual agreement of the parties in writing
without the consent of any other person. In the event the Corporation wishes to
terminate this Agreement or reduce the benefits available to the Executive
hereunder, the Corporation may unilaterally effectuate any such action, provided
that the Corporation provides the Executive with written notice of such action
at least two (2) years in advance of the effective date of any such termination
or reduction in benefits. This two-year notice requirement may be reduced or
waived by the Executive. This Agreement may be amended to enhance the benefits
available to the Executive hereunder at any time, provided the Executive
consents in writing to any such amendment.
12. ARBITRATION. The Executive and Corporation agree that any claim or
controversy arising under this Agreement shall be settled by binding and final
arbitration in Harrisburg, Pennsylvania, by an arbitrator to be chosen by mutual
agreement of the Executive and Corporation. In the event that the Executive and
Corporation cannot mutually agree to an arbitrator within thirty (30) days of a
notice to arbitrate provided by one party to the other, then an arbitrator shall
be chosen by the American Arbitration Association in accordance with its rules
then in effect. The Arbitration shall be conducted pursuant to the rules of the
American Arbitration Association then in effect. Judgment on any award of
specific performance of any order issued by the arbitration may be enforced in
any court having competent jurisdiction. Attorneys' fees, arbitration fees and
administrative court costs associate with such action shall be paid by the
Corporation.
13. EMPLOYMENT. Nothing contained herein shall be construed as
conferring upon the Executive the right to continue in the employ of the
Corporation.
14. PAYMENT OF MONEY DUE DECEASED EXECUTIVE. If the Executive dies
prior to the payment of any moneys that may be due him from the Corporation
under this Agreement as of the date of death, such moneys shall be paid to the
executor, administrator, or other personal representative of the Executive's
estate.
15. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
conflicts of law provisions.
16. CAPTIONS; PRONOUNS. All captions are for convenience only and do
not form a substantive part of this Agreement. All pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the person or persons may require.
ATTEST: MID PENN BANCORP, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxx
-------------------------------------------- -----------------------------
WITNESS: EXECUTIVE
/s/ Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxxxxxxxxx
-------------------------------------------- -------------------------------
XXXXX X. XXXXXXXXXXXX
