EXHIBIT 10.9
EMPLOYMENT AGREEMENT
AGREEMENT made this 27th day of October, 1997, by and between COMMUNITY
BANKS, INC., a Pennsylvania corporation, ("Community"), THE PEOPLES STATE BANK,
a Pennsylvania state chartered banking institution ("Peoples") and XXXXXXX X.
XXXXXXX, an adult individual (hereinafter referred to as "Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently employed by Peoples, as Peoples' Chief
Lending Officer, pursuant to a certain Employment Agreement between Peoples and
Executive, dated May 2, 1994; and
WHEREAS, Community and Peoples have entered into a certain Agreement and
Plan of Reorganization of even date (the "Merger Agreement") whereby Peoples
will be merged with and into PSB Interim Bank, a Pennsylvania state chartered
banking institution, as of the Effective Date of the Merger (as defined therein)
and, upon the Effective Date of the Merger, PSB Interim Bank shall change its
name to The Peoples State Bank; and
WHEREAS, as of the Effective Date of the Merger, Peoples will be a wholly-
owned subsidiary of Community; and
WHEREAS, for purposes of the Agreement, Community and Peoples are referred
to collectively as the "Company."
WHEREAS, the Company wishes to employ Executive and Executive wishes to be
employed by Company, as an Executive Vice President and the Chief Lending
Officer of Peoples, upon the terms set forth below, as of the Effective Date of
the Merger; and
NOW, THEREFORE, in consideration of the agreements hereinafter contained,
and intending to be legally bound hereby, the parties agree as follows:
i. Length of Employment. Company agrees to employ Executive for a
rolling term of two (2) years commencing on the Effective Date of
the Merger. On each anniversary date of the Effective Date of the
Merger, the term of this Agreement shall automatically renew and
extend for an additional one (1) year period unless either party
shall have provided notice of its intent not to renew within
sixty (60) days prior to such anniversary date. Upon the date of
any Change in Control (as defined in Paragraph 8) should occur,
the term of this Agreement shall automatically renew and be
extended for two (2) years from such date.
ii. Position and Responsibilities. During the course of his
employment, Executive shall (i) perform the duties and
responsibilities of an Executive Vice President of Company and
Chief Lending Officer of Peoples, (ii) perform such other senior
management duties and responsibilities as the Board of Directors
and CEO may direct, and (iii) shall be afforded the title and
privileges associated with being at least an Executive Vice
President of the Company.
iii. Performance of Responsibilities, Loyalty.
(1) Executive shall devote his full time to the performance of
his responsibilities hereunder. Executive shall at all times
faithfully, industriously and to the best of his abilities
perform all duties necessary to carry out his
responsibilities.
(2) Throughout the term hereof, Executive shall not at any time
or place, either directly or indirectly engage in any
business or activity in competition with or adverse to the
interests of Company.
iv. Compensation.
(1) During the initial calendar year of the term of this
Agreement, Company shall pay to Executive a base salary of
not less than $90,000.00. During successive calendar years,
the Company may, in its discretion, adjust the base salary;
provided that it shall at no point be reduced below the
initial base salary. This salary shall be paid in regular,
substantially equal installments in accordance with the
regular payroll practices of the Company, less any and all
applicable deductions for taxes, medical benefits, etc.
(2) In addition to base salary, during the term of this
Agreement, Company shall provide Executive with an
automobile, including all related maintenance, repairs,
insurance and other costs. In lieu of providing Executive
with an automobile, Company may provide Executive with a
reasonable allowance on a monthly basis, which allowance
shall cover Executive's costs associated with an automobile,
including without limitation, lease or installment payments,
maintenance, repairs, insurance and other costs.
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v. Benefits.
(1) Executive shall receive employee benefits from Company no
less favorable than the employee benefits he received as an
employee of Peoples and, in addition, shall be eligible to
participate in all employee benefit plans generally
available to executive officers of Company, including
without limita tion, health and dental insurance plans,
group life insurance plans, retirement plans, incentive com
pensation plans, supplemental executive retirement plans and
stock option, grant or appreciation rights plans. The
participation of Executive in each benefit plan described in
this paragraph shall be subject to the terms of the
applicable plan and to procedures generally applicable to
Company officers; provided, however, that Executive shall
receive credit for years of service with Peoples for vesting
purposes only. Nothing in this paragraph shall obligate the
Company to offer any such plans.
(2) Executive shall be provided holiday pay, personal days, sick
leave, short-term disability and long- term disability in
accordance with Company policy for officers of similar
position performing similar duties. Executive shall be
entitled to at least four (4) weeks paid vacation each
calendar year.
(3) The Company shall pay the reasonable costs of Executive
attending continuing education seminars and banking
conventions and meetings.
vi. Relocation. Company shall not, without the prior consent of
Executive, transfer or relocate the office in which Executive
performs the bulk of his duties to any location more than thirty
(30) miles from East Berlin, Pennsylvania without an increase in
duties and responsibilities and commensurate compensation. In the
event Executive is so transferred or relocated, Company shall pay
all reasonable out-of-pocket expenses incurred by Executive in
connection with such relocation. Company shall not require
Executive to move from his residence.
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vii. Termination of Employment. This Agreement may be terminated
during the term hereof as follows:
(1) At any time by mutual agreement of Executive and Company.
(a) If this Agreement is terminated pursuant to
subparagraph (a)(1) of this Paragraph 7, neither party
shall have further obligation or liability to the other
hereunder, except that Executive shall be entitled to
accrued and unpaid salary.
(2) By Company, at any time for Cause. "Cause" shall include
Executive's personal dishonesty, willful misconduct, breach
of fiduciary duty involving personal profit, incompetence,
intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic
violations or offenses not involving moral turpitude), final
cease and desist order of any government agency having
jurisdiction over Company, or material breach of this
Agreement, following Company's notice thereof to Executive
and Executive's failure to cure same within thirty (30) days
of such notice.
(a) If this Agreement is terminated pursuant to
subparagraph (b)(1) of this Paragraph 7, Company shall
have no further obligation or liability to Executive
hereunder, except that Executive shall be entitled to
accrued and unpaid salary.
(3) Automatically, if Executive is removed and/or permanently
prohibited from participating in the conduct of Company's
affairs by an order issued by an appropriate regulatory
agency under Section 8(e) of the Federal Deposit Insurance
Act, as amended, or any similar state or federal law.
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(a) If this Agreement is terminated pursuant to
subparagraph (c)(1) of this Paragraph 7, Company shall
have no further obligation or liability hereunder,
except that Executive shall be entitled to accrued and
unpaid salary.
(4) By Company at any time, if in its sole judgment and
discretion the continued employment of Executive would no
longer be beneficial or desirable.
(a) In the event that Executive's employment is terminated
pursuant to this subparagraph (d)(1) of this Paragraph
7, Executive shall not be obligated to perform any
services on behalf of Company and Company shall be
obligated to continue Executive's salary and those
benefits set forth in Paragraph 5(a) hereof for the
remaining term of this Agreement; provided, however,
that in no event shall this provision obligate Company
to make any further increase to Executive's salary
above his salary on the date of such termination, or
continue Executive's participation in any incentive com
pensation plan, or stock option, grant or appreciation
rights plan, or any similar incentive based
compensation plan.
(b) Notwithstanding the provisions of subparagraph (d)(2)
of this Paragraph, in the event that Executive's
employment is terminated pursuant to subparagraph
(d)(1) of this Paragraph 7 subsequent to a Change in
Control, or the Company shall breach any provision of
this Agreement subsequent to a Change in Control,
Executive may elect, which election may be made in
Executive's sole discretion, to receive from Company a
single payment upon such termination amounting to any
salary to which Executive would be entitled pursuant to
subparagraph (d)(2), such single payment being in lieu
of the payments and benefits set forth in subparagraph
(d)(2). As used in this paragraph, "Change in Control"
shall have the meaning defined in Paragraph 8 hereof.
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(5) By Executive upon a Change in Control.
(a) In the event that Executive terminates his employment
pursuant to subparagraph (e)(i) of this Paragraph 7,
Executive may elect, which election may be made in
Executive's sole discretion, to receive from Company a
single payment upon such termination amounting to any
salary to which Executive would be entitled pursuant to
subparagraph (d)(2) of this Paragraph 7, such single
payment being in lieu of the payments and benefits set
forth in subparagraph (d)(2) of this Paragraph 7.
(6) By Executive at any time, upon thirty (30) days prior notice
to Company; provided, however, that if this Agreement shall
be terminated pursuant to this sub paragraph (f) of this
Paragraph 7, Company shall not be further obligated or
liable under this Agreement, except for the payment of
accrued and unpaid salary.
viii. Definition of Change of Control. For purposes of this Agreement,
the term "Change of Control" shall mean:
(1) An acquisition by any "person" or "group" (as those terms
are defined or used in Section 13(d) of the Exchange Act, as
enacted and in force on the date hereof) of "beneficial
ownership" (within the meaning of Rule 13d-3 under the
Exchange Act, as enacted and in force on the date hereof) of
securities of Company representing 24.99% or more of the
combined voting power of Company's securities then
outstanding;
(2) A merger, consolidation or other reorganization of Company,
except where the resulting entity is controlled, directly or
indirectly, by Company;
(3) A merger, consolidation or other reorganization of Company,
except where shareholders of Company immediately prior to
consummation of any such transaction continue to hold as
least a majority of the voting power of the outstanding
voting securities of the legal entity resulting from or
existing after any transaction and a majority of the members
of the Board of Directors of the legal entity resulting from
or existing after a transaction are former members of
Company's Board of Directors;
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(4) A sale, exchange, transfer or other disposition of
substantially all of the assets of Company to another
entity, except to an entity controlled, directly or
indirectly, by Company or a corporate division involving
Company;
(5) A contested proxy solicitation of Company's shareholders
that results in the contesting party obtaining the ability
to cast twenty-five percent (25%) or more of the votes
entitled to be cast in an election of directors of Company.
(6) During any period of two (2) consecutive years during the
term of this Agreement and any renewal hereof, individuals
who at the beginning of such period constitute the Board of
Directors of Company cease for any reason (other than for
health, disability or other medical incapacity or voluntary
retirement) to constitute at least a majority thereof.
(7) The termination of employment of the Chief Executive Officer
of Company, other than for Cause pursuant to Section 6(c) or
voluntary termination under Section 6(e) of a certain
Employment Agreement between Xxxxx X. Xxxxxxxxxxxx and
Company, of even date, during the period commencing on the
Effective Date of the Merger and ending two (2) years
thereafter.
ix. Suspension. If Executive is suspended and/or temporarily
prohibited from participating in the conduct of the Company's
affairs by a notice served in accordance with law by an
appropriate regulatory agency, 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, Company shall (i) pay Executive all of the
compensation withheld while its contract obligations were
suspended and (ii) reinstate any of its obligations which were
suspended.
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x. Death or Disability. In the event that Executive is rendered
unable to complete the terms of this Agreement due to death or
disability continuing in excess of ninety (90) days, this
Agreement shall be terminated and Company shall have no further
liability, obligations or responsibilities hereunder except as
set forth in Paragraph 5(b) hereof.
xi. Covenant Not to Compete. In the event Executive terminates his
employment with Company pursuant to Paragraph 7(f), he agrees
that, for a period of one (1) year following such termination, he
shall not (i) solicit any Company employees or officers to leave
Company to accept employment by Executive or his new employer;
and (ii) solicit or encourage any Company customers to cease
doing business with the Company and/or to transfer any or all of
their business relationships to any institution which Executive
may found or to Executive's new employer.
xii. Entire Agreement. As of the Effective Date of the Merger, this
Agreement and a certain Salary Continuation Agreement between
Executive and Peoples shall constitute the entire agreement
between the parties and no prior promises, agreements or
warranties, verbal or written, shall be of any force unless
embodied herein. No modification of this Agreement shall be of
any force or effect unless reduced to writing and signed by both
parties. As of the Effective Date of the Merger, the existing
Employment Agreement between Peoples and Executive shall be
terminated, with no further rights or obligations thereunder due
to or from either party, and this Agreement shall supersede same.
xiii. Miscellaneous.
(1) This Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective heirs,
successors and assigns.
(2) This Agreement shall not be modified or changed in any way
except by a written agreement signed by the parties hereto.
(3) No waiver by any party hereto of any provision of this
Agreement shall be deemed a waiver of said provision or any
other provisions of this Agreement.
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(4) This Agreement shall be interpreted, construed and governed
in accordance with the laws of the Commonwealth of
Pennsylvania. 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.
IN WITNESS WHEREOF, the parties have set their hands and seals.
ATTEST: COMMUNITY BANKS, INC.
/S/Xxxxxxxx X. Xxxx By: /S/ Xxxxxx X. Xxxxxx
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THE PEOPLES STATE BANK
/S/ Xxxxxx X. Xxxx By: /S/ Xxxxx X. Xxxxxxxxxxxx
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WITNESS: EXECUTIVE:
/S/ Xxxxxx X. Xxxx /S/ Xxxxxxx X. Xxxxxxx
------------------ ----------------------
Xxxxxxx X. Xxxxxxx
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AGREEMENT TO MODIFY EMPLOYMENT AGREEMENT
THIS AGREEMENT TO MODIFY EMPLOYMENT AGREEMENT ("Employment Agreement
Modification") is entered into on this 15th day of January, 2002, by COMMUNITY
BANKS, INC., a Pennsylvania corporation ("Community"), COMMUNITY BANKS, a bank
and trust company organized and existing under the laws of the Commonwealth of
Pennsylvania, formerly known as The Peoples State Bank ("Bank"), and XXXXXXX X.
XXXXXXX (the "Executive").
BACKGROUND
A. Corporation, Bank and Executive entered into an Employment Agreement
("Agreement") on or about October 29, 1997.
B. The parties wish to modify the identification of Executive's job title
in the Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and intending to
be legally bound, the parties hereby agree as follows:
1. Modification of Job Title. Effective March 30, 2001, Executive's job
title shall be "Managing Director - Banking Services Division", in addition to
his title of Executive Vice President of the Bank and the Corporation.
2. No Other Changes. Except as specifically modified herein, all terms and
conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Executive and duly authorized officers of Community
and Bank have signed this Employment Agreement Modification.
EXECUTIVE:
/S/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
WITNESS/ATTEST: COMMUNITY BANKS
/S/ Xxxxxxxx X. Xxxx By /S/ Xxxxx X. Xxxxxxxxxxxx
--------------------------------------------- -------------------------
Title President & CEO
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WITNESS/ATTEST: COMMUNITY BANKS, INC.
/S/ Xxxxxxxx X. Xxxx By /S/ Xxxxx X. Xxxxxxxxxxxx
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Title Chairman & CEO
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