EXECUTIVE AGREEMENT
EXHIBIT
10.1
THIS
AGREEMENT is made as of this 25th day of
March, 2010, among CITIZENS & NORTHERN CORPORATION, a Pennsylvania business
corporation (the “Corporation”), CITIZENS & NORTHERN BANK, a Pennsylvania
banking corporation (the “Bank”), and XXXXXXX X. XXXXXXXXX, XX., an individual
residing at 00 Xxxxxxx Xxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxxxxx
(“Executive”).
W I T N E S S E T
H
WHEREAS,
Executive is employed by the Corporation and Bank as President and Chief
Executive Officer; and
WHEREAS,
the Boards of Directors of the Corporation and the Bank deem it advisable to
provide Executive with certain additional benefits in the event Executive’s
employment with the Bank is terminated other than for “cause” as defined
herein.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants and promises set forth
herein, and each intending to be legally bound, the Corporation, the Bank and
Executive agree as follows:
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1.
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Definitions. The
following terms have the meanings specified
below:
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a. “Base
Salary” means the Executive’s annual base salary, established either by contract
or by the Employer, prior to any reduction of such salary pursuant to any
contribution to a tax-qualified plan under Section 401(k) of the
Code.
b. “Cause”
means the occurrence of either of the following, the result of which is the
termination of Executive’s Employment:
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i.
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Executive’s
conviction of, or plea of guilty or nolo contendere to, a felony or a
crime of falsehood or involving moral turpitude;
or
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ii.
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the
willful failure by Executive to substantially perform his duties to
Employer, after the Executive’s receipt of written notice of such failure
from the Board of Directors of the Corporation, other than a failure
resulting from Executive’s incapacity as a result of the Executive’s
disability; or
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iii.
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A
government regulatory agency recommends or orders in writing that the
Corporation or the Bank terminate the Employment of Executive or relieve
him of his duties as such relate to the Corporation or the
Bank.
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Notwithstanding
the foregoing, Executive’s Employment shall not be deemed to have been
terminated for Cause under Section 1.b.ii hereof if such termination took place
as a result of:
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x.
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questionable
judgment on the part of Executive;
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y.
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any
act or omission believed by Executive in good faith, to have been in or
not opposed to the best interests of the Employer;
or
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z.
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any
act or omission in respect of which a determination could properly be made
that Executive met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of expenses under the By-laws
of the Corporation or the laws of the Commonwealth of Pennsylvania, or the
directors and officers’ liability insurance of the Corporation or any
Employer, in each case as in effect at the time of such act or
omission.
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c.
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“Employer”
means the Corporation and the Bank
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d. “Employment”
means Executive’s employment by the Corporation or the Bank at any particular
time.
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2.
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Resignation of
Executive. If there shall
be:
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a. Any
involuntary termination of Executive’s employment (other than for
Cause);
b. Any
reduction in Executive’s title, responsibilities or authority, including such
title, responsibilities or authority as such may be increased from time to
time;
c. Any
reduction in Executive’s Base Salary in effect immediately prior to the date of
this Agreement, or any failure to provide Executive with benefits at least as
favorable as those enjoyed by Executive under any of the pension, life
insurance, medical, health and accident, disability or other employee plans of
the Corporation or the Bank in which Executive participated as of the
date of this Agreement, or the taking of any action that would
materially reduce any of such compensation or benefits in effect as of the date
of this Agreement, unless such reduction relates to a reduction applicable to
all employees generally; or
d. Any
reassignment of Executive beyond a thirty (30) mile commute by automobile from
Wellsboro, Pennsylvania (each of the foregoing, a “Triggering
Event”).
Then, at
the option of Executive, exercisable by Executive within sixty (60) days of the
occurrence of any Triggering Event during the term of this Agreement, Executive
may resign from Employment (or, if involuntarily terminated, give notice of
intention to collect benefits hereunder) by delivering a notice in writing to
the Corporation, in which case Executive shall be entitled to (i) a lump sum
cash payment equal to the Executive’s unpaid salary, accrued vacation pay and
unreimbursed business expenses through and including the date of termination and
an amount equal to 200% of Executive’s Base Salary in effect at the time of
notification, which Employer shall pay to Executive within fifteen (15) days of
Executive’s termination of employment, and (ii) for a period of twenty-four (24)
months from the date of termination of Employment, Executive shall be permitted
to continue in and the Employer shall maintain the same level of contribution
for Executive’s participation in the Employer’s medical/health insurance
plan. If participation in the Employer’s medical/health insurance
plan is prevented by law or the terms of the plan, the Employer shall provide a
substantially equivalent substitute for the Executive.
Executive
shall not be required to mitigate the amount of any payment provided for in the
preceding paragraph by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in the preceding paragraph be
reduced by any compensation earned by Executive as a result of employment by
another employer or by employment or otherwise, except as otherwise provided
therein.
3. Change in
Control. If the event that Executive’s Employment is
terminated following a Change in Control of the Corporation or the Bank, as
defined in that certain Change in Control Agreement, dated March 1, 2010, among
the Corporation, the Bank and Executive, then, in that event, this Agreement
shall be null and void and Executive shall not be entitled to the severance
payment referenced in Section 2 hereof; rather Executive shall be entitled only
to the payment and benefit continuation provided for in the Change in Control
Agreement.
4. No Implied Rights; Rights on
Termination of Employment.
a. No Right to Continued
Employment. Nothing in this Agreement shall confer upon
Executive any right with respect to continuance of Employment by Employer, nor
shall it interfere with or limit in any way the right of Employer to terminate
Executive’s Employment at any time.
b. Termination –
Cause. If Employer terminates Executive’s Employment at any
time for Cause, this Agreement shall terminate at that time and Employer shall
have no further liability hereunder.
5. Arbitration. Any
dispute or controversy arising out of or relating to this Agreement and any
controversy as to a termination for Cause shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators, in Wellsboro,
Pennsylvania, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrators’ award in any court having jurisdiction.
6. Term. This
Agreement shall be for a two (2) year term and shall terminate automatically two
(2) years from the date hereof, unless otherwise extended or renewed by
agreement among the Corporation, the Bank and Executive.
7. Exclusive
Benefit. Executive shall have no right to commute, sell,
assign, transfer or otherwise convey the right to receive any payments
hereunder, which payment and the right thereto are expressly declared to be
non-assignable and non-transferrable. In the event of any attempted
assignment or transfer, this Agreement shall terminate at that time and Employer
shall have no further liability hereunder.
8. Notices. Any
notice required or permitted to be given under this Agreement shall be properly
given if in writing and if mailed by registered or certified mail, postage
prepaid with return receipt requested, to Executive’s residence in the case of
any notice to Executive, or to the attention of the Bank, in the case of any
notice to the Employer.
9. Entire
Agreement. This Agreement contains the entire agreement
relating to the subject matter hereof and may not be modified, amended or
changes orally but only by an agreement in writing, consented to in writing by
the Corporation and the Bank, and signed by the party against whom enforcement
of any modification, amendment or change is sought.
10. Benefits. This
Agreement shall be binding upon and inure to the benefit of and be enforceable
by Executive’s personal or legal representatives, executors, administrators,
heirs, distributes, devisees and legatees.
11. Applicable
Law. This Agreement shall be governed by and construed in
accordance with the domestic internal law (but not the law of conflicts of law)
of the Commonwealth of Pennsylvania.
12. Compliance With Internal
Revenue Code Section 409A. It is the intention of the parties
that this Agreement comply with the provisions of Section 409A to the extent, if
any, that such provisions are applicable to this Agreement, and this Agreement
will be administered by the Employer in a manner consistent with this
intent.
If any
payments or benefits hereunder may be deemed to constitute non-conforming
deferred compensation subject to taxation under the provisions of Section 409A,
Executive agrees that the Employer may, without the consent of Executive, modify
this Agreement to the extent and in the manner the Executive deems necessary or
advisable or take such other action or actions, including an amendment or action
with retroactive effect, that the Employer deems appropriate in order either to
preclude any such payments or benefits from being deemed “deferred compensation”
within the meaning of Section 409A or to provide such payments or benefits in a
manner that complies with the provisions of Section 409A such that they will not
be taxable thereunder.
13. TARP Letter
Agreement. Notwithstanding anything herein to the contrary,
the Letter Agreement, dated January 28, 2009, between Executive and the
Corporation, which, among other things, prohibits the payment to Executive of
any “golden parachute payment” within the meaning of the Emergency Economic
Stabilization Act of 2008 and applicable regulations thereto until the
Corporation repurchases 100% of its senior preferred stock from the U.S.
Department of Treasury, shall remain in full force and effect until it
terminates by its terms.
14. Headings. The
headings of the sections and subsections hereof are for convenience only and
shall not control or affect the meaning or construction or limit the scope or
intent of any of the sections or subsections of this Agreement.
IN
WITNESS WHEREOF, the Corporation and the Bank have each duly caused this
Agreement to be executed on its behalf by its duly authorized officers, and
Executive has hereunto set his hand and seal, as of the day and year first above
written.
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ATTEST:
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CITIZENS & NORTHERN | |||
| CORPORATION | ||||
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/S/
Xxxxxxx X. Xxxxx
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By: |
/S/
Xxx X. Xxxxxx
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Secretary
(SEAL)
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Chair,
Compensation Committee
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ATTEST:
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CITIZENS
& NORTHERN BANK
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/S/
Xxxxxxx X. Xxxxx
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By: |
By:
/S/ Xxx X. Xxxxxx
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Secretary
(SEAL)
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Chair,
Compensation Committee
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/S/
Xxxxxxx X. Xxxxx
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/S/ |
Xxxxxxx X. Xxxxxxxxx, Xx.
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Witness
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Executive
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