EMPLOYMENT AGREEMENT
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THIS AGREEMENT entered into this 3rd day of March 2006 (the "Effective
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Date"), by and between Xxxxx X. Xxxxxxxx (the "Employee"), Xxxxx Bank (the
"Bank"), and Xxxxxxx Financial Corp. (the "Company").
WHEREAS, the Executive continues to serve the bank in an executive
capacity under the terms and conditions set forth in this agreement; and
WHEREAS, the Employee has heretofore been employed by the Bank as its
Chief Financial Officer and is experienced in all phases of the business of the
Bank; and
WHEREAS, the Boards of Directors of the Bank and of the Company believe
it is in their mutual best interests to enter into this Agreement with the
Employee in order to assure continuity of management and to reinforce and
encourage the continued attention and dedication of the Employee to his assigned
duties; and
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of the Employee, the Bank and the Company.
NOW, THEREFORE, it is AGREED as follows:
Description of Duties: Responsible for managing the Finance and Operations Group
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in an effective manner. Primary duties include ongoing management of finance,
accounting and investment activities; timely and accurate filing of all
regulatory reports; an appropriate budgeting process and asset/liability and
interest rate risk management. Managing the Operations Division in order to
provide efficient, accurate and cost-effective technical and operational support
services. Managing the Bank marketing efforts, coordinating investor relations
function and oversight of the Bank non-deposit product sales. Supervising
assigned personnel; communicating and interfacing with other divisions and
management personnel. Reports to the President and Chief Executive Officer.
1. Defined Terms
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When used anywhere in this Agreement, the following terms shall have
the meaning set forth herein.
(a) "Change in Control" shall mean any one of the following
events: (i) the acquisition of ownership, holding or power to vote more than 25%
of the Bank's or the Company's voting stock, (ii) the acquisition of the ability
to control the election of a majority of the Bank's or the Company's directors,
(iii) the acquisition of a controlling influence over the management or policies
of the Bank or the Company by any person or by persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(iv) during any period of two consecutive years, individuals (the "Continuing
Directors") who at the
beginning of such period constitute the Board of Directors of the Bank or the
Company (the "Existing Board") cease for any reason to constitute at least
two-thirds thereof, provided that any individual whose election or nomination
for election as a member of the Existing Board was approved by a vote of at
least two-thirds of the Continuing Directors then in office shall be considered
a Continuing Director. Notwithstanding the foregoing, in the case of (i), (ii)
and (iii) hereof, ownership or control of the Bank by the Company itself shall
not constitute a Change in Control. For purposes of this paragraph only, the
term "person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(c) "Code ss.280G Maximum" shall mean the product of 2.99
and the Executive's "base amount" as defined in Code ss.280G(b)(3).
(d) "Good Reason" shall mean any of the following events,
which has not been consented to in advance by the Employee in writing: (I) the
requirement that the Employee move his personal residence, or perform his
principal executive functions, more than sixty (60) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the Change in Control
or as the same may be increased from time to time; (iii) the failure by the Bank
or the Company to continue to provide the Employee with compensation and
benefits provided for on the date of the Change in Control, as the same may be
increased from time to time, or with benefits substantially similar to those
provided to him under any of the employee benefit plans in which the Employee
now or hereafter becomes a participant, or the taking of any action by the Bank
or the Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed by him at the time
of the Change in Control or within the protected period; (iv) the assignment to
the Employee of duties and responsibilities materially different from those
normally associated with his position; (v) a failure to elect or reelect the
Employee to the Board of Directors of the Bank or the Company, if the Employee
is serving on such Board on the date of the Change in Control; (vi) a material
diminution or reduction in the Employee's responsibilities or authority
(including reporting responsibilities) in connection with his employment with
the Bank or the Company; or (vii) a material reduction in the secretarial or
other administrative support of the Employee. In addition, "Good Reasons" shall
mean an impairment of the Employee's health to an extent that it makes continued
performance of his duties hereunder hazardous to his physical or mental health.
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(e) "Protected Period" shall mean the period that begins on
the date six months before a Change in Control and ends on the later of the
first annual anniversary of the Change in Control or the expiration date of this
Agreement.
2. Employment. The Employee is employed as the Chief Financial Officer
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of the Bank and of the Company. In each capacity, the Employee shall render such
administrative and management services for the Bank and the Company as are
currently rendered and as are customarily performed by persons situated in a
similar executive capacity. The Employee shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the Bank and
the Company. The Employee's other duties shall be such as the Boards of
Directors of the Bank and the Company may from time to time reasonably direct,
including normal duties as an officer of the Bank.
3. Base Compensation. The Bank agrees to pay the Employee during the
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term of this Agreement a salary at the rate of $146,500.00 per annum, payable in
cash not less frequently than monthly. The Board of Directors of the Bank shall
review, not less often than annually, the rate of the Employee's salary, and
shall increase the employee's base salary by no less than $3,000.00 per year.
The Company hereby agrees that, in lieu of paying the Employee a base salary
during the term of this Agreement, it shall be jointly and severally liable with
the Bank for the payment of all amounts due under this Agreement. Nevertheless,
the Board of Directors of the Company may in its discretion at any time during
the term of this Agreement agree to pay the Employee a base salary for the
remaining term of this Agreement. If the Board of Directors of the Company
agrees to pay such salary, the Board shall thereafter review, not less often
than annually, the rate of the Employee's salary, and in its sole discretion may
decide to increase his salary.
Notwithstanding the foregoing, following a Change in Control, the
Boards of Directors of the Bank and the Company shall continue to annually
review the rate of the Employee's salary, and shall increase said rate of salary
by a percentage which is not less than the average annual percentage increase in
salary that the Employee received over the three calendar years immediately
preceding the year in which the Change in Control occurs.
4. Discretionary Bonuses. The Employee shall participate in an
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equitable manner with all other senior management employees of the Bank and in
discretionary bonuses that the Boards of Directors of the Bank and the Company
may award from time to time to their senior management employees. The Bank and
the Company shall pay any such discretionary bonuses to the Employee no later
than the two-and-one half (2 1/2) months after the end of the calendar year in
which such bonus was awarded to the Employee. No other compensation provided for
in this Agreement shall be deemed a substitute for the Employee's right to
participate in such discretionary bonuses. Notwithstanding the foregoing,
following a Change in Control, the Employee shall receive discretionary bonuses
that are made no less frequently than, and in annual amounts not less than, the
average annual discretionary bonuses paid to the Employee
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during the three calendar years immediately preceding the year in which the
Change in Control occurs.
5. Participation in Retirement, Medical and Other Plans.
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(a) During the term of this Agreement, the Employee shall be
eligible to participate in the following benefit plans: group hospitalization,
disability, health, dental, sick leave, life insurance, travel and/or accident
insurance, retirement, pension, and/or other present or future qualified plans
provided by the Bank, generally which benefits, taken as a whole, must be at
least as favorable as those in effect on the Effective Date and the Company.
(b) The Employee shall be eligible to participate in any fringe
benefits which are or may become available to the Bank's and the Company's
senior management employees, including for example: any stock option or
incentive compensation plans, and any other benefits which are commensurate with
the responsibilities and functions to be performed by the Employee under this
Agreement. The Employee shall be reimbursed for all reasonable out-of-pocket
business expenses which he shall incur in connection with his services under
this Agreement upon substantiation of such expenses in accordance with the
policies of the Bank and the Company. Additionally, the Employee shall be
entitled to:
(1) Banking Industry Functions. The Employee may devote
reasonable time to attending
seminars and meetings sponsored by the Pennsylvania Bankers Association, the
American Bankers Association and other banking or educational organizations at
the expense of the Bank.
(2) Other Perquisites and Benefits. The Executive shall be
entitled to receive such other
perquisites and fringe benefits as the Board of Directors of the Bank reasonably
deems appropriate in its sole discretion.
6. Term. The Bank and the Company hereby employ the Employee, and the
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Employee hereby accepts such employment under this Agreement, for the period
commencing on the Effective Date and ending thirty-six (36) months thereafter
(or such earlier date as is determined in accordance with Section 10 or 12). On
each annual anniversary date of the Effective Date, this Agreement shall
automatically renew for an additional 12 months unless either party has
beforehand provided the other party with written notice that this Agreement
shall not renew.
In the event the Employee serves the full term of this Agreement, and
the Bank does not offer more than one year before the Agreement's expiration
date to renew this Agreement upon substantially the same terms and conditions
for an additional three (3) year term, the Employee shall be entitled upon
terminating employment at any time on or after the expiration date to a
severance allowance of twelve (12) months of his then current base annual
salary, plus such vested employee benefits to which the Employee may be entitled
when due and payable, and the
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Bank shall have no further obligations to the Employee under this Agreement,
EXCEPT that in such event, the Bank shall provide, at the Employee's request,
out-placement services to the Employee through Drake, Beam, and Xxxxx, New York,
New York, or such comparable out-placement service as the parties shall select.
The Bank's costs for such services shall not exceed 17% of the Employee's then
current base annual salary, and shall be payable only through the end of the
second calendar year following the Employee's termination of employment with the
Bank and the Company.
7. Loyalty; Noncompetition; Nondisclosure.
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(a) Loyalty. During the period of his employment hereunder and
except for illnesses, reasonable vacation periods, and reasonable leaves of
absence, the Employee shall devote substantially all his full business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder; provided, however, from time to time, Employee may serve on the
boards of directors of, and hold any other offices or positions in, companies or
organizations, which will not present any conflict of interest with the Bank,
the Company or any of their subsidiaries or affiliates or unfavorably affect the
performance of Employee's duties pursuant to this Agreement, or will not violate
any applicable statute or regulation. "Full business time" is hereby defined as
that amount of time usually devoted to like companies by similarly situated
executive officers. Except with the prior written approval of the Board of
Directors of the Bank, the Executive shall not engage in any other business or
commercial activities, duties or pursuits, during the term of this Agreement.
Under no circumstances may the Employee engage in any business or commercial
activities, duties or pursuits which compete with the business or commercial
activities of the Bank nor may the Employee serve as a director or officer or in
any other capacity in a company or financial institution which competes with the
Bank. Investments and personal activities not resulting in material compensation
or a conflict of interest with the Bank shall not be deemed a breach of the
restrictions of this paragraph. Participation in trade associations, charitable,
civil or similar not-for-profit, philanthropic or eleemosynary organizations,
including service as an officer or director, shall not be deemed a breach of
this Agreement, but the total amount of time spent by the Employee in such
activities during normal working hours shall be periodically reviewed by the
Board of Directors of the Bank.
(b) Noncompetition. The Employee covenants and agrees as
follows: the Employee shall not directly or indirectly, within the marketing
area of the Bank or the Company (defined as Xxxxx County, Pennsylvania) or any
future marketing area of the Bank or the Company (defined as an area within
fifty (50) miles of any branch office located outside of Xxxxx County,
Pennsylvania and begun during the Employee's employment under the terms of this
Agreement), enter into or engage generally in competition with the Bank or the
Company either as a sole proprietor or as a partner or joint venturer, or as a
director, officer, shareholder (except as a shareholder of less than five
percent (5%) of the outstanding shares of a corporation if Executive is not an
employee, officer or director of such corporation), employee or agent for any
person, for a period of one (1) year after the date of termination of his
employment if (I) the
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Employee's employment is terminated for Just Cause pursuant to Section 10 of
this Agreement, or (ii) such termination is the result of a resignation by the
Employee other than pursuant to subsection 10(d)(2). The Employee agrees that
any breach of restrictions set forth in this paragraph shall result in
irreparable injury to the Bank and the Company and for which they shall have not
adequate remedy at law and the Bank and the Company 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.
(c) Unauthorized Disclosure. At no time during the period of his
employment hereunder and thereafter, shall the Employee, without the written
consent of the Boards of Directors of the Bank or a person authorized thereby,
knowingly disclose to any person, other than an employee of the Bank or the
Company or a person to whom disclosure is reasonably necessary or appropriate in
connection with the performance by the Employee of his duties as an executive of
the Bank or the Company, any material confidential information obtained by him
while in the employ of the Bank or the Company with respect to any of the Bank's
or the Company's services, products, improvements, formulas, designs or styles,
processes, customers, methods of distribution of any business practices the
disclosure of which he knows will be materially damaging to the Bank or the
Company; 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 Employee) 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 Bank and the Bank.
(d) Nothing contained in this Section shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other securities
of any business dissimilar from that of the Bank or the Company, or, solely as a
passive or minority investor, in any business.
8. Standards. The Employee shall perform his duties under this
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Agreement in accordance with such reasonable standards as the Boards of
Directors of the Bank and the Company may establish from time to time. The Bank
and the Company will provide Employee with the working facilities and staff
customary for similar executives and necessary for him to perform his duties.
9. Vacation and Sick Leave. At such reasonable times as the Board shall
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in its discretion permit, the Employee shall be entitled, without loss of pay,
to absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time, provided that:
(a) The Employee shall be entitled to an annual vacation in
accordance with the policies that the Board periodically establishes for senior
management employees of the Bank, but not less than four weeks in any calendar
year (pro-rated in any calendar year during which
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the Employee is employed hereunder for less than the entire calendar year in
accordance with the number of days in such year which he is so employed).
(b) The Employee shall not receive any additional compensation
from the Bank or the Company on account of his failure to take a vacation or
sick leave, and the Employee shall not accumulate unused vacation from one
fiscal year to the next, except in either case to the extent authorized by the
Board.
(c) In addition to the aforesaid paid vacations, the Employee
shall be entitled without loss of pay, to absent himself voluntarily from the
performance of his employment with the Bank and the Company for such additional
periods of time and for such valid and legitimate reasons as the Board may in
its discretion determine. Further, the Boards of Directors of the Bank and the
Company may grant to the Employee a leave or leaves of absence, with or without
pay, at such time or times and upon such terms and conditions as such Boards in
their discretion may determine.
(d) In addition, the Employee shall be entitled to an annual
sick leave benefit as established by the Board of Directors of the Bank and the
Company.
10. Termination and Termination Pay. Subject to Sections 12 and 21
----------------------------------
hereof, the Employee's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Employee's employment under this Agreement shall
terminate upon his death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred, which
shall be paid to the Employee's estate no later than two-and-one half (2 1/2)
months after the end of the calendar year of the Employee's death.
(b) Disability. The Bank and the Company may terminate the
Employee's employment if the Employee becomes totally and permanently disabled.
The Employee shall be deemed totally and permanently disabled if he becomes
unable to perform a substantial portion of his duties under this Agreement and a
physician selected by Bank determines such inability will continue for a period
of six (6) months or more and is likely to be permanent and the Employee
qualifies to receive total disability benefits under Bank's disability insurance
plan. Such termination shall be without prejudice to any right the Employee may
have to receive benefits under any long-term disability insurance plan
maintained by Bank or the Company.
(c) Just Cause. The Board may, by written notice to the
Employee, immediately terminate his employment at any time, for Just Cause. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for Just Cause. For the purposes of this Agreement, the
Bank shall have "Just Cause" to terminate the Employee's employment hereunder
upon:
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(1) the willful failure by the Employee to substantially perform
his material duties hereunder other than any such failure resulting
from the Employee's incompetence or incapacity due to physical or
mental illness; or
(2) conviction of a felony; or
(3) the willful violation by the Employee of the provisions of
this Agreement; or
(4) the willful violation by the Employee of material Bank or
Company policy as formally expressed by the Board of Directors of the
Company or the Bank; or
(5) the violation of state or federal banking, tax or financial
laws, regulations or rules in his own conduct or in the operation of
the Bank or the Company, the result of which is materially adverse to
the Bank or the Company; or
None of the above which are capable of being cured shall be grounds for
termination until Bank and the Company give notice thereof to the Employee and
the Employee fails to cure such failure or violation within thirty (30) days of
said notice, or if said failure or violation cannot be cured within thirty (30)
days, within a reasonable time thereafter if the Employee is diligently
attempting to cure the failure or violation. No act, or failure to act, on the
Employee's part shall be considered "willful" unless he has acted, or failed to
act, with an absence of good faith and without a reasonable belief that his
action or failure to act was in the best interest of the Bank and the Company.
Bank and the Company may terminate this Agreement without notice and
opportunity to cure upon receipt of a final written directive or order of any
governmental body or entity having jurisdiction over the Bank or the Company
requiring termination or removal of the Employee from the positions referenced
in Section 2 of this Agreement.
(d) Without Just Cause; Constructive Discharge. (1) The Boards
of Directors of the Bank and the Company may, by written notice to the Employee,
immediately terminate his employment at any time for a reason other than Just
Cause, in which event the Employee shall be entitled to receive the following
compensation and benefits (unless such termination occurs during the Protected
Period in which event the benefits and compensation provided for in Section 12
shall apply): (I) the salary provided pursuant to Section 3 hereof, up to the
later of the expiration date of this Agreement (including any renewal term) of
this Agreement and the date that is 12 months after the employee's last day of
employment, and (ii) long-term disability and such medical benefits as are
available to the Employee under the provisions of COBRA for eighteen (18)
months. All amounts payable to the Employee shall be paid in one lump sum within
ten (10) days of such termination.
(2) The Employee shall be entitled to receive the
compensation and benefits payable under subsection 10(d)(1) hereof in the event
that the Employee voluntarily terminates
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employment within 90 days of an event that constitutes Good Reason (unless such
voluntary termination occurs during the Protected Period, in which event the
benefits and compensation provided for in Section 12 shall apply).
(e) Termination or Suspension Under Federal Law. (1) If the
Employee is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under Sections 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818(e)(4) and
(g)(1)), all obligations of the Bank under this Agreement shall terminate, as of
the effective date of the order, but vested rights of the parties shall not be
affected.
(2) If the Bank is in default (as defined in Section
3(x)(1) of FDIA), all obligations of the Bank under this Agreement shall
terminate as of the date of default; however, this Paragraph shall not affect
the vested rights of the parties.
(3) If a notice served under Section 8(e)(3) or (g)(1) of
the FDIA (12 U.S.C. 1818(e)(3) or (g)(1)) suspends and/or temporarily prohibits
the Employee from participating in the conduct of the Bank's affairs, the Bank's
obligations under this Agreement shall be suspended as of the date of such
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Bank may in its discretion (I) pay the Employee all or part
of the compensation withheld while its contract obligations were suspended, and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.
(f) Voluntary Termination by Employee. Subject to Section
12(a)(ii) hereof, the Employee may voluntarily terminate employment with the
Bank during the term of this Agreement, upon at least ninety (90) days' prior
written notice to the Board of Directors, in which case the Employee shall
receive only his compensation, vested rights and employee benefits up to the
date of his termination (unless such termination occurs pursuant to Section
10(d)(2) hereof or within the Protected Period, in which event the benefits and
compensation provided for in Sections 10(d) or 12, as applicable, shall apply).
11. No Mitigation. The Employee shall not be required to mitigate the
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amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.
12. Change in Control Severance Payments.
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(a) Trigger Events. In lieu of the severance benefits provided
under Section 10, the Employee shall be entitled to collect the severance
benefits set forth in Subsection (b) hereof in the event that (i) the Employee
voluntarily terminates employment either for any reason within the 30-day period
beginning on the date of a Change in Control, (ii) the Employee voluntarily
terminates employment within 90 days of an event that both occurs during the
Protected Period
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and constitutes Good Reason, or (iii) the Bank or the Company or their
successor(s) in interest terminate the Employee's employment without his written
consent and for any reason other than Just Cause during the Protected Period.
(b) Amount of Severance Benefit. If the Employee becomes
entitled to collect severance benefits pursuant to Section 12(a) hereof, the
Bank shall pay the Employee:
(I) a severance benefit equal to the Code ss.280G maximum,
and
(ii) pay for long-term disability and provide such medical
benefits as are available to the Employee under the provisions
of COBRA, for eighteen (18) months (or such longer period, up to
24 months, if COBRA is amended).
Subject to Section 21 hereof, said sum shall be paid in one lump
sum within ten (10) days of the later of the date of the Change in Control and
the Employee's last day of employment with the Bank or the Company.
(c) Funding of Grantor Trust upon Change in Control. Not later
than ten business days after a Change in Control, the Bank shall (I) establish a
grantor trust (the "Trust") that is designed in accordance with Revenue
Procedure 92-64 and has a trustee independent of the Bank and the Company, (ii)
deposit in said Trust an amount equal to the Code ss.280G Maximum, unless the
Employee has previously provided a written release of any claims under this
Agreement, and (iii) provide the trustee of the Trust with a written direction
to hold said amount and any investment return thereon in a segregated account
for the benefit of the Employee, and to follow the procedures set forth in the
next paragraph as to the payment of such amounts from the Trust. Upon the
earlier of the Trust's final payment of all amounts due under the following
paragraph or the date 15 months after the Change in Control, the trustee of the
Trust shall pay to the Bank the entire balance remaining in the segregated
account maintained for the benefit of the Employee. The Employee shall
thereafter have no further interest in the Trust.
During the 15-consecutive month period after a Change in Control, the
Employee may provide the trustee of the Trust with a written notice requesting
that the trustee pay to the Employee an amount designated in the notice as being
payable pursuant to this Agreement. Within three business days after receiving
said notice, the trustee of the Trust shall send a copy of the notice to the
Bank via overnight and registered mail return receipt requested. On the tenth
(10th) business day after mailing said notice to the Bank, the trustee of the
Trust shall pay the Employee the amount designated therein in immediately
available funds, unless prior thereto the Bank provides the trustee with a
written notice directing the trustee to withhold such payment. In the latter
event, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Employee pursuant
to this Agreement, and the costs of such arbitration shall be paid by the Bank.
The trustee shall choose the arbitrator to settle the dispute, and such
arbitrator shall be bound by the rules of the American Arbitration Association
in making his determination. The parties and the trustee shall be bound by the
results of the
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arbitration and, within 3 days of the determination by the arbitrator, the
trustee shall pay from the Trust the amounts required to be paid to the Employee
and/or the Bank, and in no event shall the trustee be liable to either party for
making the payments as determined by the arbitrator.
Upon the earlier of (I) any payment from the Trust to the Employee, or
(ii) the date fifteen (15) months after the later of the Change in Control and
the date on which the Bank makes the deposit referred to in the first paragraph
of this subsection 11(d), the trustee of the Trust shall pay to the Bank the
entire balance remaining in the segregated account maintained for the benefit of
the Employee. The Employee shall thereafter have no further interest in the
Trust pursuant to this Agreement.
(d) Indemnification. The Bank shall indemnify and hold the Executive
harmless from any and all loss, expense or liability that he may incur due to
his services for the Company (including any liability he may ever incur under
Code ss. 4999, or a successor, as the result of benefits he collects pursuant to
Sections 10 or 12, provided that, subject to Section 21 hereof, any such
payments are made to the Employee within two-and-one half (2 1/2) months after
the later occurs of (i) the end of the calendar year in which the Employee's
employment with the Bank and the Company is terminated, and (ii) the date on
which the Executive incurs the loss, expense, or liability that entitles him to
payments hereunder.
13. Indemnification. The Bank and the Company agree that their
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respective Bylaws shall continue to provide for indemnification of directors,
officers, employees and agents of the Bank and the Company, including the
Employee during the full term of this Agreement, and to at all times provide
adequate insurance for such purposes.
14. Additional Offices. The Employee agrees to serve without additional
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compensation, if elected or appointed thereto, as an officer in one or more
offices or as a director of any subsidiary of the Company or the Bank; provided,
however, the Employee shall not be required to serve in such additional offices
or as a director of any subsidiary, if such service would expose him, as an
individual, to adverse financial conditions.
15. Reimbursement of Employee for Enforcement Proceedings. In the event
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that any dispute arises between the Employee and the Bank as to the terms or
interpretation of this Agreement, whether instituted by formal legal proceedings
or otherwise, including any action that the Employee takes to defend against any
action taken by the Bank or the Company, the Employee shall be reimbursed for
all costs and expenses, including reasonable attorneys' fees, arising from such
dispute, proceedings or actions, provided that the Employee obtains either a
written settlement or a final judgment by a court of competent jurisdiction
substantially in his favor. Such reimbursement shall be paid within ten (10)
days of Employee's furnishing to the Bank written evidence, which may be in the
form, among other things, of a canceled check or receipt, of any costs or
expenses incurred by the Employee.
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16. Federal Income Tax Withholding. The Bank and the Company may
---------------------------------
withhold all federal and state income or other taxes from any benefit payable
under this Agreement as shall be required pursuant to any law or government
regulation or ruling.
17. Successors and Assigns.
----------------------
(a) Bank and Company. This Agreement shall not be assignable by
the Bank and the Company, provided that this Agreement shall inure to the
benefit of and be binding upon any corporate or other successor of the Bank and
the Company which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all of the assets or
stock of the Bank.
(b) Employee. Since the Bank and the Company are contracting for
the unique and personal skills of the Employee, the Employee shall be precluded
from assigning or delegating his rights or duties hereunder without first
obtaining the written consent of the Bank and the Company; provided, however,
that nothing in this paragraph shall preclude (I) the Employee from designating
a beneficiary to receive any benefit payable hereunder upon his death, or (ii)
the executors, administrators, or other legal representatives of the Employee or
his estate from assigning any rights hereunder to the person or persons entitled
thereunto.
(c) Attachment. Except as required by law, no right to receive
payments under this Agreement shall be subject to anticipation, commutation,
alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or
to exclusion, attachment, levy or similar process or assignment by operation of
law, and any attempt, voluntary or involuntary, to effect any such action shall
be null, void and of no effect.
18. Amendments. No amendments or additions to this Agreement shall be
----------
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
19. Applicable Law. Except to the extent preempted by Federal law, the
--------------
laws of the Commonwealth of Pennsylvania shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.
20. Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
21. Tax Liabilities and Code Section 409A. The Employee is solely
-----------------------------------------
responsible for the satisfaction of any tax liability, including any taxes and
penalties that may arise under Sections 409A of the Code ("Section 409A"), that
may result from any payments or benefits that the Employee receives pursuant to
this Agreement. Any such payments or benefits shall be subject to reduction for
any applicable employment or withholding taxes. Neither the Bank nor
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the Company shall have any obligation to pay, mitigate, or protect the Employee
from any such tax liabilities. However, if the Bank or the Company determines in
good faith in either of their sole discretion that the Employee is a key
employee of a public company as defined in Section 416(i) of the Code
(disregarding Section 416(i)(5)) at the time of his termination of employment,
the Bank and the Company shall suspend paying the Employee any cash amounts that
he is entitled to receive pursuant to Sections 6, 10, or 12 above during the
six-month period following termination of the Employee's employment (the "409A
Suspension Period"), unless the Bank and the Company reasonably determine that
paying such amounts in accordance with Sections 6, 10, or 12 will not result in
the Employee's liability for additional tax under Section 409A. As soon as
reasonably practical after the end of the 409A Suspension Period, the Employee
shall receive a lump sum payment in cash for an amount equal to any cash
payments that the Bank and the Company do not make during the 409A Suspension
Period. Thereafter, the Employee will receive any remaining payments pursuant to
Sections 6, 10 or 12 in accordance with the terms of those Sections (as if there
had not been any suspension of payments).
22. Entire Agreement. This Agreement, together with any understanding
----------------
or modifications thereof as agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: XXXXX BANK
/s/Xxxxx X. Xxxx By: /s/Xxxxxxx X. Xxxxx
------------------------------ ------------------------------------------
Assistant Secretary Its: President and Chief Executive Officer
XXXXXXX FINANCIAL CORP.
/s/Xxxxx X. Xxxx By: /s/Xxxxxxx X. Xxxxx
------------------------------ ------------------------------------------
Assistant Secretary Its: President and Chief Executive Officer
WITNESS: EMPLOYEE
/s/Xxxxx Xxxxxx By: /s/Xxxxx X. Xxxxxxxx
------------------------------ ------------------------------------------
Xxxxx X. Xxxxxxxx
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