EXECUTIVE EMPLOYMENT AGREEMENT
FIRST XXXXXXX COUNTY CORPORATION
THE FIRST NATIONAL BANK OF XXXXXXX COUNTY
and
XXXX X. XXXXXXXXXX, III
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TABLE OF CONTENTS
Page
1. Employment 2
2. Term 2
3. Compensation 2
4. Position and Responsibilities 3
5. Termination 4
6. Indemnification 12
7. Expenses and Automobile 12
8. Restrictive Covenant 12
9. Binding Effect 13
10. Notice 13
11. Waiver of Breach 13
12. Vested Benefits 13
13. Savings Clause 14
14. Governing Law 14
15. Entire Agreement; Modification 14
EXHIBIT "A" 16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT made this 13th day of November, 2003, by and
between FIRST XXXXXXX COUNTY CORPORATION, a Pennsylvania business corporation,
and THE FIRST NATIONAL BANK OF XXXXXXX COUNTY, a wholly-owned subsidiary of
First Xxxxxxx County Corporation and a national banking association with its
principal offices located at 0 Xxxxx Xxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxxxxx
(hereinafter individually referred to as "Corporation" and "Bank" respectively,
and collectively referred to as "FNB") and XXXX X. XXXXXXXXXX, III of West
Chester, Pennsylvania (hereinafter referred to as "Xxxxxxxxxx").
RECITALS
Xxxxxxxxxx is presently a member of the Board of Directors of the
Corporation and the Bank.
Xxxxxxxxxx'x leadership skills and services have constituted a major
factor in the successful growth and development of FNB.
FNB recognizes that Xxxxxxxxxx'x contributions have been substantial and
meritorious and, as such, Xxxxxxxxxx has demonstrated unique qualifications to
act in an executive capacity for FNB.
FNB desires to employ and retain the experience and financial ability
and services of Xxxxxxxxxx as Chairman of the Board of Directors and Chief
Executive Officer from the effective date hereof and to prevent any other
business in competition with FNB from securing the benefit of his services,
background and expertise in the banking business.
The terms, conditions and undertakings of this Agreement were submitted
to and duly approved and authorized by the Boards of Directors of both the
Corporation and the Bank at separate meetings.
WITNESSETH:
NOW,THEREFORE, in consideration of the foregoing recitals, which are
hereby incorporated by reference, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Employment.
FNB hereby employs Xxxxxxxxxx as Chairman of the Board and Chief
Executive Officer of the Corporation and of the Bank, and Xxxxxxxxxx hereby
accepts such employment, under and subject to the terms and conditions set forth
herein.
2. Term.
Subject to the provisions for termination of this Agreement provided
herein, the term of this Agreement shall be for a period commencing November 13,
2003, and terminating December 31, 2006 (the "Term"). Thereafter, the Term shall
be extended automatically for a one year term, year to year, unless either of
the following two conditions is met: (a) FNB or Xxxxxxxxxx give written
termination notice pursuant to Paragraph 6 hereof, or (b) FNB or Xxxxxxxxxx
agree to a mutually acceptable date on which to terminate this Agreement
3. Compensation.
During
the Term, FNB shall pay Xxxxxxxxxx a salary (the "Compensation") and provide
Xxxxxxxxxx with life, health and disability insurance coverage, retirement
benefits, vacations, bonuses, and other benefits (the "Benefits"), the amounts
and nature of which shall be fixed by the Boards of Directors of the Corporation
and the Bank from time to time and set forth on the attached Exhibit "A";
provided, however, that in no event shall Xxxxxxxxxx'x Compensation be less than
one hundred percent (100%) of the Compensation set forth on Exhibit "A" and in
no event shall Xxxxxxxxxx'x Benefits be less than or materially different from
the Benefits he is to receive as of the date of this Agreement.
4. Position and Responsibilities.
(a) Position and Duties. Xxxxxxxxxx shall be employed as the Chairman of
the Board of Directors and Chief Executive Officer of the Corporation and of the
Bank, and except as set forth in this Agreement shall continue to serve as the
Chairman of the Board of Directors and Chief Executive Officer of the
Corporation and of the Bank throughout the entire Term. In no event shall
Xxxxxxxxxx be employed by the Corporation or the Bank during any calendar year
subsequent to 2003 at a lower position or rank or with substantially diminished
authority or responsibilities, and any such diminution in position or authority
shall be considered a breach of this Agreement. Xxxxxxxxxx shall diligently,
efficiently and effectively perform such duties as shall be reasonably assigned
to him, which shall consist of the general and active management of the business
of FNB and such other duties of supervision and management as are generally
vested in the office of Chief Executive Officer of a corporation or as are
described in job descriptions reasonably established by the Board of Directors
of the Corporation or the Bank for such offices. During the Term, Xxxxxxxxxx
shall devote substantially all of his time, attention, knowledge and skills to
the business and interests of FNB. The foregoing sentence shall not be construed
to prevent Xxxxxxxxxx from making investments or participating in other
non-competing businesses, enterprises or charitable or educational
organizations, provided that he does not become engaged in any such activity to
an extent which materially interferes with his ability to discharge his duties
and responsibilities to FNB. Xxxxxxxxxx shall at all times during the Term
refrain from doing any act, disclosing any information or making any statements
to any person other than officers of FNB which may result in the disclosure of
confidential information or adversely affect the good reputation of FNB in the
community or which might adversely affect the professional or business
relationship between FNB and any business, depositor, borrower or any other
person with whom FNB is doing business or is contemplating doing business.
(b) Office and Support. FNB shall provide Xxxxxxxxxx with an office,
secretarial assistance and such other facilities and support services as shall
be suitable to Xxxxxxxxxx'x position and responsibilities as set forth above and
as may be necessary to enable Xxxxxxxxxx to perform such duties effectively and
efficiently.
(c) Location of Office. In connection with Xxxxxxxxxx'x employment by
the Corporation and the Bank, Xxxxxxxxxx shall maintain his office at the
principal executive offices of FNB located at 0 Xxxxx Xxxx Xxxxxx, Xxxx Xxxxxxx,
Xxxxxxxxxxxx, or at such other FNB office as the Board of Directors of the
Corporation and/or the Bank may select within the immediate vicinity of West
Chester, Pennsylvania.
5. Termination.
(a) Death. If Xxxxxxxxxx dies during his employment hereunder, his
Compensation and Benefits hereunder shall terminate, and his bonus (if any)
shall be prorated as of the last day of the month which is the third month after
the month in which he dies.
(b) Disability. If Xxxxxxxxxx shall become disabled (as determined by
FNB's insurance carrier or a physician of its choice) during the Term, then from
and after the date upon which it is determined that Xxxxxxxxxx became disabled
and until such time as Xxxxxxxxxx returns to the full time employment at FNB, he
shall not receive his Compensation and Benefits, but shall only be entitled to
receive disability benefits as are provided under the disability insurance and
salary continuation policy covering Xxxxxxxxxx which is maintained in force by
FNB at the time such disability occurs. FNB shall maintain a disability
insurance policy or a salary continuation policy covering Xxxxxxxxxx during the
entire Term, and FNB shall not cause or suffer any termination, lapse,
suspension or modification of any of such policies or any reductions in the
amounts of coverage provided thereunder without first giving Xxxxxxxxxx at least
thirty (30) days prior written notice thereof.
(c) For Cause. The Board of Directors of the Corporation or the Bank may
terminate this Agreement at any time, "For Cause", if Xxxxxxxxxx is convicted of
a crime which is a felony under the laws of the state in which he is prosecuted
for such crime and which involves theft, embezzlement, breach of fiduciary duty,
or any similar crime involving moral turpitude, or if he breaches any material
provision of this Agreement or substantially fails to provide the services which
are required of him under the terms of this Agreement. However, prior to
terminating this Agreement by reason of Xxxxxxxxxx'x failure to provide services
hereunder or his breach of any provision of this Agreement, the Board of
Directors of the Corporation or the Bank shall first give Xxxxxxxxxx written
notice specifically identifying the manner in which Xxxxxxxxxx has breached the
terms of this Agreement and the approximate date or dates on which such
violations have occurred. Xxxxxxxxxx shall have thirty (30) days from his
receipt of such notice within which to cure or correct the effects of such
breach and to report in writing to the Boards of Directors of the Corporation
and the Bank all steps which he has taken to cure such breach. If Xxxxxxxxxx
shall not have corrected or cured such breach or diligently taken all steps
which are necessary to do so within the said thirty (30) day period, the Board
of Directors of the Corporation or the Bank may terminate this Agreement
immediately upon giving Xxxxxxxxxx written notice of such termination on or
after the 31st day following the date on which notice of the breach was
delivered to Xxxxxxxxxx. If the breach asserted by the Board of Directors of the
Corporation or the Bank is, because of its nature, incapable of being corrected
or cured, then such breach shall not be cause for termination of this Agreement
unless such breach shall be deemed to have caused FNB significant and
irreparable harm in the opinion of a majority of all of the members of the Board
of Directors of the Corporation or the Bank. Any such decision rendered by the
Board of Directors of the Corporation or the Bank which reasonably determines
that such breach has caused significant or irreparable harm to FNB shall be
final, binding and conclusive for purposes of this Agreement and shall not be
subject to challenge by Xxxxxxxxxx. If such breach is not deemed to have caused
FNB significant and irreparable harm, then this Agreement may not be terminated
by reason thereof, but any future breach of a similar nature shall be cause for
immediate termination by the Board of Directors of the Corporation or the Bank
upon giving Xxxxxxxxxx written notice thereof. If this Agreement is terminated
by FNB for cause pursuant to this paragraph (c), then FNB shall be under no
obligation to provide Compensation or Benefits to Xxxxxxxxxx following the
effective date of such termination, except for such Compensation and Benefits
which have accrued and which have not been paid or provided as of the effective
date of such termination.
(d) Removal Without Cause. The Corporation or the Bank shall have the
right at any time, upon written notice to Xxxxxxxxxx, to terminate , "without
cause", the employment of Xxxxxxxxxx hereunder. If such termination by the
Corporation or the Bank is not by reason of death, disability or For Cause
pursuant to this Section 5, FNB shall be obligated to continue to pay the
Compensation and provide the Benefits to Xxxxxxxxxx for the remainder of the
Term or for one year, whichever is longer, at the rates, times and intervals at
which such Compensation and Benefits are being paid or provided as of the date
on which FNB terminates the employment of Xxxxxxxxxx.
(e) Breach by FNB. If FNB breaches any provision of this Agreement
(specifically including, but not limited to, substantial diminution in the
position and authority of Xxxxxxxxxx as set forth in Section 4 hereof),
Xxxxxxxxxx shall have the right to leave the employment of FNB. Thereafter, he
shall be under no obligation to perform his duties hereunder and shall have no
further liability or obligations under any provision of this Agreement. In such
event, however, FNB shall be obligated to continue to pay the Compensation and
provide the Benefits to Xxxxxxxxxx for the remainder of the Term or for one
year, whichever is longer, at the rates, times and intervals at which such
Compensation and Benefits are being paid and provided on the date on which FNB
commits a breach of this Agreement.
(f) By Xxxxxxxxxx. Xxxxxxxxxx may terminate this Agreement at anytime
during the Term for any reason, by giving the Boards of Directors of the
Corporation and the Bank ninety (90) days prior written notice of the date of
such proposed termination. If Xxxxxxxxxx terminates this Agreement pursuant to
this paragraph (f), FNB shall be under no obligation to pay any Compensation or
provide any Benefits to Xxxxxxxxxx following the effective date of such
termination, except that FNB shall remain liable to pay the Compensation and
Benefits which have accrued but which remain unpaid or unfurnished as of the
effective date of such termination.
(g) At End of Term. If FNB terminates Xxxxxxxxxx'x employment hereunder
as of the end of the Term or any extension thereof, FNB shall be obligated, as
severance payments, to continue to pay the Compensation and provide the Benefits
to Xxxxxxxxxx for a period of one year after such termination at the rates,
times and intervals at which such Compensation and Benefits are being paid or
provided as of the date on which FNB terminates the employment of Xxxxxxxxxx.
(h) Termination After a Change of Control. If Xxxxxxxxxx'x employment is
terminated (i) by the Corporation or the Bank and such termination is not by
reason of death, disability or For Cause as set forth in this Section 6, (ii) or
by Xxxxxxxxxx pursuant to Section 6(f) of this Agreement, and such termination
is within two years after a "Change of Control", then the Corporation and the
Bank shall be obligated, jointly and severally, to continue to provide
Xxxxxxxxxx with the Compensation and Benefits provided for herein for the longer
of the remainder of the Term or for two years after such termination. Such
Compensation and Benefits shall be paid and provided at the rate, times and
intervals at which such compensation and benefits were paid or provided on the
date of such termination of Xxxxxxxxxx'x employment.
(i) Change of Control. For the purposes of this Agreement, "Change of
Control" shall mean any of the following events:
(i) any person (as such term is used in Rule 13d-5 under the
Exchange Act) or group (as such term is defined in Sections 3(a)(9) and 13(d)(3)
of the Exchange Act), becomes the beneficial owner of 15% or more of the Common
Stock or of securities of the Corporation or the Bank that are entitled to vote
generally in the election of directors of the Corporation or the Bank ("Voting
Securities") representing 15% or more of the combined voting power of all Voting
Securities of the Corporation or the Bank.
(ii) individuals who, as of the date of this Agreement, constitute
the Board of Directors (the "Incumbent Directors") cease for any reason to
constitute a majority of the members of the Board of Directors; provided that
any individual who becomes a director after the date of this Agreement whose
election or nomination for election by the Corporation or the Bank's
shareholders was approved by a majority of the members of the Incumbent Board
(other than an election or nomination of an individual whose initial assumption
of office is in connection with an actual or threatened "election contest"
relating to the election of the directors of the Corporation or the Bank (as
such terms are used in Rule 14a-11 under the Exchange Act), "tender offer" (as
such term is used in Section 14(d) of the Exchange Act) or a proposed Merger (as
defined below)) shall be deemed to be members of the Incumbent Board; or
(iii) approval by the stockholders of the Corporation or the Bank of
either of the following:
(1) a merger, reorganization, consolidation or similar
transaction (any of the following, a "Merger") as a result of which the persons
who were the respective beneficial owners of the outstanding Common Stock and
Voting Securities of the Corporation or the Bank immediately before such Merger
are not expected to beneficially own, immediately after such Merger, directly or
indirectly, more than 60% of, respectively, the common stock and the combined
voting power of the Voting Securities of the corporation resulting from such
Merger in substantially the same proportions as immediately before such Merger,
or
(2) a plan of liquidation of the Corporation or the Bank or a
plan or agreement for the sale or other disposition of all or substantially all
of the assets of the Corporation or the Bank. Notwithstanding the foregoing,
there shall not be a Change in Control if, in advance of such event, Xxxxxxxxxx
agrees in writing that such event shall not constitute a Change in Control
(j) Ceiling on Benefits. Under the "golden parachute" rules in the
Internal Revenue Code (the "Code") Xxxxxxxxxx will be subject to a 20% excise
tax (over and above regular income tax) on any "excess parachute payment" that
Xxxxxxxxxx receives following a Change in Control, and FNB will not be permitted
to deduct any such excess parachute payment. Very generally, compensation paid
to Xxxxxxxxxx that is contingent upon a Change in Control will be considered a
"parachute payment" if the present value of such consideration equals or exceeds
three times Xxxxxxxxxx'x average annual compensation from FNB for the five years
prior to the Change in Control. If payments are considered "parachute payments,"
then all such payments to Xxxxxxxxxx in excess of his base annual compensation
will be considered "excess parachute payments" and will be subject to the 20%
excise tax imposed under Section 4999 of the Code.
For example, if Xxxxxxxxxx'x base annual compensation were $100,000,
Xxxxxxxxxx could receive $299,000 following a Change in Control without payment
of any excise tax. If Xxxxxxxxxx received $301,000 in connection with a Change
in Control, however, the entire $301,000 would be considered a parachute payment
and $201,000 of this amount would be considered an excess parachute payment
subject to excise tax.
In order to avoid this excise tax and the related adverse tax
consequences for FNB, by signing this Agreement, Xxxxxxxxxx agrees that the
compensation and benefits payable to him under this Agreement after termination
of his employment will in no event exceed the maximum amount that can be paid to
him without causing any portion of the amounts paid or payable to him by FNB
following a Change in Control, whether under this Agreement or otherwise, to be
considered an "excess parachute payment" within the meaning of Section 280G(b)
of the Code.
If FNB believes that these rules will result in a reduction of the
payments to which Xxxxxxxxxx is entitled under this Agreement, it will so notify
Xxxxxxxxxx within 60 days following delivery of the notice of termination. If
Xxxxxxxxxx wishes to have such determination reviewed, he may, within 30 days of
the date he is notified of a reduction of payments, ask that FNB retain, at its
expense, legal counsel, certified public accountants, and/or a firm of
recognized executive compensation consultants (an "Outside Expert") to provide
an opinion concerning whether, and to what extent, Xxxxxxxxxx'x termination
compensation and benefits must be reduced so that no amount payable to
Xxxxxxxxxx by FNB (whether under this Agreement or otherwise) will be considered
an excess parachute payment.
The Outside Expert will be as mutually agreed by Xxxxxxxxxx and FNB,
provided that they we are not able to reach a mutual agreement, FNB will select
an Outside Expert, Xxxxxxxxxx will select an Outside Expert, and the two Outside
Experts will select a third Outside Expert to provide the opinion required under
this Section. The determination of the Outside Expert will be final and binding,
subject to any contrary determination made by the Internal Revenue Service.
If FNB believes that Xxxxxxxxxx'x termination compensation and benefits
will exceed the limitation contained in this Section, it will nonetheless make
payments to Xxxxxxxxxx, at the times stated above, in the maximum amount that it
believes may be paid without exceeding such limitation. The balance, if any,
will then be paid after the opinion of the Outside Expert has been received.
If the amount paid to Xxxxxxxxxx by FNB following a Change in Control is
ultimately determined, pursuant to the opinion of the Outside Expert or by the
Internal Revenue Service, to have exceeded the limitation contained in this
Section, the excess will be treated as a loan to Xxxxxxxxxx by FNB and will be
repayable on the 90th day following demand by FNB, together with interest at the
"applicable federal rate" provided in Section 1274(d) of the Code.
If the provisions of Sections 280G and 4999 of the Code are repealed
without successor provisions, this Section will be of no further force or
effect.
6. Indemnification.
FNB agrees to indemnify Xxxxxxxxxx to the maximum extent permitted under
applicable law for any liability incurred by Xxxxxxxxxx in his capacity as an
officer or director of FNB. Such right or rights of indemnification which
Xxxxxxxxxx shall have as set forth herein or in the By-laws of the Corporation
or the Bank as of the date Xxxxxxxxxx'x employment hereunder is terminated shall
survive such termination. FNB shall obtain directors' and officers' liability
insurance with coverage relating to all acts and omissions alleged to have
occurred during the Term of this Agreement.
7. Expenses and Automobile.
Xxxxxxxxxx is authorized to incur reasonable expenses for promoting the
business of FNB, including expenses for travel, entertainment and similar items
on behalf of FNB business. FNB shall reimburse Xxxxxxxxxx for all such expenses
upon the presentation by Xxxxxxxxxx, from time to time, of an itemized account
of such expenditures. In addition, FNB shall provide Xxxxxxxxxx with an
automobile for his use during the Term of this Agreement.
8. Restrictive Covenant.
During the Term of this Agreement and for a period of one (1) year
thereafter, Xxxxxxxxxx shall not, directly or indirectly, be employed by any
other bank or financial institution doing business in Xxxxxxx County,
Pennsylvania; provided, however, that if Xxxxxxxxxx terminates this Agreement by
reason of a breach of this Agreement by FNB or if Xxxxxxxxxx'x employment is
terminated due to a change of control, this restrictive covenant shall be null
and void and Xxxxxxxxxx shall be entitled to be employed by any bank or
financial institution doing business in Xxxxxxx County, Pennsylvania or in any
other location.
9. Binding Effect.
This Agreement shall inure to the benefit of and be binding upon FNB,
its successors and assigns, including, without limitation, any person,
partnership, company or corporation which may acquire all or substantially all
of the assets or business of FNB or into which FNB may be liquidated,
consolidated, merged or otherwise combines, regardless of the identity or form
of the surviving entity, and shall inure to the benefit of and be binding upon
Xxxxxxxxxx, his heirs, and personal representatives.
10. Notice.
Any notice required or permitted to be given under this Agreement shall
be sufficient if in writing and if sent by registered mail, return receipt
requested, correctly addressed to Xxxxxxxxxx'x residence, in the case of
Xxxxxxxxxx, or to its principal office, in the case of FNB. Copies of all such
notices shall simultaneously be personally delivered or sent by United States
first class mail, postage prepaid, to Xxxxxxxx X. Xxxxxxx, Esq., Xxxx Xxxxx LLP,
0000 Xxxxxx Xxxxxx, Xxxxxx Xxxxxx Xxxx, 00xx Xxxxx, Xxxxxxxxxxxx, XX 00000.
11. Waiver of Breach.
Waiver by either party of the breach of any provision of this Agreement
by the other party shall not operate or be construed as a waiver of any
subsequent breach by the other party.
12. Vested Benefits.
This Agreement shall not limit or in any way affect any benefits which
Xxxxxxxxxx may be entitled to receive under FNB's pension plan or any other
benefits in which Xxxxxxxxxx has a vested interest as of the date of this
Agreement.
13. Savings Clause.
Should any provision contained herein be determined by decree of court
or other judicial body to be illegal or unenforceable, such provision shall be
considered null and void and the remainder of this Agreement shall remain in
full force and effect and shall be construed without reference to any such
provision. Nevertheless, it is the intention of the parties hereto that any such
invalid or unenforceable provision shall, if possible, be construed and enforced
in such a manner as to make the same valid and enforceable under applicable law
and consistent with the reasonable intention of the parties as expressed in such
provision.
14. Governing Law.
Questions pertaining to the validity, construction and administration of
this Agreement shall be determined in accordance with the laws of the
Commonwealth of Pennsylvania.
15. Entire Agreement; Modification.
This Agreement constitutes the entire understanding and agreement
between the parties hereto with regard to the subject matter hereof, and there
are no other agreements, conditions, representations or understandings, oral or
written, expressed or implied, with regard to the subject of this Agreement.
This Agreement may be amended or modified only by a written instrument executed
by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written. the day and year first above written.
WITNESS: THE FIRST NATIONAL BANK OF XXXXXXX COUNTY
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------------------- -----------------------------------
Xxxxx X. Xxxxxx, Director
Personnel & Compensation Committee
ATTEST: FIRST XXXXXXX COUNTY CORPORATION
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
----------------------------------- -----------------------------------
Xxxxx X. Peirec
First Vice Chairman
WITNESS:
/s/ Xxxxxxx X. Xxxxx /s/ Xxxx X. Xxxxxxxxxx, III
----------------------------------- -----------------------------------
Xxxx X. Xxxxxxxxxx, III
EXHIBIT "A"
COMPENSATION AND BENEFITS
AS OF NOVEMBER 13, 2003
1. Annual Salary as of November 13, 2003: $300,000.00.
2. Health Insurance: Major Medical and Hospitalization Insurance through
National Alliance of Self-Funded Group Insurance Trust, Policy/Plan #JB
3/100250
3. Pension Plan: Self-Administered by FNB
4. Salary Continuance (Disability) Policy/Plan: Mutual Benefit Life
Insurance Company, Policy, or other carrier rated A or better by AM
Best, providing for a monthly benefit of $________________.*
5. Life Insurance: One year term renewable through Equitable Insurance
Company, Agreement, or other carrier rated A or better by AM Best, in
the amount of $500,000.
6. Executive Carve-out Life Insurance Policy
7. Bonus Plan: Self-Funded by FNB
8. Automobile Rental, Maintenance and Insurance
9. Six (6) Weeks Paid Vacation
* Current policy provides for a monthly benefit of 60% of
predisability earnings with a maximum of $15,000 per month and $50 minimum.
