EXHIBIT 10.1
EMPLOYMENT AGREEMENT
BY AND BETWEEN
COMMERCIAL & FARMERS BANK
AND
XXXX X. XXXXXXXXX
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT is made on this llth day of June, in
the year one thousand nine hundred and eighty seven, by and between the
COMMERCIAL & FARMERS BANK,a Maryland corporation, hereinafter referred to as the
"Bank," and Xxxx X. Xxxxxxxxx, hereinafter referred to as the "Executive."
EXPLANATORY STATEMENT
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The recent easing of prohibitions against interstate and
regional banks coupled with this Bank's location and reputation make it an
attractive acquisition target for large regional banks. The Board of Directors
anticipates invitations, from time to time, to enter into negotiations aimed at
a merger or acquisition, and it believes such events may cause uneasiness among
and distract the Bank's key executives from their duties. The Bank must attract
and retain competent and dedicated executives and other key personnel to assure
itself of continuing growth and continuity of management in the event of any
threatened or actual change in control of the Bank, and its key executives wish
to be assured of stability of employment in such events. The purpose of this
Employment Agreement is to achieve those objectives, the Directors believing
them to be in the best interests of the stockholders.
NOW, THEREFORE, THIS EMPLOYMENT AGREEMENT WITNESSETH That for
and in consideration of the mutual promises and covenants hereinafter expressed,
the Bank and Xxxx X. Xxxxxxxxx whose title is President (hereinafter
"Executive"), mutually agree as follows.
1. Effective Date of Agreement.
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This Employment Agreement shall become effective on the date
on which a Change of Control, as hereinafter defined, of the Bank shall occur.
2. Change of Control.
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The term "Change of Control" shall mean (1) any event, arising
out of a merger, consolidation, sale or share exchange, which vests the power to
direct or cause the direction of the management and policies of the Bank in
individuals who do not constitute a majority of the Bank's Board of Directors
immediately prior to the said event, or (2) the sale of all or substantially all
of the assets of the Bank to another financial institution.
3. Term of Employment.
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The term of employment shall be that period of time beginning
on the Effective Date of this Employment Agreement and ending either on the
fifth anniversary of the said Effective Date or on the 65th birthday of the
Executive, whichever shall first occur.
4. Employment.
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The Bank hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of the Bank, for
the Term of Employment hereinabove described. The Executive shall exercise such
authority and perform such duties as are commensurate with the authority being
exercised and duties being performed by him immediately prior to the Effective
Date of this Employment Agreement, which services shall be performed at the
location where the Executive was employed immediately prior to the Effective
Date hereof or at such other location as the Bank may reasonably require
provided that the Executive shall not be required to accept any location for
employment which is unreasonable in the light of the Executive's personal
circumstances or unduly disadvantageous to his career opportunities with the
Bank. During the Term of Employment, the Executive shall devote his full
business time exclusively to his executive duties and shall perform them
faithfully and effectively.
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5. Compensation.
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During the Term of Employment, the Executive shall be
compensated with an annual salary which is not less than his annual salary
immediately prior to the Effective Date of this Agreement with the opportunity
for salary increases, from time to time, which are in accordance with the Bank's
normal practice. The Executive shall be entitled to receive the normal fringe
benefits of employment, including, but not limited to, medical, group life
insurance, disability, retirement, pension, and profit sharing, which are the
greater of the employee benefits provided by the Bank to executives with
comparable duties or the employee benefits he was entitled to immediately prior
to the Effective Date of this Agreement. The Executive shall also be eligible to
participate on a reasonable basis in bonus, stock option or other incentive
compensation plans which are the greater of the opportunities provided by the
Bank to executives with comparable duties or the opportunities provided under
any such plans in which he was participating immediately prior to the Effective
Date of this Agreement.
6. Termination.
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"Termination" shall mean termination prior to the end of the
Term of Employment (1) by the Bank of the employment of the Executive with the
Bank for any reason other than death, disability, physical or mental incapacity,
or for Cause as "Cause" is hereinafter defined, or (2) by the Executive's
resignation upon the occurrence of any of the following events:
(a) a significant and material change in the nature and scope
of the Executive's authority or duties with the Bank from those described in
Paragraph 4 of this Agreement; or
(b) a reduction in the Executive's total compensation from
that provided in Paragraph 5 of this Agreement; or (c) the breach by the Bank of
any other provision of this Agreement; or
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(d) a reasonable determination by the Executive that, as a
result of the change of control of the Bank and a material change in
circumstances thereafter significantly affecting his position, he can no longer
exercise the authority, power, responsibilities, functions and duties attached
to his position as contemplated in Paragraph 4 of this Agreement.
7. Cause and Disability.
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The term "Cause" in this Agreement shall mean:
(a) gross misconduct amounting to acts which constitute a
felony under applicable Federal or State law;
(b) a willful and material breach of this Agreement by the
Executive;
(c) any act of dishonesty;
(d) any act which results in or is intended to result in the
improper personal enrichment of the Executive at the expense of the Bank;
(e) any misappropriation of property or funds;
(f) the immoderate use of alcoholic beverages; or
(g) the abuse of narcotic drugs.
The terms "disability or mental or physical incapacity" in
this Agreement shall mean that the Executive is unable for physical or mental
reasons as a result of illness or accident properly to perform his regular
duties and discharge his regular responsibilities for a consecutive period of
six months in any one employment year or for an aggregate period of eight months
in any one employment year.
8. Termination Payments.
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In the event of a Termination of the Executive, the Bank
shall, subject to the provisions of Paragraphs 9 and 10 of this Agreement, pay
to the Executive and provide him with the following:
(a) During the remainder of the Term of Employment, the Bank
shall continue to pay the Executive his salary on a monthly basis at the rate as
immediately prior to the date of Termination plus
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the estimated amount of any bonuses or other incentives to which he would have
been entitled had Termination not occurred.
(b) During the remainder of the Term of Employment, the
Executive shall continue to receive the benefits under any medical, pension,
group life insurance, disability, retirement, pension and profit sharing plan or
program ordinarily offered other officers of the Bank. If the said employee
benefits shall not be provided under any plan or program because he is no longer
an employee of the Bank, the Bank shall, to the extent necessary, pay or provide
for payment of such benefits to the Executive, his dependents, beneficiaries or
estate.
PROVIDED, HOWEVER, should the Executive resign for the reasons
described in Paragraph 6 (2) (d), the payments and benefits provided by this
Paragraph or Paragraph 11 hereinafter, or pursuant to any other provisions of
this Agreement, shall not exceed the amount allowable as a deduction to the Bank
under the applicable Internal Revenue Service laws or regulations.
9. Non-Competition and Confidentiality.
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The Bank shall not be obliged to provide any further payments
or benefits, except those already earned or accrued, if, during the Term of
Employment, the Executive shall be employed by or otherwise engage or be
interested in any business which competes directly with the Bank and if, and
only if, such employment or activity causes, or is more likely than not to
cause, material damage to the Bank.
The Executive shall not, during or after the Term of
Employment, divulge or appropriate to his own use or the uses of others any
secret or confidential information or knowledge pertaining to the operation of
the Bank obtained during his employment by the Bank.
10. Mitigation of Expenses.
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In the event of Termination, the Executive shall make
reasonable efforts to obtain other employment; provided, however, he shall not
be obliged to accept a position of substantially different character than the
highest position held by him with the Bank or a position which would require him
to
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violate the non-competition and confidentiality provision of this Agreement. To
the extent that the Executive receives salary, compensation, and benefits from
such other employment, the payments to be made pursuant to Paragraph 5 of this
Agreement shall be correspondingly reduced.
11. Severance Allowance.
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In the event of Termination during the Term of Employment, the
Executive may elect, within ninety (90) days after such Termination, to be paid
a lump sum severance allowance in lieu of termination payments in an amount
equal to the sum of the amounts determined in accordance with the following
sub-paragraphs:
(a) An amount equal to salary payments described in Paragraph
5 for 24 calendar months plus a pro rata share of the estimated amount of any
bonus which would have been payable for the bonus period, which includes his
termination date.
(b) An amount equal to the sum of any employee benefits
described in Paragraph 5 for a period of 24 calendar months, including any
medical, group life insurance, disability, retirement, pension or profit
sharing, which benefits shall be provided at the same rate as he was receiving
on the termination date.
(c) An amount equal to the reasonable value of any stock
option plan for a period of 24 calendar months in which the Executive was
participating at the termination date.
The sum of the above amounts shall be determined and shall be
paid by the Bank as soon as reasonably possible after the Executive shall have
given notice of his election. The payments under this Paragraph shall not be
subject to reduction under Paragraph 10, nor shall the Executive making this
election be restricted by the provisions of Paragraph 9.
12. Assignability.
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The Executive shall not have any right to pledge, hypothecate,
anticipate or in any way create a lien upon any amounts provided under this
Agreement, and no benefits hereunder may be
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assigned by the Executive in anticipation of payment either by voluntary or
involuntary acts or by operation of law. The provisions of this Agreement shall
inure to the benefit of and shall be binding on the Bank and its successors and
upon its assigns should the Change of Control described in Paragraph 2 occur by
assignment of all or substantially all of the assets of the Bank.
13. Notices.
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Any notice, claim, request, demand or other communication
arising out of or provided for in this Agreement shall be sufficient if in
writing and mailed by certified mail to the Bank at its principal office or to
the Executive at the last address he has filed in writing with the Bank.
14. Amendment and Severability.
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This Agreement constitutes the entire understanding and
undertaking of the parties hereto and no modification or amendment hereof shall
be effective unless reduced to writing and duly executed by the parties; it may
be amended or cancelled by mutual agreement of the parties in writing. Should
any provision or portion of this Agreement be determined invalid or
unenforceable for any reason by a Court of competent jurisdiction, the remaining
provisions of this Agreement shall be unaffected thereby and shall remain in
full force and effect.
This Employment Agreement shall be governed and construed by
the Law of the State of Maryland.
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IN WITNESS WHEREOF, The Executive has hereunto set his hand
and seal and, pursuant to a certain Resolution of its Board of Directors dated
June xxxx, 0000, the Commercial & Farmers Bank has caused this Agreement to be
executed in its name and on its behalf, and its corporate seal to be affixed
hereunto and attested by its Secretary, as of this 15th day of June in the year
one thousand nine hundred and eighty-seven:
/s/ Xxxx X. Xxxxxxxxx [SEAL]
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Executive
COMMERCIAL & FARMERS BANK
By: /s/ C. Xxxxxxxxx Xxxxx
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Its Chairman of the Board
ATTEST:
/s/ Xxxxx X. XxXxx
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Secretary
(SEAL)
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