EXHIBIT 10C
Copy of the LA Bank, N.A. Salary Continuation Agreement, dated March 11, 1997,
between the Bank and Xxxx X. Xxxxxxxx, Chief Executive Officer of the Bancorp
and President of the Bank, relating to the supplemental executive retirement
plan of the Bank.
LA BANK, N.A.
SALARY CONTINUATION AGREEMENT
THIS AGREEMENT is made this 11 day of March, 1997, by and between the LA
BANK, N.A., a national banking association located in Lake Ariel, Pennsylvania
(the "Company") and XXXX XXXXXXXX (the "Executive").
INTRODUCTION
To encourage the Executive to remain an employee of the Company, the
Company is willing to provide salary continuation benefits to the Executive. The
Company will pay the benefits from its general assets.
AGREEMENT
The Executive and the Company agree as follows:
Article 1
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1 "Change of Control" means the transfer of 51% or more of the
Company's outstanding voting common stock followed within twelve (12) months by
replacement of fifty percent (50%) or more of the members of the Company's Board
of Directors.
1.1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.1.3 "Disability" means the Executive suffering a sickness, accident or
injury which, in the judgment of a physician satisfactory to the Company,
prevents the Executive from performing substantially all of the Executive's
normal duties for the Company. As a condition to any benefits, the Company may
require the Executive to submit to such physical or mental evaluations and tests
as the Company's Board of Directors deems appropriate.
1.1.4 "Early Termination" means the Termination of Employment before Normal
Retirement Age for reasons other than death, Disability, Termination for Cause
or following a Change of Control.
1.1.5. "Early Termination Date" means the month, day and year in which
Early Termination occurs.
1.1.6 "Normal Retirement Age" means the Executive's 62nd birthday.
1.1.7 "Normal Retirement Date" means the later of the Normal Retirement Age
or Termination of Employment.
1.1.8 "Plan Year" means a twelve-month period commencing on March 11 and
ending on March 10 of each year. The initial Plan Year shall commence on the
effective date of this Agreement.
1.1.9 "Projected Accrued Benefit" means the Company's accumulated accrued
liability for the Executive's targeted normal retirement benefit under Section
2.1. For each year, the annual benefits are estimated using the interest method
of accounting, an 8% interest rate, monthly benefit payments and monthly
compounding.
1.1.10 "Termination for Cause" See Section 5.2.
1.1.11 "Termination of Employment" means that the Executive ceases to be
employed by the Company for any reason whatsoever other than by reason of a
leave of absence which is approved by the Company. For purposes of this
Agreement, if there is a dispute over the employment status of the Executive or
the date of the Executive's Termination of Employment, the Company shall have
the sole and absolute right to decide the dispute.
Article 2
Lifetime Benefits
2.1 Normal Retirement Benefit. Upon Termination of Employment on or after
the Normal Retirement Age for reasons other than death, the Company shall pay to
the Executive the benefit described in this Section 2.1.
2.1.1 Amount of Benefit. The annual benefit under this Section 2.1 is
$184,000. The Company may increase the annual benefit under this Section 2.1 at
the sole and absolute discretion of the Company's Board of Directors. Any
increase in the annual benefit shall require the recalculation of all the
amounts on Schedules A and B attached hereto. The annual benefit amounts of
Schedules A and B are calculated by amortizing the Projected Accrued Benefit,
using the interest method of accounting, an 8% discount rate, monthly
compounding and monthly payments.
2.1.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive in 12 equal monthly installments payable on the first day of each
month commencing with the month following the Executive's Normal Retirement Date
and continuing for 179 additional months.
2.1.3 Benefit Increases. Commencing on the first anniversary of the first
benefit payment, and continuing on each subsequent anniversary, the Company's
Board of Directors, in its sole discretion, may increase the benefit.
2.2 Early Termination Benefit. Upon Early Termination, the Company shall
pay to the Executive the benefit described in this Section 2.2.
2.2.1 Amount of Benefit. The annual benefit under this Section 2.2 is the
benefit amount set forth in Schedule A, Column C for the Plan Year ending
immediately prior to the Early Termination Date.
2.2.2 Payment of Benefit. The Company shall pay the annual benefit to the
Executive in 12 equal monthly installments payable on the first day of each
month commencing with the month following the Normal Retirement Date and
continuing for 179 additional months.
2.2.3 Benefit Increases. Benefit payments may be increased as provided in
Section 2.1.3.
2.3 Disability Benefit. If the Executive terminates employment due to
Disability prior to Normal Retirement Age, the Company shall pay to the
Executive the benefit described in this Section 2.3.
2.3.1 Amount of Benefit. The lump sum benefit under this Section 2.3 is the
Accrued Benefit set forth in Schedule A, Column B, for the Plan Year ending
immediately prior to the date in which Termination of Employment occurs.
2.3.2 Payment of Benefit. The Company shall pay the benefit to the
Executive in a lump sum within 60 days after the date of the Executive's
Termination of Employment.
2.3.3 Benefit Increases. Benefit payments may be increased as provided in
Section 2.1.3.
2.4 Change of Control Benefit. If the Executive is in active service at the
time of a Change of Control, the Company shall pay to the Executive the benefit
described in this Section 2.4 in lieu of any other benefit under this Agreement.
2.4.1 Amount of Benefit. The annual benefit is the annual benefit amount
set forth in Schedule A, Column D, for the Plan Year ending immediately prior to
the Plan Year in which the Change of Control occurred.
2.4.2 Payment of Benefit. The Company shall pay the annual benefit amount
to the Executive in 12 equal monthly installments payable on the first day of
each month commencing with the month following the Normal Retirement Date and
continuing for 179 additional months.
2.4.3 Benefit Increases. Benefit payments may be increased as provided in
Section 2.1.3
Article 3
Death Benefits
3.1 Death During Active Service. If the Executive dies while in the active
service of the Company, the Company shall pay to the Executive's beneficiary the
benefit described in this Section 3.1.
3.1.1 Amount of Benefit. The annual benefit under this Section 3.1 is the
Normal Retirement Benefit amount described in Section 2.1.1.
3.1.2 Payment of Benefit. The Company shall pay the annual benefit to the
beneficiary in 12 equal monthly installments payable on the first day of each
month commencing with the month following the Executive's death and continuing
for 179 additional months.
3.2 Death During Benefit Period. If the Executive dies after the benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Executive's
beneficiary at the same time and in the same amounts they would have been paid
to the Executive had the Executive survived.
3.3 Death Following Termination of Employment But Before Benefits Commence.
If the Executive is entitled to benefit payments under this Agreement, but dies
prior to receiving said benefit payments, the Company shall pay the Executive's
beneficiary the benefit described in this Section 3.3.
3.3.1 Amount of Benefit. The annual benefit under this Section 3.3 is the
benefit amount that would have been paid to the Executive pursuant to Schedule
B, Column C, for the Plan Year ending immediately prior to the Plan Year in
which death occurred.
3.3.2 Payment of Benefit. The Company shall pay the annual benefit amount
to the beneficiary in 12 equal monthly installments payable on the first day of
each month commencing with the month following the Executive's date of death and
continuing for 179 additional months.
Article 4
Beneficiaries
4.1 Beneficiary Designations. The Executive shall designate a beneficiary
by filing a written designation with the Company. The Executive may revoke
or modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Executive and accepted
by the Company during the Executive's lifetime. The Executive's beneficiary
designation shall be deemed automatically revoked if the beneficiary
predeceases the Executive, or if the Executive names a spouse as
beneficiary and the marriage is subsequently dissolved. If the Executive
dies without a valid beneficiary designation, all payments shall be made to
the Executive's estate.
4.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incapacitated, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incapacitated
person or incapable person. The Company may require proof of incapacity,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
Article 5
General Limitations
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement:
5.1 Excess Parachute Payment. To the extent the benefit would be
an excess parachute payment under Section 280G of the Code.
5.2 Termination for Cause. If the Company terminates the
Executive's employment for:
5.2.1 Gross negligence or gross neglect of duties;
5.2.2 Commission of a felony or of a gross misdemeanor involving
moral turpitude; or
5.2.3 Fraud, dishonesty or willful violation of any law or
significant Company policy committed in connection with the
Executive's employment and resulting in a material adverse effect on
the Company.
5.3 Competition After Termination of Employment. No benefits shall be
payable if the Executive, without the prior written consent of the Company,
engages in, becomes interested in, directly or indirectly, as a sole proprietor,
as a partner in a partnership, or as a substantial shareholder in a corporation,
or becomes associated with, in the capacity of employee, director, officer,
principal, agent, trustee or in any other capacity whatsoever, any enterprise
conducted in the trading area (a twenty-five mile radius) of Xxxxx 000, Xxxx
Xxxxx, XX 00000, 000 X. Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000 or both, and which
enterprise is, or may deemed to be, competitive with any business carried on by
the Company as of the date of termination of the Executive's employment or his
retirement. This section shall not apply following a Change of Control.
5.4 Suicide or Misstatement. No benefits shall be payable if the
Executive commits suicide within two years after the date of this
Agreement, or if the Executive has made any material misstatement of
fact on any application for life insurance purchased by the Company.
Article 6
Claims and Review Procedures
6.1 Claims Procedure. The Company shall notify the Executive or the
Executive's beneficiary in writing, within ninety (90) days of his or her
written application for benefits, of his or her eligibility or noneligibility
for benefits under the Agreement. If the Company determines that the Executive
or the Executive's beneficiary is not eligible for benefits or full benefits,
the notice shall set forth (1) the specific reasons for such denial, (2) a
specific reference to the provisions of the Agreement on which the denial is
based, (3) a description of any additional information or material necessary for
the claimant to perfect his or her claim, and a description of why it is needed,
and (4) an explanation of the Agreement's claims review procedure and other
appropriate information as to the steps to be taken if the Executive or the
Executive's beneficiary wishes to have the claim reviewed. If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the Executive or the Executive's
beneficiary of the special circumstances and the date by which a decision is
expected to be made, and may extend the time for up to an additional ninety-day
period.
6.2 Review Procedure. If the Executive or the Executive's beneficiary is
determined by the Company not to be eligible for benefits, or if the Executive
or the Executive's beneficiary believes that he or she is entitled to greater or
different benefits, the Executive or the Executive's beneficiary shall have the
opportunity to have such claim reviewed by the Company by filing a petition for
review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons which the
Executive or the Executive's beneficiary believes entitle him or her to benefits
or to greater or different benefits. Within sixty (60) days after receipt by the
Company of the petition, the Company shall afford the Executive or the
Executive's beneficiary (and counsel, if any) an opportunity to present his or
her position to the Company orally or in writing, and the Executive or the
Executive's beneficiary (or counsel) shall have the right to review th pertinent
documents. The Company shall notify the Executive or the Executive's beneficiary
of its decision in writing within the sixty-day period, stating specifically the
basis of its decision, written in a manner calculated to be understood by the
Executive or the Executive's beneficiary and the specific provisions of the
Agreement on which the decision is based. If, because of the need for a hearing,
the sixty-day period is not sufficient, the decision may be deferred for up to
another sixty-day period at the election of the Company, but notice of this
deferral shall be given to the Executive or the Executive's beneficiary.
Article 7
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Executive.
Article 8
Miscellaneous
8.1 Binding Effect. This Agreement shall bind the Executive and the
Company, and their beneficiaries, survivors, executors, successors,
administrators and transferees.
8.2 No Guarantee of Employment. This Agreement is not an employment policy
or contract. It does not give the Executive the right to remain an employee
of the Company, nor does it interfere with the Company's right to discharge
the Executive. It also does not require the Executive to remain an employee
nor interfere with the Executive's right to terminate employment at any
time.
8.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
8.4 Tax Withholding. The Company shall withhold any taxes that are required
to be withheld from the benefits provided under this Agreement.
8.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of Pennsylvania, except to the extent
preempted by the laws of the United States of America.
8.6 Unfunded Arrangement. The Executive and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Executive's
life is a general asset of the Company to which the Executive and
beneficiary have no preferred or secured claim.
8.7 Recovery of Estate Taxes. If the Executive's gross estate for federal
estate tax purposes includes any amount determined by reference to and on
account of this Agreement, and if the beneficiary is other than the
Executive's estate, then the Executive's estate shall be entitled to
recover from the beneficiary receiving such benefit under the terms of the
Agreement, an amount by which the total estate tax due by the Executive's
estate, exceeds the total estate tax which would have been payable if the
value of such benefit had not been included in the Executive's gross
estate. If there is more than one person receiving such benefit, the right
of recovery shall be against each such person. In the event the beneficiary
has a liability hereunder, the beneficiary may petition the Company for a
lump sum payment in an amount not to exceed the beneficiary's liability
hereunder.
8.8 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Executive as to the subject matter hereof. No
rights are granted to the Executive by virtue of this Agreement other than
those specifically set forth herein.
8.9 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
8.9.1 Interpreting the provisions of the Agreement;
8.9.2 Establishing and revising the method of accounting for
the Agreement;
8.9.3 Maintaining a record of benefit payments; and
8.9.4 Establishing rules and prescribing any forms necessary
or desirable to administer the Agreement.
IN WITNESS WHEREOF, the Executive and a duly authorized Company officer
have signed this Agreement.
EXECUTIVE: COMPANY:
LA BANK, N.A.
/s/ Xxxx X. Xxxxxxxx By /s/ Xxxxxx X. Xxxxxxx
Xxxx Xxxxxxxx Title Secretary
