EXHIBIT 10.1
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
THIS AGREEMENT is entered into on this 22 day of April, 2002 by and
between Sterling Financial Corporation (the "Company"), a Pennsylvania
corporation having its principal office at 000 Xxxxx Xxxxxx Xxxxxxxxx,
Xxxxxxxxx, XX 00000 and Xxxx X. Xxxxxx (the "Executive") residing at 0000
Xxxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000.
WHEREAS, the Executive is presently serving as the Chairman and Chief
Executive Officer of the Company; and
WHEREAS, the Executive will retire from his position as the Chief
Executive Officer of the Company effective as of April 30, 2002; and
WHEREAS, the Company wishes to reward the Executive for his many years
of faithful service and significant contributions to the Company; and
WHEREAS, the Executive and the Company wish to enter into this Agreement
so as to provide the Executive with supplemental retirement benefits in
accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, unless otherwise clearly apparent from
the context, the following phrases or terms have the following indicated
meanings.
1.1 "Account" means the bookkeeping account created and maintained
for the Executive by the Company.
1.2 "Administrator" means the person(s) designated by the Board to
administer the Agreement.
1.3 "Anniversary Date" means each April 30 during the term of this
Agreement.
1.4 "Beneficiary" means the person(s) designated by the Executive to
receive the benefits described in Section 3.5.
1.5 "Board" means the board of directors of the Company.
1.6 "Change in Control" means a change in control as defined in the
Employment Agreement dated July 27, 1999 between the Executive, the Company and
Bank of Lancaster County, N.A.; provided, however, that a consolidation or
merger of the subsidiaries of the Company, as approved by the Board, shall not
constitute a Change in Control for purposes of this Agreement.
1.7 "Effective Date" means May 1, 2003.
1.8 "Interest Rate" means the rate of interest payable on five-year
Treasury securities
1.9 "Option" means any outstanding unexercised stock option that was
granted to the Executive on or before April 30, 2002 pursuant to the Option
Plan.
1.10 "Option Plan" means the Sterling Financial Corporation 1996
Stock Incentive Plan.
1.11 "Trust" means the trust established pursuant to the Trust
Agreement.
1.12 "Trust Agreement" means the Sterling Financial Corporation
Retirement Restoration Trust Agreement.
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ARTICLE II
TERM OF AGREEMENT
This Agreement shall be effective during the five (5)-year period
commencing on the Effective Date and ending on April 30, 2008.
ARTICLE III
RETIREMENT BENEFITS
3.1 On the Effective Date, the Executive's Account shall be credited
with the amount of $729,166.67. The Account shall be subsequently credited with
interest as described in Section 3.3 and debited to reflect the payments
described in Sections 3.2, 3.4 and 3.5.
3.2 During the period commencing on the Effective Date and ending on
April 30, 2004, the Company shall pay to the Executive the total amount of
$145,833.33. This amount shall be payable in twelve (12) approximately equal
monthly installments which shall be made to the Executive on or before the last
day of each month during this twelve (12)-month period.
3.3 On April 30, 2004 and on each Anniversary Date thereafter during
the term of this Agreement, the Executive's Account shall be credited with
interest by applying the Interest Rate to the balance of Executive's Account
determined as of that Anniversary Date.
3.4 On each Anniversary Date, after the Executive's Account has been
credited with interest pursuant to Section 3.3, the balance of the Executive's
Account shall be divided by the number of months then remaining in the term of
this Agreement. Monthly distributions shall be made to the Executive on or
before the last day of each of the next succeeding twelve (12) months until the
next Anniversary Date, at which time the Executive's Account shall again be
credited with interest pursuant to Section 3.3. This procedure shall be repeated
until the last monthly payment is made to the Executive on or about April 30,
2008.
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3.5 In the event of the Executive's death prior to the distribution
of the entire balance of the Executive's Account hereunder, the remaining
balance of the Executive's Account shall be distributed to the Beneficiary
designated by the Executive or, if there has been no such designation, to the
Executive's estate. Distributions shall be made in the form of monthly
installments in accordance with Article III for the remainder of the term of
this Agreement.
ARTICLE IV
CHANGE IN CONTROL
Upon a Change in Control, the Company shall, as soon as possible, but in
no event longer than sixty (60) days following (i) the Change in Control and
(ii) each Anniversary Date thereafter, make an irrevocable contribution to the
Trust in an amount that is sufficient to make up for any shortfall between (i)
the anticipated obligations that are to be paid pursuant to this Agreement and
(ii) amounts previously contributed to the Trust that had been specifically
designated to satisfy the obligations under this Agreement.
ARTICLE V
COORDINATION WITH OTHER PLANS
Nothing in this Agreement shall be construed as having any impact on the
Executive's entitlement to retirement benefits pursuant to any plan, program or
other arrangement maintained (or previously maintained) by the Company
including, but not limited to, the Sterling Financial Corporation 401(k)
Retirement Plan, Bank of Lancaster County, N.A. Pension Plan and the Sterling
Financial Corporation Retirement Restoration Plan.
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ARTICLE VI
OPTIONS
Any and all Options shall remain exercisable in accordance with their
terms during the term of this Agreement.
ARTICLE VII
NOTICE
For purposes of this Agreement, notices and all other communications
shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: Xxxx X. Xxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
If to the Company: J. Xxxxx Xxxxx
Sterling Financial Corporation
000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon actual receipt.
ARTICLE VIII
ADMINISTRATION
The Administrator shall have full power and authority to interpret and
administer this Agreement and the Administrator's actions in doing so shall be
final, conclusive and binding on all persons interested in the Agreement.
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ARTICLE IX
AMENDMENT AND TERMINATION
This Agreement may be amended or terminated only by the mutual agreement
of the parties hereto in writing without the consent of any other person.
ARTICLE X
CLAIMS PROCEDURE
10.1 In the event that the Executive or Beneficiary is denied a claim
for benefits under this Agreement, the Administrator shall provide to such
claimant written notice of the denial which shall set forth:
(a) the specific reasons for the denial;
(b) specific references to the pertinent provisions of the
Agreement on which the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(d) an explanation of the Agreement's claim review
procedure.
10.2 After receiving written notice of the denial of a claim, a
claimant or his representative may request a review of such denial by written
application to the Administrator.
10.3 If the claimant wishes such a review of the decision denying his
claim to benefits under the Agreement, he must submit such written application
to the Administrator within sixty (60) days after receiving written notice of
the denial.
10.4 No later than ninety (90) days following the receipt of the
written application for review, the Administrator shall submit its decision on
the review in writing to the claimant
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involved and to his representative. The decision shall include specific reasons
for the decision and specific references to the pertinent provisions of the
Agreement on which the decision is based.
ARTICLE XI
TRUST
11.1 The provisions of this Agreement will govern the rights of the
Executive to receive supplemental retirement benefits pursuant to this
Agreement. The provisions of the Trust Agreement will govern the rights of the
Executive to assets transferred to the Trust.
11.2 The Company's obligation hereunder may be satisfied with Trust
assets distributed pursuant to the terms of the Trust Agreement and any such
distribution will reduce the Company's obligations hereunder.
ARTICLE XII
MISCELLANEOUS
12.1 The Executive and his Beneficiaries, heirs and successors will
have no legal or equitable rights, interests or claims in any property or assets
of the Company. The Company's obligations hereunder will be merely that of an
unfunded and unsecured promise to pay money to the Executive in the future.
12.2 This Agreement shall not be assignable by either party, except
by the Company to any successor in interest to the Company's business.
12.3 This Agreement contains the entire agreement of the parties
pertaining to the subject matter of this Agreement.
12.4 This Agreement shall be governed and construed in accordance
with the laws of the Commonwealth of Pennsylvania.
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ATTEST: STERLING FINANCIAL CORPORATION
/s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxxx
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WITNESS: EXECUTIVE
/s/ Xxxxxxxx X. Prime /s/ Xxxx X. Xxxxxx
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