THIS AGREEMENT is made as of the 1 day of January, 1999, between CSB Bank,
a Pennsylvania banking institution (the "Bank"), Xxxx Xxxxxx Financial Corp., a
Pennsylvania business corporation (the "Corporation"), and Xxxxx X. Xxxxxxxx, an
adult individual (the "Executive").
WHEREAS, the Bank is a subsidiary of the Corporation; and
WHEREAS, the Bank desires to employ the Executive as its Chairman of the
Board and Chief Executive Officer, and the Corporation desires to employ the
Executive as its President and Chief Executive Officer, both under the terms and
conditions as set forth herein; and
WHEREAS, the Executive desires to serve the Bank and Corporation in an
executive capacity under the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and intending to be legally bound hereby, the parties agree as
follows:
1. TERMS OF EMPLOYMENT The Bank and Corporation hereby shall employ the
Executive and the Executive hereby accepts employment with the Bank and
Corporation for a term of two (2) years, beginning January 1, 1999, subject,
however, to prior termination of this Agreement as set forth below. Furthermore,
subject to the subsequent provision of the paragraph, upon the expiration of
the first two (2) years after the effective date of this Agreement, and upon
expiration of each subsequent twelve (12) full calendar months thereafter, the
term hereof shall be extended for another twelve (12) full calendar months. Such
extension of the Agreement's term shall be conditioned upon the Corporation's
and Bank's written notice of their intent to extend this Agreement upon
expiration of each twelve (12) full calendar months of the term hereof, which
written notice shall be given by the Corporation and Bank not less than ninety
(90) days before the expiration
of the current twelve (12) months. Failure to give written notice of the
extension of the Agreement for an additional twelve (12) full calendar months,
shall cause termination upon the expiration of the then term.
2. POSITION AND DUTIES The executive shall serve as the President and Chief
Executive Officer of the Corporation and Chairman of the Board and Chief
Executive Officer of the Bank, and may serve as a member of the Boards of
Directors of the Corporation and Bank if properly elected, reporting only to the
Boards of Directors of the Corporation and Bank, and shall have supervision and
control over, and responsibility for, the general management and operation of
the Corporation and Bank, and shall have such other powers and duties as may
from time to time be prescribed by the Boards of Directors of the Corporation
and Bank, provided that such powers and duties are consistent with the
Executive's position as the executive officer in charge of the general
management of the Corporation and Bank.
3. ENGAGEMENT IN OTHER EMPLOYMENT The Executive shall devote all his
working time, ability, and attention to the business of the Corporation and Bank
during the term of this Agreement. The Executive shall notify the Boards of
Directors of the Corporation and Bank in writing and receive written approval
from the Corporation and Bank before the Executive engages in any other
business, commercial, voluntary, or philanthropic activities, duties or
pursuits, including, but not limited to, directorships of other companies. Under
no circumstances may the Executive engage in any business or commercial
activities, duties or pursuits which compete with the business or commercial
activities of the Corporation or Bank, nor may the Executive serve as a director
or officer, or in any other capacity in a company which competes with the
Corporation or Bank.
4. COMPENSATION
(a) ANNUAL DIRECT SALARY As compensation for services rendered the Bank
and Corporation under this Agreement, the Executive shall be entitled to receive
from the Bank an annual direct salary payable in twelve (12) substantially equal
installments (or such other intervals of
2
the Bank's payroll policy), and prorated for any partial employment period. The
Annual Direct Salary shall be reviewed by the Boards of Directors of the
Corporation and the Bank, taking into the account of the position and duties of
the Executive and the performance of the Corporation and Bank under the
Executive's leadership.
(b) ANNUAL BUSINESS PLAN The Executive shall prepare a business plan
establishing the financial and business goals of the Corporation and Bank prior
to the start of each fiscal year. The business plan prepared by the Executive
shall be reviewed promptly by the Boards of Directors of the Corporation and
Bank, which may in its sole discretion alter or modify such plan prior to its
adoption. The Board of Directors of the Corporation, in its sole discretion, may
provide for payment of a yearly bonus to the Executive in such an amount as it
may deem appropriate to provide incentive to the Executive and to reward the
Executive for his performance in accordance with the business plan.
(c) DIRECTOR FEES The Executive shall be entitled to any director's fee
as paid to other members of the Board of Directors of the Bank and/or
Corporation or subsidiaries, unless prohibited by regulation. The Executive also
agrees to serve on all committees, except the audit committee, of the Board of
Directors of the Bank and/or Corporation or subsidiary of either without any
additional compensation or fees.
5. FRINGE BENEFITS, VACATION, EXPENSES, AND PERQUISITES
(a) EMPLOYEE BENEFIT PLANS The Executive shall be entitled to
participate in or receive benefits under all Bank or Corporation employee
benefit plans, including but not limited to, any pension plan, profit-sharing
plan, savings plan, life insurance plan, or disability insurance plan as made
available by the Bank or Corporation to its employees, subject to and on a basis
consistent with terms, conditions, and overall administration of such plans and
arrangements.
3
(b) VACATION AND HOLIDAYS The Executive shall be entitled to the number
of paid vacation days in each calender year determined by the Bank from time to
time for its senior executive officers, but not less than five (5) weeks in any
calendar year (prorated in any calender year during which the Executive is
employed hereunder for less than the entire such year in accordance with the
number of days in such calendar year which he is so employed). The Executive
shall also be entitled to all paid holidays and personal days given by the Bank
to its other employees.
(c) BUSINESS EXPENSE During the term of his employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and procedures
established by the Board of Directors of the Bank for its senior executive
officers) in performing services hereunder, provided that the Executive properly
accounts therefor in accordance with Bank policy
(d) AUTOMOBILE The Executive shall be entitled to the use of a Bank
purchased or leased automobile, as may be agreed upon by the Board of Directors
and the Executive. The Executive shall also be entitled to reimbursement for all
operating expenses of the automobile, including but not limited to, oil,
gasoline, maintenance, repairs, and insurance.
6. POSITIONS The Executive agrees to serve with additional compensation as
a director on the Board of Directors of the Corporation or the Bank, and, if
elected or appointed thereto, in one or more offices of the Corporation or Bank,
and/or as a director of any of the Bank's subsidiaries.
7. LIABILITY INSURANCE The Bank or Corporation shall use its best efforts
to continue similar insurance coverage for the Executive under an insurance
policy covering officers and directors of the Bank or Corporation against
lawsuits, arbitrators, or other legal or regulatory proceedings; however,
nothing herein shall be construed to require the Bank or Corporation to obtain
such insurance, if the Boards of Directors of the Bank or Corporation determine
that such coverage cannot be obtained at a reasonable price.
8. UNAUTHORIZED DISCLOSURE During the term of his employment hereunder, or
at any later time, the Executive shall not, without the written consent of the
Boards of Directors of the Corporation or Bank, or a person authorized thereby,
knowingly disclose to any person, other than an employee of the Corporation or
Bank, or a person to whom
4
disclosure is reasonably necessary or appropriate in connection with the
performance by the Executive of his duties as an executive of the Corporation or
Bank, any material confidential information obtained by him while in the employ
of the Corporation or Bank with respect to any of the Corporation or Bank's
service, products, improvements, formulas, designs or styles, processes,
customers, methods of business or any business practices the disclosure of which
could be or will be materially damaging to the Corporation or Bank 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 Executive or any person with the assistance, consent or direction of the
Executive) 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 Corporation or Bank.
9. RESTRICTIVE COVENANT. The Executive covenants and agrees that the
Executive shall not directly or indirectly, within the marketing area of the
Bank (defined as an area within seventy five (75) miles of the Bank or any
branch office), enter into or engage generally in direct or indirect competition
with the Corporation or Bank or any subsidiary of the Corporation, either as an
individual on his own or as a partner or joint venturer, or as a director,
officer, shareholder, employee, agent, independent contractor, lessor or
creditor of or for any person, for a period of three (3) years after the date of
termination of his employment if the Executive's employment is terminated for
any reason whatsoever except upon resignation by the Executive for "Good Reason"
under paragraph 10(d) hereof (except that change of control shall not constitute
Good Reason for this paragraph). The existence of any clain or cause of action
of the Executive against the Corporation or Bank, whether predicated to this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Corporation or Bank of this covenant. The Executive agrees that any breach of
the restrictions set forth in this paragraph will result in irreparable injury
to the Corporation or Bank for which it shall have no adequate remedy at law and
the Corporation or Bank 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
5
geographical area determined to be reasonable by the court.
10. TERMINATION.
(a) The Executive's employment hereunder shall terminate upon his
death.
(b) If the Executive becomes disabled because of sickness, physical or
mental disability, or any other reason, the Corporation or Bank shall have the
option to terminate this Agreement by giving written notice of termination to
the Executive. Executive shall be deemed to have become "disabled" only in the
event and at such time as he qualifies (after expiration of any applicable
waiting period) to receive benefits for total disability under the employee
disability insurance benefit plan referred to in paragraph 5(a) above.
(c) The Corporation or Bank may terminate the Executive's employment
hereunder for cause. For the purposes of this Agreement, the Corporation or Bank
shall have "Cause" to terminate the Executive's employment hereunder upon (1)
the willful failure by the Executive to perform his duties hereunder, or (2) the
willful engaging by the Executive in misconduct injurious to the Corporation or
Bank, or (3) the willful violation by the Executive of the provision of
paragraphs 3 or 8 hereof, or (4) the dishonesty or gross negligence of the
Executive in the performance of his duties, or (5) the breach of Executive's
fiduciary duty involving personal profit, or (6) the violation of any law, rule
or regulation governing banks or bank officers or any final cease and desist
order issued by a bank regulatory authority, or (7) moral turpitude or other
conduct on the part of the Executive which brings public discredit to the
Corporation or Bank.
(d) The Executive may terminate his employment hereunder if (1) his
health should become impaired to an extent that it makes continued performance
of his duties hereunder hazardous to his physical or mental health or his life,
or (2) for Good Reason. The term "Good Reason" (1) shall mean (i) any assignment
to the Executive, without his consent, of any
----------------
(1) definition of "Good Reason"
(i) change of duties
(ii) removal from position
(iii) reduction in annual direct salary
(iv) Bank's/Corporation's violation of particular provisions in the
Agreement
(v) hostile change in control
6
duties other than those contemplated by, or any limitation of the powers of the
Executive not contemplated by, paragraphs 2 and 6 hereof, or (ii) any removal of
the Executive from (other than as a result of his failure to be re-elected to
the Corporation's and Bank's Boards of Directors) any of the positions indicated
in paragraph 2 hereof, except in connection with termination of the Executive's
employment for Cause, or (iii) a reduction of the Executive's Annual Direct
Salary as provided in paragraph 4(a) hereof, or (iv) failure of the Bank to
comply with paragraph 5 hereof, or (v) any Hostile Change of Control (as defined
herein).
11. PAYMENTS UPON TERMINATION.
(a) If the Executive's employment shall be terminated because of death,
disability or for Cause, the Bank shall pay the Executive his full Annual Direct
Salary through the date of termination at the rate in effect at the time of
termination and the Corporation and Bank shall have no further obligation to the
Executive under this Agreement.
(b) If the Executive terminates his employment without Cause or Good
Reason, the Bank or Corporation shall have no further obligation to the
Executive under this Agreement.
(c) If the Executive's employment is terminated by the Corporation or
Bank (other than pursuant to paragraphs 10(a) or 10(b) or 10(c) hereof or as a
result of nonrenewal of this Agreement), or if the Executive shall terminate his
employment for Good Reason, then the Bank shall pay the Executive his full
Annual Direct Salary from the date of termination through the last day of the
term of this Agreement or an amount equal to his current Annual Direct Salary,
whichever is greater. The Bank shall also maintain in full force and effect, for
the continued benefit of the Executive for the full term of this Agreement, all
employee benefit plans and programs to which the Executive was entitled prior to
the date of termination, if the Executive's continued participation is possible
under the general terms and provisions of such plans and programs except that if
the Executive's participation in any health, medical, life insurance, or
disability plan or program is barred, the Bank shall obtain and pay for, on the
Executive's behalf, individual insurance plans, policies or programs which
provide to the Executive health, medical, life and disability insurance coverage
which is equivalent to the insurance coverage to which the Executive was
entitled prior to the date of
7
termination and the Corporation and Bank shall have no further
obligations to the Executive under this Agreement.
(d) NONRENEWAL OF AGREEMENT AND SEVERANCE ALLOWANCE
In the event the Executive serves the full term of this Agreement,
and the Bank or Corporation do not offer to renew this Agreement, the Executive
shall not be entitled to any severance allowance whatsoever and the Corporation
and Bank shall have no further obligations to the Executive under this
Agreement.
12. DAMAGES FOR BREACH OF CONTRACT. In the event of a breach of this
Agreement by either the Corporation, Bank or the Executive resulting in damages
to another party, that party may recover from the party breaching the Agreement
only those damages as set forth herein. In no event shall any party be entitled
to the recovery of attorney's fees or costs.
13. DEFINITION OF CHANGE OF CONTROL. For purposes of this Agreement, the
term "Change of Control" shall mean: A change in control of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A and any successor rule or regulation promulgated under the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); provided that, without
limitation, such a change in control shall be deemed to have occurred if (a) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than the Corporation or any "person" who on the date hereof is a director
or officer of the Corporation is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Corporation representing twenty-five percent (25%) or more of the combined
voting power of the Corporation's then outstanding securities, or (b) during any
period of two consecutive years during the term of this Agreement, individuals
who at the beginning of such period constitute the Board of Directors of the
Bank or Corporation cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director at the
beginning of such period has been approved in advance by directors representing
at least two-thirds of the directors then in office who were directors at the
beginning of the period.
14. DEFINITION OF DATE OF CHANGE OF CONTROL. For purposes of this
Agreement, the date of Change of Control shall mean:
(a) the first date on which a single person and/or entity, or group of
8
affiliated persons and/or entities, acquire the beneficial ownership of
twenty-five percent (25%) or more of the Corporation's voting securities, or
(b) the date of the transfer of all or substantially all of the Bank or
Corporation's assets, or
(c) the date on which a merger, consolidation or combination is
consummated, as applicable, or
(d) the date on which individuals who formerly constitute a majority of
the Board of Directors of the Bank or Corporation ceased to be a majority.
15. PAYMENT UPON TERMINATION AFTER A CHANGE OF CONTROL.
(a) If within a two (2) year period, the Bank or its successor shall
for any reason terminate the Executive's employment as a result of or following
a Change of Control (as defined herein), except if such termination is for Cause
(as defined herein), the Executive shall receive a lump sum payment equal to two
and one half (2-1/2) times his annual salary, including any bonus, for the most
recent twelve (12) month period. The Executive shall also be entitled (at the
expense of the Bank or its successor) to the following employee benefits; group
health and life insurance benefits, short and long-term disability insurance
benefits, plan contribution, from the date of termination through the last day
of the term of this Agreement; however, the Executive shall not be entitled to
sick or vacation pay. If participation in these benefits is prevented by law or
the terms of the plan, the Bank or its successor shall provide a substantially
equivalent substitute. In the event that termination occurs within the one (1)
year period from Change of Control, the Executive shall have the duty to
mitigate damages by actively seeking employment for a position at a comparable
level of authority and responsibility. Available employee benefits under new
employment shall negate the need for the Bank or its successor to provide
employee benefits herein, but only to the extent that the employee benefits are
duplicative and of substantially equal coverage or benefit. Any severance
payment under this Change of Control subsection shall survive the death of the
Executive.
(b) If within a two (2) year period following a Change of Control, the
Executive resigns for Good Reason as defined below, Executive shall be entitled
to the same payments as described in the preceding section.
9
Any severance payment under this Change of Control subsection shall survive the
death of the Executive.
(c) DEFINITION OF CAUSE. For purposes of this Agreement, Bank or its
successor shall have "Cause" to terminate executive's employment following a
Change in Control hereunder upon: (a) the willful failure by Executive to
perform duties after notice by Bank or its successor identifying such failure of
performance and opportunity to cure within thirty (30) days; (b) the willful
engagement by Executive in misconduct injurious to Bank or its successor
(monetarily or otherwise); (c) the dishonesty or gross negligence of the
Executive in the performance of his duties; (d) the breach of the Executive's
fiduciary duties involving personal profit, a violation or violations of a
banking regulation, or the issuance of a cease and desist order; or (e) the
commission of any act constituting moral turpitude or other conduct on the part
of the Executive which publicly discredits the Bank or its successor. If
Executive is terminated or discharged for Cause as defined herein, he is not
entitled to any payments under the Agreement.
(d) DEFINITION OF RESIGNATION FOR GOOD REASON.
If Executive resigns from his position as President and Chief
Executive Officer as a result of a change in Executive's duties performed prior
to the Change of Control, or a reduction in his Annual Direct Salary paid to him
prior to the Change of Control, Executive's resignation will constitute and be
deemed a resignation for Good Reason for purposes of this Agreement. If
Executive resigns within a two (2) year period following a Change in Control for
Good Reason as defined herein, the Executive is entitled to all payments under
paragraph 15(a) of this Agreement.
16. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when hand-delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive: [Name]
[Address]
10
If to the Bank: [Name], Chairman of the Board
[Address]
If to the Corporation: [Name], Chairman of the Board
[Address]
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
17. SUCCESSOR. This Agreement shall inure to the benefit of and be binding
upon the Executive, the Corporation and the Bank; and any of their successors or
assigns, provided however, that the Executive may not commute, anticipate,
encumber, dispose or assign any payment except as set forth in paragraph 20.
18. SEVERABILITY. If any provision of this Agreement is declared
unenforceable for any reason, the remaining provisions of this Agreement shall
be unaffected thereby and shall remain in full force and effect.
19. AMENDMENT. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing.
20. PAYMENT OF MONEY DUE DECEASED EXECUTIVE. In the event of Executive's
death, any moneys that may be due him from the Bank under this Agreement as of
the date of death shall be paid to the person designated by him in writing for
this purpose, or in the absence of any such designation to his estate.
21. LAW GOVERNING. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
22. ENTIRE AGREEMENT. This Agreement supersedes any and all agreements,
either oral or in writing, between the parties with respect to the employment of
the Executive by the Corporation and Bank, and this Agreement contains all the
covenants and agreements between the parties with respect to the employment.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby,
11
have caused this Agreement to be duly executed in their respective names
and, in the case of the Corporation and Bank, by its authorized representatives
the day and year above mentioned.
ATTEST: XXXX XXXXXX FINANCIAL CORP.
/s/ Xxxxxx X. Xxxxxxx By: Xxxxx X. Xxxxxxx, Xx.
------------------- ---------------------
Secretary Chairman of the Board
ATTEST: CSB BANK
/s/ Xxxxxx X. Xxxxxxx By: Xxxxx X. Xxxxxxxx
------------------- ---------------------
Secretary Chairman of the Board
WITNESS:
/s/ Xxxxxx X. Xxxxxxx By: Xxxxx X. Xxxxxxxx
------------------- ---------------------
Executive
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 is made this 1 day of January 1999 by and among CSB
Bank, a Pennsylvania banking institution (the "Bank"), Xxxx Xxxxxx Financial
Corp., a Pennsylvania business corporation (the "Corporation") and Xxxxx X.
Xxxxxxxx, an adult individual (the "Executive").
WITNESSETH
WHEREAS, the Bank, the Corporation and the Executive entered into a certain
Employment Agreement effective the 1 day of January 1999 (the "Employment
Agreement");
WHEREAS, the Bank and the Corporation have been authorized by their
respective Boards of Directors to enter into fact finding the discussions with
the Clearfield Bank & Trust Company for the potential business combination of
the Bank with Clearfield Bank & Trust Company; and
WHEREAS, as a result of the potential business combination described above,
the Bank, the Corporation and the Executive desire to amend and modify the
definition of "Change of Control" as contained in the Employment Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, for good and valuable consideration, and intending to be legally
bound hereby, the parties agree as follows:
1. Paragraph 13 of the Employment Agreement is hereby amended and modified
to provide that in the event a merger, acquisition or business combination of
the Bank and/or the Corporation with Clearfield Bank & Trust Company in which
the Bank or the Corporation are surviving institutions after the effective date
of such merger, acquisition or business combination and the Executive is
employed as the President and Chief Executive Officer of the Corporation and the
resulting bank following such merger, acquisition or business combination, then
such merger, acquisition or business combination shall not constitute or be
defined to be a "Change of Control" within the meaning of Paragraph 13 of the
Employment Agreement. The above merger, acquisition or business combination or
the resulting change in the composition of the Board of Directors of the
Corporation or the Bank, shall not constitute a Change of Control for purposes
of Paragraph 13 of the Employment Agreement and shall not entitle the Executive
to any compensation or payments he would otherwise be entitled to receive upon
termination after a Change of Control as provided in Paragraph 15 of the
Employment Agreement. Only in the case where the Executive is not the President
and Chief Executive Officer of the Bank following a transaction with Clearfield
Bank & Trust Company, shall a Change of Control, pursuant to Paragraph 13 of the
Employment Agreement, be deemed to have occurred.
2. In all other respects, the Employment Agreement, as amended above, is
hereby ratified and confirmed by the Bank, the Corporation and the Executive.
IN WITNESS WHEREOF, the parties, each intending to be legally bound, have
executed the Addendum as of the date, month and year first above written.
ATTEST: XXXX XXXXXX FINANCIAL CORP.
/s/ Xxxxxx X. Xxxxxxx By: Xxxxx X. Xxxxxxx, Xx.
------------------- ---------------------
Secretary Chairman of the Board
ATTEST: CSB BANK
/s/ Xxxxxx X. Xxxxxxx By: Xxxxx X. Xxxxxxxx
------------------- ---------------------
Secretary Chairman of the Board
WITNESS:
/s/ Xxxxxx X. Xxxxxxx By: Xxxxx X. Xxxxxxxx
------------------- ---------------------
Executive
