EXHIBIT 10.1
SEVERANCE COMPENSATION AGREEMENT BETWEEN COMM BANCORP, INC. AND ITS SUBSIDIARY,
COMMUNITY BANK & TRUST CO., AND XXXX X. XXXXXXX
Comm Bancorp, Inc. (the "Company") and its subsidiary, Community Bank and Trust
Company (the "Bank"), consider the stability of its key management group to be
essential to the best interests of the Company, the Bank, and the Company's
shareholders. The Company recognizes that, as is the case with many
publicly-held corporations, the possibility of a change in control may arise and
that the attendant uncertainty may result in the departure or distraction of key
management personnel to the detriment of the Company, the Bank, and the
Company's shareholders.
Accordingly, the Board of Directors of the Company (the "Board") has determined
that appropriate steps should be taken to encourage members of the Bank's key
management group to continue as employees of the Bank notwithstanding the
possibility of a change in control of the Company.
The Board also believes it important that, in the event of a proposal for
transfer of control of the Company and Bank, you will be able to assess the
proposal and advise the Board without being influenced by the uncertainties of
your own situation.
In order to induce you to remain in the employ of the Bank, this Agreement,
which has been approved by the Board, sets forth the severance compensation
which the Company agrees will be provided to you in the event your employment
with the Bank is terminated subsequent to a "change in control" of the Company
and the Bank under the circumstances described below. The Company and the Bank
intends to be legally bound by this Agreement.
1. Agreement to Provide Services; Right to Terminate.
(a) Termination Prior to Certain Offers. Except as otherwise provided in
paragraph (b) below, or in any written employment agreement between you and the
Bank, the Bank or you may terminate your employment at any time. If, and only
if, such termination occurs after a change in control of the Company (as defined
in section 5), the provisions of this Agreement regarding the payment of
severance compensation and benefits shall apply.
(b) Termination Subsequent to Certain Offers. In the event a tender offer or
exchange offer is made by a person (as defined in section 5) for more than 30
percent of the combined voting power of the Company's outstanding securities
ordinarily having the right to vote at elections of directors ("Voting
Securities"), including the shares of common stock, par value $0.33 per share,
of the Company (the "Company Shares"), you agree that you will not leave the
employ of the Bank (other than as a result of Death or Disability as such term
is defined in section 6) and will render services to the Bank in the capacity in
which you then serve until such tender offer or exchange offer has been
abandoned or terminated or a change in control of the Company has occurred as a
result of such tender offer or exchange offer. If, during the period you are
obligated to continue in the employ of the Bank pursuant to this section 1(b),
and the Bank, reduces your compensation, your obligations under this section
1(b) shall thereupon terminate. You understand and agree that if you terminate
voluntarily your employment with the Bank during such period without Good
Reason, then you are not entitled to any of the payments or benefits under this
Agreement.
2. Term of Agreement. This Agreement shall commence on the date hereof and shall
continue in effect until September 6, 2006; provided, however, that commencing
on the first anniversary of the date hereof, and each such anniversary
thereafter, the remaining term of this Agreement shall automatically be extended
for one additional year unless at least 180 days prior to such anniversary, the
Company and the Bank or you shall have given notice that this Agreement shall
not be extended; and provided, however, that if a change in control of the
Company shall occur while this Agreement is in effect, this Agreement shall
automatically be extended for 12 months from the date the change in control
occurs. This Agreement shall terminate if you or the Bank terminates your
employment prior to a change in control of the Company but without prejudice to
any remedy the Bank may have for breach of your obligations, if any, under
section 1(b).
3. Severance Payment and Benefits If Termination Occurs Following Change in
Control of the Company for Disability Without Cause, or With Good Reason. If,
within 12 months from the date of occurrence of any event constituting a change
in control of the Company (it being recognized that more than one such event may
occur in which case the 12-month period shall run from the date of occurrence of
each such event), your employment with the Bank is terminated: (i) by the Bank
for Disability; (ii) by the Bank without Cause; or (iii) by you with Good Reason
(as defined in section 5), you shall be entitled to a severance payment as
follows:
(a) Disability. If your employment with the Bank is terminated for Disability,
your benefits shall thereafter be determined in accordance with the Bank's
long-term disability income insurance plan. If the Bank's long-term disability
income insurance plan is modified or terminated following a change in control,
the Company shall cause the Bank to substitute a plan with benefits applicable
to you substantially similar to those provided by such plan prior to its
modification or termination. During any period that you fail to perform your
duties hereunder as a result of incapacity due to physical or mental illness,
you shall continue to receive your full base salary at the rate then in effect
until your employment is terminated by the Bank for Disability.
(b) Termination Without Cause or With Good Reason. If your employment with the
Bank is terminated without Cause by the Bank or with Good Reason by you, then
the Bank shall pay to you, upon demand, an amount equal to one times your full
base salary plus year-to-date accrued vacation leave through the Date of
Termination at the rate in effect on the date the change in control of the
Company occurs.
4. Payment If Termination Occurs Following Change In Control of the Company
Because of Death, For Cause, or Without Good Reason. If your employment shall be
terminated following any event constituting a change in control of the Company
because of your death, or by the Bank for Cause, or by you other than for Good
Reason, the Bank shall pay you your full base salary plus year-to-date accrued
vacation leave through the Date of Termination at the rate in effect on the date
when the change in control of the Company occurs. The Company and Bank shall
have no further obligations to you under this Agreement.
5. Definitions of Certain Terms. For the purpose of this Agreement, the terms
defined in this section 5 shall have the meanings assigned to them herein.
(a) Cause. Termination of your employment by the Bank for "Cause" shall mean
termination because, and only because, you committed an act of fraud,
embezzlement, or theft constituting a
felony or an act intentionally against the interests of the Bank which causes
the Bank material injury. Notwithstanding the foregoing, you shall not be deemed
to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Board at a meeting
of the Board called and held for the purpose (after reasonable notice to you and
an opportunity for you, together with your counsel, to be heard before the
Board), finding that in the good faith opinion of the Board you were guilty of
conduct constituting Cause as defined above and specifying the particulars
thereof in detail.
(b) Change in Control. A "Change in Control" of the Company shall mean:
(i) 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 as in effect on the date
hereof pursuant to the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx");
provided that, without limitation, such a change in control shall be deemed to
have occurred at such time as any Person hereafter becomes the "Beneficial
Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 30 percent or more of the combined voting power of the Company's
Voting Securities; or
(ii) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Company's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period; or
(iii) There shall be consummated (x) any consolidation or merger of the Company
in which the Company is not the continuing or surviving corporation or pursuant
to which Voting Securities would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of Voting
Securities immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the merger, or
(y) any sale, lease, exchange, or other transfer (in one transaction or a series
of related transactions) of all, or substantially all of the assets of the Bank,
provided that any such consolidation, merger, sale, lease, exchange or other
transfer consummated at the insistence of an appropriate banking regulatory
agency shall not constitute a change in control; or
(iv) Approval by the shareholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company.
(c) Date of Termination. "Date of Termination" shall mean (i) if your employment
is terminated by the Bank for Disability, 30 days after Notice of Termination is
given (provided that you shall not have returned to the performance of your
duties on a full-time basis during such 30-day period), and (ii) if your
employment is terminated for any other reason, the date on which a Notice of
Termination is given; provided that if within 30 days after any Notice of
Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties or by a final judgment, order, or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected). The term of this Agreement
shall be extended until the Date of Termination.
(d) Disability. Termination of your employment by the Bank for "Disability"
shall mean termination because of your absence from your duties with the Bank on
a full-time basis for 180 consecutive days as a result of your incapacity due to
physical or mental illness and your failure to return to the performance of your
duties on a full-time basis during the 30-day period after Notice of Termination
is given.
(e) Good Reason. Termination by you of your employment for "Good Reason" shall
mean termination based on any of the following:
(i) A change in your status or position(s) with the Bank, which in your
reasonable judgment, does not represent a promotion from your status or
position(s) as in effect immediately prior to the change in control of the
Company, or a change in your duties or responsibilities which, in your
reasonable judgment, is inconsistent with such status or position(s), or any
removal of you from, or any failure to reappoint or reelect you to, such
position(s), except in connection with the termination of your employment for
Cause or Disability or as a result of your death or by you other than for Good
Reason.
(ii) A reduction by the Bank in your base salary as in effect immediately prior
to the change in control of the Company.
(iii) The failure by the Bank to provide and credit you with the number of paid
vacation days to which you are then entitled in accordance with the Bank's
normal vacation policy as in effect immediately prior to the change in control
of the Company.
(iv) The Bank requiring you to be based anywhere other than where your office is
located immediately prior to the change in control of the Company except for
required travel on the Bank's business to an extent substantially consistent
with the business travel obligations which you undertook on behalf of the Bank
prior to the change in control of the Company.
(v) The failure by the Company to obtain from any successor the assent to this
Agreement contemplated by section 8 hereof.
(vi) Any purported termination by the Bank of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of this
Agreement; and for purposes of this Agreement, no such purported termination
shall be effective.
(vii) Any refusal by the Bank to continue to allow you to attend to matters or
engage in activities not directly related to the business of the Bank which,
prior to the change in control of the Company, you were permitted by the Board
to attend to or engage in.
(f) Notice of Termination. A "Notice of Termination" of your employment given by
the Bank shall mean a written notice given to you of the termination of your
employment which shall indicate the specific termination provision in this
Agreement relied upon, and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of your employment
under the provision so indicated.
(g) Person. The term "Person" shall mean and include any individual,
corporation, partnership, group, association, or other "person," as such term is
used in section 14(d) of the Exchange Act, other than the Company, the Bank or
any employee benefit plan(s) sponsored by the Bank.
6. 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 delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company and Bank shall be directed
to the attention of the President of the Company and the Bank 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
receipt.
7. Successors; Binding Agreement.
(a) This Agreement shall inure to the benefit of, and be binding upon, any
corporate or other successor or assignee of the Company and the Bank which shall
acquire, directly or indirectly, by merger, consolidation or purchase, or
otherwise, all or substantially all of the business or assets of the Company and
the Bank. The Company and the Bank shall require any such successor, by an
agreement in form and substance satisfactory to you, expressly to assume and
agree to perform this Agreement in the same manner and to the same extent as the
Company and the Bank would be required to perform if no such succession had
taken place.
(b) This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If you should die while any amount would
still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee, or other designee or, if there
is no such designee, to your estate.
8. Miscellaneous. No provision of this Agreement may be modified, waived, or
discharged unless such modification, waiver, or discharge is agreed to in a
writing signed by you and the President of the Company and the Bank. No waiver
by either party hereto at any time of any breach by the other party hereto of,
or of compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same, or at any prior or subsequent, time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement. The validity, interpretation,
construction, and performance of this Agreement shall be governed by laws of the
Commonwealth of Pennsylvania without giving effect to the principles of conflict
of laws thereof. Any prior agreement concerning the subject matter hereof is
rendered null and void on the date hereof.
9. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
If this letter correctly sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
COMM BANCORP, INC./COMMUNITY BANK
AND TRUST COMPANY
By:
/s/ Xxxxxxx X. Xxxxxx, Xx.
---------------------------------
Xxxxxxx X. Xxxxxx, Xx., President
AGREED TO:
/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
