EXHIBIT 10.02
CHANGE IN CONTROL AGREEMENT BETWEEN
XXXXX X. XXXXXXX AND COMM BANCORP, INC. DATED SEPTEMBER 16, 1998
AGREEMENT
This Agreement (the "Agreement") is entered into as of September 16,
1998, by and between COMM BANCORP, INC., a Pennsylvania business
corporation ("Bancorp"), and XXXXX X. XXXXXXX (the "Executive").
WHEREAS, the Board of Directors of Bancorp believes that it is in
the best interests of Bancorp that it seek to assure the continued
services of Executive, undiminished by any actual or perceived threat to
continued employment, both currently and, in the event of any Change in
control of Bancorp, for a reasonable period thereafter; and
WHEREAS, should Bancorp receive any proposal from a third person
concerning a possible business combination with, or acquisition of equity
securities of Bancorp, the Board believes it imperative that Bancorp and
the Board be able to rely upon Executive to continue in his position, and
that Bancorp be able to receive and rely upon his advice, if it so
requests, as to the best interests of Bancorp and its shareholders
without concern that he might be distracted by the personal uncertainties
and risks created by such a proposal; and
WHEREAS, should Bancorp receive any such proposals, in addition to
Executive's regular duties, he may be called upon to assist in the
assessment of such proposals, advise management and the Board as to
whether such proposals would be in the best interests of Bancorp and its
shareholders, and to take such other actions as the Board might determine
to be appropriate; and
WHEREAS, Executive wishes to continue to serve in his present
capacity, but desires assurance that in the event of a Change in Control,
he will have a reasonable degree of financial security;
NOW, THEREFORE, to assure Bancorp that it will have the continued
dedication of Executive and the availability of his advice and counsel
notwithstanding the possibility, threat or occurrence of a Change in
Control of Bancorp, and to induce Executive to remain in the employ of
Bancorp, and for other good and valuable consideration, Bancorp and
Executive, intending to be legally bound hereby, agree as follows:
1. From the date hereof until the expiration of the 24-month period
referred to in Paragraph 2 below, the parties hereto agree as follows.
A. Prior to the prospect of any Change in Control of Bancorp,
Executive's employment may be terminated by Bancorp for any cause,
including disability. In that event, Executive shall have no
rights under this Agreement but shall be entitled to any benefits
normally provided by Bancorp under such circumstances.
B. If there is a Change in Control of Bancorp, and Executive is
terminated without Cause of Constructively Terminated from the
employ of Bancorp (or its successor) while this Agreement is in
effect, then, in order to protect Executive against the possible
consequences of any Change in Control of Bancorp and thereby to
induce Executive to serve as a key employee of Bancorp, he shall
be entitled to the termination benefits granted herein.
C. Executive shall not, without the consent of Bancorp, terminate
employment without giving at least 45 days prior written notice,
which shall briefly describe the circumstances constituting a
Constructive Termination, if any.
2. If a Change in Control of Bancorp occurs, and Executive is terminated
without Cause or Constructively Terminated from the employ of Bancorp
(or its successor) during the 24 months following such a Change in
Control, then Executive shall be paid and provided each of the
following.
A. Within five business days after the date of any such termination
of employment, Bancorp (or its successor) shall pay a Executive
an amount equal to two (2) times his highest annual base salary
rate during the five year period ending on the date of such
termination. This amount may be paid in a lump-sum or in twenty
four (24) equal monthly installments as Bancorp (or its
successor) may, in their sole discretion, decide.
B. Executive and his dependents shall continue to be covered until
24 months after the date of such termination by all health
benefit programs of Bancorp (or its successor) in type and amount
at least equivalent to that provided to Executive and his
dependents by Bancorp immediately prior to the Change in Control,
at a cost to Executive not exceeding the cost of equivalent
coverage to senior management employees of Bancorp. If
participation in one or more of such programs is not possible
under the terms thereof, Bancorp (or its successor) will provide
substantially identical benefits outside the programs. The
rights of Executive and his dependents to continuation of health
benefit coverage pursuant to Section 4980B of the Internal
Revenue Code of 1986, as amended (the "Code") (or any successor
section) shall commence 24 months after termination of
Executive's employment. Bancorp's (or its successor's)
obligation to continue the above insurance coverage shall end
should Executive and his dependents acquire substantially similar
benefits as an incident of employment (or reemployment) or if
provided to Executive and his dependents from any other source.
C. If all or any portion of the amounts payable to Executive under
this Agreement, either alone or together with other payments
which Executive has the right to receive from Bancorp, constitute
"excess parachute payments" within the meaning of Section 280G of
the Code that are subject to the excise tax imposed by Section
4999 of the Code (or any successor sections), Bancorp (and its
successor) shall increase the amounts payable hereunder to the
extent necessary to place Executive in the same after-tax
position as he would have been in had no such excise tax been
imposed on the payments hereunder. The determination of the
amount of any such excise taxes shall be made by the independent
accounting firm employed by Bancorp (or its successor)
immediately prior to the Change in Control.
If at a later date it is determined (pursuant to final
regulations or published rulings of the IRS, assessment by the
Internal Revenue Service or otherwise) that the amount of excise
taxes payable by Executive is greater than the amount initially
so determined, then Bancorp (or its successor) shall pay
Executive an amount equal to the sum of (i) such additional
excise taxes, plus (ii) any interest, fines and penalties with
respect to such additional excise taxes, plus (iii) the amount
necessary to reimburse Executive for any income, excise or other
taxes payable by Executive with respect to the amounts specified
in (i) and (ii) above and the reimbursement provided by this
clause (iii).
D. Executive shall continue to be indemnified under Bancorp's
Amended Articles of Incorporation and Bylaws and covered, for at
least six years following such Change of Control, by directors'
and officers' liability insurance and fiduciary liability
insurance policies that are the same as, or provide coverage at
least equivalent to, those Bancorp carries at the date of the
Change in Control.
3. As used herein, the following terms shall have the meanings
indicated.
A. "Change in Control" shall mean
(i) acquisition of ownership (whether directly, indirectly,
beneficially or of record) of 25% or more of the voting
power of all outstanding stock of Bancorp by any person
(including, without limitation, a corporation, trust,
partnership, joint venture, or individual) (a "Person") or
by any group of Persons who have agreed to act together for
the purpose of acquiring, holding, voting, or disposing of
such shares;
(ii) merger or consolidation of Bancorp in which the
stockholders of Bancorp before such merger or consolidation
do not, as a result of the merger or consolidation, own at
least 50% of the outstanding voting power of the surviving
entity following such merger or consolidation;
(iii) nomination and election of 50% or more of the members of
the Board of Directors of Bancorp without the
recommendation of the Board; or
(iv) disposition by Bancorp of its banking subsidiary, "Change
in Control" shall not include acquisition of Bancorp stock
by a qualified employee benefit plan, or action by the
members of the Board of Directors when acting as the Board
of Directors.
B. "Cause" shall mean (i) Executive's conviction of a felony, (ii)
wilful misconduct that is substantially detrimental to the
business of Bancorp, or (iii) absence from full time service to
Bancorp as a result of physical or mental illness for six
consecutive months, in each case determined by vote of not less
than a majority of the directors of Bancorp then in office, after
reasonable notice to Executive and an opportunity for him to be
heard before a meeting of the Board of Directors, held upon
reasonable notice to all directors.
C. "Constructive Termination" shall mean a resignation by Executive
due to any diminution or adverse change in the circumstances of
his employment (as determined by him in good faith), including,
without limitation, his reporting relationships, job description,
duties, responsibilities, compensation, perquisites, office or
location of employment.
4. The specific arrangements referred to above are not intended to
exclude Executive's participation in any other benefits available to
executive personnel of Bancorp (or its successor).
5. This Agreement shall be binding upon and shall inure to the benefit
of the respective successors, assigns, legal representatives and
heirs of the parties hereto.
6. If, with respect to any failure by Bancorp (or its successor) to
comply with any of the terms of this Agreement, Executive engages
legal counsel or institutes any negotiations or institutes or
responds to legal action to assert or defend the validity of, enforce
his rights under, or recover damages for breach of the same, Bancorp
(or its successor) shall pay or reimburse, within five business days
of receipt of each written request therefore, his actual expenses for
attorneys fees and disbursements, together with such additional
payments, if any, as may be necessary so that the net after-tax
payments to Executive equal such fees and disbursements. This
Paragraph 6 shall apply whether or not Executive prevails, and
Bancorp consents irrevocably to engagement by Executive of any
attorney of his choice, notwithstanding any existing or prior
attorney-client relationship between Bancorp and such attorney.
7. Any controversy or claim arising out of or relating to this
Agreement, or any breach hereof, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, any judgement on the award rendered by the
arbiter may be entered in any court having jurisdiction thereof.
8. In the event any amount due hereunder is improperly withheld, then
Bancorp (or its successor) agrees to pay interest on said amount at
an annual rate of 10%, or the time weighted average prime rate in
effect at Community Bank and Trust Company, whichever is greater,
for the period between the date said amount is due and the date said
amount is paid.
9. This Agreement shall in all respects be subject to, governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania.
10. Except for required tax withholding, Bancorp's (or its successor's)
obligation to pay Executive the compensation and to make the
arrangements provided herein shall be absolute and unconditional and
shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other
right which Bancorp (or its successor) may have against him or
anyone else. All amounts payable by Bancorp (or its successor)
hereunder shall be paid without notice or demand, except as
expressly provided otherwise. Each and every payment made hereunder
by Bancorp (or its successor) shall be final and Bancorp (or its
successor) will not seek to recover all or any part of such payment
from Executive or from whosoever may be entitled thereto, for any
reason whatsoever. Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or arrangements made
under any provision of this Agreement, and the obtaining of any such
other employment shall in no event effect any reduction of Bancorp's
(or its successor's) obligations to make the payments and
arrangements required to be made under this Agreement.
11. Executive shall retain in confidence any confidential information
known to him concerning Bancorp (or its successor) and its
respective businesses so long as such information is not publicly
disclosed.
12. Any provision in this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. This Agreement may be terminated by the Board of Directors of
Bancorp upon 12 months prior written notice to Executive; except
that this Agreement shall not be terminated, (i) during the 24
months following a Change in Control or (ii) during any period of
time when Bancorp has or should have knowledge that any Person has
taken steps reasonably calculated to effect a Change in Control
until, in the opinion of the Board, such Person has abandoned or
terminated efforts to effect a Change in Control.
14. Bancorp shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of Bancorp, by agreement
in form and substance satisfactory to Executive, expressly to assume
and agree to perform all obligations of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of the day
and year first above written.
ATTEST: COMM BANCORP, INC.
/s/ Xxxx X. Xxxxxx By:/s/ Xxxxxxx X. Xxxxxx, Xx.
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Xxxx X. Xxxxxx, Secretary Xxxxxxx X. Xxxxxx, Xx.
Chairman of the Board
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx