SEVERANCE AGREEMENT
Agreement made this 1st day of March 1999, by and between Nazareth National
Bank and Trust Company, a banking association organized under the laws of the
United States ("Bank") and Xxxxxx X. XxXxxxxx, Xx., an individual ("Employee").
BACKGROUND
Employee is currently employed by the Bank in the position of Executive
Vice President and Senior Trust Officer. In consideration of Employee's past,
present and future services to the Bank, the Bank desires to provide for the
payment of certain compensation and other benefits to Employee upon the
occurrence of certain events, all as more fully set forth below.
In consideration of the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, the parties agree as follows:
1. Term. This Agreement shall continue for a period beginning on the
day hereof and ending on the earliest of the following dates (the "Term"):
(a) the date Employee dies or becomes permanently disabled (i.e., upon his
failure to render services of the character which he had previously
rendered to the Bank, because of his physical or mental illness or other
incapacity beyond his control for a continuous period of six months or for
shorter periods aggregating six months in any twelve month period); (b)
termination of Employee's employment with the Bank for cause (as
hereinafter defined); (c) mutual agreement of the Bank and Employee; (d)
subject to Section 2 hereof, termination by Employee of Employee's
employment with the Bank by resignation or otherwise; or (e) December 31,
2000. In the event the Employee's employment with the Bank is terminated
during the Term other than as set forth in Section 2 hereof, the Employee
shall have no rights or benefits under this Agreement, but shall be
entitled to any other rights or benefits to which he or she might otherwise
be entitled to. For purposes of this Agreement, the term "cause" shall mean
(i) conviction of Employee for any felony, fraud or embezzlement or (ii)
Employee failing or refusing to comply with the written policies or
directives of the Bank's Board of Directors or the Employee being guilty of
misconduct in connection with the performance of his duties for the Bank
and the Employee fails to cure such noncompliance or misconduct within
twenty days after receiving written notice from the Bank's Board of
Directors specifying such non-compliance or misconduct.
2. Termination. If during the Term hereof, the Employee's employment
with the Bank is terminated as set forth below, the Bank will pay to
Employee the amount set forth in Section 3 hereof and Employee shall be
entitled to the benefits set forth in Section 4 hereof:
(a) the Bank terminates Employee's employment with the Bank without
cause; or
(b) the Employee terminates Employee's employment with the Bank due to
the fact that the nature and scope of Employee's duties and authority or
his responsibilities with the Bank or the surviving or acquiring person are
materially reduced to a level below that which he enjoys on the date
hereof, his then current base annual salary is materially reduced to a
level below that which he enjoys on the date hereof, the fringe benefits
which the Bank provides Employee on the date hereof are materially reduced,
Employee's position or title with the Bank or the surviving or acquiring
person is materially reduced from his current position or title with the
Bank, or without Employee's consent, Employee's principal place of
employment with the Bank is changed to a location greater than eighty miles
from his current principal place of employment with the Bank, provided,
however, that for any termination by Employee under this clause (b) the
Employee shall have first given Bank ten (10) days written notice of his
intention to termination his employment pursuant to this clause (ii),
specifying the reason(s) for such termination, and provided further, that
the Bank shall not have cured or remedied the reason(s) specified in such
notice prior to the expiration of ten (10) days after receipt of such
written notice.
3. Termination Payments to Employee. Commencing not later than 30 days
after the date Employee's employment with the Bank is terminated pursuant
to Section 2 hereof (the "Termination Date") and subject to Employee's
compliance with Section 8 hereof, the Bank shall pay compensation to
Employee for a one year period following the Termination Date (the
"Compensation Period") at a per annum rate equal to 100% of Employee's
"base annual salary" on the Termination Date. For purposes of this
Agreement, the term "base annual salary" shall mean the Employee's annual
compensation rate on the Termination Date exclusive of cash bonuses and
payments under the Bank's Annual Incentive Bonus Plan. The Bank agrees that
it will make the payments due under this Section 3 on the first day of each
month following the Termination Date in an amount equal to 1/12 of 100% of
Employee's base annual salary on the Termination Date. Such payments to
Employee shall be reduced each month by the sum of the following: (a) by
the amount of any pension or annuity benefits Employee receives under any
Defined Benefit Pension Plan maintained by the Bank as the same shall be
amended from time to time, computed as if Employee had retired at age 65
(regardless of when he actually retired) and had elected the single life
annuity benefit (regardless of the benefit he actually elected), and (b) in
the event Employee commences employment within the Compensation Period, by
the amount of base annual salary to which he is then entitled by virtue of
his new employment. The intent of this paragraph is that the sum of
payments made under this Section 3 in any year, when added to payments
received under the Bank's Defined Benefit Pension Plan and base annual
salary received by virtue of other employment, will not exceed the
Employee's base annual salary on the Termination Date. The Employee
covenants and agrees that upon the termination of the Employee's employment
with the Bank, the Employee shall use his best efforts to secure new
employment.
4. Other Benefits. In addition to the compensation set forth in
Section 3 hereof, Employee shall be entitled to the following benefits from
the Bank:
(a) for a period of one year following the Termination Date,
reimbursement for all reasonable expenses incurred by Employee in
connection with the search for new employment, including, without
limitation, those of a placement agency or service; provided, however, in
no event shall the Bank be obligated to reimburse Employee hereunder in
excess of 1/3 of his base annual salary on the Termination Date.
(b) for a period of one year following the Termination Date,
reimbursement for all reasonable relocation expenses incurred by Employee
in connection with securing new employment; provided, however, in no event
shall the Bank be obligated to reimburse Employee hereunder in excess of
1/3 of his base annual salary on the Termination Date.
(c) for a period of one year following the Termination Date, Employee
shall be entitled to participate in the following programs of the Bank:
(i) All medical, hospitalization and life insurance benefits
shall be continued for the Compensation Period except that should
subsequent employment be accepted during the Compensation Period,
continuation of any medical, hospitalization and life insurance
benefits will be offset by coverages provided through the Employee's
subsequent employer.
(ii) If permitted under the terms thereof, Employee will remain a
participant under the Bank's Defined Benefit Pension Plan, however,
benefits will be actuarially reduced based upon the number of years
remaining until Employee's normal retirement date had he remained an
employee of the Bank.
5. Withholding. The Bank may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
6. Source of Payment. All payments provided under this Agreement shall be
paid in cash from the general funds of the Bank. No special or separate fund
shall be required to be established by the Bank and the Employee shall have no
right, title or interest whatsoever in or to any investment which the Bank may
make to aid the Bank in meeting its obligations hereunder. Nothing contained in
this Agreement, and no action taken pursuant to its provisions, shall create or
be construed to create a trust of any kind or a fiduciary relationship between
the Bank and Employee or any other person.
7. (a) Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by Employee or his legal representatives without
the Bank's prior written consent.
(b) Attachment. Except as required by law, the right to receive
payments under this Agreement shall not be subject of anticipation, sale,
encumbrance, charge, levy, or similar process or assignment by operation of
law.
8. Confidentiality and Non-Competition. All payments to Employee under this
Agreement shall be subject to Employee's compliance with the provisions of this
Section 8. If Employee fails to comply with such provisions, his right to any
future payments under this Agreement shall terminate and the Bank's obligations
under this Agreement to make such payments and provide such benefits shall
cease.
(a) Employee covenants and agrees that he will not, during the term of
his employment and at any time thereafter, except with the express prior
written consent of the Bank or pursuant to the lawful order of any judicial
or administrative agency of government, directly or indirectly, disclose,
communicate or divulge to any person, or use for the benefit of any person,
any knowledge or information with respect to the conduct or details of the
Bank's business which he, acting reasonably, believes or should believe to
be of a confidential nature and the disclosure of which not to be in the
Bank's interest.
(b) Employee covenants and agrees that he will not, during the term of
his employment and for a period of one year thereafter, except with the
express prior written consent of the Bank, directly or indirectly, whether
as employee, employer, owner, partner, consultant, agent, director,
officer, shareholder or in any other capacity, engage in or assist any
person to engage in any act or action which he, acting reasonably, believes
or should believe would be harmful or inimical to the interests of the
Bank.
(c) Employee covenants and agrees that he will not, during the term of
his employment and for a period of one year thereafter, except with the
express prior written consent of the Bank, in any capacity (including, but
not limited to, owner, partner, shareholder, consultant, agent, employee,
employer, officer, director or otherwise), directly or indirectly, for his
own account or for the benefit of any person, engage or participate in or
otherwise be connected with any commercial bank which has its principal
office in either Northampton or Lehigh Counties, Pennsylvania or Xxxxxx
County, New Jersey except that the foregoing shall not prohibit Employee
from owning as a shareholder less than 1% of the outstanding stock of an
issuer whose stock is publicly traded.
(d) The parties agree that any breach by Employee of any of the
covenants or agreements contained in this Section 8 will result in
irreparable injury to the Bank for which money damages could not adequately
compensate the Bank and therefore, in the event of any such breach, the
Bank shall be entitled (in addition to any other rights and remedies which
it may have at law or in equity) to have an injunction issued by any
competent court enjoining and restraining Employee and/or any other person
involved therein from continuing such breach. The existence of any claim or
cause of action which Employee may have against the Bank or any other
person (other than a claim for the Bank's breach of this Agreement for
failure to make payments hereunder) shall not constitute a defense or bar
to the enforcement of such covenants. In the event of an alleged breach by
Employee of any of the covenants or agreements contained in this Section 8,
the Bank shall continue any and all of the payments due Employee under this
Agreement until such time as a court shall enter a final and unappealable
order finding such a breach; provided, however, that the foregoing shall
not preclude a court from ordering Employee to repay such payments made to
him for the period after the breach is determined to have occurred or from
ordering that payments hereunder be permanently terminated in the event of
a material and willful breach.
(e) If any portion of the covenants or agreements contained in this
Section 8, or the application thereof, is construed to be invalid or
unenforceable, the other portions of such covenant(s) or agreement(s) or
the application thereof shall not be affected and shall be given full force
and effect without regard to the invalid or unenforceable portions to the
fullest extent possible. If any covenant or agreement in this Section 8 is
held unenforceable because of the area covered, the duration thereof, or
the scope thereof, then the court making such determination shall have the
power to reduce the area and/or duration and/or limit the scope thereof,
and the covenant or agreement shall then be enforceable in its reduced
form.
(f) For purposes of this Section 8, the term "the Bank" shall include
the Bank, any successor to the Bank under Section 9 hereof, and all present
and future direct and indirect subsidiaries and affiliates of the Bank.
9. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Bank which may acquire,
directly or indirectly, by merger, consolidation, purchase, or otherwise, all or
substantially all of the assets of the Bank, and shall otherwise inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
executors, administrators, successors and assigns. Nothing in the Agreement
shall preclude the Bank from consolidating or merging into or with or
transferring all or substantially all of its assets to another person. In that
event, such other person shall assume this Agreement and all obligations of the
Bank hereunder. Upon such a consolidation, merger, or transfer of assets and
assumption, the term "the Bank" as used herein, shall mean such other person and
this Agreement shall continue in full force and effect.
10. Waivers Not to be Continued. Any waiver by a party of any breach of
this Agreement by another party shall not be construed as a continuing waiver or
as a consent to any subsequent breach by the other party.
11. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed, certified or registered mail, return receipt
requested, with postage prepaid, to the following addresses or to such other
address as either party may designate by like notice:
If to Employee, to:
Xx. Xxxxxx X. XxXxxxxx, Xx.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
If to the Bank, to:
Nazareth National Bank and Trust Company
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Board of Directors
and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.
12. Applicable Law~ Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the substantive laws of the
Commonwealth of Pennsylvania with respect to contracts executed in and to be
wholly performed therein. Bank and Employee consent to the exclusive
jurisdiction of the Court of Common Pleas, Northampton County, Commonwealth of
Pennsylvania and the United States District Court for the Eastern District of
Pennsylvania in any and all actions arising hereunder and irrevocably consent to
service of process as set forth in Section 11 hereof.
13. General Provisions.
(a) This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof, and supersedes and
replaces all prior agreements between the parties. No amendment, waiver or
termination of any of the provisions hereof shall be effective unless in
writing and signed by the party against whom it is sought to be enforced.
Any written amendment, waiver or termination hereof executed by the Bank
and Employee shall be binding upon them and upon all other persons, without
the necessity of securing the consent of any other person, and no person
shall be deemed to be a third party beneficiary under this Agreement.
(b) This Agreement shall not limit or infringe upon the right of the
Bank to terminate the employment of Employee at any time for any reason,
nor upon the right of Employee to terminate his employment with the Bank.
(c) The term "person" as used in this Agreement means a natural
person, joint venture, corporation, sole proprietorship, trust, estate,
partnership, cooperative, association, non-profit organization or any other
legally cognizable entity.
(d) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same Agreement.
(e) No failure on the part of any party hereto to exercise and no
delay in exercising any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other rights, power or
remedy.
(f) The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall in no way restrict or modify
any of the terms or provisions hereof.
(g) Nothing contained herein shall be construed to require the Bank to
violate applicable law, including, but not limited to, applicable banking
laws and regulations, and all obligations of the Bank under this Agreement
shall be deemed to be qualified accordingly.
ATTEST: NAZARETH NATIONAL BANK AND
TRUST COMPANY
By: /S/ Xxxxxxxx X. Xxxxxx BY: /S/ S. Xxxx Xxxxxxx
Xxxxxxxx X. Xxxxxx, Secretary S. Xxxx Xxxxxxx, President
Witness:
/S/ Xxxxx X. Xxxxxx /S/ Xxxxxx X. XxXxxxxx, Xx.
XXXXXX X. XxXXXXXX, XX.(SEAL)
