SEVERANCE AGREEMENT
Agreement made this 1st day of January, 2001, by and between Nazareth
National Bank and Trust Company, a banking association organized under the laws
of the United States ("Bank") and Xxxxx X. Xxxxxxxxx, an individual
("Employee").
BACKGROUND
Effective January 1, 2001 and subject to the terms of this Agreement, the
Bank will continue to employ Employee in the position of Executive Vice
President and Senior Loan Officer, and to perform such other duties as may be
assigned to him by the President of the Bank. Employee agrees to serve the Bank
in this capacity on a full-time basis, faithfully, diligently and to the best of
his ability. Employee further agrees to fully cooperate with the officers and
employees of the Bank to the best of his ability, and not to engage in any
outside for profit business deemed to be in conflict with general commercial
banking, employment or commercial activity without the prior written consent of
the President of the Bank. The Bank and Employee wish 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 begin on January 1, 2001 and shall terminate
at 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) the date of termination of Employee's employment
with the Bank for cause (as hereinafter defined); (c) the date specified by
mutual agreement of the Bank and Employee; (d) subject to Section 2 hereof, the
date of termination by Employee of Employee's employment with the Bank by
resignation or otherwise; or (e) December 31, 2001. If this Agreement expires on
December 31, 2001 pursuant to (e) of the foregoing sentence ("the Initial
Term"), it shall renew automatically for successive terms of up to one year
beginning on January 1 of the applicable succeeding year ("Successive Term(s)"),
provided neither of the parties has given written notice to the other party of
his or its intention not to renew at least two months prior to December 31, 2001
or December 31 of the applicable succeeding year. In the event that this
Agreement is renewed pursuant to the foregoing sentence, the Agreement shall
terminate on the earliest of the following dates: (i) a date listed in the (a)
through (d) of the first sentence of this paragraph; (ii) December 31 of the
applicable succeeding year. If Employee's employment with the Bank is terminated
during the Initial Term or any Successive Term (other than as set forth in
Section 2 hereof), Employee shall have no rights or benefits under this
Agreement except to receive payment of base salary through the effective date of
his termination. For purposes of this Agreement, the term "cause" shall mean (i)
conviction of Employee for any felony, fraud or embezzlement or (ii) Employee's
failure or refusal to comply with the written policies or written directives of
the Bank's Board of Directors or Employee being guilty of misconduct in
connection with the performance of his duties for the Bank, provided Employee
fails to cure such non-compliance or misconduct within twenty (20) days after
receiving written notice from the Bank's Board of Directors
specifying such non-compliance or misconduct.
2. Termination. If during the Initial Term or any Successive 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) Employee terminates his employment with the Bank: (i) for any
reason at any time within eighteen months after a "change in control" of
the Bank (as defined hereinafter), or (ii) due to the fact that, without
Employee's consent and whether or not a change of control of the Bank has
occurred, 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 reduced to a level below
that which he enjoys on the date hereof or at any time hereafter (whichever
may be greater), 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 fifty miles from his current principal place of employment
with the Bank, provided, however, that for any termination by Employee
under this clause (ii) the Employee shall have first given the Bank written
notice of his intention to terminate 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 twenty (20) days after receipt of
such written notice.
(c) For purposes of this Agreement, a "change in control" shall be
deemed to have occurred upon the happening of any of the following events:
(1) A change within a twelve month period in a majority of the
members of the Board of Directors of the Bank or its holding company,
First Colonial Group, Inc. (the "Holding Company");
(2) A change within a twelve month period in the holders of more
than 50% of the outstanding voting stock of the Bank or its Holding
Company; or
(3) Any other event deemed to constitute a "change in control" by
the Board of Directors of the Bank.
3. Termination Payments to Employee. Commencing not later than 30 days
after the date Employee's employment with the Bank is terminated pursuant to any
event enumerated in subsection (a) or subsection (b) of 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 "Severance 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 bonus plan(s), if any. 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. If Employee's employment with the Bank is
terminated pursuant to any event enumerated in subsection (a) or subsection (b)
of Section 2 hereof, Employee shall have a duty to seek substantially equivalent
employment. The payments required by this Section 3 shall be reduced on a
dollar-for-dollar basis by any income or earnings received by Employee from any
other employer or by any income or earnings obtained from any other working
activity in which Employee may engage during the Severance Period. Employee
shall notify the Bank promptly of his receipt of any income or earnings during
the Severance Period.
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 in
the event that Employee's employment with the Bank is terminated pursuant to any
event enumerated in subsection (a) or subsection (b) of Section 2 hereof:
(a) for the Severance Period, 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, and 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 in excess of
1/3 of his base annual salary on the Termination Date for the sum of
Employee's search and relocation expenses hereunder.
(b) for the Severance Period, Employee shall be entitled to
participate in the following group programs of the Bank if such programs
are in effect at the Termination Date (or, if such participation is not
permitted by the terms of the group programs, through substantially
equivalent benefits), with the Bank paying for the Employee's continued
participation in such group programs at the same annual rate at which the
Bank was paying on the Termination Date: all medical, hospitalization, life
and disability group insurance benefits which existed at the Termination
date, except that should other subsequent employment be obtained by
Employee during the Severance Period, continuation of any medical,
hospitalization, life and disability group insurance benefits will be
offset by coverages provided through the Employee's subsequent employer.
(c) If permitted by the terms thereof, Employee will remain a
participant of the Bank's defined benefit pension plan.
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 by the Bank from such funds as the President shall direct. No special or
separate fund shall be required to be established and 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, Lehigh or Monroe 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.
(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. Xxxxx X. Xxxxxxxxx
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, 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
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: _________________________ By:____________________________
S. Xxxx Xxxxxxx, President
Witness:
_____________________________ _________________________(SEAL)
Xxxxx X. Xxxxxxxxx
