EXHIBIT 10.2
SEVERANCE AGREEMENT
THIS AGREEMENT, made as of the 1st day of January 1991,
between FIRST LEESPORT BANCORP, INC. ("Bancorp"), a Pennsylvania
business corporation having its principal place of business in
Leesport, Pennsylvania, and XXXX X. XXXXXXXX ("Executive"), an
individual residing at 0000 Xxxxxxxxxxxx Xxxxx, Xxxxxx Xxxxxxxx,
Xxxxxxxxxxxx.
WITNESSETH:
WHEREAS, Executive is presently serving as President
and Chief Executive Officer of Bancorp; and
WHEREAS, Bancorp considers the continued services of
Executive to be in the best interests of Bancorp and desires to
induce Executive to remain in the employ of Bancorp on an
impartial and objective basis in the event of a change in the
management or control of Bancorp.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be
legally bound, agree as follows:
1. Term of Agreement.
(a) This Agreement shall be for a two (2) year
period commencing on January 1, 1991 and ending on December 31,
1992; provided, however, that this Agreement shall be
automatically renewed on January 1, 1992 and on January 1 of each
subsequent year (the "Annual Renewal Date') for a period ending
two (2) years from each Annual Renewal Date unless either party
shall give written notice of nonrenewal to the other party at
least sixty (60) days prior to an Annual Renewal Date, in which
event this Agreement shall terminate at the end of the then
existing term.
(b) Notwithstanding the provisions of Section
l(a) of this Agreement, this Agreement shall terminate
automatically for Cause (as defined herein) upon written notice
from the Board of Directors of Bancorp (the "Board") to
Executive. As used in this Agreement, "Cause" shall mean any of
the following:
(i) Executive's conviction of or plea of
guilty or nolo contendere to a felony, a crime of falsehood,
or a crime involving moral turpitude, or the actual
incarceration of Executive for a period of forty-five (45)
consecutive days or more;
(ii) Executive's failure to follow the good
faith lawful instructions, with respect to Bancorp or its
operations, of the Board, following written notice of such
instructions; or
(iii) Executive's willful failure to
substantially perform Executive's duties to Bancorp, other
than a failure resulting from Executive's incapacity because
of physical or mental illness, which willful failure results
in demonstrable material injury and damage to Bancorp.
If this Agreement is terminated for Cause, Executive's rights
under this Agreement shall cease as of the effective date of such
termination.
(c) Notwithstanding the provisions of Section
l(a) of this Agreement, this Agreement shall terminate
automatically upon Executive's voluntary termination of
employment (other than in accordance with Section 2 of this
Agreement), retirement at Executive's election, or Executive's
death, and Executive's rights under this Agreement shall cease as
of the date of such voluntary termination, retirement at
Executive's election, or death; provided, however, that, if
Executive dies after Executive delivers a Notice of Termination
(as defined in Section 2(a) of this Agreement), the provisions of
Section 8(b) of this Agreement shall apply.
(d) Notwithstanding the provisions of Section
l(a) of this Agreement, this Agreement shall terminate
automatically upon Executive's disability and Executive's rights
under this Agreement shall cease as of the date of such
termination; provided, however, that, if Executive becomes
disabled after Executive delivers a Notice of Termination (as
defined in Section 2(a) of this Agreement), Executive shall
nevertheless be absolutely entitled to receive all of the
compensation and benefits provided for in, and for the term set
forth in, Section 3 of this Agreement. For purposes of this
Agreement, "disability" shall mean Executive's incapacitation by
accident, sickness, or otherwise which renders Executive mentally
or physically incapable of performing the services required of
Executive for three hundred sixty (360) consecutive days.
2. Termination Following Change in Control.
(a) If a Change in Control (as defined in Section
2(b) of this Agreement) shall occur and if thereafter, at any
time during the term of this Agreement, there shall be:
(i) any involuntary termination of
Executive's employment (other than for the reasons set forth
in Section 1(b) or l(d) of this Agreement);
(ii) any reduction in Executive's title,
responsibilities, including reporting responsibilities, or
authority, including such title, responsibilities,
or authority as such title, responsibilities, or authority
may be increased from time to time during the term of this
Agreement;
(iii) the assignment to Executive of duties
inconsistent with Executive's office on the date of the
Change in Control or as the same may be increased from time
to time after the Change in Control;
(iv) any reassignment of Executive to a
location greater than twenty-five (25) miles from Leesport,
Pennsylvania;
(v) any reduction in Executive's annual base
salary in effect on the date of the Change in Control or as
the same may be increased from time to time after the Change
in Control;
(vi) any failure to continue Executive's
participation in any of Bancorp's incentive compensation or
bonus plans in which Executive participated at the time of
the Change in Control or any change or amendment to any
provisions of any of such plans which would materially
decrease the potential benefits to Executive under any of
such plans;
(vii) any failure to provide Executive with
benefits at least as favorable as those enjoyed by Executive
under any of Bancorp's retirement or pension, life
insurance, medical, health and accident, disability or other
employee plans in which Executive participated at the time
of the Change in Control, or the taking of any action that
would materially reduce any of such benefits in effect at
the time of the Change in Control;
(viii) any requirement that Executive travel
in performance of his duties on behalf of Bancorp for a
significantly greater period of time during any year than
was required of Executive during the year preceding the year
in which the Change in Control occurred;
(ix) any sustained pattern of interruption
or disruption of Executive for matters substantially
unrelated to Executive's discharge of Executive's duties on
behalf of Bancorp; or
(x) any breach of this Agreement of any
nature whatsoever on the part of Bancorp;
then, at the option of Executive, exercisable by Executive within
one hundred twenty (120) days of the occurrence of any of the
foregoing events, Executive may resign from employment with
Bancorp (or, if involuntarily terminated, give notice of
intention to collect benefits under this Agreement) by
delivering a notice in writing (the "Notice of Termination") to
Bancorp and the provisions of Section 3 of this Agreement shall
apply.
(b) As used in this Agreement, "Change in
Control" shall mean the occurrence of any of the following:
(i) (A) a merger, consolidation, or division
involving Bancorp, (B) a sale, exchange, transfer, or other
disposition of substantially all of the assets of Bancorp,
or (C) a purchase by Bancorp of substantially all of the
assets of another entity unless (x) such merger,
consolidation, division, sale, exchange, transfer, purchase
or disposition is approved in advance by eighty percent
(80%) or more of the members of the Board who are not
interested in the transaction and (y) a majority of the
members of the Board of Directors of the legal entity
resulting from or existing after any such transaction and of
the Board of Directors of such entity's parent corporation,
if any, are former members of the Board; or
(ii) any other change in control of Bancorp
similar to any of the foregoing.
3. Rights in Event of Termination Following Change in
Control.
(a) In the event that Executive delivers a Notice
of Termination (as defined in Section 2(a) of this Agreement) to
Bancorp, Executive shall be absolutely entitled to receive the
compensation and benefits set forth below:
(i) If, at the time of termination of
Executive's employment in accordance with Section 2 hereof,
a "Tax Change" (as defined in Section 3(a)(iii) of this
Agreement) has also occurred, Bancorp shall make a lump-sum
cash payment to Executive no later than thirty (30) days
following the date of such termination in an amount ("X")
determined pursuant to the following formula:
X = (2.99A - B) x (1 + C) D.
For the purpose of the foregoing formula,
A = Executive's base amount, determined pursuant to Section
28OG(b)(3)(A) of the Internal Revenue Code of 1986, as
amended (the "Code");
B = the present value of all other amounts which qualify as
parachute payments under Code Section 28OG(b)(2)(A) or
(B) (without regard to the provisions of Code Section
28OG(b)(2)(A)(ii)), such present value to be determined
pursuant to the provisions of Code Section 28OG;
C = 120% times 0.5 times the lowest of the semiannual
applicable federal rates (determined pursuant to Code
Section 1274(d)) in effect on the date of the "Tax
Change"; and
D = the number of whole semiannual periods plus any
fraction of a semiannual period from the later of the
date of the "Tax Change" or the Change in Control to
the date of termination of Executive's employment.
Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, if the amount determined under
"B" above equals or exceeds 2.99 times the amount determined
under "A" above, no payment shall be made to Executive under
this Section 3, nor shall Executive be required to make any
payment to Bancorp.
(ii) If, at the time of termination of
Executive's employment in accordance with Section 2 hereof,
a "Tax Change" has not occurred, Bancorp shall make a lump-
sum cash payment to Executive no later than thirty (30) days
following the date of such termination in an amount equal to
(A) 2.99 times the lesser of (I) Executive's base amount
determined pursuant to the principles set forth in the
regulations promulgated under Code Section 28OG(b)(3)(A) and
as though a "Tax Change" had occurred on the date of
Executive's termination of employment and (II) Executive's
base amount so determined but as though a "Tax Change" will
occur in the calendar year following the date of Executive's
termination of employment, minus (B) any other amounts paid
or payable within thirty (30) days following Executive's
termination of employment which would constitute (or be
presumed to constitute) parachute payments under Code
Section 28OG(b)(2)(A) or (B) (without regard to the
provisions of Code Section 28OG(b)(2)(A)(ii)) if a "Tax
Change" had occurred on the date of such termination of
employment.
(iii) For purposes of this Agreement, "Tax
Change" means a change (A) in the ownership or effective
control of Bancorp or (B) in the ownership of a substantial
portion of the assets of Bancorp, determined pursuant to
regulations promulgated under Section 28OG of the Code.
Such term also means any similar change with respect to
First National Bank of Leesport or an affiliate, to the
extent provided in such regulations.
(iv) To the extent benefits become payable
under Section 3(a)(i) or Section 3(a)(ii) by reason of
Executive's termination of employment on or after his
attainment of age 62-1/2, the following amount, if less than
the amount calculated under the relevant section, shall be
paid within thirty (30) days of such termination in lieu of
the amount otherwise payable:
Percentage of Basic
If Termination Occurs Compensation Payable
On or after age 62-1/2 but
before age 63 250%
On or after age 63 but
before age 63-1/2 200%
On or after age 63-1/2 but
before age 64 150%
On or after age 64 but
before age 64-1/2 100%
On or after age 64-1/2 but
before age 65 50%
On or after age 65 0%
For purposes of this paragraph, the term "Basic
Compensation" shall mean the sum of (A) Executive's
highest annualized base salary within the three (3)
years immediately preceding termination of employment,
and (B) Executive's highest amount of bonuses paid or
accrued with respect to the three (3) calendar years
immediately preceding such termination.
(b) Bancorp shall pay to Executive all legal fees
and expenses incurred by Executive as a result of Executive's
delivery of a Notice of Termination (including all such fees and
expenses, if any, incurred in successfully contesting or
disputing any termination of employment or in seeking to obtain
or enforce any right or benefit provided by this Agreement).
(c) Executive shall not be required to mitigate
the amount of any payment provided for in this Section 3 by
seeking other employment or otherwise. The amount of payment or
the benefit provided for in this Section 3 shall not be reduced
by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive's
receipt of or right to receive any retirement or other benefits
after the date of termination of employment or otherwise.
4. Notices. Except as otherwise provided in this
Agreement, any notice required or permitted to be given under
this Agreement shall be deemed properly given if in writing and
if mailed by registered or certified mail, postage prepaid with
return receipt requested, to Executive's residence, in the case
of notices to Executive, and to the principal executive office of
Bancorp, in the case of notices to Bancorp.
5. Waiver. No provision of this Agreement may be
modified, waived, or discharged unless such waiver, modification,
or discharge is agreed to in writing and signed by Executive and
an executive officer specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or 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.
6. Assignment. This Agreement shall not be assignable
by either party, except by Bancorp to any successor in interest
to Bancorp's business.
7. Entire Agreement. This Agreement contains the
entire agreement of the parties relating to the subject matter of
this Agreement.
8. Successors; Binding Agreement.
(a) Bancorp will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or
assets of Bancorp to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Bancorp
would be required to perform it if no such succession had taken
place. Failure by Bancorp to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
constitute a breach of this Agreement and the provisions of
Section 3 of this Agreement shall apply. As used in this
Agreement, "Bancorp" shall mean Bancorp as defined previously and
any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law
or otherwise.
(b) This Agreement shall inure to the benefit of
and be enforceable by Executive's personal or legal
representatives, executors, administrators, heirs, distributees,
devisees, and legatees. If Executive should die after a Notice
of Termination is delivered by Executive and any amounts would be
payable to Executive under this Agreement if Executive had
continued to live, all such amounts shall be paid in accordance
with the terms of this Agreement to Executive's devisee, legatee,
or other designee, or, if there is no such designee, to
Executive's estate.
9. Arbitration. Bancorp and Executive recognize that,
in the event a dispute should arise between them concerning the
interpretation or implementation of this Agreement, lengthy and
expensive litigation will not afford a practical resolution of
the issues within a reasonable period of time. Consequently,
each party agrees that all disputes, disagreements and questions
of interpretation concerning this Agreement are to be submitted
for resolution, in Reading, Pennsylvania, to the American
Arbitration Association (the "Association"). Bancorp or
Executive may initiate an arbitration proceeding at any time by
giving notice to the other in accordance with the rules of the
Association. The Association shall designate a single arbitrator
to conduct the proceeding, but Bancorp and Executive, may, as a
matter of right, require the substitution of a different
arbitrator chosen by the Association. Each such right
of substitution may be exercised only one time. The arbitrator
shall not be bound by the rules of evidence and procedure of the
courts of the Commonwealth of Pennsylvania but shall be bound by
the substantive law applicable to this Agreement. The decision
of the arbitrator, absent fraud, duress, incompetence or gross
and obvious error of fact, shall be final and binding upon the
parties and shall be enforceable in courts of proper
jurisdiction. Following written notice of a request for
arbitration, Bancorp, and Executive shall be entitled to an
injunction restraining all further proceedings in any pending or
subsequently filed litigation concerning this Agreement, except
as otherwise provided herein.
10. 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.
11. Applicable Law. This Agreement shall be governed
by and construed in accordance with the domestic, internal laws
of the Commonwealth of Pennsylvania, without regard to its
conflicts of laws principles.
12. Headings. The section headings of this Agreement
are for convenience only and shall not control or affect the
meaning or construction or limit the scope or intent of any of
the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
FIRST LEESPORT BANCORP, INC.
By________________________________
(SEAL)
Attest:___________________________
Secretary
"Bancorp"
Witness:
_____________________________ _____________________________(SEAL)
Xxxx X. Xxxxxxxx
"Executive"
PAGE 8
ADDENDUM TO SEVERANCE AGREEMENT
The undersigned directors of First Leesport Bancorp,
Inc. ("Bancorp") have reviewed and have approved the execution of
the Severance Agreement between Xxxx X. Xxxxxxxx and Bancorp,
dated as of January 1, 1991, to which this Addendum is attached.
_______________ ___________________________________
Date Xxxxx Xxxxx
_______________ ___________________________________
Date R. Xxxxxxx Xxxxx
_______________ ___________________________________
Date Xxxxxxxx X. Xxxxxxxxxxx
_______________ ___________________________________
Date Xxxx X. Xxxx
_______________ ___________________________________
Date Xxxxxxx Xxxxxx
_______________ ___________________________________
Date Xxxxx X. Loose
_______________ ___________________________________
Date Xxxxx X. Xxxxxx
_______________ ___________________________________
Date Xxxxx X. X'Xxxxx III
_______________ ___________________________________
Date Xxxxxxxx X. Xxxxxx