EXHIBIT 10.6
EMPLOYMENT CONTRACT
AGREEMENT made this 31st day of December, 2001by and between COMMUNITY
BANKS, INC., a Pennsylvania corporation, ("Company") and XXXXXX X. XXXX, an
adult individual (hereinafter referred to as "Executive").
WHEREAS, the Company wishes to employ Executive, and Executive wishes to be
employed by Company, as an Executive Vice President and the Chief Financial
Officer of Company and its subsidiary banks, upon the terms set forth below;
NOW, THEREFORE, in consideration of the agreements hereinafter contained,
and intending to be legally bound hereby, the parties agree as follows:
1. Length of Employment. Company agrees to employ Executive for a
rolling term of two (2) years commencing as of December 31, 2001 (the "Effective
Date"). On each anniversary date of the Effective Date, the term of this
Agreement shall automatically renew and extend for an additional one (1) year
period unless either party shall have provided notice of its intent not to renew
within sixty (60) days prior to such anniversary date. Upon the occurrence of
any Change in Control (as defined in Paragraph 8), the term of this Agreement
shall automatically renew and be extended for two (2) years from the date
thereof.
2. Position and Responsibilities. During the course of his employment,
Executive shall (i) perform the duties and responsibilities of an Executive Vice
President and Chief Financial Officer of Company and its subsidiary banks, (ii)
perform such other senior management duties and respon sibilities as the Board
of Directors and CEO of Company may direct, and (iii) shall be afforded the
title and privileges associated with being at least an Executive Vice President
of the Company. For purposes of this Agreement, "Executive Vice President" shall
be deemed to include and refer to the title "Managing Director," as such title
is used for employee officers of the Company from time to time.
3. Performance of Responsibilities, Loyalty.
a. Executive shall devote his full time to the performance of his
responsibilities hereunder. Executive shall at all times faithfully,
competently, industriously and to the best of his abilities perform all duties
necessary to carry out his responsibilities.
b. Throughout the term hereof, Executive shall not at any time or
place, either directly or indirectly engage in any business or activity in
competition with or adverse to the interests of Company or the subsidiaries and
affiliates of Company.
4. Compensation.
a. Salary. Company shall pay to Executive (i) a base salary of
not less than $135,000 during calendar year 2002 and (ii) provided that
Executive performed his duties for Company in a professional and workmanlike
manner and in accordance with this Agreement during 2002, a base salary of not
less than $150,000 during calendar year 2003. This salary shall be paid in
regular, substantially equal installments in accordance with the regular payroll
practices of the Company, less any and all applicable deductions for taxes,
medical benefits, etc.
b. Automobile Expenses. In addition to base salary, during the
term of this Agreement, Company shall provide Executive with an automobile,
including all related maintenance, repairs, insurance and other costs. In lieu
of providing Executive with an automobile, Company may provide Executive with a
reasonable allowance on a monthly basis, which allowance shall cover Executive's
costs associated with an automobile, including without limitation, lease or
installment payments, maintenance, repairs, insurance and other costs.
c. Signing Bonus. Upon execution of this Agreement, Company shall
pay to Executive a lump sum of $15,000, which amount shall be subject to normal
tax and other withholdings.
d. 2002 Bonus. Provided that Executive has performed his duties
for Company in a professional and workmanlike manner and in accordance with this
Agreement during 2002, Company shall pay Executive a bonus in January 2003 of
not less than $20,000, which amount shall be subject to normal tax and other
withholdings.
5. Benefits.
a. Executive shall be eligible to participate in all employee
benefit plans generally available to executive officers of Company, including
without limitation, health and dental insurance plans, group life insurance
plans, retirement plans, incentive compensation plans, supplemental executive
retirement plans and stock option, grant or appreciation rights plans. The
participation of Executive in each benefit plan described in this paragraph
shall be subject to the terms of the applicable plan and to procedures generally
applicable to Company officers. Nothing in this paragraph shall obligate the
Company to offer any such plans.
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b. Executive shall be provided holiday pay, vacation, personal
days, sick leave, short-term disability and long-term disability in accordance
with Company policy for officers of similar positions performing similar duties.
c. The Company shall pay the reasonable costs of Executive to
attend continuing education seminars and banking conventions and meetings.
6. Relocation. Company shall not, without the prior consent of
Executive, transfer or relocate the office in which Executive performs the bulk
of his duties to any location more than thirty (30) miles from Harrisburg,
Pennsylvania without an increase in duties and responsibilities and commensurate
compensation. In the event Executive is so transferred or relocated, Company
shall pay all reasonable out-of-pocket expenses incurred by Executive in
connection with such relocation. Company shall not require Executive to move
from his residence.
7. Termination of Employment. This Agreement may be terminated during
the term hereof as follows:
a. (i) At any time by mutual agreement of Executive and
Company.
(ii) If this Agreement is terminated pursuant to
subparagraph (a)(i) of this Paragraph 7, neither party shall have further
obligation or liability to the other hereunder, except that Executive shall be
entitled to accrued and unpaid salary.
b. (i) By Company, at any time for Cause. "Cause" shall include
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, incompetence, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or offenses not involving moral turpitude), final cease and desist
order of any government agency having jurisdiction over Company, or material
breach of this Agreement, following Company's notice thereof to Executive and
Executive's failure to cure same within thirty (30) days of such notice.
(ii) If this Agreement is terminated pursuant to subparagraph
(b)(i) of this Paragraph 7, Company shall have no further obligation or
liability to Executive hereunder, except that Executive shall be entitled to
accrued and unpaid salary.
c. (i) Automatically, if Executive is removed and/or permanently
prohibited from participating in the conduct of Company's affairs by an order
issued by an appropriate regulatory agency under Section 8(e) of the Federal
Deposit Insurance Act, as amended, or any similar state or federal law.
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(ii) If this Agreement is terminated pursuant to subparagraph
(c)(i) of this Paragraph 7, Company shall have no further obligation or
liability hereunder, except that Executive shall be entitled to accrued and
unpaid salary.
d. (i) By Company at any time, if in its sole judgment and
discretion the continued employment of Executive would no longer be beneficial
or desirable.
(ii) In the event that Executive's employment is terminated
pursuant to this subparagraph (d)(i) of this Paragraph 7, Executive shall not be
obligated to perform any services on behalf of Company and Company shall be
obligated to continue Executive's salary and those benefits set forth in
Paragraph 5(a) hereof for the remaining term of this Agreement; provided,
however, that in no event shall this provision obligate Company to make any
further increase to Executive's salary above his salary on the date of such
termination, or continue Executive's participation in any incentive compen
sation plan, or stock option, grant or appreciation rights plan, or any similar
incentive based compensation plan.
(iii) Notwithstanding the provisions of subparagraph (d)(ii)
of this Paragraph, in the event that Executive's employment is terminated
pursuant to subparagraph (d)(i) of this Paragraph 7 subsequent to a Change in
Control, or the Company shall breach any provision of this Agreement subsequent
to a Change in Control, Executive may elect, which election may be made in
Executive's sole discretion, to receive from Company a single payment upon such
termination amounting to any salary to which Executive would be entitled
pursuant to subparagraph (d)(ii), such single payment being in lieu of the
payments and benefits set forth in subparagraph (d)(ii). As used in this
paragraph, "Change in Control" shall have the meaning defined in Paragraph 8
hereof.
e. (i) By Executive upon a Change in Control.
(ii) In the event that Executive terminates his employment
pursuant to subparagraph (e)(i) of this Paragraph 7, Company shall be obligated
to continue Executive's salary and those benefits set forth in Paragraph 5(a)
hereof for the remaining term of this Agreement; provided, however, that in no
event shall this provision obligate Company to make any further increase to
Executive's salary above his salary on the date of such termination, or continue
Executive's participation in any incentive compensation plan, or stock option,
grant or appreciation rights plan, or any similar incentive based compensation
plan.
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(iii) In the event that Executive terminates his employment
pursuant to subparagraph (e)(i) of this Paragraph 7, Executive may elect, which
election may be made in Executive's sole discretion, to receive from Company a
single payment upon such termination amounting to any salary to which Executive
would be entitled pursuant to subparagraph (e)(ii), such single payment being in
lieu of the payments and benefits set forth in subparagraph (e)(ii).
f. By Executive at any time, upon thirty (30) days' prior notice
to Company; provided, however, that if this Agreement shall be terminated
pursuant to this subparagraph (f) of this Paragraph 7, Company shall not be
further obligated or liable under this Agreement, except for the payment of
accrued and unpaid salary.
8. Definition of Change of Control. For purposes of this Agreement,
the term "Change of Control" shall mean:
a. An acquisition by any "person" or "group" (as those terms are
defined or used in Section 13(d) of the Exchange Act, as enacted and in force on
the date hereof) of "beneficial ownership" (within the meaning of Rule 13d-3
under the Exchange Act, as enacted and in force on the date hereof) of
securities of Company representing 24.99% or more of the combined voting power
of Company's securities then outstanding;
b. The consummation of a merger, consolidation or other
reorganization of Company, except where shareholders of Company immediately
prior to consummation of any such transaction continue to hold as least a
majority of the voting power of the outstanding voting securities of the legal
entity resulting from or existing after any transaction and a majority of the
members of the Board of Directors of the legal entity resulting from or existing
after a transaction are former members of Company's Board of Directors;
c. A sale, exchange, transfer or other disposition of
substantially all of the assets of Company to another entity, except to an
entity controlled, directly or indirectly, by Company or a corporate division
involving Company;
d. The consummation of a contested proxy solicitation of
Company's shareholders that results in the contesting party obtaining the
ability to cast twenty-five percent (25%) or more of the votes entitled to be
cast in an election of directors of Company.
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9. Suspension. If Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Company's affairs by a notice served in
accordance with law by an appropriate regulatory agency, the Company's
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, Company shall (i) pay Executive all of the compensation withheld
while its contract obligations were suspended and (ii) reinstate any of its
obligations which were suspended.
10. Death or Disability. In the event that Executive is rendered
unable to complete the terms of this Agreement due to death or disability
continuing in excess of ninety (90) days, this Agreement shall be terminated and
Company shall have no further liability, obligations or responsibilities
hereunder except as set forth in Paragraph 5(b) hereof.
11. Covenant Not to Compete. In the event Executive terminates his
employment with Company pursuant to Paragraph 7(f), he agrees that, for a period
of one (1) year following such termination, he shall not (i) solicit any em
ployees or officers of Company or its affiliates and subsidiaries (collectively
referred to as "Company" for purposes of this paragraph) to leave Company to
accept employment by Executive or his new employer; or (ii) solicit or encour
age any customers of Company to cease doing business with the Company and/or to
transfer any or all of their business relationships to any institution which
Executive may found or to Executive's new employer.
12. Entire Agreement. This Agreement shall constitute the entire
agreement between the parties and no prior promises, agreements or warran ties,
verbal or written, shall be of any force unless embodied herein. No modification
of this Agreement shall be of any force or effect unless reduced to writing and
signed by both parties.
13. Miscellaneous.
a. This Agreement shall be binding upon and inure to the benefit
of the parties hereto, their respective heirs, successors and assigns.
b. This Agreement shall not be modified or changed in any way
except by a written agreement signed by the parties hereto.
c. No waiver by any party hereto of any provision of this
Agreement shall be deemed a waiver of said provision or any other provisions of
this Agreement.
d. This Agreement shall be interpreted, construed and governed in
accordance with the laws of the Commonwealth of Pennsylvania. 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement
on the date first written above.
ATTEST: COMMUNITY BANKS, INC.
/S/ Xxxxxxxx X. Xxxx By: /S/ Xxxxx X. Xxxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxxx
President and CEO
WITNESS:
/S/ Xxxxxxxx X. Xxxx /S/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
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