FORM OF EMPLOYMENT PROTECTION AGREEMENT (Penn Security Bank and Trust Company Letterhead)
Exhibit
10.1
FORM
OF EMPLOYMENT PROTECTION AGREEMENT
(Penn
Security Bank and Trust Company Letterhead)
____________,
2008
(name and
address]
Dear
[ ]:
On behalf
of Penn Security Bank and Trust Company (the “Company”), this letter
memorializes our agreement to provide you with certain salary continuation
benefits if your service to the Company ceases under specified
circumstances. Your employment is “at will” employment, terminable by
either you or the Company at any time, upon not less than 60 days written
notice; provided that the Company may terminate your employment without notice
at any time, if the termination is for Cause.
1. Definitions. As
used herein, the following terms have the following meanings:
“Cause”
means the occurrence of any of the following, as determined in good faith by the
Board of Directors of the Company: (i) any physical or mental condition
reasonably expected to or which does prevent you from performing any essential
element of your job for more than 90 days; (ii) alcohol abuse or use of
controlled drugs by you (other than in accordance with a physician’s
prescription); (iii) illegal conduct or gross misconduct by you which is
materially and demonstrably injurious to the Company, its affiliates or
subsidiaries including, without limitation, fraud, embezzlement, theft or proven
dishonesty in the course of your employment; (iv) conviction of a misdemeanor
involving moral turpitude or a felony; (v) the entry of a guilty or nolo
contendere plea to a misdemeanor involving moral turpitude or a felony, (vi)
material breach of any agreement with, or duty owed to, the Company, or (vii)
your failure, refusal or inability to perform, in any material respect, your
duties to the Company, which failure continues for more than thirty (30) days
after written notice thereof from the Company.
“Good
Reason” means a material reduction by the Company in your annual salary,
provided that if the salaries of substantially all of the Company’s senior
executive officers (including the Company’s President and CEO) are
contemporaneously and proportionately reduced, a reduction in your salary will
not constitute “Good Reason” hereunder. The foregoing will constitute
Good Reason, however, only if you provide the Company with written objection to
the event or condition within 30 days following the occurrence thereof, the
Company does not reverse or otherwise cure the event or condition within 30 days
of receiving that written objection, and you resign your employment within 30
days following the expiration of that cure period.
2. Salary and Benefits
Continuation. In recognition of your continued employment, if
your service to the Company ceases at any time hereafter due to a termination by
the Company without Cause or due to a resignation by you for Good Reason, you
will be entitled
to: (i)
separation payments in the form of salary continuation (less applicable
withholding) for a period ending on the date that is twelve months after the
last day of your employment with the Company, and (ii) if you elect to receive
continuation coverage under the Company’s group health plan pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), for the twelve
(12) month period immediately following the last day of your employment with the
Company, waiver of the applicable premium otherwise payable for COBRA
continuation coverage for you to the extent such premium exceeds the monthly
amount charged to active similarly-situated employees of the Company for the
same coverage. The separation payments described above will be paid
at the base salary rate in effect as of the date of your separation from the
Company and will be payable in accordance with the Company’s normal payroll
practices.
3. Treasury Regulation; Release
of Claims.
a. If
the cessation giving rise to the payments described in Section 2 is not a
“Separation from Service” within the meaning of Treas. Reg. § l.409A-1(h)(1) (or
any successor provision), then the amounts otherwise payable pursuant to that
section will instead be deferred without interest and will not be paid until you
experience a Separation from Service. In addition, to the extent
compliance with the requirements of Treas. Reg. § 1.409A-3(i)(2) (or any
successor provision) is necessary to avoid the application of an additional tax
under Section 409A of the Internal Revenue Code to payments due to you upon or
following your Separation from Service, then notwithstanding any other provision
of this Agreement (or any otherwise applicable plan, policy, agreement or
arrangement), any such payments that are otherwise due within six months
following your Separation from Service (taking into account the preceding
sentence of this paragraph) will be deferred without interest and paid to you in
a lump sum immediately following that six month period. This
paragraph should not be construed to prevent the application of Treas. Reg. §§
l.409A-1(b) (4) or (9) (or any successor provisions) to amounts payable
hereunder. For purposes of the application of Treas. Reg. §
l.409A-1(b)(4), each payment described in Section 2(a) will constitute a
separate payment.
b. Moreover,
notwithstanding any other provision of this letter, no payment or obligation
will be owed by the Company hereunder, unless: (i) you execute and deliver to
the Company a general release of claims against the Company and its affiliates
in a form reasonably prescribed by the Company within 30 days (or 45 days, if
required to comply with the Age Discrimination in Employment Act of 1967, as
amended) following your cessation of employment, and (ii) that release becomes
irrevocable.
4. No
Liability of Officers and Directors. You acknowledge that any
compensation payable to you in respect of your service to the Company (including
any amount payable pursuant to this letter) is solely an obligation of the
Company and not its officers or directors, even in the event of the Company’s
insolvency. Accordingly, intending to be legally bound, you hereby
waive and release all claims for payment of compensation from officers or
directors of the Company.
5. Miscellaneous
Provisions. The salary continuation benefits described in this
letter will be paid in lieu of, and not in addition to, benefits payable
pursuant to any other salary continuation, severance, termination or similar
arrangement maintained by the Company
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or its
affiliates. For avoidance of doubt, a cessation of your service as a
result of your death or a mental or physical condition entitling you to benefits
under the Social Security Act or under any disability plan or arrangement
maintained or funded by the Company will not constitute a termination without
Cause. This letter represents our entire agreement regarding your
salary continuation benefits and merges and supersedes all prior or
contemporaneous discussions, agreements and understandings between us relating
to that topic. This letter may not be changed or modified, except by
an agreement in writing signed by you and an authorized representative of the
Company. This letter will be governed by, and enforced in accordance
with, the laws of the Commonwealth of Pennsylvania without regard to the
application of the principles of conflicts or choice of laws.
To
acknowledge your agreement to all of the foregoing, please execute this letter
in the space provided below and return the executed copy to me.
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Sincerely,
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Penn
Security Bank and Trust Company
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By:
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Acknowledged
and agreed on
_______________,
2009:
____________________________
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